Greetings reader! Thanks for joining us for the third volume of the 12 Best Practices of Compliance Solutions Series.
In this series we will address twelve of the key challenges you face, one-by-one, with best-practice advice derived from over a quarter of a century of support to global industry!
In this volume, we examine the challenge of getting leadership commitment for a global EHS compliance program.
This is the million-dollar question: How do you get senior corporate leadership in your company engaged in EHS regulatory compliance as a value proposition to your organization? There are a number of sub-challenges to this question, including:
- Of course, any CEO’s ultimate responsibility is to his shareholders. Regardless of whether it is justified or not, EHS is often seen as a cost-center.
- C-Suite executives will rarely have experience managing EHS. This is highlighted by the fact that extremely few MBA and other management programs have any kind of focus on EHS as a fundamental part of doing business.
- In many companies this challenge is exemplified (and amplified) by the fact that EHS may not have a direct reporting line to the CEO/C-Suite. This often raises the question of where the EHS structure falls within your company. Is EHS best handled by Legal? HR? Chief Sustainability Officer? Compliance & Risk Officer? EHS can impact each of these areas.
- If EHS is not taken seriously, leadership risks being reactive if there is a negative event or incident. This can have major repercussions if an adverse event takes place that could damage the company’s reputation and finances, both long and short-term. You may have engaged current leadership, but a (sudden) change in leadership can lead to changes in priorities and different ways of doing things—which can impact priorities and budgets for EHS (and other departments).
- Leadership can change, and change frequently. CXOs and CEOs all must retire at some point. Executives don’t typically stick around with one company for their entire careers—they come in with a mission and a fixed-term contract and when these are completed—they move on.
- The circumstances and context of your company’s overall corporate strategy will likely have a huge impact on resources for EHS. If a company is struggling, tightening belts and seeking simply to stay afloat, it is a real danger that corners are cut and EHS slips further down the slippery slope that leads to the C-Suite door.
- These questions are exacerbated by the fact that the benefits of EHS program can be hard to visualize/demonstrate:
- It can be hard to compile clear data points, especially in environmental compliance.
- It is extremely difficult to explain and assign a cost to noncompliance that does not result in penalties or jail time (think brand reputation).
Clear commitment to EHS from company leadership is vital. If EHS is part of the key strategic priorities of the business (i.e. it is integrated into corporate policy from the CEO, right down to the lowest level)—it sets the tone for success. How do you achieve this? Here are some ideas:
- Best-in-class companies structure their EHS programs around (global) integrated management systems, such as ISO 14001 and soon-to-be-adopted ISO 45001. Under the new standard structure of ISO management systems, there is a renewed focus on the importance of leadership. Leadership need to be involved for companies to maintain their certifications. Certifications are increasingly an essential part of working with customers and suppliers. Systematic management of EHS issues is increasingly a must have, not just a nice to have. With the focus on leadership, there is no avoiding their need to be engaged and involved.
- Recent regulatory and judicial developments mean that there are increased prosecutions of company managers and directors for EHS failures. These failures are often put down to a failing corporate culture.
- Growing bodies of evidence indicate that CEOs of companies taking on the challenge of sustainability, social responsibility and employee welfare outperform those that don’t.
- There are various resources out there to help you make the business case clearly and succinctly for proactive management of compliance. Ask your EHS-related consultants/service providers for documentation or presentations to help you. Use existing resources; there is no need to reinvent the wheel!
- Highlight and communicate the impacts of EHS on other corporate departments and where synergies lie. For example: Operations, HR, finance, legal and insurance all benefit from managing compliance with EHS laws.
- Compliance metrics, enforcement statistics and other resources, such as insurance and worker compensation costs, can be useful to help persuade of the importance of managing EHS as something impacting the bottom line.
- Use clear, concise resources that allow clear reporting and data analysis. Keep plugging away and getting results! Do the right things well and make communication a large part of your program, so that the work you do and value it brings does not go unnoticed.
- Encourage environmental and safety communication from non-EHS leaders to the rest of the company and the outside world. This encourages the development of a workplace and corporate culture that can also help with your marketing and branding.
If leadership are on board with EHS and the value it brings, from day one, then it will have a positive impact right down through the organization and your job will be made easier.
However, if leadership in EHS is not coming from the top of your company, you probably have a mountain to climb in catching the attention and buy-in from the C-Suite. There are a variety of steps you can take to try to get commitment from your corporate executives; each of these revolve around making a business case and talking in terms of shareholder value, business continuity, corporate governance & reputation, risk management and sustainability.