Conducting a Sustainability Assessment Reply

Every business has a number of sustainability practices already in place.  Because the practices are spread across many operating functions, it may be difficult to identify all of them.  We often compare this to the tiles in a game of “Scrabble.”  You find the sustainability practices that you have in place, and then you strive to make sense with them.  In Scrabble, you select the tiles and then arrange them on a board to make words.  You link the words to other words to score more points.  Your sustainability program activities need to be ordered similarly in a transparent way to contribute value to your organization. 

Instead of the Scrabble board, you could use an integrated management system to help organize your sustainability effort.  With the introduction of ISO 26000 (social responsibility standard), it is easier than ever to integrate all three responsibilities (environmental stewardship, social well being and economic prosperity) into a single program.  This new guidance provides some of the program elements that need to be searched for within the scope of a sustainability assessment. 

CAPACCIO uses a pre-visit questionnaire to help an organization locate the sources of information, in order to determine activities and processes that address each of these responsibilities.  By conducting a site visit, it is possible to get a good picture of the current state of the sustainability program.  The components of an integrated management system help to identify the gaps in the program.  Sometimes there are not any gaps at all.  This information just resides in different functions in the company and the activities just have not been communicated internally.  The integrated management system provides a framework for both internal and external communications.  It also inventories the environmental, social and economic elements that should be captured in this program.

It is very important to have a complete sustainability baseline before attempting to benchmark the program with competitors and customers.  We always find more program elements than are captured in the pre-visit questionnaire.  This is why it is prudent to have a different set of eyes involved in the sustainability assessment.  You need someone that can communicate with all of the functional managers involved in the efforts.  There is no “one-size-fits-all” list to use for the interviews.  An experienced sustainability assessor will often find pertinent activities that are not on the “checklist.”

Once you begin to see the sustainability activities, you can form teams to link them just as you do in a game of Scrabble.  By increasing the value of sustainability to the organization, there will be a drive to fill the gaps and create yet more links.  It is now possible to create a “roadmap” to improve the program and getting more people involved.  All this – thanks to ISO 26000 guidance.

 

Management Review 1

I have recently seen a lot organizations struggling with defining the frequency for management reviews.  ISO 14001:2004, section 4.6 “Management Review,” represents a top management review that’s conducted at defined intervals, as determined by each organization.  The ISO 14001:2004 requires management review be conducted at planned intervals.  The ISO requirements and implementation guidance documents do not define “frequency.”

The intent of management review is to provide a communication path to top management on how the EMS is performing (results of internal audits and corrective preventative actions), the organization’s compliance status (legal requirements and other requirements, external interested parties), the organization’s continual improvement projects (objectives targets and programs) and other potential impacts to the organization (changing circumstances).

It is recommended that the frequency of the management review be aligned with the organization’s current structure.  At most organizations, an operational management review or quality management review is conducted.   Best practice would be to align the EMS management review with these meetings and actually integrate EMS into them, as environmental is actually a branch of the organization’s operations anyway.   To ease the process of management review, streamline the meetings by integrating the EMS management review into the organization’s existing structure and follow the frequency already defined.

The Importance of Internal Audits Reply

Environmental, Health and Safety (EH&S) auditing is about reducing risks. EH&S auditing, whether driven by external factors or internal, is an independent, objective review of activity designed to add value to an organization’s operations. Auditing brings a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, operational controls, and processes. Completing proactive EH&S audits can ensure the effectiveness and efficiency of operations, the reliability and integrity of operational information, and the safeguarding of assets and compliance with laws, regulations, and contracts…all of which have a direct relationship to the organizations financial performance.

For example, EH&S efficiencies and the organization’s public image can have a substantial impact from a direct and indirect cost standpoint. A proactive EH&S audit program can drive improved efficiencies which will reduce direct costs (e.g. using less material to create a product) and improve indirect costs (create more in a shorter period of time – energy savings). An EH&S audit program ensures regulatory obligations are being sustained, which, in turn, prevents a negative public image. In addition, an EH&S audit program provides recommendations for improvement in those areas where opportunities or deficiencies are identified.

The intent of EH&S auditing is to provide objective data that assures top management that internal controls are effective and working as intended. An EH&S audit program directly supports risk management by providing an organization with data and the ability to control and make decisions to prevent financial loss and reduce an organization’s EH&S risks.

Sustainability Reporting – “Focal Point USA” Reply

The Amsterdam-based Global Reporting Initiative (GRI) has initiated a drive to get more US-based companies to use their reporting guidelines when publishing sustainability reports.  This drive was initiated on February 1st and is dubbed, “Focal Point USA.”  Of the Standards & Poor (S&P) 500 companies, 230 filed sustainability or other non-financial reports in 2010.  Only 97 of these reports used the GRI “G3” reporting guidelines. 

GRI offers 79 suggested results for companies to report on.  Some are called “core” results and others are “additional” (suggested).  All of these results are lagging indicators – the moment they are measured the results are in the past. 

Many companies are beginning to see the need to look at “leading indicators.”  These indicators are used to drive performance of the sustainability program itself into the future.  Leading indicators come from a number of performance frameworks used around the world.  The most widely used performance frameworks are EFQM (Europe), and Baldrige (US).  Australia, India, China, Japan, and Brazil also have similar frameworks.  CAPACCIO has posted a white paper on leading indicators to provide you with more information. 

Companies really need to use both leading and lagging indicators to have a sustainability that will be around for the long term. It is interesting that many US firms use leading indicators in corporate business performance assessments but do not mention them in their sustainability reports.  The sustainability/corporate responsibility professionals are getting interested in leading indicators to associate their programs with other corporate performance programs.

Performance programs refer to the lagging indicators (results) as “merely the outcome of performance.”  Good performance, as measured by the leading indicators, should lead to better results in the future.

Now that ISO 26000 (social responsibility standard) recognizes the EFQM performance standard, GRI will need to reconsider its insistence on sticking with the lagging indicator-only stance.  Maybe they will hear this message in the Focal Point USA effort. 

Related Papers: “Using Leading Indicators to Drive Sustainability Performance” http://www.capaccio.com/sustainability

LINKS:

Focal Point USA:  http://www.globalreporting.org/AboutGRI/WhoWeAre/FocalPoints/FocalPointUnitedStatesLandingPage.htm

GRI:  http://www.globalreporting.org/Home

S&P 500: http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf–p-us-l–

EFQM: http://www.efqm.org/en/

Baldrige: http://www.nist.gov/baldrige/