Using EHS Metrics to Enhance ESG (Environment, Social, Governance) Performance and Reporting
Blog | May 12th, 2023

Using EHS Metrics to Enhance ESG (Environment, Social, Governance) Performance and Reporting

Altex Energy is a premier rail terminal and logistics company that specializes in moving products like Crude, Natural Gas Liquids, Condensates (C5+), and Waste Engine Oil. Environmental compliance is critical for the operational efficiency of Altex, which predominantly operates in four locations throughout Western Canada. Spill protection is also a critical factor.

The company had well-planned EHS (Environment, Health & Safety) procedures in place, but the whole process was manual. The company was using a combination of tools including paper, Microsoft SharePoint, Word, Excel, and a mobile field-data collection app. This made tracking, reporting, and measuring performance difficult, which was also a challenge to continuous improvement. The company’s leadership soon realized that having a manual system was also a bottleneck to meeting EHS as well as ESG goals.

The company implemented ComplianceQuest’s EHS software and has since been able to tackle incidents with 30% more efficiency. Because everything is centralized in one platform, the Altex staff and the management have full visibility into the status of all incidents. They can easily view dashboards that help in identifying, analyzing, and correcting hazards and preventing future recurrence.

meet esg and ehs goals

All of the company’s locations have access to the system and continually log important information, even from out in the field, providing leaders with access to a thorough and accurate picture of each incident.

Overall, the digital transformation of EHS processes has played a key role in driving operational excellence. Over 600 documents were migrated into the new system and the company plans to build more dashboards, create more sophisticated reports, and conduct risk assessments to continually improve operational processes and become more aligned with ESG goals.

The digital transformation journey of Altex Energy highlights the following important points:

  • Without data, metrics and dashboards, it’ll be difficult to track EHS performance
  • EHS metrics have a direct impact on meeting the ESG goals of a company
  • Implementing a modern EHS software that provides actionable insights and better collaboration/task management capabilities can be a game changer to any organization

Enhancing ESG (Environment, Social, and Governance) Performance and Reporting

EHS solutions help businesses be compliant with health and safety regulations. But now, the stakes are getting higher. Since 2006, when the UN released the Principles for Responsible Investment (PRI), companies are now doubling up their focus on ESG and putting together strategic plans for the same.

Though the need for sustainable development has been discussed since the 1960s, it looks like the stakes are higher now and investors, key stakeholders, and even customers & employees want to work with sustainable corporations.

All large and listed companies must reveal the risks and opportunities arising from social and environmental issues and how their activities will impact the people and the environment. This will help assess the sustainability performance of the organizations and help investors and other stakeholders make sustainable investments.

On 5 January 2023, the European Union announced the Corporate Sustainability Reporting Directive (CSRD) to modernize and strengthen the reporting of the performance of corporates on social and environmental parameters. Investors and other stakeholders will be provided with access to the information required to evaluate investment risks resulting from sustainability issues such as climate change and create a culture of transparency with regard to how the companies will impact people and the environment. This is also expected to reduce the reporting costs in the medium to long term as there will be a harmonization of the information required.

Nearly 50,000 European companies and 10,000 American will have to conform to the CSRD and submit reports compliant with European Sustainability Reporting Standards (ESRS). The draft standards developed by the EFRAG (formerly European Financial Reporting Advisory Group) require companies to present audited sustainability reports in a digitalized form. Till the CSRD rules come into force, the reports will have to conform to the rules laid down by the Non-Financial Reporting Directive (NFRD), which covers:

  • Environment
  • Social matters and how employees are treated
  • Human rights
  • Anti-corruption and bribery
  • Inclusive company boards (age, gender, educational and professional background)

These requirements make measuring and reporting the ESG performance critical to enable the identification of the environmental, social, and governance risks and mitigation to improve performance. It also is a guide for investors to assess whether the company is aligned with the ESG goals and whether investing in that company would create a positive impact.

ESG Performance: Goals & Metrics

At a broader level, companies are now putting together strategies for the following:

Environmental Goals: The environmental goals aim to reduce pollutants and waste generated by the company products while limiting the use of finite natural resources such as water, energy, etc.

Social Goals: The social goals include improving workplace safety, inclusivity rate, pay equity, and benchmarking against the local minimum wage standard.

Governance Goals: Complying with rules and regulations, both the government and similar authorities and the corporate policies, fall under this category. These can be broadly divided into:

  • People Metrics: Including health and safety, diversity, and wages
  • Planet Metrics: Complying with the environment and conservation-related regulations
  • Prosperity Metrics: Providing employment opportunities and wealth generation
  • Principles of Governance Metrics: Improving accountability and aligning strategies with ESG goals

Measuring the ESG performance indicators helps investors:

  • Determine the risks of investing in an organization or project
  • Calculate the potential return on investment
  • Assess the company’s commitment to meeting its ESG goals with supporting data to substantiate claims
  • Evaluate the progress and implement continuous improvement

For the companies committed to pursuing ESG goals, it increases access to capital as 89% of global investors have included ESG performance as one of the criteria for evaluating opportunities. This will improve brand value, increase compliance, and enhance employee engagement.

ComplianceQuest EHS to Improve ESG Performance and Reporting

EHS, which stands for environment, health, and safety, can be considered a precursor to ESG. It helps businesses continuously improve environment and employee safety by identifying risks and implementing measures to mitigate them.

It provides businesses with visibility into their operations and data needed to monitor and track EHS key performance indicators. This helps in identifying gaps and improving compliance while bringing down the number of incidents.

ComplianceQuest’s cloud-based EHS Solution built on Salesforce enables businesses to automate their end-to-end EHS workflows and integrates reactive, proactive, and predictive approaches. Tools such as incident management speed up response to incidents and also conduct investigations, identify the root causes, and initiate CAPA. Safety Observations, Audit, and Inspection features help to proactively identify risks and address them based on ranking - high, medium, or low.

The solution provides the top management and safety leaders with data to track key performance indicators. It empowers employees with tools to proactively participate in improving the EHS parameters and reporting near misses and safety observations. It is scalable and flexible and can be extended to meet the ESG goals. For businesses already committed to EHS, CQ can help take the leap to include ESG. For those starting the journey, CQ EHS can help them come up to speed and automate processes to meet ESG goals faster.

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