How can you determine if your EHS regulatory compliance program represents value for money?

On 11th and 13th July I had the pleasure of presenting two sessions of the latest Enhesa webinar. The topic this time was the costs of complying vs. not complying with environmental, health and safety laws and sought to help EHS leaders to make a clear, unequivocal business case for managing their EHS regulatory compliance globally.

We had a few hundred attendees and got some great feedback!

  • “Great summary of non-compliance consequences and a good reference for stats and trends to pass along to our company leadership in order to have more impact on their commitment to supporting EHS programs and budgets.”
  • “Good statistics on cost of non-compliance - it helps me in conversations with business leaders.”
  • “Very informative with quoted values that we can use to make a business case!”

We produced a Enhesa Educational Publication to coincide with the webinar. This can be downloaded here.

Thanks to input from 400 people in the pre-webinar survey, the webinar included further insight, beyond that contained in the aforementioned publication.

For example, we asked webinar registrants to select one of four statements to best describe their handle on the costs of complying or not complying.

Just over half of respondents were confident enough to say that they know the global annual cost to their organization of both compliance as well as non-compliance with EHS laws.

The second largest wedge, just under a third of respondents, indicated that although they knew the cost of their compliance program, they did not really have an idea of how much non-compliances were costing them.

This chart tells us that some three quarters of companies are far more aware of the cost of complying than of not-complying.

However, it must be said that for this question we did not provide a definition for “costs”. Responses may have been different had we differentiated between direct and indirect costs.

In the next question we asked participants if they felt their compliance program represented value for money.

Although around 37% said they did feel they were getting value for money, the clear majority of respondents did not feel they could answer the question with confidence.

What is clear, the reason why we have produced the publication and held the webinar, is that there is a considerable body of global EHS professionals struggling to make the business case for their compliance budget. This is because the benefits, especially when compared to the cost of complying, are hard to quantify.

In the context of discussion around the indirect/less-definable cost of non-compliance, the survey asked another question where respondents were asked you to rank a number of potential consequences of non-compliance based on the weight given to each by your organization.

Perhaps unsurprisingly, the top answers were cessation in production and damage to company reputation, closely followed by share price. These are what impacts your organization’s bottom line and public standing in the clearest way.

So companies generally do recognize the significant cost-multiplying implications due to indirect consequences.

But are companies set up to manage EHS legal compliance globally (and therefore reduce the potential costs burden from non-compliance) in the most effective coherent way? How much does complying with EHS law cost businesses? In the webinar and publication, we examine the cost of complying and best practices in this regard, in order to compare it with the costs of non-compliance.

In this context we asked survey respondents how they structured their EHS compliance program and we found that two-thirds use a variety of different solutions in different regions, countries or even across sites. Only a quarter of companies currently use or intend to use one global solution.

 

This is interesting as it is our strong belief, that managing the costs of compliance (and awareness of your non-compliance exposure) globally cannot be done in the best way by decentralizing your approach.

What we often see is that country or site operations will have a completely different approach to managing compliance and the people managing  it will not be lawyers and not have time to stay on top of regulatory change consistently. This means that without having a consistent global picture it is almost impossible to answer the questions we asked at the start of this webinar.

There is also that fact that if you don’t have an adequate view on the compliance status of your locations, the recurring problematic issues or the penalties being incurred, then it is quite simply not something that can be managed effectively.

If you would like to learn more and find answers to whether your EHS Regulatory Compliance program represents value for money please download the publication or listen to our webinar!