Easy as Pie: Using Your EHS Program to Elevate Your ESG Strategy

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Overview of ESG Reporting Frameworks

First, the ESG Disclosure Landscape is not all encompassing, and new standards are emerging all the time. There are so many ways to share ESG disclosures that it can be hard to find a pattern. The list below represents common reporting mechanisms, but note that companies sometimes issue their own questionnaires that are more specific to their operations. The three main ones include:

1. Frameworks and Standards: Voluntary reporting frameworks and standards to guide qualitative and quantitative sustainability disclosures in a structured and comparable manner to meet various stakeholder needs.
2. Third party disclosures: Annual disclosures via questionnaires for select or comprehensive ESG topics and KPIs. Scoring is available after response submittals to reflect an organization's ESG performance/maturity.
3. Independent Raters and Rankers: Rating agencies that assess and score an organization's ESG performance based on publicly available information. Organizations may have opportunities to provide feedback and updated information during the designated comment period.

Two of the most well-recognized reporting frameworks include the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI). The GRI requires detailed qualitative and quantitative information to align with their standards, which SASB requires mostly quantitative data. GRI requires a formal notification and review process if you’re aligning with their reporting standard, but SASB doesn’t and needs no formal sign off.

Key Performance Indicators

Robust ESG disclosures include both quantitative and qualitative indicators and many overlap with EHS metrics. Some examples of quantitative EHS indicators include total water and energy consumption, total work-related fatalities / health incidents, and total employee training hours. Some examples of qualitative EHS indicators that overlap with ESG include environmental compliance / noncompliance, return to work policies, and audit programs.

As you can see, there’s already quite a bit of overlap between EHS and ESG, and that’s why we all have a part to play in this. Understanding how your role and work contributes to an ESG strategy will have an impact on corporate disclosure, since everyone in the organization should work together to get an ESG report together. The actual work at the facility level gives these disclosures life and taking time to understand where your role and responsibilities sit helps unlock meaningful content for ESG disclosures.

EHS Compliance is an Essential Component of ESG Storytelling

So, how do EHS and ESG overlap, and what should EHS report to ESG? Well, for starters, many employees at the facility level don’t feel connected to the ESG discussion. That’s why you need to break it down to make it feel more personal.

According to the World Economic Forum’s Global Risks Report 2022, environmental and social risks comprised eight of the top 10 most severe risks over the next 10 years. Some of these risks such as climate action failure, infectious diseases, and extreme weather, can be addressed at facility level compliance. Recognizing these risks shows employees at the facility level that they have a role and a voice, which helps them realize the importance of ESG and how they can support their organization’s strategy.

EHS and ESG

EHS compliance is key to ESG success. EHS keeps people safe, protects the environment, and helps your organization to be a good steward in the community. Regulations and permits drive compliance, including penalties, and the supply chain often has a contractual requirement to do no harm. On the other hand, ESG criteria lets other companies know your company is doing a good job in the community and is compliant and worth investing in or working for. That connection starts at the facility level and trickles up.

Metrics – it should not be TRIR only

Your organization needs strong ESG reporting, because without metrics, you can edge into the negative world of greenwashing. It’s important to communicate to your ESG corporate group what metrics you’re looking at.

Some companies only use the Total Recordable Incident Rate (TRIR) number, but that only reports accidents and injuries, which is just a lagging indicator. That’s not enough, because it doesn’t show how your facility is doing now. It’s better to bring metrics you’re already measuring to the ESG group in your company. That way, your metrics will show how the building is doing right now.

For example, think about your day-to-day facility work to find metrics such as Near Misses, Audits completed and percent compliance, Safety Innovation Awards, and percent completion of EHS training. These are key leading indicators that EHS managers can promote to ESG. It’s important to understand that the work your facility is already doing fits into ESG, and you have a voice. Combined, the compliance metrics you’re already measuring and the metrics ESG uses will make a stronger ESG report.

The Value of an Audit

There are different types of audits, including third party, self-assessment, supply chain, single to full portfolio, vendor audits, and more. Audits have value for compliance programs and your company’s ESG narrative, which is why it’s important to understand how you’re performing.

First, you must determine where your company’s focus is. What vehicle are you using to report your ESG narrative (e.g., SASB, GRI) and what data are you getting from your audits that can express how well you’re addressing compliance issues? Your stakeholders also need to understand the value of the audit and the results to understand your company’s performance. You can use this audit data laterally across your organization to get the most out of it.

So, what can you do? If you’re an ESH manager, you should connect with your ESG and sustainability team to make them aware of what metrics you’re collecting and ask how they fit into the ESG strategy and other goals set by the organization.

If you’re on the ESG team, ask the EHS team what data they’re collecting at a facility level. You may be surprised at all the data the facility already has available.

How to Prepare Best-in-Class ESG Disclosures from your EHS programs

The key here is collaboration. Below is a list of 5 things you can do to achieve best in class ESG and EHS disclosures:

1. Make sure all EHS managers are part of ESG planning sessions
2. Tie actions to United Nations Sustainable Development Goals and Global Compact
3. Link EHS programs with human rights and wellness leadership
4. Engagement between EHS leadership and with the supply chain to ensure suppliers are upholding their end of EHS progress
5. Finally, make sure your words are tied to actions and solicit feedback from employees and other stakeholders.

In Closing

This is a journey, and EHS and ESG professionals need to work together to achieve their goals.

If you’re an EHS manager, you can start this process by finding out the answers to the following questions: Who in your organization is responsible for ESG? How are they connected on the facility level? What are your organization’s plans for ESG (annual ESG report, continued messaging around it)? Finally, what did the most recent ESG report not promote and/or know about your operations at the facility level? From there, you can focus on the facility’s current strengths, link actions to leading metrics, and alert the ESG team of success stories.

If you’re an ESG manager, consider taking time to tour a manufacturing facility to understand the operations and the role of EHS. Also, recognize the differences in facility types within your organization. It’s also important to take into consideration which countries your company operates in that are in risk-control versus prescriptive regulatory paradigms. Finally, collaborate on EHS metrics that are collected and visualized.

Together, EHS and ESG managers can work together to bring the right metrics and data together for a stronger, more accurate ESG report. It truly is easy as pie.

Do you want to learn more? Reach out to our EHS Auditing and Compliance practice or our ESG Advisory Services at Antea Group today.

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