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Global EHS Compliance Audit Survey 2014
3ENVIRON
Managing environmental, health and safety (EHS) compliance in today’s regulatory environment has become a comprehensive exercise involving mounting regulations and affecting increasing numbers of organisations. Non-compliance can have serious financial, criminal and reputational impacts. As a consequence, the importance of EHS compliance audits has grown significantly in recent years.
In light of this, ENVIRON has conducted an independent research project to look into the various ways that companies structure and carry out their EHS compliance auditing programmes. Our goal is to give corporate EHS officers the benchmarking data they need to understand common industry practices today and to plan for more effective and efficient EHS compliance audit operations in the future.
For the purposes of this study EHS compliance auditing is defined as a voluntary, systematic and verifiable process to review the current operating practices and documentation of a site or organisation against the requirements of applicable international, national and local EHS legislation.
With input from ENVIRON compliance audit practitioners around the world, we developed an exhaustive survey that was sent to more than 2,000 contacts globally.
We received responses from the EHS departments of 310 different companies in 23 countries, with the majority of companies headquartered in Europe (53%) and North America (41%). Survey respondents were mainly based at large and medium-sized, publicly-traded companies, with participants from 16 industry organisations providing a comprehensive view of compliance in a wide variety of organisational settings. The overwhelming majority of the participants (92%) run an EHS compliance audit programme. 72% of the participants are EHS managers or audit directors.
In this report you will find an executive summary followed by a detailed explanation and evaluation of the survey results. We hope you find the information insightful and valuable. Our intention is that this report will serve as a useful tool to help you maximise the effectiveness of the EHS compliance auditing programme within your organisation. We remain at your disposal for any additional data or support you may need.
ENVIRON October 2014
Welcome
4 5ENVIRON ENVIRON
Executive Summary 6
Selected Survey Respondents 9
Survey Methodology and Demographics 11
Glossary of Terms 13
About ENVIRON 14
Authors 16
For a copy of the full report please contact:
Lorenz Mikosch +49 89 1392 832 0 [email protected] Schmidtke +49 89 1392 832 0 [email protected]
esponses from 310 companies from 16 industry types in 23 countriesR
Contents
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Key FindingsAudit drivers: 85% of respondents conduct EHS compliance audits due to compliance assurance, 63% to reduce accident rates and environmental footprint and 50% to identify and correct problems before they are discovered externally. Protecting company reputation is extremely important for 44% of respondents and 31% mention protecting company officials against liability. Another driver indicated by 30% of respondents is the desire to avoid business interruptions.
Audit scope: 98% of respondents indicate that their audits cover environmental compliance, 93% health and safety compliance, 76% fire safety topics, 63% culture, leadership and behaviour, 49% process safety/HAZOP, 47% security, 44% product safety/stewardship compliance and 21% workers’ rights.
Audit standards: 92% base audits on existing legal requirements, 89% on corporate standards, 68% on EHS management system requirements and 13% on draft legal requirements.
Leadership: Nearly eight out of 10 respondents say that the corporate EHS department takes the lead on scheduling and managing EHS compliance audits.
Reporting findings: Results of EHS compliance audits are commonly reported to the corporate EHS department (77%), business unit management (73%) and site management (73%). In addition, 56% report results to the board of directors or other senior executives, 31% to the legal department and 19% just to the corporate compliance officer.
Type of audited facilities: 99% indicate that they audit production sites and service centres, 56% research and development sites and 46% office sites.
Audit team: The majority use some combination of corporate staff (74%), third-party consultants (71%) and personnel from divisions (51%) for their EHS compliance audits.
Audit duration: Not surprisingly, as the size of a site increases, so does the number of audit days. For example, the most common site visit duration of facilities with 101–250 full time employees (FTE) is three days (27%) followed by 26% conducting two-day site visits, whilst 17% have four days on-site.
Audit frequency: There is a very strong correlation between audit frequency and the perceived risk posed by the facility to be audited. For example, just over half of the respondents (51%) indicated that they audit high-risk facilities annually, followed by 21% once every two years and 24% once every three years.
Reporting audit results: All respondents prepare some form of written report to document audit findings. The majority of respondents (47%) use a full report format. Three in 10 respondents rely on a tabular report and 22% have a software system in place.
Documentation of audit findings with photographs: 57% of respondents document audit findings with photographs and incorporate these into audit reports.
Managing audit findings: The overwhelming majority of respondents maintain a systematic process of findings close-out, usually including a database or similar solution to track the status of corrective actions (81%) and verification audits (53%). Only 10% report having no such system implemented.
Timeframe for findings close-out: As expected, the higher the significance of the risk posed by an audit finding, the shorter the timeframe defined for its close-out. For example, six out of 10 participants indicate that their sites have 30 days within which to close out high-risk findings. For close out of low-risk findings almost 40% of participants give their sites 61–180 days and 22% allow 271–365 days.
Scoring of site performance: More than two-thirds of respondents (68%) score the overall audit performance of their sites. Of these, 58% use significance of findings as criteria, 45% note the number of findings, 29% the number of repeat findings and 13% the number of findings that are closed out within a defined timeframe.
Measuring success of an audit programme: Survey participants were asked what metrics they use to evaluate the success of their audit programme. Most common are the number of findings (46%), workplace accident rate (42%), the number of high-risk findings (37%), the number of repeat findings (33%), the number of findings that are closed out within a defined period of time (31%), releases to the environment (28%), fines and enforcement issues (25%) and process safety incident rates (23%). Interestingly, 24% of participants indicate that they have no formal method to evaluate the success of audit programmes.
Annual budget for EHS compliance auditing: Survey participants were asked about the annual budget for EHS compliance auditing activities. For example, the majority of participants operating 20–100 sites have an annual budget of $100,000–$500,000 (47%) followed by less than $100,000 (39%) and $500,001–$1million (11%).
Programme implementation: Four out of 10 participants (42%) without an EHS compliance auditing programme are planning to implement one within the next three years.
Trends in EHS compliance auditing: Expanded and a more risk-focused scope, wider usage of third party auditing eg due to reduced internal resources, more compliance auditing of suppliers, enhanced automation, stronger audit finding analysis to establish trends and focus areas, audit score increasingly affecting site and senior management annual performance appraisals, bonuses and pay increases.
Executive Summary
Aim of the studyTo research the various ways that companies structure and undertake EHS compliance auditing programmes and give corporate EHS officers the benchmarking data they need to plan for more effective and more efficient audit operations in the future
Method
Online survey, May–July 2014
AddresseesMore than 2,000 management and corporate-level EHS, legal and compliance personnel
Responses 310 companies completed the questionnaire
Survey demographics82% of participants have had their EHS compliance audit programme in place for more than six years
53% of participants are from Europe and 41% from North America
72% of participants are EHS managers and audit directors
Mainly large and medium-sized publicly-traded companies
Broad spectrum of business and industry
53%from Europe and 41% from North America
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Selected Survey Respondents
310 companies completed the survey, including the following who consented to being named
ABBAbbVie IncAgfa-Gevaert AhlstromAICEP Global ParquesAleris RecyclingAlstomAlzChem Amgen IncASK ChemicalsATT Tanjung Bin (ATB)Avery DennisonBabcock International GroupBAE SystemsBayer HealthCareBeam SuntoryBoseBostik Boston ScientificBraas Monier Building GroupBruno Bock Chemische Fabrik BSH Bosch und Siemens Hausgeräte Caffaro Brescia CargillCeramTec Chem-Trend ClariantCroda International Dal-Tile CorporationDunlop Oil and Marine Ecolab
EmersonEnelEvonikExelisF Hoffmann-La Roche Fletcher Building Flint GroupFlowserve CorporationFujifilm Europe General ElectricGivaudan International Haemonetics CorporationHermes LogistikIdeal Standard InternationalIngersoll Rand CompanyIntel CorporationInvensysIpsenJ M HuberKimberly-ClarkLennox International Lenzing LillyLorealLufthansa Technik Merz Pharma Messer GroupMichelman Molson CoorsMomentive Performance MaterialsNavistar
Nord Stream NovartisNSG GroupNV Bekaert Office DepotOrion Engineered CarbonsOutokumpuPerrigoPetronas Lubricants InternationalPort of Brisbane Procter & GambleRaytheon CompanyReckitt BenckiserRio TintoRoyal Adhesives & Sealants Royal Bank of CanadaSeagate Technology SiemensSime Darby BerhadSIMMEL Difesa Smiths MedicalSouth Pacific Chemical Industries (SPCI)Sterigenics International The Dow Chemical CompanyTioxide Malaysia Treibacher Industrie Triton PartnersW R Grace & Co-ConnWW GraingerWaterfront TorontoWhite Castle Management
72%are EHS managers or audit directors
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Survey Methodology and Demographics
With input from ENVIRON compliance audit practitioners around the world, we developed an exhaustive survey that was sent to more than 2,000 EHS professionals globally.
The survey was conducted from May to July 2014. It covered a series of questions to capture data about corporate EHS compliance audit programmes. The majority of the questions were multiple choice with an option to provide narrative comment in most cases.
A filter question at the beginning of the survey directed participants to three different questionnaires that were evaluated separately: (1) for companies with an existing EHS compliance auditing programme, (2) for companies planning to implement an EHS compliance auditing programme within the next three years, and (3) for companies without an existing EHS compliance auditing programme and no plans to implement one.
We received responses from the EHS departments of 310 different companies in 23 countries, with the majority of companies headquartered in Europe (53%) and North America (41%). Survey respondents were mainly based at large and medium-sized, publicly-traded companies, with participants from 16 industry types providing a comprehensive view of compliance in a wide variety of organisational settings. The overwhelming majority of the participants (92%) run an EHS compliance audit programme. 72% of the participants are EHS managers or audit directors.
The survey results presented in this study were mainly aggregated by location of respondents’ company headquarters and grouped into (1) Europe, (2) North America and (3) Asia-Pacific, Africa and South America.
Occasionally, respondent comments have been included in this report where we consider they represent an interesting idea, express a common theme or innovative concept.
The following pages contain data about the nature, size and location of the participants’ organisations and their position within the company.
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Glossary of Terms
Code of conduct A written set of guidelines issued by an organisation to its workers and management to help them conduct their actions in accordance with its primary values and ethical standards.
Compliance State when someone or something is in accordance with established guidelines, specifications or legislation.
Corporate social responsibility (CSR) Voluntary, corporate initiatives concerned with community development, the environment and human rights.
EHS Environment, health and safety.
EHS compliance audit Voluntary, systematic and verifiable process to review the current operating practices and documentation of a site or organisation against the requirements of applicable international, national and local EHS legislation.
Full-time equivalent (FTE) Number of working hours that represents one full-time employee during a fixed time period.
FTSE4Good Series of ethical investment stock market indices launched by the FTSE Group.
General counsel Head lawyer at a legal department in a corporation or government department.
Hazard and operability study (HAZOP) Structured and systematic examination of a planned or existing process or operation to identify and evaluate problems that may represent risks to personnel or equipment, or prevent efficient operation.
HSE Health, safety and environment.
ISO 14001 Management standard which specifies a set of requirements for environmental management systems.
OHSAS 18001 Management standard that specifies a set of requirements for health & safety management systems.
Process safety incident rates (PSIR) Process safety incident as defined by the Center for Chemical Process Safety is an unplanned event arising from the manufacturing process that results in a product spill, fire, explosion or injury.
REACH Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals in the European Union.
RoHS Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment in the European Union.
SAM Swiss company that carries out corporate analyses focusing on environmental, social and corporate matters eg Dow Jones Sustainability Indices (DJSI) World Index.
SME Small and medium enterprise.
Socially responsible investment (SRI) Investment strategy which seeks to consider both financial return and social good.
TSCA Toxic Substances Control Act is a United States law.
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ENVIRON’s EHS Audit Services
EHS auditing and compliance assessments, whether to local regulatory regimes, corporate standards, best practice or management system requirements, are a core part of ENVIRON’s services delivered to industrial and commercial clients.
Our understanding of the audit process and our global presence has enabled us to successfully manage numerous compliance auditing programmes for multi-national companies and to conduct thousands of compliance audits around the world.
Our experience includes both comprehensive multi-media audits and focused media-specific or topic-specific audits and spans a broad range of industrial and commercial sectors. Our work assists clients to protect themselves against business interruption and potential liabilities, enabling them to address identified issues proactively.
ENVIRON is a leading international EHS consultancy firm providing state-of-the-art scientific, engineering and strategic risk management assistance to clients globally. Currently the firm has over 1,500 employees worldwide.
ENVIRON provides a wide range of audit services to assist clients in compliance with EHS regulations. These services include:
•Identificationandanalysisofregulatoryrequirementsapplicableto client facilities and operations
•ManagingandconductingEHScomplianceauditsglobally
•Preparationofauditprotocolsandtailoredchecklists
•Allaspectsofcomplianceprogrammedevelopment,gapanalyses,evaluation and training
For more about ENVIRON or to find your local representative please visit environcorp.com
About ENVIRON
ENVIRON’s Global Services
Air Quality Management
Applied Epidemiology
Building Technology Services
Climate Change and Energy Management
Compliance Assistance
Ecology and Sediment Management
EHS Management
EHS Information Management
Expert Services
Exposure Reconstruction and Analysis
Human Health Sciences
Impact Assessment and Planning
Industrial Wastewater Management
International Finance
M&A Due Diligence
Nanotechnology
Occupational Health and Safety
Product Safety and Regulatory Support
REACH
Risk Assessment and Risk Management
Site Investigation and Remediation
Sustainability
Toxicology
Water Resources
Waste Management
WEEE, RoHS and EcoDesign
ENVIRON’s Offices
92 offices in 21 countries with projects completed in 130 countries
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AuthorsLorenz Mikosch Senior Consultant, ENVIRON Germany +49 89 1392 832 0 [email protected]
Lorenz is based in ENVIRON’s Munich office. He has more than eight years’ experience in conducting EHS compliance audits and directing large-scale, multi-disciplinary audit programmes for a variety of industrial sectors. Lorenz is also experienced in performing and managing environmental, social and governance (ESG) due diligence studies in support of mergers and acquisitions (M&A) and the implementation of EHS management systems. Lorenz is a certificated professional for ISO 14001 and OHSAS 18001.
Joachim Schmidtke Principal and Managing Director, ENVIRON Germany +49 89 1392 832 0 [email protected]
Joachim has more than 25 years of experience in EHS management, including regulatory compliance support, environmental due diligence, remediation management, loss research and prevention, technical and financial assessment of industrial risks, and environmental and product liability risk assessment. As team leader of an interdisciplinary group of experts from various fields, he has provided solutions for environmental projects and technical and organisational strategies for the improvement of safety management. His expertise extends over multiple industry branches.
Acknowledgements
We would like to thank all participants for their support. We would also like to express our gratitude to Britta Wesseling, Bruce Gordon, Juliana Ding, Kelly Young, Milind Pradhan, Richard Andrews and Sebastian Paradowski from ENVIRON.
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Printed on FSC certified paper using vegetable oil-based inks and waterless printing technology
© October 2014 ENVIRON. All rights reserved. This content is for general information purposes only and should not be used as a substitute for consultation with professional advisors.
environcorp.com
For a copy of the full report please contact:
Lorenz Mikosch +49 89 1392 832 0 [email protected] Schmidtke +49 89 1392 832 0 [email protected]