Archive for March, 2011
Quantifying the value of your sustainability investments
Celia Spence
We heard at the 2010 EHS Management Forum about how Bloomberg is now posting environmental, social and governance (ESG) performance data on the terminals its 300,000 customers use to make investment decisions every day.
Bloomberg went live with this data in July 2009 and it is reported in the April issue of Fast Company magazine that “in the second half of 2010, 5,000 unique customers in 29 countries accessed more than 50 million ESG indicators via Bloomberg’s screens.” This is a 29% increase over first half of last year.
According to the article and Bloomberg’s sustainability director, Curtis Ravenel, they expect that trend to continue. Investors are finally waking up to the idea that good performance in these areas can impact shareholder value. Bloomberg gleans this data from many different sources and provides it to their clients as just one more subject area to be used to evaluate investment decisions. Ravenel states that “ESG ought to be in SEC-required company filings, and until it is, it won’t be viewed as material by a lot of people.
“Of course, a lot of the financial data in there now aren’t material either.”
While performance data may provide important bits of information for investors, what is really needed to determine whether they are material is to analyze how the ESG initiatives impact the cash flow of the company. Full valuation audits of ESG initiatives could answer that question. Understanding how ESG initiatives can impact shareholder value provides information that is critical for strategic planning and gives environmental, health and safety (EHS), and sustainability leaders the evidence they need to push projects forward in a meaningful manner.
Does your company have any idea of how your initiatives are impacting shareholder value? Do you just do a simple payback analysis and leave it at that?
Showing the link to the price of the stock is going to be critical for fully integrating sustainability in our corporations. Because, let’s face it, a company that is not producing value for its shareholders is not sustainable.
Busy, yes. But are you effective?
Stephen Evanoff
An NAEM member posed the following question at a recent NAEM event: “If you could recommend only one book to your fellow EHS professionals, what would it be?”
My nominee would be “The Effective Executive,” by the late Peter F. Drucker.
Why? First of all, don’t let the word “Executive” turn you off. When I first read the book, I was a junior manager responsible for the environmental program at a manufacturing facility. Back then, there never seemed to be enough hours in the day to get everything done. I found myself nearly burned out after six months in the position. Drucker’s book taught me that effectiveness isn’t a gift that certain people are born with, rather it is a learned set of practices, and the following key practices must be learned and made into habit by:
- Managing your time: Drucker points out that with even the most sophisticated executives, there is frequently a disconnect between where they think they spend their time and where their time is actually spent. He recommends doing a one week inventory of your activities every six months.
- Choosing your main contribution to the organization: This is more difficult than it sounds. It requires a keen understanding of one’s own capabilities, insight into the organization’s needs, and the discipline to work within the role you’ve defined for yourself.
- Setting the right priorities: Drucker suggests selecting a few, critical areas where you can make the maximum impact and focusing your energy on them.
- Knowing where and how to focus strengths: Drucker states emphatically that individuals and organizations should leverage what they are good at. They should understand and compensate for their weaknesses, but build on strengths.
- Making decisions prudently: Drucker gives compelling examples of the value in disagreement and the importance of a diverse set of perspectives when making decisions.
These five principles may not seem like much of a revelation at first. But, in the midst of the day-to-day grind, it is easy to become reactive to events, loose ones bearings, and end up busy rather than effective. As an old boss of mine once said, “We pay for results, not effort.” Or as Drucker put it, “The ability to manage others isn’t proven, but one can always manage oneself.”
What techniques have you learned for ensuring effectiveness? What lessons have you taken away from situations you’ve observed where bright, capable, experienced people came up short?
Let’s talk about metrics
Carol Singer Neuvelt
After an exciting week in San Antonio talking about environmental, health and safety (EHS) management information systems (MIS), I’ve been thinking a lot about what an impressive feat data collection and management really is. All I can say is ‘Bravo.’
Perhaps nothing drives home the enormity of this task more than hearing EHS managers describe the process for mapping work flows or hearing Mark Stoler recall how he managed to get General Electric’s approximately 300,000 employees to adopt a single, global EHS tracking system.
Without this kind of peek under the hood, it might seem as though comprehensive data like this is easy to come by. It isn’t.
Beyond the initial challenge of figuring out how to document internal processes, though, identifying and reporting metrics is often just as laden with obstacles. While most of the information is intended to enhance internal decision-making or track performance, there is, of course, a growing interest in a company’s EHS and sustainability metrics by outside entities as well.
And when it comes to external requests for data, the burden of responding usually falls on the EHS function. In our recent ‘Green Metrics that Matter’ survey of the NAEM Board of Regents, 74 percent of those who responded said the corporate EHS manager took the lead role in external reporting. For 17 percent of respondents, these requests took up as much as one-quarter of an employee’s time (and we expect these numbers to jump as we survey our full membership).
With the amount of time EHS folks are spending, it’s not surprising that about half of respondents said they were fairly dissatisfied with the current state of EHS/environmental, social, governance (ESG) disclosure.
There must be a better way.
In the latest installment of SustainAbility’s ‘Rate the Raters’ research, the firm identified the following steps ratings firms should take to improve their influence and make the process easier for corporate leaders:
- Improve transparency: Transparency leads to trust, according to the researchers. “We find that the stronger ratings in our selection are the most transparent. When raters provide strong disclosure of their methodologies and results, they give companies clear blueprints for improving performance in the future…This also gives clients, ratings users and other stakeholders a sound basis on which to decide whether to use rating information when making decisions (which drives ratings adoption or uptake).”
- Start engaging stakeholders: It’s time for ratings firms to do the same kind of stakeholder engagement that sustainability-oriented companies now do, the study found. “The majority of ratings today are based on arms-length assessments of performance,” the report stated. “Going forward, we believe that every rater can and should spend more time with the companies they assess, and that there are myriad benefits to doing so (e.g. gain stronger understanding of their businesses, verify publicly-reported information, help companies understand ratings and improve sustainability performance).”
As a step toward improving the reporting process, NAEM will host a collaborative dialogue on May 4 for EHS and sustainability decision-makers, as well as representatives from research firms, investor relations departments and NGO’s. The purpose is to help attendees better understand one another’s objectives and concerns, which we hope will help improve the consistency, clarity and value of corporate sustainability efforts.
As we put together the program for the day, what are the kinds of issues would you like us to address? What questions do you have for ESG research and ratings firms?
A Scot’s guide to a better battle plan
Alex Pollock
In the midst of a cold, snowy Michigan winter I’ve been enjoying rediscovering and reflecting on my Scottish heritage. I’m finding it much more enjoyable now than I did many years ago in my Scottish secondary school. I’m reconnecting with heroes like Robert the Bruce, Bonnie Prince Charlie and of course William Wallace of “Braveheart” fame. (Who can forget the blood chilling cry of Mel Gibson’s Wallace: “All men die but few really live?”)
Scottish history is filled with battles, won and lost, strained relationships, treachery and deceit, martyrdom, amazing acts of patriotism and important legacies to our society beyond kilts, bagpipes, whiskey and golf. ( See “How the Scots Invented the Modern World” by Arthur Herman.)
In the next few blogs I’d like to share my leadership reflections from Scottish history and stir conversation around themes like; the importance of planning, conflict resolution, the importance of a cause and the power of celebration.
When bravado becomes disconnected from brains the results can be devastating. Many battles were lost before they began because actions were initiated before adequate plans were developed.
John Maxwell the leadership expert describes nine simple steps in the leadership planning process:
P: Predetermine your course of action
L: Lay out your goals
A: Adjust your priorities
N: Notify key personnel
A: Allow time for acceptance
H: Head into action
E: Expect problems
A: Always point to your successes
D: Daily review your progress
What are your golden rules for planning? What frustrations have you overcome? How can we better decide when the planning stops and implementation begins? We can learn from your experiences.
Treating an audit as a chance to improve
Rebecca Zentko
I can remember some time ago, in our early days of ISO 9000 certification, when as the time grew near for the ISO Auditor to appear on the scene, the air was thick with tension as the Quality Management Representative (QMR) and other affected personnel literally scrambled to get everything in order for “the audit.”
In 1998, Muir Omni Graphics achieved the ISO 9000 Certification (now 9001-2008) for Quality Assurance. In spring 2008, we were proud to have succeeded in our goal of achieving the ISO 14001-2004 Certification after designing and implementing a formal environmental management system to the ISO standard. The QMS surveillance audits were initially set up to be conducted every six months and the EMS fell right in step with this timing. Receiving audit feedback more frequently has been beneficial in keeping our systems on track.
As the Environmental Management Representative (EMR), I can certainly attest to how fast six months can fly by. It seemed like the next thing we knew, the auditor was contacting us to set up a date for the audit visit. One thing I realized early was there was no need to panic, nor was it necessary to make a desperate scramble to make sure every “T” was crossed. Muir Omni Graphics has been dedicated to following ISO Standards every day, not just the day and a half the auditor is in our facility.
We completed the ISO 14001 recertification audit last week. I admit that just the month before I had gripping moments of “Wow I should be…”, but I stopped myself. Again I realized we are supposed to be in compliance every day. If we received a Corrective Action, it would be an opportunity for improvement.
The auditor has been in our facility every six months since 2008, performing thorough audits on both the Quality and Environmental systems. We have integrated some QMS/EMS systems elements where we could, so as QMR and EMR, we spend a significant portion of time together with the auditor. He knows our processes and can easily see that we operate in a manner that is focused on continuous improvement.
He has been an instrumental role model as we continually improve our own internal auditing process and team. I look forward to his audit reports where he identifies areas in which we are doing good work, and then follows up with one or two ideas for areas of improvement.
If you are ISO certified what have your ISO auditing experiences been like? What strategies have you developed to make the process smoother?
Rebecca Zentko is Environmental, Health and Safety Director for Muir Omni Graphics, a manufacturer of durable decals and OEM industrial graphics. She is a Six Sigma Black Belt and an active member of NAEM’s LinkedIn discussion group. You can connect with her online at: http://www.linkedin.com/in/rebeccazentko
Snapshot of an evolving EHS MIS marketplace
Carol Singer Neuvelt
As we wrap up the first day of our EHS MIS conference in San Antonio, I’d like to take a moment to reflect on the evolution of the EHS MIS marketplace and share a few trends.
When we first started this conference back in the 1990’s, data management was largely governed by spreadsheets and worksheets. In fact, I remember the audience’s awestruck reaction when an EHS IT manager from Mobil Oil showed a simple form they deployed to every location around the world to provide a uniform system for tracking incidents and injuries. In today’s computer-savvy, globally connected, mobile workforce, it’s hard to imagine how companies managed to collate and analyze data that way, but for years, this was what EHS managers had to do.
After the technology transition in the early 2000′s, we saw a dramatic increase in the use of software in collecting and tracking data. The emergence of a formal software industry provided companies with both customized and off-the-shelf software such as material safety data sheets (MSDS) databases, audit protocols, incident and emissions tracking, and corrective action planning.
Along the way, the software solutions have moved from individual tools to integrated solutions and from PC-based software to software-as-a-service. Today the EHS software industry is a mature marketplace that is helping companies solve traditional EHS challenges, while rapidly growing into new areas such as carbon reporting.
As we move into this next phase of growth, here are few trends I think are worth looking out for:
- Growth in carbon and energy management to help firms with their carbon tracking and carbon footprinting challenges
- Creation of “sustainability” tracking solutions to support sustainability reporting requirement and supply chain management
- Increased flexibility in software solutions to enable companies to configure their software to align with their business processes
- Greater emphasis in global compliance and training to support geographic diversity and accountability
- Integration of content and real-time access to relevant information such as key sources, protocols, case law within EHS MIS software
- Applications for handheld devices (tablets, iPads and phones) to enable practitioners to access information in the field
What trends would you add to this list? Is there other functionality you would like to see software systems include?
