Corporate view of safety program vs environmental protection

Balancing the AccountsAs someone who has seen up close and personal how senior management views its health and safety program and its environmental protection program, I would like to share some of my thoughts here with our readers.

Corporate health and safety program gets much higher level of management support for a number of reasons. Cost accounting is the main one. Performance of health and safety is monitored at the corporate level through workers compensation costs. A program that drives down the workers comp costs is viewed as an effective one. And rightly so. When the management board sees an 80% reduction in workers comp cost in a few years after implementation of a safety program, it is going to continue to support it with large budgets and manpower.

Safety performance can be reduced to dollar and cents.

Environmental performance, on the other hand, is much harder to track. Environmental protection budgets are often hidden in O&M. The benefits are even harder to quantify – as opposed to a workers comp cost. An environmental program that is working for the company means the company is not being fined. There isn’t a line item in the monthly budget to senior management that reflects that. On the other hand, senior management only knows that the environmental program has failed when it is hit with a big fine. In other words, senior management does not see a need to maintain or improve the environmental budget until something bad happens.

The key really lies in environmental cost accounting. If a company’s accounting system can show management the financial benefits it is getting from its environmental program, management will continue to support it in the same manner that it is supporting the safety program.

Unfortunately, not too many companies have such an accounting system.

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4 responses to “Corporate view of safety program vs environmental protection

  1. Very well written – thank you!

  2. There is a need to educate senior management on the purpose of such things as SPCC Plans, SWPPPs and Emergency Response Plan. Most corporate management think of these an an annoying requirement the government thought up to make their lives difficult. On the contrary, these plans are living documents that can save them money, property and even sometimes lives. A properly implemented plan not only saves the amount of a fine, it prevents the adverse publicity that comes from an environmental “incident”. Also, employees’ health can be put in jeopardy when they are not properly trained to handle an emergency such as a petroleum or chemical spill. Corporate management needs to be educated how environmental compliance and health and safety interact with each other.

    • Katherine,

      Thank you for your comments. I agree with you completely. However – as a consultant – I would not be telling senior management (clients) that they need to be “educated”. I mean don’t they have lots of degrees already? How would those Harvard MBAs react? I would rephrase it and say that they need to be “made aware” of all the benefits that those plans can bring if done properly. They just don’t see the benefits because the incurred costs are often hidden and the benefits are unclear.

      You are right that E and HS need to interact. That’s why I admire companies that have ONE integrated EHS department.

      Norman

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