© 2007 Business & Legal Reports, Inc. How to Make the Business Case For Your EHS Program David...
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Transcript of © 2007 Business & Legal Reports, Inc. How to Make the Business Case For Your EHS Program David...
© 2007 Business & Legal Reports, Inc.
How to Make the Business Case For Your EHS Program
David Galt, Legal EditorKelly Lagana, Associate Editor
© 2007 Business & Legal Reports, Inc.
Determines the health and well-being of an organization—sustainability
Tangible values– Profit– Market share
Hidden values– Reputation– Employee morale
What is ‘Business Value’?
© 2007 Business & Legal Reports, Inc.
EPA Green Dividends Study (2000)1. No common terminology to describe
performance2. Uncommon language for data analysis3. Lack of technical skills to see how environmental
strategies affect financial outcomes4. Lack of market mechanisms5. Investment rules discourage disclosure of EHS
performance
Barriers to EHS Performance As Business Value
© 2007 Business & Legal Reports, Inc.
Six Steps to Integrate EHS as a Business Value
WHAT GETS MEASURED
GETS RESULTS
© 2007 Business & Legal Reports, Inc.
Step 1—Identify the Primary Value Drivers
Understand your organization’s value drivers– Profitability– Reputation/brand
Do some basic research– Financial report, annual report, mission
statements– ID key financial personnel and learn from them
Step 2—Identify Costs of EHS Functions
© 2007 Business & Legal Reports, Inc.
Step 2—Identify Costs of EHS Functions (cont.)
Identify costs using Activity-Based Costing (ABC)– Direct and indirect costs to produce a product or
service
Total cost accounting
Step 2—Identify Costs of EHS Functions
Image Credit: TEEX Center for Instructional Technologies
Step 2—Identify Costs of EHS Functions (cont.)
Step 3—Link EHS Functions to the Value Drivers
Step 3—Link EHS Functions To Value Drivers (cont.)
© 2007 Business & Legal Reports, Inc.
Step 4—Tools to Improve Business Value Performance
Process Map
Balanced Organizational Scorecard
© 2007 Business & Legal Reports, Inc.
Step 4—Process Map
Figure 1. Automobile Refinishing Process Map—Prepare the Automobile for Refinishing (Second Level).
PREPARE AUTOMOBILE FOR
REFINISHING1
REFINISH (PAINT)THE AUTOMOBILE
2
FINISH THE AUTOMOTIVE REFINISHING
3
© 2007 Business & Legal Reports, Inc.
Step 4—Resource Accounting Sheet
© 2007 Business & Legal Reports, Inc.
Step 4—Resource Accounting Sheet
Step 4—Activity Accounting Sheet
Step 4—Activity Accounting Sheet
Step 5—Display Results:Balanced Organizational Scorecard
© 2007 Business & Legal Reports, Inc.
Step 6—Always Follow Up
Present information on a regular basis
Give them only what they need
Use the preferred means of communication
© 2007 Business & Legal Reports, Inc.
Key Points to Remember
EHS functions undervalued due to:– Five barriers between EHS performance and business
values and lack of standard performance metrics
Six steps1. ID value drivers2. Calculate EHS costs3. Link drivers to EHS functions4. Implement EHS enhancement tools5. Display results in biz-speak6. Follow up
© 2007 Business & Legal Reports, Inc.
Thank You!
For more information and supplementary materials, see:
www.blr.com/ehsbizcase