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Environmental Management Systems: Demonstrating ROI AHMP 2009 Presentation
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Environmental Management Systems: Demonstrating ROI AHMP 2009 Presentation



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  • 1. Greg Lemke, CSP, CHMM
  • 2.  Introductions  Old vs New (Compliance vs. EMS)  Ideas for the future 30,000 foot i 30 000 f t view
  • 3.  Command and Control ◦ Regulatory compliance emphasis ◦ Enforcement ◦ Not always cost effective ◦ Reliance on:  Environmental Policy  Environmental Audits
  • 4.  Environmental Management Systems Approach ◦ Continuous Improvement ◦ Cost Saving Focused ◦ Corporate Social Responsibility
  • 5. 1. The pace of the global economy ◦ Competitiveness ◦ instantaneous knowledge 2. 2 The sharp increase in energy costs 3. The more recent and ramped-up attention of global climate change.
  • 6. Are your operations, organizational structure, core products and/or services, and stakeholder engagements sustainable? ◦ Third-party verifiable sustainability ◦ Corporate social responsibility reporting ◦ I t International standards f environment and h lth ti l t d d for i t d health and safety
  • 7.  In business, ROI is most often thought of as dollars made or saved in relation to dollars invested ◦ baseline operations ◦ implement programs with specific metrics ◦ work to achieve those goals  The return on investments need to well- documented, and sustainable operations need to be beneficial to the traditional bottom line
  • 8. 95% of business executives report that workplace safety has a positive impact on a company‘s financial performance. 93% of executives surveyed see a relationship between: ◦ Direct costs, or payments to injured employees and their medical care providers, and ◦ Indirect costs, such as lost productivity, overtime costs Source: The Executive Survey of Workplace Safety by the Liberty Mutual Group
  • 9. Workers Compensation Premiums $300,000.00 $265,052.72 $250,000.00 $235,602.42 $209,424.38 $200,000.00 $196,821.33 $186,155.00 $174,952.29 $162,849.00 $155,513.15 $150,000.00 Possible EMR .75 $144,509.00 Current EMR 1.0 $100,000.00 $50 000 00 $50,000.00 $0.00 2005-06 2005 06 2006-07 2006 07 2007-08 2007 08 2008-09 2008 09 2009-10 2009 10 2010-11 2010 11
  • 10.  Investment  Return ◦ Employee training ◦ More satisfied & professional workers ◦ Improved ◦ More efficient and management systems repeatable business practices ◦ Increased ◦ Engage with the transparency and stakeholders of the public relations organization
  • 11.  All of these investments will provide ◦ Strength, ◦ Stability, ◦ Sustainability to the organization organization, ◦ Increase the value of the company or the brand
  • 12.  Cost Savings  Regulatory Compliance  Minimize Environmental Liability  Demonstrated ROI ◦ Increase Shareholder Value
  • 13.  Top Management Support ◦ Commitment C i ◦ Demonstrated Action ◦ Strategic Planning  Goals ◦ Prioritize ◦ Available Technology  Celebrate Successes ◦ Motivates stakeholders  Training ◦ Integrate EMS Philosophy throughout organization
  • 14.  Generally accepted and understood that there is a significant and growing correlation between companies' investment in their environmental programs and their overall competitiveness and financial performance. ◦ Firms investing in environmental management g g posted accumulated returns over 48.8% higher than environmental laggards over a 3-year period, and 6% higher returns over 1-year. 1 year. Source: Innovest Strategic Value Advisors, in an annual investment research report on the Global Auto Parts market
  • 15.  In the electric utility industry: portfolio managers who screen out companies with h t i ith poor environmental records can outperform others by more than 7% annually. y y  The top environmental performers in the computer sector have outperformed their industry rivals financially by 25% since the beginning of 1998. Source(s): Innovest Strategic Value Advisors and The Computer Industry -- Hidden Risks and Value Potential for Strategic Investors
  • 16.  Green to Gold, 2006 by Daniel Esty & Andrew Winston  Numerous benefits of a sound environmental policy: 1. Boosting brand value l di 1 B ti b d l leading t i to increased d customer loyalty and retention 2. Increased staff morale leading to higher productivity and lower employee turnover 3. Greater creativity and 4 An edge in recruiting talented staff 4. staff.
  • 17.  The Green to Gold authors argue that the reason companies complain of little visible i l i f littl i ibl ROI from environmental policies is because they don’t count the right things: y g g  Cost of retaining an existing client vs. obtaining a new one. (customer loyalty)  Benefit of obtaining new clients primarily due to your g p y y corporate responsibility position (usually not measured)
  • 18. (for energy usage) (for global climate change)
  • 19. (Used for raw material metrics or Chemical Emissions Metrics)
  • 20.  Tracking of chemical releases to the air, land, and water are common as part of SARA Title III requirements. ◦ Use this data to develop metrics for calculating chemical emissions reductions. (for chemical release metrics)
  • 21.  Electricity Conservation ◦ Electricity conversation or reduced use of energy  Green Energy ◦ Switching to greener or renewable energy sources  Fuel Substitution ◦ Reduced fuel use, substitution to greener fuels  Greening Chemistry ◦ Reduced use of or substitutions of high global-warming- global warming potential (GWP) chemicals  Water Conservation ◦ Reduced water use  Materials Management ◦ Reductions from life-cycle analysis and extending the life of secondary materials y
  • 22.  Work to increase awareness of sustainability among staff and management. ◦ This will provide a common language and keep everyone thinking about the impact y have during the course of our daily tasks. p you g y  Take an inventory of current efforts that make progress toward sustainability and be frank about areas that need improvement. ◦ Enhance your current efforts and identify additional improvements.  Formulate vision of what sustainability means to you ◦ Identify long-term goals necessary to achieve that vision.
  • 23.  Incorporate the awareness and terminology of sustainability into your budget decisions, program administration and project development.
  • 24.  Does this help move us toward sustainability  Even if incrementally?  Will elements of this project serve as a potential stepping stone toward other changes or initiatives?  Will increased implementation costs yield savings in the long-run or provide a social or environmental return on g p investment?
  • 25.  In a corporate climate that embraces the adage that "what matters gets measured"  The ability to measure and evaluate environmental performance allows environmental staff to demonstrate the value of its programs and gain equal footing with f f other business objectives
  • 26.  Goals stated: "Execute this process well" vs. "Don't perform this process badly."
  • 27.  Goals should be precise and measurable so that progress toward them can be tracked and evaluated to determine the relative success of environmental performance performance. ◦ “Maintain regulatory compliance and identify cost saving opportunities… opportunities ” vs ◦ Reduce hazardous waste by 25% by 2011 ◦ Reduce SARA reportable releases by 35% by 2010 ◦ Recycle 50% of alcohol solvent in 2010
  • 28. Miljömålen Renewables Natural Capitalism Ecoliteracy Cleaner Factor 10 Production RMA
  • 29.  Comparing environmental performance against its return on investment (ROI) is a bottom line-oriented approach.  Illustrate that environmental, healthy, and safety (EH&S) programs have a positive effect on company financials.
  • 30. 1. Recognition and commitment from senior leadership; 2. Build a business case based on benchmarking against sector standards and trends, and baseline your existing programs, activities, and services; 3. Defining sustainability, based on sector-type, culture, brand, existence of programs, and longer-term goals; 4. Implement sustainability initiatives including specific actions, roles/responsibilities, and implementation schedule; and 5. Measure and report processes to measure progress against specific metrics and use this data to report to management, shareholders, customers, employees, and/or other stakeholders.
  • 31. Thank You QUESTIONS? Greg Lemke, CSP, CHMM Director, L Di t Loss P Prevention ti OCCU TEC I OCCU-TEC, Inc. Kansas City, Missouri