ESG: Health and Safety Obstacle or Opportunity?

Over the past few years, much has been written and discussed about the role of environmental, social and governance, commonly referred to as ESG. Investors and customers are increasingly applying these nonfinancial factors as part of their analysis process to identify material risks and growth opportunities in the companies they decide to invest in. According to research from the Weinreb Group, in publicly held U.S. companies, the position described as chief sustainability officer has grown from 29 such officers in 2011 to 183 in 2023 (see https://weinrebgroup.com/2023-cso-report-press-release/). These are roles that typically sit in the C-suite of a company and have direct strategic decision-making responsibilities.

Many health and safety (HS) leaders and professionals find themselves intertwined with company initiatives that require time or resources beyond what they may believe to be their day job. For example, have you recently been invited to a meeting about the sustainability of personal protective equipment? What about the environmental aspects of the solvents or lubricant products your crews use in the field? Or how about all the time your transmission or generation folks spend on Scope 1, 2 or 3 emission sources instead of the safety walkdown? As we look at the components of ESG throughout this article, you may be surprised by how much topic and responsibility overlap exists. Given investor and regulatory pressures, this is a potential opportunity that the HS community of professionals would be wise to learn about and participate in.

As climate change, social equity and biodiversity become more closely identifiable with company reputation and even the license to operate, the synergies between HS and ESG are gaining greater attention. Many HS leaders and professionals are taking a contemporary approach to managing EHS in today’s workplaces. This approach considers the human elements of the organization – such as leadership, behavior and cultural change – while supporting workers with the necessary processes, structures and tools to stay safe and healthy. However, few utility businesses currently meet all of the transformational ESG requirements, placing them at odds with the future of work. Without our companies learning from leading HS professionals, a golden opportunity is being missed to incorporate knowledge from the past 30 years to build a better world of work – one that equally benefits employees and the organizations they work for.

Now, let’s look more specifically at the crossovers between ESG and HS.

Environment
The “E” in ESG refers to environment. In this context, environment means dealing with environmental risks and natural resource management. At first glance, you may think this is more specific to the stewardship of resources associated with a company’s environmental impact, but upon closer look, you may think again. For instance, many of us spend countless hours researching PPE or completing PPE assessments associated with various hazardous materials in the workplace. But what if we decided to leverage the ESG momentum in our supply chains to procure less hazardous substances? What if we eliminated some of the safety data sheets in our chemical inventories through nonhazardous product substitutions? These are just two mechanisms that align with ESG that many of us already do as part of our day job. Think about the business case you could make for those safety initiatives or resources by eliminating PPE costs or chemical inventory work hours for hazardous materials your teams or company uses every day. The savings could add up quickly, and you could find yourself in the admirable position of reducing company costs, improving safety through eliminating hazardous materials exposures, and being a steward and champion of the “E” in ESG, further building your company’s sustainability platform.

Social Responsibilities and Factors
The “S” in ESG refers to social responsibilities and factors. Several social factors can affect a company’s financial performance, ranging from short- to long-term challenges. At face value, ensuring the safety and well-being of employees is a key element of this social section. The role of HS professionals is directly tied to social responsibility. Sometimes it may be difficult to quantify or express, but ultimately, how HS professionals help establish a safe workplace promotes employee well-being through reducing turnover, absenteeism and negative legal impacts, and encouraging sustainable mental health. As we build out or continuously improve our company’s safety performance, how are factors such as diversity of thought and inclusion of cross-functional teams being incorporated? This “S” section of ESG is often a lost opportunity to enhance programs and performance through equitable representation of craft workers, supervision and management on our improvement teams. Here’s another question to consider: How do you incorporate this into your improvement strategy? And where is mental health on your list of HS priorities? Employee diversification and holistic well-being are gaining tremendous attention as part of investor company reviews.

Governance
The “G” in ESG refers to the governance factors of decision-making, from policymaking to the distribution of rights and responsibilities among different participants in corporations, including the board of directors, managers, shareholders and stakeholders. When you think about governance in HS, you can directly tie it to the programs, policies and procedures that govern how you do work every day. Just as in HS, the governance section of ESG requires companies to clearly demonstrate responsible management and risk mitigation in a written and specific form. So, have you ever considered bringing HS into the creation of your company’s sustainability policies? If your company participates in the Dow Jones Sustainability Indices, what do you write for your improvements in HS governance that equate to less harm to employees? If the company you work for is publicly traded, how are you asking for HS to be included in your annual sustainability report? HS professionals must recognize that all the work conducted in this space directly correlates to investment opportunities for their company. With more investment, it’s more likely we can continue moving to a no-harm workplace through initiative funding or additional resources.

Enhance Your Understanding of ESG
In recent discussions with HS professionals, it has become clear that an opportunity to enhance HS is present, but many do not know how to execute a successful strategy. Others are concerned about the workload increase given the limited time and other resources available for daily tasks. Most current HS member organizations and academic institutions are doing a lackluster job of helping to prepare and educate HS leaders and professionals on the importance of and direct correlation between ESG and HS. ESG represents a watershed opportunity for HS to leverage investor and regulatory pressures, requests for additional resources and increased attention to our field. Following are four practical, immediate steps a HS professional and leader can take to enhance their ESG understanding.

1. Be curious. Curiosity is being open to learning new things – like the various facets of ESG – which makes you more informed and well-rounded. Being curious and seeking out information increases your intelligence, creativity and problem-solving abilities and supports your efforts to stay current and connected.
2. Understand the connection. As previously stated, there is a direct link between ESG and HS responsibilities. By recognizing the crossover, you may be able to position your HS organization for additional resources while finding efficiencies at the company level.
3. Acquire knowledge. Attend local and national conferences with an ESG track or group of courses. Benchmark with other utility organizations to see how your colleagues handle ESG at their companies. All of our companies can be challenged to do more with less, and peer learning is an excellent path toward overcoming resource constrictions.
4. Be adaptable. HS professionals and leaders may be uncomfortable with ESG due to the social stigma or a lack of knowledge about the topic. Taking on ESG topics will demand flexibility in a potential new work environment with people you may not currently associate or work with much.

Conclusion
I cannot recall a time I have ever had a discussion with a fellow HS professional during which they told me they are flush with too many resources or too much bandwidth. But while the extra effort to dig into the components of ESG can be viewed as an obstacle, there is the potential to reap great rewards.

About the Author: John Fischer is the director of corporate EHS and environmental strategy for Duke Energy. Reach him at john.fischer@duke-energy.com.

FEBRUARY - MARCH 2024

• Determining Reasonable Energy Estimates
• What’s Missing in Your Training?
• Game-Planning for Safety
• February – March 2024 Q&A
• Pattern Disruption: Don’t Start with ‘Why’
• ESG: Health and Safety Obstacle or Opportunity?
• FR/AR Apparel Use: Are Your Workers Properly Trained?
• Getting to the Heart of At-Risk Behaviors with Facilitative Learning