EHS and ESG: Understanding the Evolving Interface
The federal administration’s policy reversal on environmental, social, and governance (ESG) initiatives has created a dynamic regulatory environment. For environmental, health, and safety (EHS) professionals, staying informed about these shifting dynamics is essential for maintaining compliance and managing risks effectively.
This article clarifies the relationship between EHS and ESG, offering practical insights for professionals to navigate uncertainty. It’s important to distinguish between ESG (reporting-focused) and sustainability (operational strategy), terms often used interchangeably.
Identifying Material ESG Issues
High-priority ESG issues specific to a company’s industry are considered “materially significant.” These topics should be prioritized for measurement and stakeholder reporting. Companies report through government channels like OSHA and EPA, as well as through voluntary disclosures.
The following sections analyze seven critical areas requiring coordination between EHS and other business units:
Energy Management Strategies
Despite policy changes affecting the Inflation Reduction Act programs, the business case for energy management remains compelling. EHS professionals play a crucial role in reducing energy consumption and related emissions of regulated pollutants—especially valuable during price volatility.
Actions for EHS leaders:
- Participate in the DOE’s Better Buildings, Better Plants initiative
- Implement ISO 50001-aligned energy management systems
Circularity and Waste Reduction
EHS professionals must navigate jurisdiction-specific requirements led by California and the EU. The lack of federal coordination creates opportunities for brand differentiation through circularity-based innovation.
Actions for EHS leaders:
- Partner with engineering and operations on waste reduction
- Utilize Lean manufacturing to identify waste sources
- Engage early in compliance strategy development
Decarbonization Approaches
Though the U.S. is withdrawing from the Paris Climate Agreement, thousands of companies continue basing their GHG reduction targets on scientific consensus. Companies should prepare for energy price volatility and increasing buyer demands for carbon footprint disclosure.
Actions for EHS leaders:
- Partner with finance on renewable energy options
- Consider organizations like the Clean Energy Buyers Association
- Evaluate carbon accounting software options
Addressing Climate Change Risks
EHS managers play a direct role in preparing for increasingly frequent climate-fueled disasters. California SB 261 will require companies to disclose climate-related financial risks by 2025.
Actions for EHS leaders:
- Update Business Continuity and Disaster Response Plans
- Develop comprehensive emergency planning
- Utilize GIS tools to prepare operations and disclose risks
Managing Supply Chain Impacts
New regulations in California, Canada, and the EU are making supply chain sustainability legally required. Non-compliance risks include reputational damage and trade restrictions with significant penalties.
Actions for EHS leaders:
- Collaborate across departments on compliance
- Prepare proactively for reporting requirements
Pollution Control Priorities
Despite promises of “cleanest air and water,” early executive actions present environmental risks. While some companies may benefit from temporarily lax enforcement, making long-term decisions based on a four-year regulatory cycle could have negative consequences.
Actions for EHS leaders:
- Maintain best practices regardless of federal changes
- Meet requirements from state and local jurisdictions
- Consider voluntary standards like ZDHC
Navigating DEI Changes
Federal agencies are removing DEI from various programs. However, the financial connection between employee satisfaction, safety, and profitability remains proven. Anti-harassment programs are still legally required in many states.
Actions for EHS leaders:
- Recognize the correlation between workplace culture and safety
- Focus on policies emphasizing mutual respect
- Use engagement surveys to measure inclusiveness
Conclusion: Strategic Leadership in Uncertain Times
Despite changing federal priorities, EHS professionals remain essential to organizational risk management. By staying informed about evolving regulations and maintaining strong partnerships, EHS leaders can help their organizations navigate uncertainty while identifying opportunities for innovation and competitive advantage.
