© 2007 Business & Legal Reports, Inc.

How to Make the Business Case For Your EHS Program

David Galt, Legal EditorKelly 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’?

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EPA Green Dividends Study (2000)1. No common terminology to describe

performance2. Uncommon language for data analysis3. Lack of technical skills to see how environmental

strategies affect financial outcomes4. Lack of market mechanisms5. Investment rules discourage disclosure of EHS

performance

Barriers to EHS Performance As Business Value

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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

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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.)

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Step 4—Tools to Improve Business Value Performance

Process Map

Balanced Organizational Scorecard

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Step 4—Process Map

Figure 1. Automobile Refinishing Process Map—Prepare the Automobile for Refinishing (Second Level).

PREPARE AUTOMOBILE FOR

REFINISHING1

REFINISH (PAINT)THE AUTOMOBILE

2

FINISH THE AUTOMOTIVE REFINISHING

3

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Step 4—Resource Accounting Sheet

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Step 4—Resource Accounting Sheet

Step 4—Activity Accounting Sheet

Step 4—Activity Accounting Sheet

Step 5—Display Results:Balanced Organizational Scorecard

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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 steps1. ID value drivers2. Calculate EHS costs3. Link drivers to EHS functions4. Implement EHS enhancement tools5. Display results in biz-speak6. Follow up

© 2007 Business & Legal Reports, Inc.

Thank You!

For more information and supplementary materials, see:

www.blr.com/ehsbizcase