Giving EHS Risk Equal Footing in Financial Discussions

As an EHS professional, do you ever have difficulty “pitching” an EHS improvement project? Even in a strong safety culture company, how do you get the EHS projects to “compete” with the high revenue return capital projects that look so much more attractive to the senior executives?

More importantly, when is an EHS project with no apparent visible economic return more important than a significant capital project? How do you quantify the value of a human life, something which is priceless? How do you value the reputational risk of a significant notice of violation, not just its dollar amount?

These are questions we as EHS professionals face every day and especially every budget cycle. How do we solve this dilemma?

In my career, I have found three ways:

  1. Push EHS projects because “it’s the law, we have to” or using the safety culture angle of “it’s the right thing to do”. This works well in a positive EHS culture but gets tested hard in a down economic cycle.
  2. Learn to talk in financial language, and discuss EHS projects based on their return on investment. This works well for projects that are designed to clearly tackle a defined issue with a history of costs that can be used in the financial calculations as “payback”. An example might be an ergonomics project to address a history (with quantified medical costs) of ergonomic-related back injuries from poor work station design.
  3. Work with management to define a risk matrix with culturally defines the importance of EHS risks on scales that also have financial dollar impacts. This approach moves the conversation or debate away from pure dollars to discussing relative risk and putting EHS risk on a level playing field with other business risks (while having and underlying financial metric component the financial managers can be happy with).

While all three approaches can be effective, I have found the third approach, when done right, creates a common, non financial risk language for comparing competing capital demands and actually addresses the issues of option 1 and 2. The key is to culturally define where EHS risks sit on a risk matrix compared to other business risks. Sound complicated? It doesn’t have to be but it is more involved than just a 2 x 2 or 3 x 3 risk matrix.

This is a subject I will be exploring in more detail at the May NAEM EHS Compliance Conference in Atlanta and showing how my company utilizes a risk matrix to drive key risk decisions and how EHS risks fit prominently on the risk matrix. Hope to see you there!

About Rodney Canada

Rodney Canada is the Vice President of Environmental, Health, Safety and Sustainability for CP Kelco, a JM Huber company. He leads EHS&S for CP Kelco’s global operations which consists of specialty chemicals facilities in the US, Brazil, Europe and Asia. His EHS&S career has spanned over 30 years working in diverse fields such as chemicals, mining, heavy civil construction and manufacturing giving him a broad perspective on EHS&S issues.

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