As 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.