Safety professionals live in a world of acronyms. We use abbreviations like EHS, OEHS, and SH&E to describe the nature of our work – not to mention the letters for all our certifications. We recognize these tags to indicate duties surrounding safety, health, and the environment.
In recent years, another acronym has emerged. And while it’s not the same as those others with which we are so familiar, there is some overlap with its principles. It is ESG, and it is wide-ranging.
You likely already know it stands for environmental, social, and governance. So what exactly does that mean? It’s a new paradigm through which companies are being asked to view their priorities. It’s a different way of thinking about business, a more human-centered approach as opposed to one focused solely on the bottom line.
Companies are being encouraged to more thoroughly evaluate their responsibilities in these areas, some of which are already familiar to safety and health professionals. Through this new lens, they are asking questions like:
- Environmental (E): Are we taking care of our natural resources? What are we doing to reduce emissions and prevent spills? How are we limiting physical waste and excess water usage?
- Social (S): Are we properly caring for our employees, customers, and anyone for whom we hold a duty of care? Are we treating our people equitably? Are we engaged with our community?
- Governance (G): Do we manage our company in an ethical manner? Are we operating transparently? Do we have safeguards in place to prevent corruption?
There are, of course, many other questions to ask, but they can all be fit into this general framework.
In a presentation for BCSP’s Global Learning Summit, Global Solutions Inc. founder Kathy Seabrook, CSP, CFIOSH, EurOSHM, FASSP, described ESG-driven thinking as understanding two concepts: First, the impact a company can have, positively and negatively, on its human and natural resources. And second, its dependency upon those resources.
Seabrook identified ESG as a company’s pursuit of true north, “where the impact and dependency of people and their safety, health, and well-being – and the environment – are valued and reflected in all business decision-making as a measure of true corporate performance.”
Today’s demand for organizations to demonstrate a commitment to the principles of ESG is coming from a variety of angles:
- Bodies like the Securities and Exchange Commission (SEC) and Sustainability Accounting Standards Board (SASB) require ESG-related disclosures.
- Banks are providing better interest rates on loans to companies with high sustainability marks.
- Insurance companies are using ESG scores to make coverage decisions.
- Investors are putting their money behind companies that operate ethically.
“There’s good research behind it to show that companies that execute well in the ESG space perform better as a company,” said IMA, Inc. Vice President of Risk Innovation and Strategy Craig Halpern, CSP, CPE, ARM, at the Global Learning Summit.
“They’re more profitable. They’re able to retain their employees. I think that’s why this movement is gaining traction is that consumers are demanding it of the companies they buy products from, and employees want to work for companies that are doing good things not only from an environmental point of view but also on the social front – how they support their communities and health and safety. Are the companies well governed? Do they have a plan for sustainability?”
By nature, at least a portion of ESG responsibilities often fall upon the safety professional. In theory, it may sound like a lot. In reality, safety professionals have been focused on many of these items for a long time. They have been the driving force in protecting people and the environment.
Because they already do much of this daily, Halpern and Seabrook see this paradigm shift as an opportunity for safety and health professionals to make an even greater impact.
“If you have an initiative, try to figure out what the link is between your initiative and ESG goals that have been published,” Halpern said. “We have to learn how to understand what the financial goals are at the C-suite and be able to draw a line between our initiatives and those in order to make sure we have support for our projects.”
Or as Seabrook stated in her presentation: “Safety and health is in ESG. We don’t have to ask to sit at any tables. We are there. We are the people side of sustainability, the social side of sustainability.”