POSITIONING EH&S IN THE POST-ENRON/ANDERSEN ENVIRONMENT
Relative to the specific climate for EH&S thinking and initiatives, EH&S executives should expect a number of changes in CEO, senior executive and Board demands for scrutiny, accountability and public reporting.... Gaining a greater understanding of what is happening to Governance itself and then applying that understanding to EH&S is going to be a unique challenge.
BOARD GOVERNANCE ELEMENTS AND KEY CONSIDERATIONS FOR EH&S EXECUTIVES:
While 'Governance' is receiving considerable business attention, executive understanding of what is actually driving Governance is not in many corporations. The fact that ENRON/Andersen was such a shock to the system dangerously implies that very few sitting board members understand what 21st-Century Governance means and how the process is rapidly changing. In terms of business evolution, there are two underlying conflicts being brought to bear:
First, there are both confusions and conflicts between the concept of Governance vs. the capability and capacity of Board members to effectively undertake it. This has already created a critical (and behaviorally, little understood) overload on the Board's time, charter, resources, etc., the resolution of which is likely to involve the devotion of resources to staff key critical Board functions. At present, crisis conditions and/or bankruptcy and/or takeovers are the only precedent for such actions. However, given current conditions of public distrust and skyrocketing corporate liability, we see nothing that can stop independent resource requirements from further advancing.
Second, at issue is the resolving of Governance conflicts inherent in Board management since the beginning of the Industrial Age: 'expansion through access to resources' vs. 'balanced societal costs for a shared quality of life.' Most of the present 59 global conflicts (as identified by the National Defense Foundation, Alexandria, VA) have deep roots in this type of polarization. By nature, commercial corporations attempt to plan and implement their plans across conflict's borders. Successfully doing so requires a long-term strategy that, under the American system of capital markets, has been deeply crippled since the mid 1970s by the artificial demands of Quarterly Financial Reporting.
It is within this arena that EH&S issues intensely compete for executive attention (especially the near-daily need to out maneuvering current and threatened competition). However, the companies that 'figure this out' over the next five years are each going to win major new market share, world presence and profits.