A Quantifiable Way EH&S Adds Business Value

A Quantifiable Way EH&S Adds Business Value

Also this month:

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What is the single, most direct and quantifiable way for an EH&S department to add business value?

Steve:
In my opinion, it’s occupational safety. In the U.S., the use of a standardized measure such as Total Reportable Injury Rate (TRIR) presents several unique opportunities -- it is:
  • Understood -- manufacturing, business, accounting and human resource staffs are familiar with the measure; there’s nothing new for them to learn

  • Ubiquitous -- it is applicable and comparable within and across many industries

  • Measured and reported -- data and benchmarks already exist, are reported and are readily available

  • Relatable -- there is a direct relationship between performance measure improvement and economic value
Talking about the business value achieved per incremental 0.1 point reduction in a company’s TRIR, however, is the more difficult part. This is because, as one EH&S executive recently told me, it suggests ‘economic value’ judgments will be made regarding employees’ safety.

For those unfamiliar with TRIR, it’s a measure of the rate of reportable workplace injuries, normalized per 100 workers per year. While a TRIR of 2.0 indicates 2 injuries per 100 workers per year, it provides no indication of the severity of those injuries. In real, economic terms, a company of 5000 workers with a TRIR of 2.0 and a lost-time injury average of ten days (plus other assumptions) would suffer business value loss of over $200,000. Thus, a one-point reduction in the TRIR would provide $100,000 in direct business value; reductions in workmen’s compensation insurance, increased productivity and decreased costs for employee health/life insurance could easily double or quadruple that number.

Of course, the business value potential would be even higher in a) companies with more employees and b) companies/industries with higher typical average TRIR rates. For example, the chemical industry’s average is around 2.0; the textile, construction and mining industries have much higher average rates.

It is important that any TRIR reduction efforts establish the historical/existing TRIR, a clear communication of the intended reduction target and business value equivalent, and a delineation of the specific actions that produced the value created.


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I’m thinking of becoming an ‘independent’ practitioner; what suggestions can you provide to increase my chances of success (Part 2 of 3)?

Steve:
Continuing with my list from last month, here are five more ‘lessons learned’:
  • Keep adding reasons for clients to hire you. Develop new products and services; obtain new qualifications and certifications. Also, don’t forget to ask for referrals from satisfied clients.

  • Be very selective in what you provide for free, and to whom. Give some free advice to demonstrate your competency or foster positive client relationships, but keep your most valuable advice and services as something folks have to pay to receive (e.g. “value for value”). Otherwise, you’ll operate as a non-profit and earn the reputation for providing free services.

  • Use your advertising budget and time for targeted, person-to-person efforts. I’ve never experienced, nor has anyone else I know, print or banner ads even coming close to returning their cost in new business. Develop a ‘word-of-mouth’ referral network; find ways to network with, and through, others. Trust me, making cold calls (or even ‘warm’ calls) and sending emails are two of the least enjoyable, although necessary, things you’ll ever HAVE to do.

  • Evolve with your markets and customers -- or die. Businesses must listen to their marketplace (or as I say, ‘keep the sonar on and listen for the pings’) and change appropriately. Otherwise they slowly (and sometimes quickly) fade away. For example, Back Thru The Future Microcomputers has recently added a new, sophisticated service to manage the data security and risk management needs associated with clients’ obsolete computer equipment; this supplements the company’s equipment recovery and recycling services.

  • Provide project confirmations, not just proposals. The activities, timing and deliverables should be already agreed upon verbally, along with the amount and timing of payments, before spending the time to develop a formal job request for client signature. That way, the document is a project confirmation for client signature than a proposal for client consideration. Also, include a date until which the offer remains valid; otherwise clients may hold you to the ‘offer’ long after you thought they lost interest.
    You may also want to review the April 2003 column for advice on setting your billing rates.
Next month: The final five most important ‘lessons learned.'


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How does a person obtain access to a company’s public environmental files?

Steve:
There are three primary purposes for reviewing these types of files -- due diligence (as part of an acquisition or divestiture), liability assessment (as part of a legal discovery process) or business intelligence (as part of a competitive intelligence assessment). While I’m more familiar with the third type, the process of obtaining access is essentially the same although the specific files to be requested will vary.

Requests for information and files associated with federal programs, or state programs that are still operated by the U.S. EPA, must go through its Freedom of Information Act (FOIA) request process by submitting an electronic FOIA request. Documents can then be reviewed at either EPA headquarters in Washington, D.C. or one of several U.S. EPA regional ‘reading rooms’. Don’t expect the process to go quickly or smoothly, though -- most of my electronic requests seem to go into some rift in the time/space continuum, never to be seen or heard from again. I have been much more successful by developing contacts in the departments or offices with primary program responsibility, then working with them directly. Of course, less information is readily available since September 11th but a skilled practitioner should be able to navigate the process. Just don’t expect immediate access and be very specific about what files or information you are requesting.

Requesting information from state agencies is quite different as states’ environmental agencies all seem to be structured slightly differently and their records management operation may or may not reflect their administrative or operational structure. Typically, their FOIA process is posted on each agency’s web site although it’s often hard to find -- possibly an intentional barrier to having to respond to such requests. You may have to search either ‘FOIA’ or ‘open records.’

While some states (like Texas and Louisiana) now have a centralized file room, several (like Pennsylvania and Massachusetts) still have a decentralized system and others (like Michigan and New Jersey) have a hybrid system. Centralized file rooms offer ‘one-stop’ shopping for all programs and all regions in the state, so can be very efficient for reviewing several facilities and program areas in one visit. Decentralized systems have all the records for all facilities within a designated operational region although each program area may have its own office location. Hybrids are the most difficult to maneuver as some records are kept centrally at headquarters and others are kept regionally; you’ll have to do a bit of detective work to determine how each state’s system works.

Even within categories, state record management systems can vary widely. While Texas has a terrific records catalogue, indexing and status database (available remotely for Title V and New Source Review documents), the center frequently can’t find the appropriate file despite being shown in the database. My file review there last month produced only 60-70% of the documents listed in the database. On the other hand, Louisiana’s new system is all digital and very current, though not indexed very thoroughly -- the inability to enter a search for a specific unit often requires a program/timeframe search followed by a meticulous document-by-document review. New Jersey’s process is so dysfunctional that I advise my clients of the high likelihood of an extended (six months or more) process that still might not produce any useful results, then let them decide if they still wish to continue with the effort.

An article I wrote a few years ago provides some useful ‘do’s and don’ts’ when conducting file reviews.


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Postscripts: The Myth of the Hydrogen Economy? As noted in the December issue’s Postscripts, I feel it is important that we all keep ‘checking back in’ on the assumptions and information that form the bases for our individual opinions on various issues. In that column I indicated a shift in my opinion on the greenhouse gas/climate change issue. A recent project is questioning my opinion on the benefits of the still-emergent ‘hydrogen economy.’

While there are multitudes of studies and publications touting the environmental advantages and economic challenges of the hydrogen economy, the more I read about the real or potential upstream and downstream consequences the more I question whether of lot of work is being conducted to produce little incremental benefit. For example, when natural gas undergoes steam reformation to produce hydrogen for ‘clean burning’ applications, the carbon in the molecule doesn’t just go away -- it is typically burned in a co-generation turbine or CO boiler so still gets emitted as CO2. An electrolysis system disassociates the hydrogen from water, but the high levels of electricity needed to produce large volumes of hydrogen still produces CO2 if generated from fossil fuels, especially coal.

Also, having worked with hydrogen in my former days of designing thermal denox control systems, it is quite explosive. The number of people I see smoking while refueling their cars at gasoline stations, despite the ‘No Smoking While Refueling’ signs, will scare me even more if those same stations add hydrogen to their refueling options.

While I don’t have detailed scientific knowledge about hydrogen production or the potential hydrogen economy, I’ve read and/or seen publications dealing with these issues, including Harnessing Hydrogen (J. Cannon; 1995; especially pages 215-230), The Hydrogen Economy (J. Rifkin; 2002), The Hype About Hydrogen (J. Room; 2004) and a recent article in Business Week (“Hydrogen Cars Are Almost Here, But…”; January 24, 2005). It seems, however, as if there should be even more literature that investigates the potential upstream/downstream consequences and offers balanced assessments of each of them before we, as a society, delve too deeply into a major shift that may have much less benefit than is currently promoted.

It’s the only way that we can make intelligent, informed choices before creating otherwise unforeseen consequences. Kudzu, anyone?


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Steve Rice is president of Environmental Opportunities, Inc., a strategic EH&S management and project support services company in Florham Park, New Jersey. He has 30 years of executive EH&S leadership experience, including 25 years with both Exxon and BASF, and is an ACC-authorized Responsible Care Management Systems (RCMS) auditor.

Copyright 2005, Environmental Opportunities, Inc.