Understanding the Board's Perspective on EHS Risk
GT: Why is this topic timely and relevant for NAEM members? Can you think of any recent examples of how this trend has played out in the real world?
KO: At the 2014 National Association of Corporate Directors (NACD) Global Board Leader’s Summit, enterprise risk management was a hot topic. This included all the components that make up corporate risk such as cyber risk, business resilience, future trends in market disruption and emerging risks. We also discussed environmental, safety and sustainability risk and the board directors were encouraged to challenge senior management at the companies they advise to develop more formal risk management programs that will reduce, eliminate, or manage the current risk. This has been evident is several firms who are looking at managing Superfund and business resilience to reduce or eliminate 'surprises'.
GT: How often do EHS and sustainability issues rise to Board level? What issues seem to be most on their radar?
KO: To my knowledge, sustainability issues are discussed and managed at both the board level and board subcommittee level annually. At a minimum, these come up during strategy development and risk management. The key metrics they discuss include reduced carbon count and percentage of products with life-cycle environmental concerns built into the design.
GT: Why are Board expectations something that an EHS manager should be paying attention to? How could better understanding this help NAEM members be more effective in their work?
KO: Board expectations are an essential part of shareholder value in every company. One of the board’s goal is to reduce or eliminate risk and allow for transparency of liability. When board question senior management expect answers,senior management typically forwards these requests to EHS&S management to address. Knowing the emerging trends will allow EHS&S management to proactively address concerns and ensure shareholder value through reduced risk and increased transparency.
For more information about this year's EHS & Sustainability Management Forum, or to register, please visit: http://ehsforum.naem.org/index.php.
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About the Author
NAEM Staff
The National Association for Environmental, Health and Safety, and Sustainability (EHS&S) Management (NAEM) empowers corporate leaders to advance environmental stewardship, create safe and healthy workplaces and promote global sustainability. As the leading business community for EHS&S decision-makers, we provide engaging forums, a curated network, peer benchmarking, research insights and tools for solving today’s corporate EHS&S management challenges. Visit us online at naem.org.