The Demands on Your Company and the Business World Have Changed
Historically, all a company had to do to be “successful” was to make a good product at a fair price. But times have changed. Pressure on organizations due to the “Sustainability Tsunami” has disrupted the playing field. This adds some complexity to your planning BUT it also presents an opportunity to elevate the EHS function – to ensure that EHS is connected and aligned with enterprise vision.
Are you identifying the best actions to support the entire enterprise vision?
EHS professionals may need to expand their horizons on how our function integrates and supports others in the organization. Unintentionally, we become functioning silos, drifting to our “comfort zone” of technical expertise to drive safety excellence. But are we “connected” within the organizational enterprise? Are we a team player? Are we adding value? Is it possible that we are missing opportunities, where with just some minor tweaks, we would be able to substantially help others in achieving the collective and “connected” enterprise mission?
A good place to start is to have a discussion with your teams supporting ESG and Sustainability. The demands on them to publicly report advances is increasing, and we know that data supporting progress in “S” (social) and “G” (governance -including risk management and compliance) have some deficits. For many companies, current sustainability reports are weak in “S” and “G” in comparison to the “E” (environment) efforts.
Historically, companies have relied on lagging indicators as the primary reporting mechanism for corporate and regulatory EHS reporting. Lagging indicators such as Total Recordable Incident Rate (TRIR), Days Away, Restricted, or Transferred (DART) Rate, and Lost Time Incident Rates (LTIR) are embedded safety performance measures. They reflect failures of the past, but on their own, provide limited insight into the future.
To meet the challenge and the expectations associated with emerging sustainability reporting requirements, companies will need to enhance their “S” and “G” progress. [Note: the new EU Corporate Sustainability Reporting Directive (CSRD) will be effective in 2024. It applies both to EU companies and public and private non-EU companies meeting threshold criteria]. CSRD will require reporting on a broader range of ESG topics, in much more detail than before. The EHS function can assist the ESG team in addressing this data deficit/data void by leveraging and enhancing safety-based leading and lagging indicators; and by developing and deploying a refreshed data analytics strategy.
In our EHS roles, we will need to meet the increasingly higher levels of demand for “S” and “G” data with credible information, to both inform the public and improve corporate efforts in the EHS arena.
Refresh your Data Analytics Effort
As part of our EHS function, when untoward events occur it is our mission to determine what happened, assess the status of the current situation, evaluate the likelihood of recurrence, and identify mitigating actions. In addition to a strong incident investigation process, the effectiveness of the evaluation can be augmented by an ongoing, robust data analytics assessment.
This combination approach can lead to actionable, preventative outcomes and the development of leading indicators supporting:
- Opportunity identification for system and process improvement leading to reduced incidents and injuries.
- A quantitative, measurable approach to current programs and practice improvement.
- Innovative, sustainable solutions that encourage employees to contribute to your safety process and culture.
Increasing the Utility of Leading & Lagging Indicators Beyond Health & Safety
A 2021 Global ESG Survey by BNP Paribas revealed that 51% of investors surveyed (covering 356 institutions) found the “S” to be the most difficult to analyze and embed in investment strategies. The intent of the “social” bucket in ESG is to assess the impact generated by an organization’s relationships with people, including its workers, customers, suppliers, and communities.
How thoroughly are we evaluating leading and lagging indicators to identify the challenges within our operations to guide us toward achieving the optimal result? Are we looking for synergies that can benefit others in achieving their objectives?
OSHA defines leading indicators as “proactive, preventive, and predictive measures that provide information about the effective performance of your health and safety activities.” While the nature of lagging indicators is inherently reactionary (the score at the end of the game), lagging indicators CAN be leveraged in concert with leading indicators to give insight to problematic program areas. Using this solid data analytics approach can provide a platform where progress and program improvements can be measured.
Analysis of lagging data can give insight into trends. Beyond incident rate calculations, analysis of lagging data can shed light on accident outcomes with respect to common comparative variables. Examples include:
- Evaluation of day, time, shift, operator experience, time on job, number of accidents, severity, activity, production volume, etc.
- Comparison of tasks, activity, energy source, and accident type.
- Trends by the level of medical treatment provided.
- Comparisons of the number of lost workdays to body parts, energy sources, or accident types.
- Trending for alone/with crew, supervised/unsupervised.
- Analyses of PPE use versus severity.
- Evaluation of total cost (direct and indirect, length of service, and severity).
With respect to leading indicators, we need to think beyond the traditional metrics as well. The Campbell Institute identified the following characteristics of leading indicators: actionable, achievable, meaningful, transparent, easy to communicate, valid, useful, and timely.
Although training completion rates, audit findings and corrective action completion, behavior-based safety observations, and the like fit this definition, none of these are/will be key differentiators that yield a unique program improvement initiative and ESG strategy to set your enterprise apart from your competition.
Taking an Innovative Approach
Antea Group strives to help companies develop an approach that includes ingenuity, creativity, and vision to develop leading indicators that yield “knockout, step-changing results” by finding associations in the positives (affirmative compliance).
Consider an approach that measures tenants fundamental to Human and Organizational Performance (HOP) efforts - the operational philosophy dedicated to creating resilient organizations. If HOP is new to you, read here for more insight.
Look for associations of the underlying root cause, aside from the human failure that led to the event. If “blame” is a significant part of your solution set, this analytical focus can aid in the process of shifting away from “fixing the worker” (training, discipline, or termination) towards a system that enhances the solution set to correct a problem. As stated by Dr. James Reason, a world-leading expert on human error,
Workplaces and organizations are easier to manage than the minds of individual workers. You cannot change the human condition, but you can change the conditions under which people work.
Leading measures may place an emphasis on the hierarchy of controls that focus on elimination, substitution, or engineering out hazards inherent in an operation. You can capture data proactively by deploying a Strength of Defense Matrix analytical approach (Antea Group has developed a visual tool to support this effort) to quantitatively demonstrate actions that eliminate, prevent, catch detect, or minimize the impact of hazards.
Consider a more in-depth approach to evaluating engineering controls that were in place, or those that were in place but failed, or those that should have been in place but were not, etc. Look for associations of the underlying root cause, aside from the human failure that led to the event.
Finally, an emerging trend involves data analytics that evaluates disparate databases to reveal associations and trends. Comparing accident data to local meteorological data, economic indicators, product line growth, human resource benefit plan selection and participation, and more, may yield interesting insights for leading indicator measurements.
Conclusion
Enhancing the utility of EHS leading and lagging indicators can yield value beyond the direct outcome of an improved EHS program. If developed and aligned with the perspective of supporting ESG efforts, the synergies can support the enterprise’s mission in the ESG arena. Although the perception is that both EHS and ESG-related investments on the surface are a net financial cost to your company, Deloitte and others indicate that there is a “green” premium in a company’s market valuation when a company’s efforts are better than their status-quo peer performance.
Your EHS lagging and leading indicators can become central to your organization’s business strategy.
