Governance
EHS Governance has become increasingly important at multinational chemical and energy firms for several reasons-
- Outside Directors are being increasingly held responsible for ensuring that effective Governance Processes are in-place.
- Several high profile EHS incidents have been reminders that Shareholder Value can be destroyed through inadequate Governance Processes.
- Ongoing mergers and acquisitions in these industries have placed added emphasis on ensuring consistency throughout global organizations.
As a result, Corporate Officers and Outside Directors are now focused on understanding if any Gaps exist in their EHS Governance and, if so, to develop plans to close those Gaps.
The components of effective EHS Governance include: Leadership and Involvement; Operational Processes and Measurement; External Relationships; and Emerging Issues Processes.
A three-step process is typically used to strengthen a company's EHS Governance –
- Benchmarking Governance practices at the firm with evolving Best Practices in use by leading chemical and energy companies. No single firm has a monopoly on all the Best Practices – the challenge is selecting a composite of Best Practices from a cross-section of leading companies as the Benchmarking standard. This Benchmarking process will identify Gaps that can be systematically closed.
- Developing Action Plans, including Milestones and Responsibilities, to address the Gaps identified by the Benchmarking. When major shifts are necessary, such as implementing sophisticated Management Systems, the time required can be 3-5 years.
- Monitoring the implementation of the Action Plans and ensure that the changes made are producing the desired results. Adjust the Action Plans as required.
Pilko & Associates has advised clients since 1989 on strengthening their EHS Governance Processes. Our clients have included some of the largest companies in the energy and chemical industries. Clients appreciate our understanding of evolving Best Practices; our track record of objectively Benchmarking a client's status compared to these Best Practices; and our ability to customize solutions which will assure that the desired progress is made.
Our ongoing series of Governance Roundtables bring together Corporate Officers and Outside Directors to discuss trends in EHS Governance and the effectiveness of current Best Practices. These Roundtables keep us at the forefront of developments in Governance. We hold 3-4 of these Roundtables in different cities each year; the feedback from the participants has been outstanding.
George Pilko has written a series of articles for Directors and Boards magazine on this topic during the past 15+ years. Click here for his latest articles.