A prudent approach to EH&S oversight.

• Author: Pilko, George
• Position: Environmental, health and safety

Here are guidelines for managing environmental, health, and safety concerns, particularly in three areas where good judgment can pay the greatest dividends.

Environmental, health, and safety (EH&S) are not static issues. The increase in the number and complexity of regulations is exceeded only by the expectations of society. How does one develop a business plan that effectively manages both current and potential EH&S risks and liabilities?

Compliance is not enough. Valdez was a wake-up call, as were Bhopal and Love Canal; in each case, the company involved was in full compliance with regulations. Remaining in compliance with regulations is necessary, but not sufficient to prevent financially catastrophic EH&S problems. Clearly, management and the board of directors cannot rely on government and government regulators to dictate the actions required to protect their companies' interests.

In recent years, industry's emphasis has changed from a reactive (compliance) approach to a proactive approach based on evaluating and managing potential EH&S risks and liabilities whether or not regulations are involved. But how do you identify major risks before a physical (or financial) disaster occurs? Everyone is smart in hindsight. And how do you decide on a prudent approach to mitigate risks, given the alternatives available and the business situation? Senior executives from many large companies struggle with these issues.

This article describes the specific difficulties that face senior managers today, presents a generalized approach for managing EH&S concerns efficiently and cost-effectively, and reviews three areas where a proactive, managed approach can pay the greatest dividends.

The Skills Gap

One of the key factors that compounds the problem of obtaining the information needed to exercise good EH&S judgment is what I call the "skills gap."

When industry's environmental activities consisted chiefly of ensuring compliance, the full-time EH&S staff consisted mainly of technical specialists, and management's involvement consisted mainly of approving budget requests. Technical specialists typically had little or no understanding of the long-term business strategy of the company. And senior executives had little or no understanding of the technical issues involved in complying with regulations, nor did they understand the potential future impact that environmental issues could have.

As senior management became aware of the increasing complexity of EH&S issues, they often assigned ex-operating managers to head EH&S functions and serve as liaisons to the technical staff. The job of these ex-operating managers was to bridge the skills gap and implement a proactive approach to EH&S.

These EH&S managers faced a difficult task in an environment where neither the playing field nor the rules of the game were well defined. As the recession of the early 1990s forced downsizing, budget cutbacks, and reengineering, many companies reduced corporate EH&S staff dramatically.

Today, the challenge remains: How do you establish a realistic mission for EH&S efforts, and how do you accomplish this mission? How do you determine what is prudent from an EH&S standpoint to support your long-term business strategy, regardless of whether these actions are required by regulatory agencies? And how do you identify and manage risks?

Four Thrusts

The first step in establishing a corporate EH&S mission is to identify the areas to be included. We see four, which should be approached in the following order:

* Ensuring Compliance. This requires the appropriate technical and regulatory expertise combined with an effective audit program. In many cases, companies have facility audits that monitor detailed compliance issues plus...