Don’t Believe the Hype on EHS: It’s Not Just Another Name for ESG

Originally published on TriplePundit

There’s a lot of confusion in the sustainability market right now, and I think a lot of it has to do with acronym overload. GRI? TCFD? CSRD? It’s a lot to keep track of, even for specialists.  I’d like to sort out the confusion over one such letter scramble and explain how to distinguish EHS (environment, health and safety) from ESG (environment, social and governance): two disciplines that might seem almost identical, but are actually quite different. Let’s start with a little history on each.

EHS: Making employee safety paramount

Many companies have had EHS departments for decades. The purpose of EHS, first and foremost, is to promote employee safety. However, EHS also often tracks the impact of the business on the outside environment in the context of complying with regulations. The last two parts of EHS (“H” for health and “S” for safety) are well-established practices that report to federal agencies such as the Occupational Safety and Health Administration (OSHA) in the U.S. Over time, EHS has developed a common language for the “E,” referring to environmental contaminants like pollution, waste generation and greenhouse gas emissions. Regulatory bodies around the world have synced on common standards and fines for all components of EHS.

ESG: The new frontier

Comparatively, ESG has a much shorter history. Unlike EHS, ESG has its roots in the financial sector. It was originally conceived as a way for funds to objectively grade holdings on their sustainability measures — for example, tracking diversity, equity and inclusion programs and environmental factors for investors looking for “greener” or more socially conscious funds. 

“E” in this context can refer to a broad array of environmental metrics that move beyond the question, “What waste is this company producing?” and asks, “How is the environment impacting the company, and how is the company impacting the environment?” We call this the “double-materiality” standard. That means the “E” could cover both what pollution the company is emitting (like a traditional EHS measurement would) and many other environmental impacts like materials lifecycles, water usage and reuse, economic impacts on communities affected by the company, procurement practices, and so on.

The “S” and “G” parts of the equation have an equally broad scope that can cover everything from diversity initiatives, to community relations, to executive compensation, to ethical guidelines for employees. Unlike health and safety, these areas are still being developed in the standards and regulatory landscape.

Compared with EHS, ESG is an evolving discipline, and organizations are still developing metrics and best practices to deliver on ESG’s ambitious goals.  

How can EHS complement ESG? 

So while there are areas of overlap — specifically in greenhouse gas emissions and following OSHA standards that might fall under “governance” writ large — ESG’s scope is so much larger that it can’t be seen by looking through a narrow EHS lens. 

Some organizations make the mistake of eliding the two departments, never defining where one department ends and another begins. In many cases, former EHS staffers are being transitioned into senior ESG roles, blurring the lines even further. 

For these reasons, it’s best to think of the two initiatives as complementary, with EHS nested within ESG, which has a broader scope. 
Here are a few typical questions I get about EHS and its relationship to ESG: 

Q: Do I need to start with EHS to begin an ESG initiative?

A: No, though if you want to have an award-winning ESG initiative, it doesn’t hurt to build on what you’ve started already in EHS. Even if you are starting from scratch, EHS represents only part of the whole. The ESG initiative will include EHS topics, but you won’t be able to pass off EHS as a comprehensive ESG program.

Q: How do I “convert” an EHS into an ESG program? 

A: The pathway to a mature ESG program will vary widely, but we recommend having two separate initiatives, one focused on sustainability writ large (ESG) and another that focuses on core health and safety compliance. The most important thing is to realize that, professionally, EHS and ESG are two distinct skillsets. We don’t recommend simply adding “sustainability” in an EHS job description after you’ve made the hire, then calling it a day on ESG.

Q: If I’m already measuring EHS metrics, can I use that data for ESG as well? 

A: Probably, but EHS data alone will not cover everything you need. One common misperception is that health and safety initiatives within EHS can substitute for social and governance initiatives within ESG — for example, that a safety initiative dealing with ergonomics (typically a health and safety issue) could also count as improving the social aspects of the workplace. Or that the compliance and regulatory aspects of EHS could check off some “good governance” boxes on the ESG side. 

Asking EHS staffers to cover everything that falls under ESG’s “S” and “G” categories is like asking a general practice doctor to diagnose and plan treatment for a tendon tear in your knee. The GP might give you some well-informed advice, but you’re probably better off going to the knee specialist if you want to get it permanently fixed. 

We’re seeing a bit of an ESG gold rush as sustainability becomes a must-have for investor funds, and new standards and regulations for things like value-chain emissions (so-called Scope 3) have either been released or are coming out soon. In the rush to get an ESG program up and running, it may be tempting to essentially rebrand EHS and call it a day. But that would be a mistake. The better move is to treat your existing EHS program as a building block while figuring out what kind of ESG program you want to build. 

This article series is sponsored by FigBytes and produced by the TriplePundit editorial team.

Image credit: Naiyana/Adobe Stock