Many companies around the world are required by laws and regulatory requirements, including those in their operating permits, to track and report on their waste management and environmental impacts to air and water. The act of identifying and managing these regulatory requirements is known as environmental compliance. If you’re an environmental, health, and safety (EHS) professional managing environmental compliance for your company, you’re already familiar with environmental reporting. And that means you’re also in an ideal position to evolve your environmental compliance program beyond compliance and integrate environmental, social, and governance (ESG) principles, and start fostering an ESG program.
Your environmental compliance program provides the framework needed for gathering necessary data to evaluate how well your company is maintaining compliance. You’re already tracking your company’s environmental impact and reporting this data at a very high level. In fact, your company’s sustainability reports are already probably using some of this data.
In addition to environmental compliance data, many sustainability reports include how companies are managing utility usage and greenhouse gas (GHG) emissions, which fall under the ESG umbrella. Plus, more ESG focused data will start finding its way into mandated disclosures. Expanding your environmental compliance program to measure utility usage and GHG emissions will elevate your company above compliance and give it a competitive edge.
If you’ve been following this “Step into ESG” blog series, you know there are multiple EHS frameworks to utilize to grow ESG maturity. These frameworks include safety, ergonomics, control of work, health, and operational risk. Environmental compliance is no different and is already greatly contributing to the environmental component of ESG. This blog will examine how your environmental compliance management framework has laid the foundation for an ESG program and what you can do now to prepare for the future.
Why is ESG Important?
Short answer—sustainability. Whether it’s environmental sustainability, social sustainability, corporate sustainability, or showing accountability for how you’re meeting these demands from your stakeholders, ESG plays a pivotal part in making sustainability happen.
ESG puts practices in place that help to protect the environment and people, while being transparent in how this is accomplished. It represents a set of criteria that investors, stakeholders, consumers, and soon governing bodies increasingly use to evaluate the impacts your company has on these resources. In order to truly build business resilience and growth in today’s marketplace ESG initiatives are becoming more essential and should no longer be considered a “nice-to-have,” but an integral business strategy for long-term success and a sustainable future.
Why is Environmental Compliance Important?
The answer is pretty simple—avoiding violations and fines, and the management deficiencies that lead to them. You are the one who makes sure your company adheres to the different governing laws and regulations in place to help protect the environment, ecosystems, and human well-being. This includes measures to control air emissions, waste management, and water quality. Managing an environmental compliance program can be complex and time-consuming but is necessary to avoid the penalties of non-compliance, such as massive fines and even prison, not to mention the impacts to our natural resources and your company’s reputation.
And then there are the reputational and marketplace risks that come with noncompliance, because regulatory agencies often make compliance history public, as EPA does with its Enforcement and Compliance History Online (ECHO) database.
Environmental compliance is a regulatory necessity. But built into this necessity comes the reward of protecting the environment and preventing harm to human health. There’s an intrinsic connection between environmental compliance and ESG because both strive to build a sustainable future through environmental preservation.
How Does Environmental Compliance Connect to ESG?
Environmental compliance is the cornerstone for responsible and sustainable practices. It’s an assurance that the environment and its resources are protected. Your environmental compliances management program greatly aligns with the environmental aspect of ESG while also helping to contribute to some of the social and governance components. You can have an environmental compliance management program while also further managing GHG and energy usage.
Growing Regulations for a Sustainable Future
Although there are laws and regulations that drive environmental compliance it is one of the first steps to build a mature ESG program. You’re already managing air, water, and waste by gathering the data to show you’re meeting necessary requirements. Why not expand on this data and start tracking your company’s energy usage and GHG emissions? You can move beyond compliance and help position your company to be more competitive in the ESG landscape.
The environmental pillar of ESG involves not just meeting compliance regulations but taking the next step by reducing the impact your company has on the environment. This means putting policies and practices in place to minimize GHG and air emissions, conserve resources, improve water quality, and reduce waste.
New 2024 Regulations
With the growing concern for sustainability there are some laws and regulations going into effect in 2024 that will require ESG disclosures along with environmental compliance. For example, the EU Corporate Sustainability Reporting Directive (CSRD) will require ESG disclosures on a range of issues, including climate risks and GHG emissions, biodiversity, air and water pollution, and management of risks and opportunities related to value chain workers, from approximately 50,000 EU and EU-listed companies. Affected companies will need to prepare and submit their disclosures based on the European Sustainability Reporting Standards (ESRSs) developed by European Financial Reporting Advisory Group (EFRAG).
The largest of these companies (in terms of financial performance and number of employees) will need to start collecting data in 2024 for inclusion on 2025 disclosures. Even if your company isn’t currently going to be affected, these new regulations will have a trickledown effect. Plus, stakeholders are increasingly expecting and demanding that the companies they do business with demonstrate similar accountability for their ESG performance by preparing disclosures.
You should also keep in mind that one of your customers could be required to submit ESG disclosures and account for their supply chain, which might include your company. If you’ve already taken action to incorporate ESG initiatives into your environmental compliance program, you’ve positioned your company to meet your customer’s needs and potentially gain new ones.
Leveraging Chemical Management to Reduce Waste
Another approach to getting ahead of growing regulations is through reducing your company’s generation of hazardous waste. One way to go about this is through better chemical management. This is because some chemicals become hazardous waste at the end of their cycle based on ingredients or specific characteristics, while others do not. Implementing modern green chemistry practices is a strategic approach to build ESG and reduce hazardous waste by selecting safer, more sustainable chemical products, including those that do not become hazardous waste after use.
Green chemistry is the principle of designing chemical products and processes in a way that reduces or eliminates the use or production of hazardous substances. It aims to deliver cost-competitive chemical products and processes that achieve the same function of more hazardous alternatives while reducing pollution and other chemical hazards at the source. It applies across the life cycle of a chemical product, including its design, manufacture, use, and ultimate disposal.
It’s obvious that the current regulations in place for environmental compliance are there for a reason and help preserve our environment and resources. In turn, they contribute to ESG initiatives. However, regulations are constantly evolving, and many governing bodies are starting to incorporate ESG concepts into new compliance policies. The sooner you start implementing ESG processes into your environmental compliance management program the better positioned you’ll be for long-term success.
Community Preservation
ESG stakeholders include external stakeholders such as customers and the communities. Environmental compliance is in place to help preserve communities and their economic growth by safeguarding the air quality, water quality, and managing waste. However, many stakeholders are demanding more than compliance, which is quickly becoming viewed as the bare minimum.
Stakeholders’ demands to move beyond compliance are growing because communities have a need for a safe and healthy environment, and even though environmental compliance contributes to this need, more needs to be done. You’re in the position to further meet these demands and provide even safer environments for surrounding communities by building in ESG.
When you weave ESG policies into your environmental compliance framework, you can do more than meet requirements, you can work towards improving the environment. Preserving the environment helps to preserve surrounding communities and their economic growth. And when the surrounding community’s economy is thriving so will the economic growth of your business.
Strengthen Compliance Reporting through Governance
Governance encompasses the process by which businesses make decisions, manage business risks, and how they hold themselves accountable for the processes put in place. Applying good governance principles and practices throughout the company can help strengthen stakeholder confidence and build business resilience. Compliance is a branch of good governance. Through compliance, businesses show which objectives are being achieved while abiding by laws and regulations put in place to protect people and the environment.
Producing environmental compliance reports shows you’re helping to meet governance practices. The data you collect shows how well you’re managing your environmental compliance program, and by expanding your data collection to include ESG reporting initiatives, you position your company to be more competitive on a global platform.
Integrating environmental compliance and ESG strategies will help to strengthen environmental performance, mitigate risks across the company, and forge a path to true sustainability. As the business world continues to evolve, bridging the gap between environmental compliance and ESG becomes instrumental in building a sustainable future.
Looking for More Information to Help Guide Your EHS and ESG Journey?
You’ve come to the right place. Here at VelocityEHS, we have plenty of resources available giving you expert insights and the tools you need to maintain environmental compliance and continue your ESG journey:
- Webinar—The Corporate Sustainability Reporting Directive (CSRD) and European Financial Reporting Advisory Group (EFRAG) Standards: What Do They Mean to You?
- Webinar—EPA Enforcement: Maintaining Compliance in 2023 & Beyond
- eBook—EHS to ESG: Starting the Journey
- eBook—An Overview of ISO 14001: Using the Standard to Improve Environmental Management
EHS & ESG Thought Leadership Subscriptions:
Don’t just take our word for it! Learn from our customer’s experiences and see how different solutions have helped many different companies become safer and more sustainable.
Don’t Forget—Velocity Is Here to Help!
The Velocity Environmental Compliance Solution makes it easy to manage your air emissions, water quality, and waste compliance data. Our state-of-the-art software is built by experts to help you reach your highest levels of environmental performance.
Next, start to transition out of compliance and step into ESG with our award-winning Velocity ESG Solution. Get access to investor-grade data for managing GHG emissions, energy consumption, and tools to strategically align your ESG strategy with your stakeholders.
Velocity offers multiple solutions that make it easier to manage, maintain, and ensure the long-term success of your EHS and ESG programs. The VelocityEHS Accelerate® Platform offers a single platform providing access to leading technology, expertise, and predictive safety management tools, known as ActiveEHS®, to help you more proactively address workplace risks and move beyond compliance.
Discover more about how our solutions work together, and request a demo today!