Experts Cite Growing Popularity of Integrated Platforms

For quite a while now, I’ve been advocating that companies move to a unified software platform to simplify EHS risk and compliance, centralize data into a unified repository and manage data enterprise wide.

Last week, I received a briefing about the capital markets from a firm in our space that specializes in M&As and got a clearer picture of how they view compliance software. The presentation traced the history of compliance initiatives back to pre-SOX days (when we started ESS). It showed the hockey stick growth of compliance as a tactical matter, characterized by information silos, duplicate entities and limited compliance visibility. It shows that compliance has now emerged as a strategic imperative in the enterprise. Industry analysts like AMR have long ago embraced the concept. Now it’s gaining acceptance among other compliance software companies.

The presentation goes on to say that the compliance space is growing 2-4 times faster than any other in software and “no other software application category is growing as quickly. The next generation of compliance software will transform ‘converging’ point solutions to fully integrated compliance platforms, which will sustain and accelerate the rate of growth and demand in the coming years.”

AMR Senior Research Analyst Simon Jacobson, the keynote speaker at ESS EXPO.08, recommended that EHS data should be consolidated in a common database that efficiently collects information, ties it together and communicates it throughout the enterprise. Dow Chemical successfully leveraged that strategy to save more than $2 million and enabled all of the company’s U.S. facilities to use a common reporting process.

Ultimately, this affirms that growth in our space will occur not only because compliance is a strategic objective of nearly every company. It will happen because executives worldwide have discovered that compliance helps companies lower costs and reduce operational risk.

Add comment October 14th, 2008

Fallout from Bailout Bill Will Bring GRC Process into Greater Focus

Our longtime friend Michael Rasmussen of Corporate Integrity has once again sent a thoughtful email to advise us that the execution of Governance, Risk and Compliance policies will be changing again after Congress passed the financial bailout legislation last week. More and more investors and stakeholders will demand greater oversight of business operations because of what has happened to Wall Street and the investment banking industry. The current financial “spill” is not unlike an oil spill; it may be inadvertent, but it leaves behind a toxic environment.

The speed with which events multiplied to destroy century-old firms tells us that companies cannot afford to have systems that are outdated or siloed anymore. Risk can come from anywhere, at any time. Managing risk well demands an investment in the latest information technologies for collecting, analyzing and reporting information. Organizations all over the world, especially large global enterprises, will not be able to raise capital without proof that they are adequately managing business risk and market risk. In addition, stakeholders are looking to management to enhance EHS sustainability for more favorable corporate responsibility reporting.

Businesses that must comply with environmental, health and safety regulations are not immune to this trend. We have seen increasing year-over-year regulations for the past thirty years. This trend is not going to stop; rather, regulators are now empowered to both adopt and enforce an increasing number of regulations on behalf of their constituencies.

Here’s a list of questions Rasmussen suggests business leaders ask themselves right away:

• Do you have the correct risk management oversight across business operations and relationships?
• Do you have appropriate compliance processes?
• Do your compliance processes get to the principle of the matter; or are they simply about checking a requirement?
• Are the values and code of conduct of the corporation adequately defined and communicated?
• Are people properly trained on the expectations set before them?
• Are risk and compliance managed across business relationships?
• How do Governance, Risk and Compliance practices intersect and support corporate responsibility?

We have been urging that businesses ask these questions. It is more important than ever in the current environment. Are your GRC processes set up to be a holistic ecosystem or are they just a set of applications that don’t prompt your company’s managers to talk to each other or the C-suite?

Add comment October 6th, 2008

ESS Attends Oracle OpenWorld to Promote Enterprise Sustainability Issues

I’ve just returned from a trip to China, where there are some new developments taking place in that market. I’ll be sharing details with you later; but for now, I’m really pleased to be in San Francisco to attend Oracle OpenWorld this week. Oracle is doing some exciting things at this year’s user conference, including launching an enterprise sustainability program called the Green Room. There is an entire track of Green Room sessions exclusively focused on sustainability, environmental stewardship and the business of green. ESS will be participating in several Green Room activities.

Here’s a list Green Room programs, including:

• The Green Room
• The Green Marketplace
• Empower the Green Enterprise Awards
• Ready. Set. Connect.

But wait, there’s more. Tomorrow, I am going to participate in a pair of presentations with Oracle senior executives on important sustainability issues: I’ll join Ed Abbo tomorrow morning to present a session entitled, Empowering the Green Enterprise; after lunch I’ll co-present with Hardeep Gulati on Environmental Health and Safety in the Context of Enterprise Applications. We’re pleased for the opportunity to share the stage with these respected IT experts.

Also, I’ll be on hand this afternoon to attend the inaugural “Empower the Green Enterprise” Award ceremony, where Oracle executives will recognize organizations that have successfully used information technology to achieve sustainable operations.

Finally, ESS is going to make a big announcement at OpenWorld on Tuesday. I’ll be blogging about the details shortly after the announcement. Suffice to say it’s a big deal and we’re all pretty excited about sharing the news with you.

If you are attending OpenWorld, I encourage you to stop by ESS’ exhibit booth at Oracle’s Green Marketplace at the Yerba Buena Center for the Arts, adjacent to the Moscone Convention Center. We look forward to seeing you here.

Add comment September 22nd, 2008

ESS Announces Publication of “Executive Ethics”

This is the first time we’ve been asked to contribute to a book, and the reason I said “yes” is because it’s a book on corporate ethics, which has always been one of the most important subjects in my life. In fact, when I started the company I did so out of a concern for the ethics involved in preventing refrigerant emissions from releasing CFCs into the ozone layer. That sure seems like a long time ago, in the environmental Dark Ages. Or maybe it’s better to call it the beginning of the Renaissance of a concern for sustainability.

At any rate, I’m pleased to announce ESS’ contribution to the recently-published book, Executive Ethics: Ethical Dilemmas and Challenges for the C-Suite.

Recognized subject-matter experts and business leaders were invited to provide commentary on topics that apply various aspects of business ethics to executive decision making. I was honored to contribute the chapter on environmental ethics, which summarizes social and political movements and events that transformed environmental concerns from a stakeholder concern to a matter of business ethics. Issues like major industrial accidents, conversion of atomic (and later, nuclear) power from military to commercial use and the development of EHS information technology, like ESS software, helped drive greater awareness of and benefits from incorporating corporate responsibility strategies into executive decision making.

The book, published by Information Age Publishing, is now available from leading retail and online booksellers, including Amazon, Barnes and Noble and Borders.

Our participation has already paid dividends for our company, as the book’s worldwide acclaim has provided a new forum for ESS - already acknowledged as the global industry leader - to be recognized as a thought leader.

We run our business with the conviction that what we are doing is not only good business, but good for everyone around us. We’re a cog in the great machine that can create and preserve global sustainability.

Add comment August 20th, 2008

Report Tracks Growth of Corporate Sustainability Reporting

What are the implications when an organization forms solely to research and analyze sustainable investments? It means that institutional investors are requiring corporations to present sustainability performance data in their corporate responsibility reporting. If you haven’t already heard of the organization, meet the Sustainable Investment Research Analysts Network (SIRAN), which has just issued a report on the corporate responsibility initiatives of the S&P 100 companies.

According to the report, more than half of the U.S.’s largest publicly traded companies now report on their sustainability efforts. Over a third integrate elements of the Global Reporting Initiative (GRI) sustainability reporting guidelines. The GRI guidelines establish a standard for what should be in a sustainability report. Clearly this group puts pressure on the rest of the S&P 400 to “belly up to the bar.”

To me, the existence of a group like this demonstrates the extent to which sustainability initiatives have graduated out of Environmental Health and Safety departments into the corporate boardroom. Companies are being watched for their efforts to become sustainable and judged based on publishing real metrics, not glossy photos.
Out of the 100 companies:

• 86 have corporate sustainability sites, a 48 percent increase from 2005
• 49 produced a sustainability report in 2007, up 26 percent from 2005
• 41 incorporate GRI standards, a 71 percent increase from 2005
• 34 include a GRI Index in their report, up 70 percent from 2005

The SIRAN study says a sustainability report must include data covering three or more areas of corporate responsibility performance or execution on corporate governance initiatives.
What does this mean? It means your organization’s EHS data needs to be defensible in front of an industry analyst if it courts both institutional and individual investors.

Add comment July 23rd, 2008

Chemical Companies Face Both Data Management and Communications Issues from REACH

The biggest challenge in the new global regulatory environment created by REACH will be informational, according to Marc Dillon our Senior Product Manager. In order to be in compliance, chemical manufacturers will need to have all their information readily available in a single location that is auditable and verifiable.

The first step in managing this aspect of the challenge is to simply identify what information is actually needed. We suggest working with stakeholders in the organization to identify sources of information, gather up that data, evaluate the completeness and then try to fill in any existing holes. But maintaining and managing all this information can create its own set of challenges unless you know what to do with it.

Dillon recommends storing the information in a single database that allows users to query the information in multiple ways, view the information and then create the necessary reports. For example, with REACH you need to have information available for submission to the European Chemical Agency’s (Helsinki) IUCLID-5 application (this is the International Uniform Chemical Information Database, which serves as a common format to submit pre-registrations and registrations).

Our Essential Suite™ lets users export information out of their own database and put it into a format that is accepted by IUCLID-5. This is a time and, more importantly, error saver compared to the alternative of going to the agency’s website and filling out forms manually. But you wouldn’t want to buy something for a single use, and we’ve been careful to design Essential Suite so the information it collects can be used in many ways.

The advantage of a multiple-use system like Essential Suite, says Dillon, is that the information is available and can be accessed for other needs as well. The same system and information can be used to do things like generate labels and manage MSDS for chemicals that are stored and tracked in the system in order to comply with product stewardship initiatives.

Aside from the obvious benefit of serving as a data repository, Essential Suite can be used for multiple EH&S needs such as crisis management, risk management and compliance because the required information for associated reports is simply an output of the system.

REACH and other product stewardship initiatives are creating challenges related to what one expert refers to as the “communications circle,” or information sharing between external and internal business partners.

We regard REACH as a compliance issue; but it’s just as important to recognize that it is a supply chain issue. The entire supply chain is affected by REACH and everyone in that supply chain has to be in the know and in compliance for it to work. This is another case in which the information you have collected once, can be managed and output again.

Add comment July 8th, 2008

Australia Implements New Regulation for GHG Reporting

Effective this month, Australia has a new National Greenhouse and Energy Reporting System that’s designed to monitor the emissions that cause climate change. Australian businesses that exceed greenhouse gases (GHG) limits will be required to monitor, measure and report emissions data to the government by 2009.

It’s the first step of Australia’s emissions trading program, which requires robust and comparable information –much of which is already demanded by the public.

Katie Lahey, chief executive of the Business Council of Australia, wrote last October in “The Age” newspaper, “…businesses cannot afford to sit back and wait for trading to formally start before addressing the implications of the new requirement on their strategies and operations. It’s a fundamental long-term transition from a high-emissions to a low-emissions world economy.”

This year, Australia will quantify emissions produced by large corporations. Businesses that emit more than 125 kilotons of greenhouse gases or consume or produce more than 500 trillion joules of energy will be required to collect data to meet annual reporting requirements.

Individual facilities that emit more than 25 kilotons of greenhouse gases, or use or produce 100 trillion joules of energy will also need to collect and report data. Twenty-five kilotons of greenhouse gas emissions is the equivalent of the annual emissions of more than 6,200 cars; 100 trillion joules equates to the annual energy use of about 1,900 households.

While the National Greenhouse and Energy Reporting Act takes effect this month, businesses will have until August 31, 2009 to register and until October 31, 2009 to submit their first annual greenhouse and energy report.

Most Australian corporations already report their GHG information because of increasing pressure from stakeholders, but the new program will standardize what is monitored and measured.
A rapidly growing number of jurisdictions worldwide are adopting new standards for GHG reporting that require robust information management. The ESS GHG/Carbon Management Solution is designed to help businesses comply with regulations in Australia and most other countries worldwide. Whether your organization is conducting internal baseline calculations or complying with laws that require greater levels of transparency and accountability, integrated information management systems are a necessary component of a corporate carbon management plan.

Add comment July 2nd, 2008