9 minutes10/12/2024
Corporate sustainability is like a jigsaw puzzle. It incorporates several different elements, all of which work together seamlessly to ensure that your organization operates responsibly. For a truly successful strategy that supports people and the planet, you will need to consider both EHS and ESG within your sustainability strategy.
In simple terms, Environment, Health, and Safety (EHS) forms part of a focus on the safety of employees and the environment, while Environmental, Social and Governance (ESG) issues address your organization’s responsibility towards the planet and the resources it provides.
Despite the similarities, these two important jigsaw pieces differ in intent and scope. Unlike EHS, which is a familiar driver for most organizations, there is still some confusion about what ESG entails and how it differs from EHS.
That’s why, in this article, we’ll explore how ESG and EHS relate to each other, how they differ, and how to best to integrate them into your organization, ensuring that you have the data you need to complete the sustainability puzzle and see the bigger picture.
What is EHS?
The field of Environment, Health, and Safety encompasses a range of laws, regulations, programs, professions, and workplace initiatives that are designed to ensure the health and safety of employees and the public, while also protecting the environment from business-related hazards.
To this end, the Environment aspect of EHS involves complying with environmental regulations related to matters like:
- Carbon emissions
- Ambient air quality
- Energy conservation
- Wastewater
- Ambient water quality
- Water conservation
- Waste management
- Noise pollution
- Contaminated land
The Health element of EHS concerns itself with preventing harm to people through the development of procedures, best practices, and monitoring activities that are safe and environmentally friendly. It can include topics like:
- Community water quality and availability
- Disease prevention
- Hazardous materials management
Finally, the Safety component of EHS focuses on identifying workplace hazards and reducing accidents and exposure to harmful situations and substances by creating organized procedures for:
- Employee training
- Accident prevention and response
- Emergency readiness
- Proper use of protective clothing and equipment
- Fire safety
- Traffic safety
- General facility design and operation
What is ESG?
Now, let’s consider the Environmental, Social, and Governance issues which help corporations measure and report on their impacts.
The Environmental aspect of ESG covers impacts related to an organization’s operations including concerns like:
- Climate change
- Energy consumption
- Water stewardship
- Waste management
- Air quality
- Biodiversity
- Deforestation
The Social element involves your business’ impacts on people including topics such as:
- Gender inclusivity
- Diversity
- Hiring practices
- Customer satisfaction
- Data protection
- Human rights
- Labor standards
Finally, the Governance component concerns itself with how an organization is being run including matters like:
- Board composition and membership selection
- Executive compensation
- Shareholder rights
- Accounting and auditing procedures
- Ethics, bribery, and corruption policies
- Lobbying
- Political contributions
How are ESG and EHS related?
As you can see, ESG and EHS can overlap in some areas, particularly on environmental aspects and in fact, there are several ways in which they are broadly related:
- They both deal with the effect of business activities on the environment and society.
- They both help businesses in identifying, mitigating, and managing risks in their operations.
- They both provide guidance on best practices for a business’s operations.
For these reasons, both ESG and EHS are important for all companies to consider in order to operate sustainably and responsibly.
How do ESG and EHS differ?
Despite having some similarities, however, ESG and EHS are fundamentally different. Unlike EHS, which is primarily focused on compliance with environmental and employee health and safety regulations, ESG encompasses a broader range of sustainability topics and issues. The two can be differentiated by their intent, scope, and impact, which vary considerably.
Intent
The primary focus of an EHS program is protecting the environment and maintaining health and safety in the workplace. It is driven by compliance with local regulations, whether that’s the US Environment Protection Agency’s (EPA) Clean Air Act, regulations such as the UK’s Control of Substances Hazardous to Health directive, Canada Labour Code’s Occupational Health and Safety Regulations, or the European Framework Directive on Safety and Health at Work.
An ESG program on the other hand has a broader focus. Developed in response to investor concerns, it’s a financial concept that was initially intended to protect investors, drive better business evaluations, and quantify sustainability impacts. Today, however, governments around the world are proposing disclosure regulations on ESG performance such as the US SEC climate disclosure rules and the EU’s Corporate Sustainability Reporting Directive (CSRD).
Scope
While both EHS and ESG address the environment, ESG’s reach is more expansive than EHS, going beyond a company’s workplace or local community to encompass societal and global considerations including climate impact and corporate ethics.
This distinction is important because it means that ESG considerations can have a much broader impact on a company’s operations and bottom line. Furthermore, in recent years, investors have become increasingly interested in ESG factors when assessing a company’s long-term prospects, which has led to a growing demand for sustainability data and more involved reporting.
Impact
Another way in which ESG and EHS differ is in the impacts of each program for an organization and its stakeholders. EHS, for example, focuses on the immediate health and safety of a company’s employees and workplace as well as its direct impacts on the environment like pollution and waste.
ESG, however, focuses on a broader range of impacts which overlap with EHS, such as tracking greenhouse gas (GHG) emissions, but it goes further to evaluate an organization’s impacts on areas like materials lifecycles, water usage and reuse, economic impacts on communities, community relations, ethical guidelines for employees, and more.
Integrating EHS and ESG into your organization
If you’re currently building an ESG program, you need support to boost your EHS capabilities, or your company is looking to integrate ESG within your sustainability strategy, connect with an Quentic advisor to see how you can do more with your data.
