Structures and Staffing for Environmental, Health and Safety

In 2012 the National Association for Environmental Management (“NAEM”) issued a report on the results of a survey of the organizational structure, staffing levels and responsibilities of the function that supported a company’s environmental, health and safety (“EHS”) and sustainability goals.[1]  The survey consisted of online questionnaires to full time, “in house” corporate EHS and sustainability professionals and qualitative interviews with senior EHS and sustainability leaders across different industries.  The results reflect the views of 199 senior leaders (i.e., managers, directors and vice presidents) working within combined EHS and sustainability functions at U.S.-based companies with revenues ranging from $250 million to $50 billion.  Among the key findings described in the executive summary to the report were the following:

• Most of the respondents managed EHS through a single consolidated, centralized function. Two-thirds of respondents reported a governance structure that centralized authority and policies, and one-third also incorporated a centralized budget process.
• The function generally reported into one of several core areas: legal, operations, human resources or the C-Suite.
• While there were multiple approaches to organizing the EHS function, the most common department structure tended to be one that integrated EHS at the corporate and facility levels.
• Staff levels were driven largely by perceived EHS risk, industry and structure. Companies that identified as operating under a high degree of EHS risk (e.g., companies in the utilities, extractives and chemicals industries) tended to have larger staff sizes. Decentralized structures tended to require higher staff levels per total employees, as did small and mid-sized companies; however, companies with higher revenues reported fewer EHS staff per total employees.
• EHS budgets (normalized by total employees) were largely driven by employee needs such as salaries, benefits, expenses and travel. Because of this interdependence, the same factors that influence staff levels also influenced budgeting.  In other words, high-risk companies, or those with decentralized EHS structures, tended to have more staff and therefore, larger budgets.
• EHS and sustainability professionals were highly credentialed, seasoned leaders with 79% of the respondents having worked in the field more than 15 years and strong backgrounds in science or engineering.
• The EHS function generally took the lead in regulatory compliance, auditing and information management and was primarily responsible for setting environmental goals, waste management, pollution prevention, regulatory tracking/compliance/disclosure and due diligence.[2] Data management and EHS management information systems were also key areas of responsibility, likely driven by the growth in external reporting of environmental metrics.
• EHS professionals also played a key role in sustainability and respondents indicated that the EHS function either led, or shared responsibility for, the majority of activities including establishing sustainability strategy and tracking and reporting the sustainability metrics.
• Most of respondents reported they were managing sustainability through a cross-functional team with members drawn from corporate communications, operations, legal sales and marketing and EHS. These teams were most often led by the EHS function or a combined EHS and sustainability function. When sustainability was assigned to a stand-alone department, EHS was most often in the lead, followed by stand-alone sustainability department.

In the summer of 2014 NAEM conducted an online survey to identify the skills, knowledge areas and attributes for members of the EHS and sustainability profession.[3]  NAEM collected information from 345 respondents at 197 different companies.  Most of the companies were operating globally and the three most represented industry sectors were manufacturing, pharmaceutical/medical products and chemical.  A majority of the respondents had at least 15 years of professional and EHS experience and respondents tended to be at the leadership level (7% were executive leaders at the vice president level, 22% were at the senior director/director level and 13% were senior managers).  EHS professionals generally were placed in the corporate function as opposed to acting from a site/facility or business unit and most of the respondents worked in a combined EHS or EHS/Sustainability function as opposed to working in an organizational structure in which environmental, safety and/or sustainability issues and activities were treated as stand-alone functions.  Use of a combined function was notable in that illustrated that companies were concerned that stand-alone groups might compete with one another for resources and/or promote conflicting policies.
NAEM found that compliance was a core focus for EHS leaders at all levels, regardless of the size of the company.  The list of the top responsibilities of the respondents, including areas where they took the lead and areas in which they played a role as a strong collaborator, including the following:

The survey asked EHS leaders to identify the activities in which they generally acted as leaders and assumed direct and/or shared responsibility and other activities in which they were involved without having responsibility.  The results indicated that while EHS leaders were accountable for a set of core compliance and pollution prevention programs (e.g., reporting to meet internal and external requirements; EHS management information systems; environmental compliance; regulatory tracking and setting EHS goals), they were also involved with, collaborated on, or influenced the management of a broad range of activities within their organizations including employee engagement, emergency management preparedness, corporate annual reports, risk management, supply chain engagement and building energy efficiency.
One of the interesting outputs of the survey was a set of descriptions of the roles and responsibilities of EHS professionals at various levels of their career progression.  In general, the information confirmed that as EHS professional advanced their roles became more strategic:

The survey was also an opportunity to explore the skills, knowledge and other competencies that EHS professionals should expect to have to develop in order to be successful and advance.  EHS professionals must not only be knowledgeable about business operations but must also have the interpersonal skills necessary for managing people and processes and being successful as an integrator and influencer including the ability to team build, motivate others and manage without authority. Other important business skills included written communications, interpreting regulatory requirements, oral communications, decision making, program and project management and training.  The most important areas of general and technical knowledge for EHS professional included EHS risks, regulatory compliance systems, waste management, training, environmental science, communications, management systems and budgeting.  As for business acumen, EHS professionals needed to demonstrate knowledge across a number of areas including training, communications, budgeting and business operations and the presenters of the survey results noted that these skills were consistent with the core EHS responsibilities associated with creating a strong EHS culture, communicating its value across silos and collaborating across functions to embed EHS principles into business operations.
Another important issue with respect to the competencies and roles of EHS responsibilities is how they were integrated into the organization’s overall strategies and processes with respect to risk management.[4]  Traditionally organizations have created and maintained separate departments for EHS and risk management and while professionals in each of the departments share many of the same goals there have often been breakdowns in their ability to work together.  For example, risk managers typically see EHS professionals as being a subdivision of the risk management department whose job is limited to compliance (i.e., doing inspections/audits, accident investigations and focused on employee safety) while EHS professionals downplay the role of risk managers as simply being the purchasers and administrators of insurance.  The problem with this situation is that the organization needs to maintain two different budgets and personnel groups, which is inefficient and expensive, and management is confused about the value and purpose of each of the departments.
The solution to the dilemma posited above lies in the transition from the traditional roles of EHS and risk management to a more comprehensive solution referred to as enterprise risk management (“ERM”).  The scope of ERM is enabling all strategic, management and operational tasks of an organization throughout projects, functions, and processes to be aligned to a common set of risk management objectives.  EHS professionals can contribute to this process through their skills with respect to the recognition, evaluation and control of environmental factors or stresses, arising in and from the workplace, which may cause sickness, impaired health and wellbeing or significant discomfort and inefficiency among workers and/or citizens of the community.[5]  At the same time, risk managers can provide their expertise in making and implementing decisions that will minimize the adverse effects of accidental and business losses on an organization.[6]  However, in order for the collaboration to be effective, EHS professionals need to have a new job description that not only includes providing professional knowledge and expertise in the administration, integration, and support of environmental health and safety programs at all levels of the organization, but also working in coordination with risk managers to develop environmental health and safety programs that reduce hazard, financial, operational, strategic, reputational, and compliance risks in support of the strategic objectives and mission of the organization.
For further discussion see the Sustainable Entrepreneurship Project’s materials on Sustainability Governance and Management.
[1] National Association for Environmental Management, EHS & Sustainability Staffing and Structure: Benchmark Report (November 2012).
[2] Specific environmental management areas mentioned in the survey included EPA compliance, hazardous materials, waste disposal, spill prevention/control, permitting, air pollution, storm water, waste recycling, chemical management, carbon foot printing, site remediation and industrial emissions reductions.
[3] The discussion of the results of the survey included herein is adapted from Key Competencies for the EHS & Sustainability Profession: Benchmark Report (NAEM, February 12, 2015).
[4] The discussion in this paragraph and the paragraph immediately below is adapted from Risk Managers are from Mars, EHS Professionals are from Venus: The EHS Professionals’ Role in ERM (California State University Risk Management Authority).
[5] Id. (citing NSC, Fundamentals of Industrial Hygiene, 3rd Edition)
[6] Id. (citing Fundamentals of Risk Management, 3rd Edition, Volume 1)