The price of safety: your EHS budget is NOT an EHS budget
At every safety conference I go to, in nine out of ten instances there is a return to the basic question of why we manage health and safety.
At every safety conference I go to, every safety talk, speech or presentation – in nine out of ten instances there is a return to the basic question of why we manage health and safety. The question generally has an unequivocal response: “to ensure that we and our colleagues go home to our families each day”.
Family above everything. Of course it is. And yet. And yet…
Why are EHS departments always battling for funding? Why are budgets so tight? Why, in this age of technology; of intelligence; of prosperity and abundance is it still a challenge to be at the top of the corporate agenda? Why are we constantly being asked to deliver a business case to justify ourselves?
“Our strength is our people” is probably the most prevalent cliché in corporate brochures, yet do we always back these words up with action?
The initial response is, of course, that the capitalist monster needs feeding and we need jobs, employment and industry to keep our economy functioning, to make profits for our employers and to produce the best quality products or deliver the best services. This inherently involves risk. There is no production, progress or initiative without a certain amount of risk.
Should we accept this risk as an unavoidable consequence of doing business, any business? I think we have to. There is risk in everything we do in life, and the amount of care we take and our primordial survival instincts mean that we manage these inherently: we look both ways when crossing a road; we supervise our children in the bath; we don’t leave knives lying around; we put on sunscreen; we follow the rules of the road (or at least most of us do!).
Yet, on a daily basis we hear stories of workplace fatalities or life-changing events. Many of which were avoidable.
Are we getting better? Yes…accident and fatality rates have declined significantly over the years in many countries, but the fact is they continue. As business becomes more global we are operating in countries that have a less-developed EHS culture and where rates may be dropping, but continue to be relatively high. But where does the threshold lie and at what point do we accept the risks as a cost of doing business? For many companies, the prevailing culture is of EHS being an inconvenience to the bottom line; a burdensome overhead; a cost.
My response would be that an EHS budget is not really an EHS budget at all. An investment in EHS personnel; management systems; training; technology, tools and all other services around environment and health & safety is, rather, an investment in the following, “other” things:
1. Marketing & Sales
My guess is that you would at least think twice about buying a product or service from a company splashed all over the news wires for having polluted the environment or contributed to the death or injury of its employees? Recent history is peppered with such examples. This is how customers think and act, especially in our social media era. So an EHS budget is also part of your Sales & Marketing budget.
Do you find it a challenge to find good people on the job market? In an economic environment where the hunt for employment opportunities, especially for young talent, is increasingly competitive, companies need to differentiate themselves. Evidence increasingly suggests that the best graduates will base a good part of their decision on whether to work for a company (or even to apply to work there) on the basis of the corporate image and reputation with regards to its employees and the environment. An EHS budget is therefore also part of your HR budget.
Innovation is a central tenet of any economy. If you can develop new techniques, products and services you will grow. Investing in safe and environmentally-friendly product development can have wide-ranging benefits, both internal and external – as they will make you money AND keep you and your customers safer/greener.
4. People & Productivity
Are your employees motivated? Is your work equipment efficient, productive and safe? If an incident or accident occurs, motivation will take a hit. People will be hurt – physically and psychologically. Productivity will naturally suffer. So an investment in EHS is an investment in productivity.
Had any litigation or fines around non-compliance with EHS laws recently? Had to compensate workers following an accident? Perhaps your legal department enjoy the challenge, but I am guessing it was not a fun or cheap experience. We have seen evidence of fines on the rise and an increasing tendency for regulators to pursue the upper-tiers of management – and to not be afraid to invoke custodial sentences. Pre-empting compliance issues will ultimately reduce your legal costs and will also save you (doing) time. Invest in EHS and you are investing in a pro-active legal strategy.
If you are an insurance underwriter looking at renewing a corporate or site insurance policy and you have access to accident and injury stats, or if your insurance audit of a particular site has thrown up some serious concerns, you are going to increase the premium. If a site or company has exemplary performance, it will go down. It is not rocket science! An investment in EHS is an added insurance policy and will keep your insurance policy costs down.
So, Dear Members of the Board, invest abundantly in your EHS department – because you are not just funding EHS for the sake of ticking a box. Let’s all go home to our families at the end of the day.