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For business leaders, the enduring outcomes of the pandemic era, from persistent supply chain snarls, hybrid work modes, and labor shortages to the entrenchment of stakeholder expectations for enterprise sustainability, has made one thing clear.
Our corporate immune systems are weak.
Indeed, reactive risk management frameworks, even when undergirded by a wealth of standardized mitigation protocols, are demonstrably ill-equipped to meet businesses’ actual, anticipated, and unknown needs. But that doesn’t mean enterprise resilience, however intangible it may seem, is unattainable.
The key to building it lies with improved planning and preparation; processes that, when well executed, lend themselves to a more efficient, effective, and eventually more proactive risk management and mitigation framework. For business leaders to maintain their footing against internal and external risks, including those that affect Environmental, Social, and Governance (ESG) performance outcomes, they will need to focus on operational processes and a heightened level of employee engagement which requires the application of advanced digital technologies to strengthen their operational data collection, management, reporting, and especially analysis capabilities.
To execute this digital transformation, the Environment, Health and Safety (EHS) function is a natural launchpad. EHS leaders and their teams possess unique experience in cutting across and synthesizing cross-functional teams as well as expertise in the management and mitigation of financially relevant workplace safety, human capital, regulatory compliance, and climate-related risks exacerbated in the pandemic era. Specifically, it’s their judgment of which EHS risks that merit attention, their knowledge of the efficacy of EHS risk mitigation measures, and their access to troves of historical EHS performance and compliance data that, together, will form the basis of an enterprise resilience-building effort.
And with some 70% of leading ESG performance metrics falling within their remit, EHS leaders are inherently equipped to spearhead the design, development, and operationalization of a data-driven enterprise sustainability program. Juggling these dual responsibilities, however, is easier said than done—at least without the right technological reinforcements.
Indeed, EHS professionals will need unobstructed access to enterprise-wide operational data before they can assume leadership of a credibly proactive, more resilient risk management effort. They will need mechanisms that empower them to handle the management and mitigation of enterprise risks over their full lifecycles, too. And they will need tools that not only enable continuous analysis of EHS and ESG performance incidents and trends, but also augment their EHS and ESG performance management decision-making processes.
Manual, spreadsheet-driven data management, analysis, and reporting processes—while effective for strictly reactive EHS risk and ESG performance management efforts—will not only fail to provide this functionality, especially as an organization grows in size and sophistication. Cloud-based enterprise data collection, management, and reporting platforms, particularly when equipped with artificial intelligence (AI) and machine learning (ML) capabilities, offer a scalable solution.
Cloud-supported data management systems are uniquely positioned to facilitate enterprise-wide employee engagement. And they are capable of automating the collection, collation, digital tagging, and storage of operational data within the remit of the EHS function, as well as data from legal, HR, operations and logistics, IT, and other departments that describes ESG performance. These platforms support data retrieval and internal reporting, too. Together, these capabilities help functional leaders limit risk of human error and delay when recording EHS incidents and ESG performance failures, the deployment of remediation measures, and verification of those measures’ outcomes.
These are essential competencies for a more agile, but nonetheless reactive risk management and mitigation framework. The path toward proactivity—toward resilience—runs through AI, ML, and other algorithmic software applications.
By applying descriptive, predictive, and prescriptive analytics against troves of historical EHS and ESG performance data, these advanced solutions strengthen both the efficiency of enterprise risk management and efficacy of risk mitigation measures.
For example, consider the case of a facilities engineer that discovers and documents a potential source of inadequate indoor air quality; a hazard that presents clear workplace safety, regulatory compliance, climate, and ESG performance-related risks.
Well-trained AI can apply descriptive analytics to assess the accuracy and completeness of the hazard report that the engineer files. It can apply predictive analytics to help the engineer determine the likelihood and severity of the identified hazard. And it can leverage descriptive, predictive, and prescriptive analytics to aid the engineer’s decision to escalate the report, help responsible parties determine whether intervention is necessary, recommend the appropriate remediation measure, and assist with the evaluation of the remediation’s life cycle outcomes.
With ESG performance management, too, the value-add of AI-equipped, cloud-based data management and reporting platforms is much the same.
EHS leaders and other functional program leaders tasked with measuring, monitoring, and managing assigned ESG key performance indicators (KPIs) will be able to automate their data collection methods. They will be able to employ AI-driven analytics to not only delineate forward-looking performance trends, but determine the efficacy of ESG performance management measures. And with cross-functional communications channels at their disposal, they’ll be able to streamline and maximize the impact of the distributed ESG performance management effort.
These technologies, to be sure, are no crystal ball. What matters, though, is that business leaders are capable of evaluating the probability and severity of risks that may materialize, and that they have in place the mechanisms to respond swiftly and conclusively to those that do. And it’s by adopting the digital tools that afford EHS leaders and other functional leaders with the penetrating visibility and cogent direction they need that resilience will be built.
Donavan Hornsby has dedicated the past 20 years of his career to the advancement of Environment, Social & Governance (ESG) principles and best practices. Serving as Chief Market Strategy Officer at Benchmark Digital Partners (brand owner and service provider of Benchmark | Gensuite®), Donavan provides strategic direction for global business/market development and product leadership and innovation for the organization. In addition to executive leadership responsibilities, Donavan is an active thought leader and member of cross-industry efforts to advance and promote the impact of and best practices within ESG.