© 2007 Business & Legal Reports, Inc. How to Make the Business Case For Your EHS Program David Galt, Legal Editor Kelly 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 performance 2.Uncommon language for data analysis 3.Lack of technical skills to see how environmental strategies affect financial outcomes 4.Lack of market mechanisms 5.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 REFINISHING 1 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 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 steps 1. ID value drivers 2. Calculate EHS costs 3. Link drivers to EHS functions 4. Implement EHS enhancement tools 5. Display results in biz-speak 6. Follow up

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