New Product Stewardship and Globalization Trends Impacting Businesses

New international product laws and regulations are impacting nearly all industry sectors. According to a report recently published by Ernst & Young, regulatory compliance risk is the greatest strategic challenge facing global businesses in 2008. “The continually escalating burden, as well as ever more complex compliance challenges, means this is still the biggest business risk to be addressed.” The report went on to say that “as companies become more and more global, compliance becomes an even greater challenge, forcing them to manage diverse regulations in different markets. Industrial groups have speculated that by 2010, more than 75% of all electronic products will be sold in countries with legislation similar to the European Union (EU) Directives.”

Recent international environmental laws and regulations require comprehensive product requirements and chemical substance registrations designed to restrict the toxic effects of chemicals in products during one or more phases of the products’ life cycle. The most comprehensive regulations are referred to as “directives,” and have been adopted by the EU. It’s not just EU driving this trend. Similar environmental regulations are being adopted around the world, including China, Taiwan, Korea, Japan, Central and South America, as well as several Canadian provinces, and U.S. states.

Noncompliance is really not an option for companies selling their products internationally. Companies that fail to comply with such directives may not be able to sell their products in the EU and other countries. Market pressures like this now require companies to manage the health and environmental impacts across their products’ life cycles.

Three of the most important new EU regulations are the Waste Electrical and Electronic Equipment Directive (WEEE), the restriction of the use of certain hazardous substances in electrical and electronic equipment, or RoHS and the Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH).

WEEE requires producers of electrical and electronic equipment to register, arrange and pay for a product’s end-of-life collection and recycling. WEEE shifts responsibility from governments and the key enforcing authority to the manufacturers themselves.

RoHS requires manufacturers to restrict the use of certain metals and chemicals beyond a specified concentration value in electrical equipment. These substances have historically been critical components in the production of electronic products.

As I’ve mentioned in earlier posts, REACH impacts nearly all chemical manufacturers. The directive requires companies to identify and manage risks from chemical substances and provide safety information to all downstream users. Specifically, REACH requires every importer or producer of more than 1 metric ton of a chemical substance to register the substance and provide detailed information on the risks, hazards, uses and end-of-life characteristics.

As supply chains continue to become more global, these directives will have a significant impact on companies, their production processes and their ability to compete globally. For example, the U.S. electronics and automotive industries have spent millions of dollars complying with the WEEE and RoHS requirements since 2002, and more recently, U.S. chemical manufacturers, pharmaceutical companies and other manufacturers are working toward achieving compliance with other directives such as REACH.

To insure successful compliance with these directives, organizations need to take a proactive approach. This starts with developing a sound strategy, a regulatory road map and incorporation of information management systems to collect the required data, organize it and enable reporting both internally and externally. We are working hard at ESS to insure our software makes this effort easier, faster, more reliable and reduces the costs of compliance.

Add comment June 25th, 2008

Climate Leaders Helps Companies Meet GHG Reduction Targets

Deere & Company is one of a growing number of companies that have announced plans to reduce their total global greenhouse gas emissions by a specific number — in this case 25 percent per dollar of revenue from 2005 to 2014. The company has committed to the reduction goal in conjunction with its participation in the U.S. Environmental Protection Agency’s (EPA) Climate Leaders program, which Deere joined in 2007.

Climate Leaders is a voluntary industry-government partnership that works with companies to develop long-term comprehensive climate change strategies. Participants set a corporate-wide greenhouse gas emissions reduction goal and annually report their progress to EPA. Through program participation, companies create a credible record of their accomplishments, reduce their impact on the global environment and identify themselves as corporate climate leaders.

Becoming a corporate climate leader can’t be easy for companies in industries such as oil, energy and equipment because direct greenhouse gas emissions are generated from both plant operations and from the final product. Monitoring and collecting data across the organization as well as tabulating and benchmarking against publicly stated goals requires an enormous amount of data integration and reporting capability.

We have been seeing this trend across the enterprise lately, in all industries, as corporate social responsibility becomes a matter of setting and reaching sustainability goals that are expressed in numbers and percentages. Moreover, we’re seeing a need to allow this kind of data aggregation and reporting from mobile platforms as well as from desktop PCs. As a result, we have set out a product roadmap that meets these needs for our customers more completely and fully than any of our competitors. Fortunately, we have the talent on our team to get this done!

Add comment June 19th, 2008

Study Shows Spreadsheets Can Increase Data Quality Risks for Corporate Reporting

Be careful with uncontrolled use of spreadsheets to track and manipulate corporate data. Spreadsheets can become a huge problem for companies that have regulatory reporting requirements or planning requirements, according to a KMPG study. The study concluded that the basis for as many as 95 percent of financial models were flawed. Spreadsheets that collect and manipulate data were deemed inadequate to save companies from corporate risks associated with data quality.

I just finished reading an article in Information Age about analysts at market intelligence company, The Data Warehousing Institute (TDWI), which in 2007 set out to investigate the uncontrolled use of spreadsheets by end-users when undertaking data analysis tasks.

The findings make for sobering reading: of the 200 companies surveyed, including companies of all sizes and from a wide range of industry sectors, 90 percent reported that they were living with the problem of so-called spreadmarts. Spreadmarts are shadow data systems that extract, transform and format data and publish reports.

If you have EHS reporting requirements or if your CSR reporting goals will be measured, you can’t afford to have data aggregated from separate PCs across the enterprise. You must have an integrated platform to collect, analyze and report out uniform data.

In case I haven’t alerted you sufficiently, the article highlights the experience of a major U.S. utility that hiked consumer gas prices by between $200 million and $1 billion due to a mistake in a spreadsheet file. In another example cited in the article, a U.S. mortgage company was forced to write down $2.4 billion in mortgages due to a change control error in a spreadsheet. Spreadsheets over 200 lines long are almost guaranteed to be flawed.

Companies continue to allow employees to take corporate data out of their primary systems, massage it and write it back to a core transactional system because it is very hard to stop that process. We are trying to alert the key decision makers worldwide about the risks associated with inconsistent and poorly manipulated data and encourage the use of an integrated data collection and management platform to reduce the associated complexities, costs and risks.

Add comment June 16th, 2008

ESS’ Greatest Asset, Our People: Maxine Orens

Maxine Orens is ESS’ Reference Program Coordinator, supporting our Solutions Management team from our Rockville, Maryland office, near Washington D.C. Maxine has nearly 30 years experience in the EHS and Crisis Management software industry. She has been with the company since 2002 when ESS acquired Essential Technologies.

This is the second installment of our series ESS’ Greatest Asset: Our People.

1 comment June 5th, 2008

Standard & Poor’s ERM Analysis Expected to Raise Profile of Corporate Risk

Standard & Poor’s (S&P) has released its long-awaited direction on how it will incorporate Enterprise Risk Management (ERM) into its business analysis and reporting. This development is going to impact all kinds of businesses, so they’re going to take it slow: S&P isn’t expected to include ERM into its ratings until Q3 2009. Still, companies should consider reviewing their GRC strategies — or consider developing one.

S&P regards ERM, as:

• An approach to assure the firm is attending to all risks;
• A set of expectations among management, shareholders and boards of directors regarding which risks the firm will and will not take;
• A set of methods for avoiding risk exposure that would be outside of the organization’s tolerance;
• A method to shift focus from “cost/benefit” to “risk/reward;”
• A way to help fulfill a fundamental responsibility of a company’s board and senior management;
• A toolkit for trimming excess risks and a system for intelligently selecting which risks need trimming; and
• A language for communicating the firm’s efforts to maintain a manageable risk profile.

S&P is expected to assure the market that companies aren’t expected to eliminate all risks. But it’s prudent to show that the enterprise’s risks are known and well managed. That’s another reason why an integrated software platform that helps managers monitor and manage risk across the enterprise is a C-suite imperative right now.

Add comment May 21st, 2008

More Companies Finding Benefits from Reducing GHG Emissions

Forward thinking companies are gaining a competitive advantage and expanded profits by leading the way in addressing climate change.

According to a recent report from Goldman Sachs, companies that are leaders in environment; and good governance policies have outperformed Morgan Stanley Capital International World Index by 25 percent. Seventy-two percent of the companies outperformed industry peers.

That’s why I was intrigued by a new report, The Economic Case for Climate Action. It maintains that companies that implement climate-protection programs can enhance their financial performance by cutting energy and materials costs in industrial processes, facilities design and management and fleet management. They can enhance core business value through sector performance leadership and first-mover advantage, gain easier access to capital, improve corporate governance, strengthen their ability to drive innovation and improve government relations. Doing this helps companies retain competitive advantage, enhance their reputation and brand equity and increase their ability to capture market share and differentiate their products. Such programs increase companies’ abilities to attract and retain the best talent; increase employee productivity and health; improve communication, creativity and morale in the workplace and achieve better stakeholder relations.

The report provided examples of companies that are using proactive climate change measures to gain a business advantage. For example:

• DuPont pledged in 1999 to reduce its greenhouse gas emissions 65 percent below its 1990 levels by 2010 and obtain 10 percent of its energy and 25 percent of its feedstocks from renewables. The company made this announcement in the name of increasing shareholder value and delivered on that promise, when, during the same period, the value of DuPont stock increased 340 percent as the company reduced global emissions 67 percent for a savings, to date, of $3 billion.
• ST Microelectronics pledged to become carbon neutral (zero net CO2 emissions) by 2010 with a forty-fold increase in production. Figuring out how to do this drove the company’s innovation, taking it from the twelfth-largest microchip manufacturer in the world to the sixth. ST gained market share, won awards, and believes it will have saved almost a billion dollars by the time it meets its goal.
• Wal-Mart the world’s largest retailer; pledged to reduce energy use at its stores by 30 percent over three years; become carbon neutral; become 100 percent powered by renewable energy; double the efficiency of its vehicle fleet; build hybrid-electric long-haul trucks and sell millions of compact fluorescent light bulbs.

These companies realize that cutting carbon emissions and other greenhouse gases is a winning strategy. Using energy more efficiently not only reduces carbon emissions, and reduces risk and costs.

Add comment May 16th, 2008

Mobile Technology Adds Speed, Efficiency to EHS Applications

ESS is currently building an enhanced mobile framework using the latest Microsoft technology and tools. Joseph Jordan, ESS’ director of Mobile Architecture, is heading up this project for us. This framework will be used to build new and enhanced workflow, data collection, data transfer, and data distribution capabilities.

What are the benefits of utilizing mobile solutions for enterprise EHS management and sustainability? For one, using mobile devices makes data collection and monitoring of critical information faster and easier. This technology also makes workers more productive by giving them the ability to respond to all types of business challenges in real time.

The new framework and architecture we are developing gives organizations real-time access to critical data and information, streamlining compliance activities and improving data integrity. Mobile technology has always made it easier for organizations to collect data from the plant or site level so it can be quickly uploaded into their EHS software databases for analysis and communicated throughout the organization. These new mobile development tools now also make preventative and predictive information including metrics, KPIs and business intelligence reports accessible to the operator’s via mobile “push” technologies to help them better manage their areas of responsibility which were previously only available through the desktop. That’s one big reason why we are excited about our plans to add these new mobile capabilities to our EHS and Crisis Management solutions for air, water, hazardous waste, fugitive emissions, chemical inventory management, auditing, incident management and industrial hygiene. You’ll see more about this in the near future.

ESS has been delivering handheld and mobile solutions for over 10 years, beginning with our Waste Management bar code and waste tracking handhelds and Jordan Systems chemical inventory mobile tools. So this technology isn’t new to us. What’s new and better is the higher quality of information available to the users as well as real time and wireless data transfer, improving oversight and decision making while freeing up more time for other important duties.

Another benefit of this new and advanced architecture platform is that it will also enable our customers to standardize on common handheld devices across the entire spectrum of integrated modules within our integrated sustainability platform. In addition to reducing the aggregate cost of hardware for mobile capability this will also result in:

• Easier and more intuitive data entry
• Enhanced data integrity and automation of compliance processes
• Improved productivity. Simpler data collection effort
• Improved field documentation of incident investigations
• Faster identification and implementation of corrective actions by site personnel

These new enhancements will speed up process management and data collection, improve accuracy for all EHS functions and help ensure regulatory compliance, production uptime and injury free workplaces.

Here’s an anecdote that shows the benefits of a mobile device. Mind you, this isn’t even a crisis — just a normal day to day activity in the life of an operator:

A manager of a waste storage facility is currently offsite, but would like to check the status of the overnight preparations for a waste shipment scheduled to take place later that morning:

The Mobile Approach: The manager is offsite and receives an alert on his PDA or smart phone, enabled with mobile technology. With an icon click, information appears on the screen indicating that there may be a problem with a hazardous waste shipment that is incorrectly labeled. The manager makes a quick call to the plant to inquire about the project status and clear up the issue with the overnight supervisor. Upon the manager’s arrival at the facility, waste drums are promptly re-labeled, loaded and ready for shipment.

Typical Desktop Approach: The same manager, without the benefit of mobile technology, drives to the facility, unaware that a problem exists. The manager logs onto a desktop computer, enters the appropriate application, which requires another login and password; uses a navigation tree to drill down to the report menu; uses a pull-down menu to choose the affected facility; and finally clicks the icon to run the report. That’s when the problem is identified.

Because many compliance activities occur away from the desktop, handheld functionality is a critical link in the compliance automation chain. Thanks to innovators like Joseph Jordan and other members of our development and product management team, you’ll see these mobile technology solutions in our offering in the near future.

Add comment May 9th, 2008

Leading Analysts Advise Organizations to Implement Integrated Solutions

I’ve been beating the drum for integrated sustainability solutions since 2000. Since then we have been building out our solution to encompass all critical environmental health and safety matters, which enables organizations to take a holistic and strategic approach to sustainability. The integrated design reduces complexity, risks and costs by leveraging critical data, information and best practices from a common database for a facility, business unit or across the enterprise.
In the past two weeks, two different industry analysts have been discussing sustainability platforms in the same terms, which tells me that the direction we are taking is the right one.

Michael Rasmussen, a well-respected industry expert and the principal of a consulting service called Corporate Integrity, has long been a proponent of platforms rather than silos. In his most recent blog post, he says that information technology risk management isn’t the be-all and end-all of risk management; it’s only one aspect. He warns that vendors who say they are in the GRC space without an integrated platform may be thrown out of meetings. There can’t be a much stronger warning than that against point solutions rather than integrated solutions.

In addition, at its GRC summit this week, the lead Gartner GRC analyst, Dan Miklovic, presented an overview of the EHS space called “Environmental, Health and Safety: “Your Applications Must be Part of an Overall GRC Process.” Gartner says that EHS information systems must become fully integrated and, when they do, they help organizations by reducing:

• number of applications
• interfaces
• support staff
• IT hardware and
• number of vendors to be managed

That advice aligns with ESS’ approach of reducing complexity to reduce risks and costs.

We are always working with our customers to make sure they get the innovative solutions they need to reach their sustainability, performance and compliance goals. One of the ways we do that is by inviting IT experts and users from some of the world’s leading companies to our user conference, ESS EXPO.08, which is a highly successful event for sharing best practices among our partners and customers. EXPO.08 is coming up April 13-17, and I hope to see you there. This year’s keynote will be AMR analyst Simon Jacobson, who will talk about laying the foundation for sustainability through environmental compliance.

1 comment March 13th, 2008

Report Shows How Manufacturers Are Changing Rules for Use of Chemicals

I’ve been reading the new State of Green Business 2008 report on critical initiatives in business, published by GreenBiz.com. This report shows how organizations are changing the way they do business by changing their operational processes to reduce the amount of toxic chemicals that are used in manufacturing processes.

It’s noteworthy that several ESS clients, like DuPont, were applauded for being at the forefront of significant win-win environmental initiatives.

There is growing interest among industry leaders and other global stakeholders regarding international chemical reporting standards. The European Union already has taken an important first step with its REACH regulations. We at ESS have noted that more organizations are carefully reviewing their processes; and we’re working with our customers and partners, and regulatory bodies to ensure our clients are positioned to effectively address current or future chemical regulations with our software platform.

The report’s authors say there is insufficient data to show how companies are doing, in aggregate, to move the needle in the U.S. on issues like climate change, toxics reduction, water conservation, and resource efficiency. However, there is quite a bit of information about companies that either executed on or committed to address corporate sustainability initiatives. Change is taking place across the board, not just with high-profile global enterprises in the oil and gas, utility and mining industries.

The report examines practices from a wide range of industries. There were a few surprises: for example it notes that some personal care products have been found to contain a surprisingly high number of toxic ingredients.

Another amusing example of coming change is the iconic new car smell that we all admire. It was found to be a byproduct of bromines, lead, chlorine and heavy metals used to manufacture automobiles. Several foreign car companies make cars containing the highest numbers of these substances.

Use of toxic ingredients may pose risks to the consumer, of course; but they have an even greater impact on the companies that use them, prompted by risk-averse investors and corporate stakeholders who are demanding changes even faster than some regulators.

Add comment February 27th, 2008

ESS EXPO.08 to Provide Latest Trends, Innovative Solutions for EHS Software Users

If you haven’t already registered, here’s a personal invitation from me to join us at ESS EXPO.08 from Sunday, April 13 - Tuesday, April 15, at Sheraton Wild Horse Pass Resort outside Phoenix, Arizona.

ESS EXPO.08 is the largest software users’ conference of the year dedicated to Environmental, Health & Safety and Crisis Management. Attendees will see the latest technology innovations from ESS – with up-close looks at new versions of our software (Essential Suite™ version 7.1 and the browser-based version of Compliance Suite™) as well as quick tips and in-depth explanations from the experts who design, develop and support those tools. In addition, our training team will offer training courses that address key regulatory compliance issues and best practices.

Participants will hear the latest news about a variety of Governance, Risk and Compliance issues and information management challenges. Sessions like “Corporate Sustainability: Helping People and Businesses Reach Their Potential” by Microsoft and “REACH – Understanding and Implementing for Compliance” by PTK, Ltd — the firm that co-authored the regulation — provide a brief sample of the topics that will be discussed at this year’s ESS EXPO.

At ESS EXPO, you can meet your peers, exchange best practices and meet keynote speakers Simon Jacobson of AMR Research and racing icon Kyle Petty. Jacobson will provide an overview of enterprise trends, while Petty, of course, plans to talk about NASCAR and business success.

Our business partners will show how they can enable ESS users to achieve even greater success with complementary solutions and services. And finally, ESS software users will benefit from sharing their own ideas and experiences while networking with other top professionals from a wide variety of vertical industries.

ESS EXPO.08 continues the tremendous success of previous EXPO events, which have attracted hundreds of EHS and Crisis Management professionals.

Add comment February 13th, 2008