EHS Digital Solution Evergreening 101: Use Case Compliance Tasks

What is Evergreening? Why is it Important?

Evergreening, as you might imagine, is keeping things fresh. In a digital system, evergreening is the process of updating content in a compliance tool to keep it accurate and useful. When a new digital tool is implemented, the content should not remain static. Master data, such as permit conditions, must be updated to keep the system accurate and useful. This task is typically an administrator or “super user” task to maintain the system rather than normal usage. The process of evergreening applies to all types of content such as regulatory requirements, emission calculations, procedure versions, or waste transporters.

This article will focus on keeping your compliance tasks evergreen, as these are often driven by regulations and permits that are routinely updated, requiring changes in either task language, task frequency, or referenced regulatory citation to keep content evergreen. However, similar principles apply to all types of content.

Evergreening Best Practices

When Should Evergreening Be Done?

Compliance evergreening should start as soon as possible after a renewed or revised permit is issued or after regulatory changes are final. The goal is to have the updated and accurate content in the system as quickly as reasonably possible to minimize risk and the amount of time that the information in the digital system does not match the compliance requirements. It may be worth trying to streamline the evergreening process where possible or to allocate resources to support evergreening. Below we discuss some best practices to optimize evergreening.

Who Should be Involved in Evergreening?

A collaborative effort is key for compliance task evergreening. The following stakeholders should be involved:

• The EHS professional responsible for the site must be involved.
• Operations or maintenance personnel who will be interacting with the finished content in the solution should be involved in a review of the content before it is final.
• External subject matter experts may be contributors, particularly if site-specific resources do not have time to be involved with every step of the process and are instead serving as reviewers.
• Corporate EHS staff may be helpful with evergreening if they support permitting and are familiar with site methods of demonstrating compliance.

To maintain consistency and promote efficiency, it is important to both understand and implement the business rules used for due dates and other content in the system. In addition to understanding the required changes driving regulatory, permit, or site changes, a refresher on the business rules is recommended.

How Should Evergreening be Accomplished? Simple tools to support Evergreening

It may be helpful to use a tool to identify changes in the permit to increase accuracy, to eliminate human errors, and to increase transparency of the evergreening process. This can range from a spreadsheet comparing the data to a technology tool that automates identification of changes. A copy of the comparison can be part of a strong quality assurance review process and a resource if any questions arise later related to how certain permit requirements changed and how those changes were captured.

For efficient reviews a recommended part of the evergreening process is flagging which conditions or requirements have been updated.  Additional review can then be directed to conditions or other content that has been updated. It may be helpful to have specific flags for content that is new, updated, unchanged, or is being deleted as part of the evergreening process. A deleted flag in particular gives a reviewer a chance to consider whether the deletion is accurate. It is much easier for a reviewer to object to a noted change than it is to notice something is missing and comment on it as part of a review.

Evergreening should be performed with a standardized process and quality assurance procedure checklist to ensure consistency. Using a set process can avoid skipping critical steps or spending time on tasks that are not valuable to the process. Reviewers may be new or have months of time between reviews, so a standardized checklist for quality reviews can focus their efforts. Examples of correct content or brief descriptions of business rules can be included as part of the checklist. The checklist should be refined over time as new issues are encountered. Just like the content, quality tools like checklists should be refreshed.

Summary

Evergreening is a critical administrative task to revise and update data in a digital solution. An effective evergreening process supports companies EHS programs. An effective evergreening process includes evergreening as soon as possible, involving all key stakeholders, and structuring the process to increase accuracy, efficiency, and consistency.

This blog has provided a brief discussion of evergreening your EHS compliance tool content.  ALL4’s Digital Solutions Practice has extensive experience helping clients scope, select, implement, maintain, and upgrade various types of digital tools. If you would like to discuss a digital solution for your company, please contact Julie Taccino at jtaccino@all4inc.com or 281-201-1247.

Updated PFAS Regulations in Pennsylvania Have Been Approved. How will it Affect You?

On November 20, 2021, an amendment to Pennsylvania’s Land Recycling Program (i.e., Act 2) came into effect following the approval of PA’s Independent Regulatory Review Commission (IRRC) on September 23, 2021.  In the amendment to 25 Pa. Code Chapter 250, PA Department of Environmental Protection (PADEP) fulfills its obligation to review new medium-specific concentrations (MSCs), keep up with new scientific information, and propose new regulations whenever necessary. PADEP updated its list of MSCs under the Statewide Health Standard, which includes the addition of three new contaminants: Perfluorooctanoic Acid (PFOA), Perfluorooctane Sulfonate (PFOS), and Perfluorobutane Sulfonate (PFBS), all members of the Per- and Poly-fluoroalkyl Acid (PFAS) family of compounds addressed in the 2018 publication from the U.S. Environmental Protection Agency (U.S. EPA) regarding revised Lifetime Health Advisory Levels (HALs) of PFOS and PFOA in groundwater.

The new MSCs for the three new PFAS contaminants are as follows:

The amendment affects remediators of contaminated sites or commercial/industrial facilities with the potential to release PFAS substances into soil and groundwater.  U.S. EPA specifically mentions PFOA and PFOS as being typically found in contaminated sites near facilities manufacturing textiles, food packaging, and other material such as cookware resistant to water, grease, and stains. Industries and remediators will need to consider the new listed contaminants and updated MSCs, especially in contaminated sites near these industries.

Given the breadth of this amendment (it includes multiple adjustments of MSC levels, new contaminants, and a variety of administrative changes), changes to remediation costs as a result of this amendment are difficult to predict.  Regardless, facilities and remediators in Pennsylvania should familiarize themselves with these updated standards to ensure an administratively complete and technically compliant Act 2 closure.  The regulated community should use these new MSCs as a guide to address new contamination risks and consider expanding the scope of remediation and analytical activities to address the changes in this Act 2 amendment.

If you have any questions on PFAS and how the final rule will affect your facility, feel free to contact your ALL4 project manager or Luke Zhu at lzhu@all4inc.com for more information.

Coming Soon: Cumulative Impact Analyses (CIA) for Certain Categories of Air Quality Permits

ALL4 has seen interest and activity around Cumulative Impacts Analyses (CIA) for air emissions sources lately, both at the federal and state level.  For example, the Governor of Massachusetts, Charlie Baker, signed “An Act Creating a Next Generation Roadmap for Massachusetts Climate Policy” into law on March 26, 2021.  This act requires the Massachusetts Department of Environmental Protection (MassDEP) “to evaluate and seek public comment on the incorporation of cumulative impact analyses in the assessment and identification of certain categories of permits and approvals.”  Additionally, the Act requires the Secretary of the Executive Office of Energy and Environmental Affairs (EEA) to develop regulations to guide similar CIAs to be conducted as part of environmental impact reports (EIR) submitted to the Massachusetts Environmental Policy Act (MEPA) office.  MassDEP held its first official stakeholder meeting to discuss and seek input on the new provisions for CIA on August 31, 2021.

CIA can be defined as, “the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions”. Throughout this stakeholder process, MassDEP has discussed various key items to be considered for the CIA Process:

1. What types of impacts should be included (environmental, health and safety, etc.)?
2. How should a CIA be conducted?
3. What types of air permits should require a CIA?
4. What criteria should MassDEP use to make permit decisions? Should this be qualitative, quantitative, or both?

The general idea is that MassDEP will hold monthly stakeholder meetings where members can present and discuss information, different policy options used in other states, and solicit input.  The proposed timeline to have a CIA conceptual model and include public involvement in the CIA process is January 2022.  The draft regulation is to be proposed by October 2022, and public hearings and the comment period will occur from November 2022 to December 2022.  The final regulations and guidance will be developed by March 2023 and by April 2023 the regulations will be promulgated, and guidance will be issued.

New Jersey is another state that has recently developed environmental justice legislation that includes a CIA component.  Permits for new facilities and expansions are subject to an environmental justice review and an impact assessment.  An administrative order was recently issued which requires that issued permits shall include, to the maximum extent allowable by applicable statutes and laws, any special conditions necessary to avoid or minimize environmental or public health stressors on an overburdened community.

On the federal side of things, the U.S. Environmental Protection Agency (U.S. EPA) has continued to work on its guidelines for analyzing cumulative risks from environmental hazards.  The Office of Civil Rights is working on cumulative impacts guidance for agency funding recipients to help ensure collective permitting and other environmental actions do not disproportionately harm minorities.  U.S. EPA scientists have also drafted “EPA Guidelines for Cumulative Risk Assessment Planning and Problem Formulation” that are in the process of being peer reviewed.  U.S. EPA expects to release both documents by the end of 2021.

The federal implementation of guidance around cumulative risk assessments (CRA) is looked at as potentially the first real rulemaking by the administration to apply additional requirements to the environmental permitting process around Environmental Justice (EJ). First floated by the Bush administration in 2003, it was part of the Obama administration’s environmental agenda in 2014 but it stalled and was tabled.  One of the current Administrator’s priorities is to expand consideration of cumulative risk in permitting and enforcement decisions. A CRA would require an assessment of cumulative risk from multiple overlapping environmental hazards:

• Air quality
• Water
• Chemical mixtures
• Non-chemical stressors (higher at-risk local population, etc.).

The challenge in the development of a CRA policy over the years has been how to calculate a score for the non-chemical stressor portion of the analysis.  These stressors include many of the EJ indicators that drive the definition of whether a community should be considered overburdened and are critical to how this guidance might further the administration’s goals in that area. How they are scored will likely become a point of debate once the draft policy comes out.

As states and U.S. EPA begin to implement plans for further analyses, studies, and rulemakings related to CIA and CRA, ALL4 will provide updates and insight on how these actions could affect your operations.  If you have any questions on these developments, contact Gina Maiorana at 601-422-1180 or your ALL4 project manager for more information.

U.S. EPA Releases PFAS Roadmap – What’s the Plan for the Next Three Years?

On October 18, 2021, U.S. Environmental Protection Agency (U.S. EPA) released the “PFAS Strategic Roadmap” document, which establishes specific timelines and actions that U.S. EPA will take over the next three years in order to further the development of federal regulation for per- and polyfluoroalkyl substances (PFAS).  In general, the goals are based on three ideas – Research, Restrict, and Remediate.  The document also discusses the importance of taking a “lifecycle” approach to regulate PFAS.  For example, rather than just focusing on regulating potential downstream releases (e.g., remediation), U.S. EPA also identifies the importance of regulating potential upstream releases (e.g., manufacturing of PFAS chemicals).

A few highlights of U.S. EPA’s goals and commitments are provided below.  Note that this list is not exhaustive.  For a complete listing, please refer to the published “PFAS Strategic Roadmap” document.

Office of Chemical Safety and Pollution Prevention:

• Proposed removal of “de minimis” exemption under the Toxic Release Inventory (TRI); Spring 2022:
  • U.S. EPA is planning to propose rulemaking to classify the TRI-listed PFAS as “chemicals of special concern”, which means that the TRI de minimis exemption would no longer apply.  Facilities that use TRI-listed, PFAS-containing materials would no longer be able to rely upon supplier certifications that state that PFAS are included in quantities less than de minimis levels as the reason for report exemption.  In addition, and in accordance with the fiscal year 2020 National Defense Authorization Act (NDAA), U.S. EPA is also planning to continue adding PFAS to the list of chemicals subject to the TRI.  The NDAA provided a framework for additional PFAS to be added on an annual basis (e.g., upon adoption of a final toxicity value).
• Final PFAS data gathering rule under TSCA; January 2023:
  • U.S. EPA published a draft proposed data gathering rule under TSCA Section 8(a)(7) that would require collection of information on PFAS manufactured since 2011.  This rule is anticipated to be finalized by January 1, 2023.

Office of Water:

• National enforceable drinking water regulations for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS); Fall 2022/Fall 2023:
  • U.S. EPA is proposing to regulate PFOA and PFOS under the Safe Drinking Water Act (SDWA) by publishing federally enforceable drinking water standards.  The proposed rule is expected to be issued in Fall 2022, with a final regulation expected in Fall 2023.
• Publish toxicity assessments and health advisories for several additional PFAS; Fall 2021/Spring 2022:
  • U.S. EPA is planning to finalize toxicity assessments for seven new PFAS [hexafluoropropylene oxide dimer acid and its ammonium salt (“GenX chemicals”), perfluorobutyrate (PFBA), perfluorohexanoic acid (PFHxA), perfluorohexanesulfonic acid (PFHxS), perfluorononanoic acid (PFNA), and perfluorodecanoic acid (PFDA)].  Finalized toxicity assessments will allow U.S. EPA to issue water quality health advisory levels.  Currently, U.S. EPA has health advisory levels for PFOA and PFOS only.  As we’ve seen with PFOA and PFOS, although the U.S. EPA health advisory levels are not federally enforceable, they can lead to states and local jurisdictions setting their own enforceable standards based on these values.
• Increased monitoring requirements in National Pollutant Discharge Elimination System (NPDES) permits; Winter 2022:
  • U.S. EPA is planning to use existing authority under NPDES to obtain additional PFAS water release information.  Most notably, U.S. EPA is planning to include monitoring requirements in federally-issued NPDES permits (i.e., NPDES issued by U.S. EPA in MA, NH, NM, DC, territories, federal waters, Indian Country, and federal facilities in DE, CO, VT, WA) for facilities that are “expected or suspected” to have PFAS present.  Additionally, U.S. EPA will be issuing new guidance to states that do not fall under the federally-issued NPDES permits to urge those states to do the same.  The monitoring requirements are expected to utilize U.S. EPA Method 1633, which covers 40 unique PFAS chemicals.  ALL4 has already seen PFAS monitoring requirements in select NPDES permits, and this provision of the Roadmap is only expected to increase that frequency.

Office of Land and Emergency Management:

• Designation of PFOA and PFOS as hazardous substances; Spring 2022/Summer 2023
  • U.S. EPA is developing rulemaking to designate PFOA and PFOS as “hazardous substances” under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).  This designation would require facilities with PFOA and/or PFOS-containing materials on-site to report certain releases of these materials.  The proposed rule is expected in Spring 2022, with a final rule expected in Summer 2023.

Office of Air and Radiation:

• Further development of technical foundation for future air regulation; Ongoing
  • Critical to regulating PFAS air emissions is the ability to accurately measure and quantify emissions.  As such, U.S. EPA is continuing research and efforts in several key areas:
    • Develop monitoring approaches (stack and ambient) for measuring PFAS
    • Develop information on cost-effective mitigation technologies
    • Increase understanding of fate and transport of PFAS air emissions
    • Use of EJSCREEN for PFAS air pollution evaluations
    • Use information collected from other programs (e.g., TRI, TSCA) to develop air release data and identify sources of PFAS air emissions
    • Propose listing of certain PFAS as hazardous air pollutants (HAP)

Office of Research and Development:

• Further development of U.S. EPA-approved sampling and analytical methods; Ongoing
  • U.S EPA is continuing to develop the list of approved sampling and analytical methods for measuring PFAS in air, water, and soil. This effort will be ongoing, but new methods nearing development are:
    • Draft total adsorbable fluorine method for wastewater for potential laboratory validation (Fall 2021)
    • Draft method for measuring additional PFAS in air emissions (Fall 2022)
    • Draft methods and approaches for evaluating PFAS leaching from solid materials (Fall 2022)

Cross-Program Goals:

• Develop smaller subcategories of PFAS to allow the addressing of multiple PFAS at once; Ongoing
  • U.S. EPA is working to divide the large, diverse class of PFAS chemicals into smaller subcategories in order to streamline regulations and more quickly address public health concerns. For example, U.S. EPA plans to use toxicity and toxicokinetic data to categorize PFAS by hazard. Additionally, U.S. EPA plans to categorize PFAS based on removal technologies. This categorization will help prioritize future actions. As you can see, PFAS continues to permeate various environmental regulatory sectors, and although the Roadmap still speaks in fairly general terms, it’s clear U.S. EPA is hyper-focused on developing PFAS-based regulations that will extend to most programs, resulting in potential impacts to the environmental regulated community.

If you have any questions or would like further information on this roadmap, please reach out to me at kturney@all4inc.com.

Carolinas Air Quality Updates

The Carolinas Air Pollution Control Association (CAPCA) hosted the 52^nd Annual Fall Technical Workshop and Forum on October 13-15, 2021 in Myrtle Beach, South Carolina.  ALL4 Carolinas staff were excited to participate in an in-person conference for the first time in quite a while.  As attendees arrived on Wednesday morning, they were immersed in a technical session on environmental control equipment or enjoying a round of golf.  The young professional committee hosted a lunch on Wednesday and a cornhole hour that evening, followed by dinner by the pool where we were able to connect with old friends and make some new ones. The main social event was on Thursday evening where conference attendees were transported back to their childhood, put on their Halloween costumes, and went trick-or-treating at each of the booths.  Only this time, those that found the special pieces of candy were entered into a drawing for two nights free stay at the Hilton.  We heard from the SC Attorney General Friday morning and closed out the conference with lunch and the annual business meeting.

The technical sessions included air program updates from the United States Environmental Protection Agency (U.S. EPA) Region IV, the South Carolina Department of Health and Environmental Control (SC DHEC) and the North Carolina Department of Environmental Quality (NC DEQ).  There were also sessions focused on public engagement, climate change, and sustainability. Technical session highlights are summarized below.

U.S. EPA Update

The U.S. EPA update was provided by Caroline Freeman, Director of the Air and Radiation Division in Region IV. The U.S. EPA is reconsidering the 2020 decision to retain the annual National Ambient Air Quality Standards (NAAQS) for Particulate Matter less than 2.5 micrometers in aerodynamic diameter (PM_2.5) of 12 micrograms per cubic meter and is evaluating whether the current standards are enough to protect public health based the latest available technical information. A proposed rule is anticipated in summer 2022 with a final rule in the spring of 2023. The agency notes that the reconsideration process will provide opportunities for public engagement and will also consider environmental justice (EJ).  If revised, the Clean Air Act (CAA) deadline for nonattainment designations would be no later than Spring 2025 and will be based on 2021-2023 or 2022-2024 monitoring data.

EJ continues to be a focus of the agency, with ongoing efforts to refine the objectives and strategies for incorporating EJ into rulemaking, permitting, and compliance. For permitting, the focus is on best practices for promoting meaningful engagement in communities and using developed tools to identify these communities of concern.  The agency also plans on implementing and enhancing rulemaking guidance for considering EJ during the development of regulatory actions.

Other highlights include withdrawal of the 2020 startup, shutdown, malfunction (SSM) policy and reinstating the 2015 policy (U.S. EPA will revisit the individual State Implementation Plan (SIP) actions in 2020 for Texas, North Carolina, and Iowa that withdrew the SSM SIP Calls), review of the ethylene oxide regulations, and continued research and development related to Per- and Polyfluoroalkyl Substances (PFAS).

SC DHEC Update

The SC DHEC update was provided by Rhonda Thompson, Chief of the Bureau of Air Quality (BAQ).  SC DHEC is preparing the draft Regional Haze SIP for public notice and is currently addressing comments from the federal land managers and U.S. EPA. Based on the level of public interest in other states, SC DHEC expects a high level of public engagement when the pre-hearing draft SIP is released to public notice.

SC DHEC is proposing to reorganize the permit division to transition from geographical sections to sector-based sections. The goal of the reorganization is to improve efficiency by increasing industry and facility knowledge of the permit writers and to increase consistency between permit decisions. Some facilities will receive a new permit writer as new applications are submitted and the timing is expected to align with the rollout of ePermitting for air permitting and compliance.  SC DHEC will be looking for stakeholders, targeted for late 2021/early 2022, to help test the ePermitting System prior to the external release.

NC DEQ Update

The NC DEQ update was provided by Mike Abraczinskas, Director of the Division of Air Quality (DAQ). North Carolina has achieved significant visibility improvements since 1998 and is ahead of the uniform rate of progress glidepath toward achieving natural conditions by 2064.  The pre-hearing draft Regional Haze SIP was posted to public notice on August 30, 2021 and the public comment period closed on October 15, 2021 following the virtual public hearing held on October 6, 2021.  NC DEQ will be reviewing and preparing a response to comments.

NC DEQ provided a status update on the Regional Greenhouse Gas Initiative (RGGI) following a vote to grant the petition for rulemaking by the NC Environmental Management Commission (EMC) on July 13, 2021.  The rulemaking process has commenced and NC DEQ is developing a fiscal analysis which will be followed by preparation of an EJ report and later a public comment process including a public hearing prior to final action by the EMC.

Greenhouse Gases and Sustainability

The audience heard from a variety of speakers discussing the science of greenhouse gases (GHG), anticipated climate impacts to the Carolinas, the impact of GHG regulations on stationary sources, and company specific sustainability programs and progress.  With a high focus on carbon policy under the current administration, it will be important for stakeholders to stay up to date on programs under consideration including establishing a Carbon Dioxide (CO₂) NAAQS (which has new source review (NSR) permitting implications), emission standards for methane sources, and state carbon tax or cap and trade programs (e.g., RGGI).  A few companies shared insights and progress in implementing their CO₂ reduction strategies based on classification of scopes 1, 2, or 3 emissions and plans for future reductions.

Public Participation

Another theme of the technical workshop was centered around increased public interest in environmental issues including providing comment on proposed environmental regulations and new or revised air quality permits.  Additionally, the volume of emissions data has increased via the availability and use of handheld ambient sensors. The U.S. EPA, the state agencies, and other partners including sensor manufactures are working together to deliver high quality information to the public and to clarify results via the Air Quality Information Exchange Workgroup.  Questions have increased from the public related to interpreting different air quality results collected in the same location and time.  It is recognized that air quality products should provide clear information on what the data represents and the level of data quality as results from sensors will differ from air regulatory monitors which, unlike many sensors, are driven by NAAQS and have heavily regulated quality assurance and control procedures. The U.S. EPA and state agencies continue to emphasize the importance of community outreach as well as engaging the public at the beginning of projects requiring air permitting.

We look forward to seeing you all for the Spring 2022 event in Asheville, NC! If you have questions regarding air permitting and compliance in North or South Carolina or the issues mentioned here, please reach out to Claire Corta at ccorta@all4inc.com or 919-578-4195.

PA Industrial Stormwater – No New Coverage for General Permits!

The Federal regulations at 40 CFR §122.26 require facilities with industrial stormwater discharges to apply for a National Pollutant Discharge Elimination System (NPDES) permit; either an individual permit or a general permit from a state such as Pennsylvania that has promulgated NPDES authority.  In Pennsylvania, facilities that wish to seek general permit coverage do so through the Pennsylvania Department of Environmental Protection’s (PADEP) NPDES General Permit for Discharges of Stormwater Associated with Industrial Activities (PAG-03) (3850-PM-BCW0083d).

Most general permits are issued for a five-year period, and PADEP’s PAG-03 General Permit is no exception.  The PAG-03 permit was last issued on September 24, 2016 and expired on September 23, 2021 without a replacement.  However, on September 18, 2021, PADEP announced that the existing PAG-03 permit would be administratively extended and permittees that had existing coverage could continue to operate for an additional year, until September 23, 2022.  That’s OK for existing permittees, but what about new or existing facilities seeking PAG-03 permit coverage?  Unfortunately, PADEP has stated that no new coverage under the PAG-03 General Permit may be authorized until a new PAG-03 General Permit is issued (or it is renewed). PADEP’s posting of this issue can be found in this PA Bulletin Notice.

So, if a new facility or a facility attempting to seek industrial stormwater coverage for the first time, the options are limited.  Specifically, the facility can either apply for an individual permit, which is more costly and burdensome than the PAG-03 General Permit, or the facility can apply for No Exposure Certification, assuming the discharge of stormwater at the facility meets the conditions of no exposure to industrial activity.

PADEP intends to notify the regulated community of the new PAG-03 permit, including any substantial changes, when it is renewed.  This is expected to occur on or before September 23, 2022.  Upon renewal, it is expected that existing PAG-03 permittees will need to re-apply for coverage (known as a Notice of Intent, or NOI) and the window for seeking new coverage will re-open at that time.  It is anticipated that the renewed PAG-03 permit may include modifications to the pollutant benchmark values.  ALL4 will conduct a thorough review of the renewed PAG-03 permit when it is reissued and will release an update regarding our findings.

If you have questions about how this administratively extended PAG-03 General Permit could affect your NPDES stormwater coverage, or what your next steps should be while the PAG-03 General Permit is renewed, please reach out to Andrew Beaver or Paul Hagerty, P.G., P.E. at (610) 422-1175 or (610) 422-1168, respectively.

ESG Meaning in Businesses

|What is ESG?|Why Do I Care?|Are there Regulatory Drivers to ESG?|How do I Get Started on my ESG Journey?|What Are the Benefits and Risks of ESG Reporting?|How Can ALL4 Help?|

Environmental, Social, and Governance (ESG) is one of the most relevant topics in the investment and environmental worlds these days. ESG gives socially-conscious investors a set of criteria to follow to better screen potential business investments.

What Is ESG?

The criteria around Environmental are those that we as EHS professionals have known and worked around for years, essentially measures of how a company rates in its protection of the environment.

The Social criteria measure a company’s relationships with its employees, customers, other businesses, and the community around it. Perhaps the most visible of the social criteria right now is the relationship with neighboring communities as Environmental Justice (EJ) continues to be a key element of nearly every action the Biden administration takes.

Governance looks at a company’s leadership, how executives are compensated relative to the company’s sustainability goals, and the internal controls protecting the integrity of the company’s business information.

Why Do I Care?

ESG criteria are used by investment firms, shareholders, and other stakeholders to evaluate the environmental performance of businesses and grade or rank them in comparison to other companies to help inform investment decisions. ESG covers a broad range of topics as shown above. Companies disclose information about their goals and performance in an ESG or sustainability report outlining the company’s ESG footprint, challenges, successes, and plans.

As the number of firms and members of the public using ESG performance as an important criterion to determine whether to invest in a business or buy their products increases, having a positive ESG story to tell will become more and more important.

5 Ways ESG Creates Value for Businesses

It’s clear that ESG is important to include in your business practices from top to bottom. To help you better understand how this looks in a practical sense, here are five ways ESG can create value for your business:

• Top-line growth: A strong ESG framework is attractive to governing authorities, causing them to put more trust in such businesses. This opens the door for easier access to licenses and approvals that make business expansion easier. Many consumers will also preferentially buy from businesses whose ESG values align with their own.
• Cost reductions: One part of good ESG practices is being a steward of the environment, which includes being mindful of your business’s use of utilities and resources. Energy and water costs can increase rapidly, but an ESG framework will help your business use these things with greater mindfulness, reducing costs along the way.
• Reduced regulatory and legal interventions: ESG can give businesses greater strategic freedom by easing pressure from regulations. As your business aims to achieve its goals, having a strong ESG framework can help you avoid adverse government actions that could make achieving those goals difficult. Align your goals with ESG, and the government will look more favorably on your aspirations.
• Employee productivity uplift: With a strong ESG framework, you can attract high-quality candidates and keep your employees happy and productive. You’ll enjoy a lower employee turnover rate as you give your teams a greater sense of purpose. You can also show your employees that working for your business is actually making the world a better place, both environmentally and socially.
• Investment and asset optimization: An ESG framework can help your business put its capital into more sustainable, promising and robust investment opportunities. Your ESG values will guide your investment decisions away from areas that can see drastic reductions in market value due to environmental factors.

Are there Regulatory Drivers to ESG?

In a word, no, but there are numerous reporting frameworks. This creates both opportunities and challenges when developing ESG reports.

On the one hand, many of us are engineers or scientists and as such want concrete numbers and standards to target and comply with. On the other, the variety in reporting methodologies available allows a firm to choose the one that is the best fit for their sector or allows for the most positive ESG story.

There are at least 10 ESG reporting frameworks to choose from, each with its own metrics, methodology, and scoring system. Some are tuned to specific industries and sectors, while others focus on the needs of specific stakeholder groups.

Where possible, it is best to choose one that is both widely accepted and in use by companies in your sector so that comparisons can be made between your firm and those with which you compete. In recent months, several of these organizations have announced partnerships to merge their areas of expertise and provide a more complete overall reporting package.

Some of the most popular ESG reporting frameworks are:

• Global Reporting Initiative (GRI): The GRI was the first global standard for sustainability reporting, launched in 1997. It is still the most widely used ESG reporting framework, with over 80% of the world’s 250 largest corporations using it. GRI is popular because of its flexibility. There are 3 Universal Standards used by every organization reporting through GRI, but there are also numerous additional Topic Standards that can be used to prepare reports for specific sectors, users, or purposes. The GRI framework is continuously evolving to improve reporting on specific topics.
• Sustainability Accounting Standards Board (SASB): SASB is a non-profit organization that has developed global standards around identifying and communicating financial materiality information to investors. They have accomplished this by developing a materiality map, which contains metrics for 77 different industries. SASB assists in translating this materiality data into useful information for investors. Companies often pair the SASB materiality assessments with other standards like GRI, and in fact, SASB and GRI announced towards the end of last year they would be working together to promote greater transparency amongst reporting firms.
• Carbon Disclosure Project (CDP): Founded in 2000, CDP is one of the most common reporting frameworks and is used by nearly 10,000 companies worldwide. CDP focuses primarily on climate impacts like deforestation, water usage and carbon emissions. CDP takes the information collected during the annual reporting process and scores the company on its environmental actions. CDP provides metrics and Key Performance Indicators (KPIs) for firms to track and evaluate. Like SASB and GSI, CDP has recently announced plans with other reporting organizations.
• Climate Disclosure Standards Board (CDSB): The first CDSB framework was released in 2015 and is similar to the CDP in that the focus is environmental activity. Unlike the CDP, CDSB does not provide metrics or KPIs but relies on other organizations like CDP. CDSB’s goal is to integrate climate change data into mainstream financial reports required by the U.S. Securities and Exchange Commission (SEC) to promote connectivity between sustainability and corporate business strategy.
• The Task Force on Climate-Related Financial Disclosures (TCFD): The TCFD was established in 2015 and somewhat like the CDSB, is focused on creating consistent climate-related financial risk disclosures aimed at firms with financial interests including banks, shareholders and investors.

How Do I Get Started on my ESG Journey?

The good news is, regardless of whether you are aware of it or call it ESG, you already have! Most companies have been collecting data, especially greenhouse gas (GHG) emissions, for years to feed their sustainability or other corporate reports. In many ways, ESG can be looked at as an expansion of those efforts. The first step is to conduct internal benchmarking to understand what data you’ve been collecting, determine the accuracy of that data and identify the gaps in data collection and controls that need to be corrected.

The next step is a materiality assessment. Per the GRI, the definition of materiality is “Those topics that have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental, and social value for itself, its stakeholders and society at large.” However, materiality also has an external context, as you will evaluate what investors and other entities consider important.

Understanding the difference between the two and where the synergies lie is critical for maximizing your efforts in defining your ESG footprint and preventing wasting resources on things that don’t matter as much to the business or your target audience.

Once the benchmarking and materiality assessment is complete, the next phase is to identify and implement your reporting objectives, targets and KPIs, in alignment with your findings and chosen ESG goals and reporting methodology.  This includes gaining alignment and approval all the way to the board level and assigning specific roles and responsibilities within the organization. Finally, developing a disclosure strategy, often with third-party certification, is critical in presenting a strong, defensible ESG report that satisfies your stakeholders’ requirements.

What Are the Benefits and Risks of ESG Reporting?

Aside from telling your ESG story and improving the organization’s reputation, the process of developing strong ESG reporting practices provides several internal benefits:

• Positive environmental impact: Sourcing ethically produced materials, measuring and reducing carbon emissions and managing your water usage are all parts of an ESG framework that can cause your business to have a positive impact on the environment.
• More convincing investment appeal: Investors will see your ESG framework as a commitment to long-term sustainability and profitability and see you as a wise business to invest in.
• Loyal customer base: Today’s customers choose businesses that align with their values. Therefore, an ESG framework can contribute to attracting like-minded customers who will remain loyal to your business. Conversely, many buyers are abandoning brands that show little interest in ESG efforts.
• Healthier corporate culture: You can attract and retain strong talent for your team by leaning into your ESG framework and values. Happy employees will enjoy their work while operating at healthy efficiency and productivity levels. Your teams will display better teamwork, and everyone will feel like they are a part of something bigger than themselves.
• Process development: An ESG framework forces the development of stronger data collection, assurance and control practices.
• Greater risk-benefit awareness: You can increase your business’s internal understanding of risks while finding more opportunities for improvement on many levels.
• Increased productivity and efficiency: An ESG framework will help your business achieve new levels of productivity and efficiency at points throughout the business.
• Improved relationship between finances and the environment: Your business can create a more concrete link between financial and environmental performance by establishing and abiding by an ESG framework.
• Better third-party relationships: An ESG framework will help you achieve improved awareness of the environmental footprint of your third-party suppliers.

ESG reporting does not come without potential risks, however. It is critical that statements made in an organization’s ESG reports are backed by concrete data and are easily defensible to prevent questions about the credibility of the report and accusations of greenwashing  — outside stakeholders will be watching, and questions will be asked.  It is critical to be prepared to answer those questions not only about your own activities but also those of the organizations with whom you partner.

How can ALL4 help?

At ALL4, we have been watching the development of ESG reporting methodologies closely and actively assisting our clients on their ESG journeys. We can help in several ways:

• Developing digital solutions for evaluating, tracking, and documenting sustainability, climate, and ESG projects and progress toward goals
• Researching issues of interest to internal and external stakeholders and developing goals
• Benchmarking across industries, geographies, companies or facilities to understand KPIs of interest or performance
• Reviewing current environmental footprint and resource use and developing strategies for reductions
• Conducting materiality assessments
• Assist in reviewing or developing a GHG inventory including Scope 1-3 emissions.
• Reviewing current ESG programs for gaps
• Developing corporate ESG strategies
• Creation of ESG reports

If you’d like to discuss your ESG approach and strategy, feel free to contact your ALL4 Project Manager or Rich Hamel. We’re happy to share what we’ve learned and assist you in making your ESG reporting as efficient and beneficial to you as possible. We’re here to help!