Corporate standards: good enough in today’s world?

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Have you ever questioned whether or not your corporate standards were comprehensive enough to ensure compliance globally? Do you feel confident that your facilities all over the world have all of the right tools to be compliant locally? In May 2012, hundreds of EHS Managers from some of the world’s largest multinational organizations tuned in to Enhesa’s recent webinar, Going Beyond Corporate Standards to Ensure EHS Compliance. It was an hour dedicated to exploring these questions and more on the case for corporate standards, followed by a practical demonstration on how to tackle the toughest gaps between corporate requirements and local regulations worldwide.

The webinar was presented by Enhesa Director, Paul Beatley, and Enhesa’s special guest speaker, Dawn Horst, Global EHS Audit Program Manager of Ingersoll Rand.

In order to compare and gain insight on the world’s top EHS Managers’ perspectives on corporate standards, Enhesa conducted a survey to gather the general opinions on the issue and analyze current company practices. Those results are incorporated throughout this article.

The basis for corporate standards: when were they created and why?

Corporate Standards were first envisioned during the 1980s, when the world saw trends towards a more global economy.  Corporations began to expand their operations outside their home countries, and discovered that compliance became exponentially more difficult as expansion into new territories increased. Lack of legislation or access to it, cultural miscommunication, and varying government bureaucracies were just a few of the issues that contributed to a need for a standardized methodology regarding EHS compliance.  In the 1990s, corporations were advised to develop a single set of stringent corporate standards to apply consistently throughout their operations around the world. In fact, over 90 percent of Enhesa’s preliminary survey takers responded that their company was one of the many that established such corporate standards.

Furthermore, during this time, the most heavily regulated areas of the world were primarily the United States and Europe, which meant that most of the emerging standards were derived from EU or US laws and practices. As seen in figure 1, almost 60 percent of survey respondents answered that their company’s corporate standards were initially developed using US and EU regulation.

Thus, the development and use of such corporate standards for EHS compliance made sense in many ways for companies in the 20th century, but trends in the past ten years have proven that relying solely on such corporate standards may not be enough in today’s world.

Recent regulatory trends

The 21stcentury has witnessed a steep rise in EHS regulation all over the world. In 2006, for example, Enhesa tracked 374 new EHS laws and regulations in Europe, Latin America, and the Asia-Pacific region combined. In 2011, that amount more than doubled (see figure 2), with the Asia-Pacific region alone accounting for 266 new laws and regulations. Enhesa expects Asia Pacific to reach over 400 in 2012.

Enhesa has also seen that nations around the globe are keen to follow the trends and regulatory frameworks of other countries but are adapting them to take into account local and regional differences.  For example, many nations have followed the European example in developing laws for handling end-of-life products, or chemical regulatory schemes based on the EU REACH model. However, there are modifications in most cases. Enhesa has seen this type of variation through its GHS Tracking Service, which currently tracks regulatory and policy changes in over 75 countries worldwide. Although many countries have adopted GHS in an attempt to streamline chemical regulation, almost every nation has its own exceptions.

What happens when local regulations deviate from your corporate EHS standards?

Enhesa’s survey results pointed out that over half of respondents with corporate standards said they considered them stringent enough to deal with all global situations. On the other hand, of those who reported using corporate standards for compliance, 70 percent said they had encountered local or national requirements in various parts of the world that were stricter than their corporate standards. Forty-two percent said they had been cited for EHS violations in a foreign country, and almost half reported that the subject of the noncompliance was not covered in their corporate standards.

For example, a major oil company refinery operating in Victoria, Australia, was fined for three spills of fuel oil from a jetty. In announcing the fine against the company, Mick Bourke, chairman of the Victorian Environmental Protection Authority, said the company “needs to ensure that they not only meet their standards, but go beyond that and meet the standards the community demands.”

Among these cases and others discussed in the webinar, it is increasingly apparent that corporate standards may not be completely sufficient to meet the needs in all parts of the globe. It is clear that when the number of laws and regulations is rapidly increasing, when countries are getting tougher about enforcing their laws, where key regulatory definitions may differ from western norms, and where differing cultural practices may actually prohibit things that are encouraged in other areas of the world, corporate standards may no longer be enough to prevent noncompliance and enforcement actions against the organization.

Are corporate standards still important?

The simple answer is YES. Although we’ve discussed some of the weaknesses of corporate standards, we cannot ignore the fact that there are strong advantages to having a corporate mandate with minimally acceptable standards regarding EHS issues.  They are extremely useful and advisable, especially where EHS law is still not well developed or enforced. Furthermore, corporations and their officers can still be held liable in some countries on the basis of failure to follow industry best practices or customary international law, even if their actions or inaction doesn’t contravene with existing local laws and regulations. In these areas corporate standards may provide the basis for avoiding liability.

In addition to adding a necessary layer of protection, having corporate standards is an excellent way to instill corporate values throughout the organization and ensure business continuity. Standards can help to streamline business processes and further promote the overall ethics of day-to-day business. Moreover, corporate standards can be vital in promoting and enhancing the reputation of the company, which not only enhances the company’s public image but also improves relations with stakeholders in pursuing a more sustainable business model.

Thus far, it has been argued that corporate standards may not ensure compliance but are still vital in today’s world. This begs the final question: how can companies incorporate both corporate standards and local regulations into one approach?

How to achieve the balanced approach

Ingersoll Rand’s approach became the practical case study and focal point of the webinar. As a leading multinational with a diversified industrial product line and locations in 54 countries around the world, Ingersoll Rand has evolved its EHS management program to meet the demands of their global reach. In the past decade, Ingersoll Rand grew to understand that their EHS program was too US-centric, too focused on manufacturing, too “one size fits all,” and very expensive.

Dawn Horst, Global EHS Audit Program Manager of Ingersoll Rand, explained how Ingersoll Rand found those weaknesses and revolutionized their program into an EHS management system that incorporated a risk-based approach, performance assurance, a site-specific process to incorporate facility level needs, and a performance-based assessment. Acknowledging the need to combine corporate standards with local regulation, Ingersoll Rand aligned their corporate standards into Enhesa’s ten thematic module approach in order to merge the two into the same tool for self-assessments. Dawn summarized the components of a successful program as “process & compliance + culture = results.”

Enhesa concluded with a vision of the ideal corporate standard: one that is independent of any one national scheme, is applied consistently across all countries, is able to address all areas of environment, health and safety, incorporates local standards, and is kept up-to-date with changes.

How Enhesa can help you to achieve the balanced approach

Enhesa brings years of experience to helping corporations meet these challenges. According to Enhesa, a balanced corporate standard approach consists of identifying the best practices from different countries and allowing for local deviations. Here are a few examples of how Enhesa has helped several companies reach their corporate standard goals:

  • Provided targeted research on applicable regulatory requirements relative to corporate standards
  • Reviewed corporate EHS standards against local regulations to identify weaknesses, opportunities for improvement
  • Drafted  global corporate EHS standards on basis of needs assessment
  • Benchmarked company standards against industry best practices

Enhesa’s verification and monitoring services further complete the process for evaluating and maintaining compliance. Enhesa Audit Protocols and Monitoring Reports, prepared by highly trained legal and regulatory consultants, provide organizations with the background and context they need to succeed in over 150 jurisdictions around the world, along with crucial updates on changing EHS law and requirements.

Enhesa’s new Corporate EHS Standards Forum—join us!

Following the success and interest in the subject generated from the webinar, Enhesa has recognized a need to expand its services to foster the development of corporate EHS standards for multinationals worldwide. Enhesa has established a forum for corporate EHS managers on corporate EHS standards. The goals of the Forum include facilitating dialogue and benchmarking between members through an interactive platform; providing help in drafting, maintaining or implementing corporate EHS standards; guidance in determining whether the standards are appropriate and cover the right subjects; assistance in rolling them out globally; and more.

More information on the Forum is provided here in this issue of Enhesa Flash.

About enhesa

Enhesa is a global environmental, health and safety consultancy, providing EHS regulatory compliance assurance support to industry worldwide. Having to identify, understand and assure compliance with a multitude of legal requirements is a fact of doing business in today's global marketplace. Having said that, we realise that this is often easier said than done, which is where we come into the picture. Enhesa has been helping business and industry ensure ongoing compliance for years, and we have developed a range of products and services tailor-made to the needs of our clients. Wherever your business is located, Enhesa's team of highly trained and experienced, multilingual consultants is in a unique position to keep you ahead of the latest regulatory and policy issues as they unfold.

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