Top 5 Reasons EHS Systems Increase Profitability

Top 5 Reasons EHS Systems Increase Profitability

Author Peter Hargittay

Environment, Health, and Safety (EHS) systems help companies to automate and streamline safety management, ensure consistency in their processes and protocols, and simplify regulatory compliance. EHS software can help businesses to achieve their targets for environmental responsibility, reduce employee absenteeism, defend against regulatory fines and penalties, and more.
By looking after common concerns such as ergonomics, training, air quality, and safety inspections; as well as tending to specific industry requirements, – employers can maximize the health and well-being of their most valuable resource, – their people.
In fact, it’s virtually impossible to put a price tag on the potentially devastating human costs associated with poor health and safety practices. A single incident can be life changing. It seems that we all know someone who has suffered a serious injury in the workplace and is plagued by chronic pain, disability, and/or depression. The worst-case scenario, of course, is loss of life. Fortunately, safety practices have evolved to the point at which workplace fatalities in the most developed countries are at all-time lows.
There is a common myth suggesting that safety measures result in net costs to the companies that implement them. We sometimes hear accusations that a particular company “cares more about its profits than the safety of its employees.” Although that might unfortunately be true in some cases, – the reality is that safety and profitability don’t necessarily operate in opposition to one another. In fact, companies with the strongest cultures of health and safety tend to be substantially more profitable and they consistently generate higher returns to their investors than their less diligent counterparts.
EHS systems provide a critical tool for companies seeking to establish that winning mentality about environment, health, and safety. By providing a structured framework, data collection and data analysis capabilities, and automated workflows; EHS software ensures that company personnel are proactively getting the job done, – treating environmental, health, and safety issues with the importance they deserve.
Here are five specific reasons why EHS systems results in higher profits:

Reason #1: Avoid Legal Liability
For better or worse, we live in a very litigious society. The threat of litigation often compels companies to implement measures aimed at reducing the likelihood of civil suits. Whether legal action originates from a party who had been legitimately injured, or from a disgruntled employee or other opportunist; companies that have robust systems in place for managing health & safety will be better positioned to defend themselves against such suits.
While liability insurance typically pays for legal defense and covers settlement costs, such claims may result in higher premiums going forward. In addition, businesses can suffer reputational damage because of litigation, – particularly if a plaintiff has incurred serious injury and the incident has been reported in the press.
EHS systems provide evidence that your company has effective environment, health, and safety measures in place; that you take such things seriously, and that you have documented your policies and activities. The mere existence of such systems and processes serves as a first line of defense against any potential litigation.

Reason #2: Prevent Regulatory Action
In much the same way, EHS systems provide evidence of due diligence to regulatory agencies such as the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA), and similar agencies that operate at the state or local level. EHS provides a framework for ensuring that the proper training takes place a regular basis, that inspections have occurred in a timely manner, and that regulatory compliance is taken seriously by your company.
As a rule, inspectors are not aiming to find fault in cases where there is adequate reason to believe that health, safety, and environmental regulations are taken seriously. By implementing a robust EHS system, companies can minimize the likelihood that they will incur fines or penalties from regulatory agencies.

Reason #3: Let Customers Know You Care
More than ever before, customers want to know that they are doing business with companies that care about people and the environment. Green energy certifications such as Leadership in Energy and Environmental Design (LEED) and the adoption of renewable energy sources are points of pride for many for-profit organizations. 3M pioneered this philosophy in the 1970s with its “Pollution Prevention Pays” campaign, known by company insiders as “3P”. The company claims more than $1 billion of resulting savings since the program’s inception. 3P has also earned the company accolades and loyalty from its customers.
Today, environmental stewardship is increasingly important to consumers. Employees, likewise, can take pride in working for companies that proactively manage their impact on the world around them. Companies wishing to take that responsibility seriously can actively manage their impact with a structured, data-driven EHS system.

Reason #4: Keep Your Employees Happy (and Safe!)
As we commented earlier, most business leaders understand that people are their most valuable resource. When employees arrive at work feeling confident that their well-being is taken seriously, they can be more productive. They also tend to stay in their jobs longer, which drives turnover down and results in lower costs for recruiting, training, and onboarding.
For obvious reasons, any reduction in health and safety issues in the workplace also results in lower absenteeism. That makes for smoother operations and more manageable workplace environment.

Reason #5: A Culture of Safety = Higher Returns
Here on the Intellect blog, we have written a great deal about corporate culture, – specifically, the value that emerges because of creating a strong culture of quality. Very much the same thing can be said of environment, health, and safety. In a 2016 study published in the Journal of Occupational and Environmental Medicine, researchers tested the hypothesis that companies exhibiting a strong record in health & safety generally performed better financially as well.
That study examined the market returns generated by a group of companies recognized for their leadership in health and safety and compared those returns to the aggregate of all S&P 500 companies. In the period covered by the study, the S&P 500 returned a total of 105 percent. The selected companies that had been recognized as health & safety leaders returned an average of 333 percent.
That belies the myth that environment, health, and safety are net costs to an organization. In fact, a strong culture of safety correlates with financial strength and profitability.

If your organization is seeking to establish better controls and processes for the environment, health, and safety; or if you’re aiming to develop a more data-driven approach to EHS, Intellect can help. Contact us today to discuss your project, and learn how Intellect’s flexible, highly configurable software solutions can be tailored to address your organization’s unique EHS requirements.

What’s next?

Now that you’ve learned about the top 5 reasons EHS system increase profitability, learn about “How Does Culture of Quality Impact Profitability“.