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How to Make the Business Case For Your EHS Program

How to Make the Business Case For Your EHS Program. David Galt, Legal Editor Kelly Lagana, Associate Editor. What is ‘Business Value’?. Determines the health and well-being of an organization—sustainability Tangible values Profit Market share Hidden values Reputation Employee morale.

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How to Make the Business Case For Your EHS Program

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  1. How to Make the Business Case For Your EHS Program David Galt, Legal Editor Kelly Lagana, Associate Editor

  2. What is ‘Business Value’? • Determines the health and well-being of an organization—sustainability • Tangible values • Profit • Market share • Hidden values • Reputation • Employee morale

  3. Barriers to EHS Performance As Business Value EPA Green Dividends Study (2000) • No common terminology to describe performance • Uncommon language for data analysis • Lack of technical skills to see how environmental strategies affect financial outcomes • Lack of market mechanisms • Investment rules discourage disclosure of EHS performance

  4. Six Steps to Integrate EHS as a Business Value WHAT GETS MEASURED GETS RESULTS

  5. 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

  6. Step 2—Identify Costs of EHS Functions

  7. Step 2—IdentifyCostsof EHS Functions(cont.) • Identify costs using Activity-Based Costing (ABC) • Direct and indirect costs to produce a product or service • Total cost accounting

  8. Step 2—Identify Costs of EHS Functions

  9. Step 2—IdentifyCostsof EHS Functions(cont.) Image Credit: TEEX Center for Instructional Technologies

  10. Step 3—Link EHS Functions to the Value Drivers

  11. Step 3—Link EHS Functions To Value Drivers (cont.)

  12. Step 4—Tools to Improve Business Value Performance • Process Map • Balanced Organizational Scorecard

  13. Step 4—Process Map Figure 1. Automobile Refinishing Process Map—Prepare the Automobile for Refinishing (Second Level). REFINISH (PAINT) THE AUTOMOBILE 2 PREPARE AUTOMOBILE FOR REFINISHING 1 FINISH THE AUTOMOTIVE REFINISHING 3

  14. Step 4—Resource Accounting Sheet © 2007 Business & Legal Reports, Inc.

  15. Step 4—Resource Accounting Sheet © 2007 Business & Legal Reports, Inc.

  16. Step 4—Activity Accounting Sheet

  17. Step 4—Activity Accounting Sheet

  18. Step 5—Display Results:Balanced Organizational Scorecard

  19. Step 6—Always Follow Up • Present information on a regular basis • Give them only what they need • Use the preferred means of communication

  20. Key Points to Remember • EHS functions undervalued due to: • Five barriers between EHS performance and business values and lack of standard performance metrics • Six steps • ID value drivers • Calculate EHS costs • Link drivers to EHS functions • Implement EHS enhancement tools • Display results in biz-speak • Follow up

  21. Thank You! • For more information and supplementary materials, see: www.blr.com/ehsbizcase

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