- [Mary] Hi there. Welcome to "Safety Labs by Slice." In corporate settings, ESG initiatives and reporting have become extremely important, spawning a whole consulting and communication specialty. Today's guest sees strong ties between ESG projects, that's environmental, social, and governance issues, and safety management.
In March of 2023, he co-wrote with Dr. Linda Martin, an article in the "Professional Safety" journal about the safety professional's role within ESG initiatives. Today, we'll discuss the connections and opportunities that ESG represents for safety practitioners. Nicolai Massyn works in corporate compliance and risk management in Canada and the U.S. He started his career as an advocate of the high court in South Africa and built a specialized practice in environmental law for mining and industrial clients.
For over 20 years, Nicolai has developed experience in areas such as EHS auditing, consulting, certification auditing, and building compliance software. He's founded several companies focused on EHS compliance tech, RegTech, and consulting services. Nicolai is the author of several published articles and co-author of a book on environmental law.
He was the founder and managing director of the African Office of a Canadian Supply Chain Management Company. With a lifelong passion for all things related to sustainability, he has often been accused of being an environmentalist. Nicolai joins us from Calgary, Alberta.
- [Nicolai] Thanks for having me.
- I'd like to start by defining in a fuller way, ESG. So most people, I think, have heard the term, but they might not be aware of the kinds of activities that could fit within it. So we'll go letter by letter, and I'd like you to talk a little bit about what kind of activities does it include, and if there are any activities that you think might surprise listeners, that maybe people don't generally know, starting with E.
- Sure. I like to look at ESG as a basket of risks that meets compliance and management, and also unlocks a lot of opportunities, of course, because it starts with compliance and it ends with sustainability and with efficiency actually. So I think it's good business practice as well.
But if we strictly look at what ESG encompasses, it's basically the lens through which capital markets look at your non-financial sustainability risks. And typically, they've then clumped into the E, S, and G topics, and then each of them have their typical subtopics. So under your environmental, the biggest one, the biggest flavor of the next few years, I guess, would be your climate management and climate footprint and carbon accounting.
But linked to that is also your water usage. I think a lot of it has to do with protection of ecosystems and the effect that humanity has on different ecosystems.
- Compliance around environmental matters, you know, how compliant are companies and how do they prove compliance around these? And linked to that is, of course, waste management. So, I would say on the environmental side, those are the big ones. And then within climate, there's the two strands that needs investigation, and that's the mitigation part and the adaptation part.
Now, mitigation is all about what is your organization doing to mitigate its impact on the environment. And adaptation is how does your organization adapt to be resilient and sustainable given the changes to the physical environment that it operates in and its supply chains operate in? And it's turning to a whole world of compliance and then management and consulting out there.
So that's your typical E elements. Then if we look at the S elements, or the social elements, first of all, let's focus on the workers. Primary there, you'd look at worker health and safety on-site, your traditional safety management. And that's where the role of the safety manager, in my opinion, plays such a critical role in implementation of ESG.
Then we look at your worker and supply chain, human rights, child labor, forced labor, victimization, you know, sexual harassment, those kind of things. Then we look at things like DEI, diversity, equity, and inclusivity. And that's got a different flavor for different industries and different countries because they all have their own histories that come with them, and therefore they've got their own social balances and social dynamics.
So it's different region to region. There's no one-fits-all solution there or answer or ratio, I would say. Then there's also what contribution that organization has and how does it interact with the direct community that it operates in on the social side. And then focusing on the employees a little bit more is about worker training as well and upliftment, so to speak.
That's your typical social elements. And then when we look at governance, the broad concept of governance is how our companies...how do they regulate themselves? That's the area of governance. Now, legislation plays a role in the companies legislation, how companies should operate. But then also the rules of the board, the rules of the organization. How do you take leave?
What do you do with cell phone charges? You know, the basic nitty-gritty of running a company, that's the governance side of it. Now, rolled up into that from the ESG, the G in ESG, I think the composition of the board and the competence of the board plays a definitive role. In other words, do they have the expertise to take on ESG and are they diverse enough? Do they also mimic the DIE requirements of that organization?
Then we need to look at the ethical position that the organization takes. So that would be your ethics around business practices around corruption, anti-money laundering, terrorism, those kind of practices. How are those managed? And then often forgotten are your governance elements around your information security, cyber security. It's so critical.
We all work with data. We all work with client data, employee data, supplier data. What are our vulnerabilities. Are we ensuring that private information is adequately protected? Massive world, massive. We also need to look at quality. What quality of goods and services do we provide?
How do we ensure that we do it properly? And then the sustainability around the financing side of it, what are policies about returns, you know, about deliveries, returns, quality of the product, these kind of things? Also actually, the purchasing and finance play a big role. And then business continuity, in general, that often links to your cybersecurity. But it's not only that, there's a physical component to that as well.
Oh, the hurricane is coming in. We've got high rainfall. We've got extreme drought or fires. We've got COVID. How does this affect our business continuity? So you have to factor in all of these things. Now, to revisit a statement that you had about what do I find surprising, what I do find surprising is how many of these elements that I've just mentioned here are actually already addressed within organizations.
They already do many of these things. They have not clumped it under the basket of ESG imperative because in the end, all of these ESG compliance requirements rolls up into how is it reported into whatever framework organizations have to report.
So that's the end result of the process and the administration of the ESG is the reporting. And we often don't think about the fact that we are already doing much of this on the safety side, information security, business continuity, environmental management. You know, it's good business practice not to use more water than you should, not to use more electricity than you should.
It makes business sense because in the end, sustainability means doing more with less as well to a certain extent because that means there's more left over for later. So I think efficiency plays a big role in that. And I think ESG and the other factor that surprises me there too is the extreme level of weaponization that's happened in the whole world of ESG, political weaponization where the two different...left and the right has taken up elements of ESG and it either becomes a pillar of their fight against the other.
People interpret it so incorrectly and they turn it into something that it was never meant to be. If it's the capital markets that require these things and there's a good business reason behind that because it makes the organizations invest they in more sustainable, less risk of pushback from any area that they're operating. So from my perspective, I think it's great business practice to implement decent ESG metrics.
The fact that it's now been weaponized just shows you how people are grasping to anything to try and get the one-upmanship on the other party.
- Yeah. It's about going beyond compliance in all of these, and really proving to investors, right? That's kind of the core of it.
- Oh, absolutely. I mean, it's stakeholder capitalism, I've heard it called, that's quite interesting. And I agree. It's trying to meet your stakeholders' expectations of your organization. If you have happy stakeholders, chances are that your organization is going to be successful because why wouldn't it? Each segment of stakeholder and their interests are properly taken into account and properly managed, and then reported to those stakeholders.
So, I think by and large, it's a great initiative.
- Okay. So before we get into more safety-specific discussion, can you give me just like a broad strokes history of ESG initiatives? Where did this kind of...in a sense, businesses have always been doing a lot of these activities, but where did this kind of reporting or when maybe an investor interest start to show its head?
- I think it was a culmination of the environmental justice movement and social justice movements that sort of coalesced and linked it to the financial imperatives. And there were some forward-thinking investment houses and capital market players that recognized the importance of these elements and gradually started introducing it over time.
So I think it's been a long time coming. It hasn't been labeled ESG always. It was there in many different kaisers and people have been...most large organizations have been cognizant of all of these elements over time, and they've been managing it. It's just never been clumped together in this particular basket. So I don't think it's really new.
I think it's new the way that it's being reported on. So yeah, I would say that it's been foundational in capital markets looking at sustainability of the investments for a really long time. And it's only now that all the...I mean, the frameworks have been long coming and the United Nations' involvement in these things and setting out the rules of good responsible businesses. They've set the trend for sure.
And then many NGO-type organizations started developing sustainability metrics. And I think most of the push has come from the sustainability and the environmental, the E in ESG, and sustainability side of things, more so than any of the other elements. And then the others being part of the baskets now being uplifted and given more visibility given the reporting frameworks.
So it's been a long time coming. There wasn't one specific moment that just catapulted this into fame. It's been long development over multiple years.
- Now, let's get a little more specific about safety. And you did mention a little bit of this, but more fully, how are ESG activities compatible with safety management?
- Right. You know, I think the cycle of managing risk, doing risk management in organizations, the phases of it, it doesn't matter which type of risks get managed. I think there's a particular phase in which these things get managed. And ESG is no different from it because ESG is nothing different from just another set of risks that an organization needs to manage.
And safety professionals by their very nature, their whole world is predicated on these cycles of identifying risks, then rating them, then identifying controls to manage that risk, implementing that control, measuring to see whether it's being effective or not. And also setting certain objectives or targets, numbers behind it, to see whether you are achieving your objectives, and then going back and deciding whether it's worked or not by seeing whether your numbers are achieving in real life what you set out to achieve, and then improving the cycle.
And over and over it goes. So, it links back to your Deming cycle, your plan-do-check-act cycle. I mean, most business comes back to that. So if we apply that normal plan-do-check-act cycle that I just mentioned to your ESG metrics, some of the names are different because instead of doing a basic risk assessment, you do a materiality assessment and you inventory the material ESG elements that are pertinent to your business.
And obviously, we're not only looking at the risk, but also the opportunities. And you'll probably know that most of the ISO certifications that you can do, the ISO standards are all starting to look at risk and opportunities because they want to improve the business as a whole and not just look at the negative side of things. So we find on the high level that the ISOs are also adopting this type of thinking that you look at your risks and opportunity.
And ESG is no different because it's not only the risks that we look at, we need to look at the business opportunities inherent in complying and improving on certain metrics. And facts have actually proven out, numbers have proven out that companies that do good ESG implementation and maintenance over the long-term do better and are deemed to be more sustainable and seemingly are more sustainable that companies that ignore the ESG elements.
But I digress, so back to the process. So what we are saying fundamentally, the hypothesis is that the cycle that safety professionals follow to do their work is familiar. They have the tools and they have the mechanisms available. And this approach can be applied to a slightly wider basket of risks than they are used to looking, not just the safety, let's put some more risks in that basket and we treat them in the same way.
We are not saying that every safety professional becomes climate adaptation specialist. No, we're just saying that they're good at managing the process, identifying, okay, adaptation is a risk. What do we need to do about it? Appoint the required specialists to come and assist us with this, get them in, manage the interaction, get the feedback back to the different business departments.
And the same can be said for multiple different elements. Sure, there's a multitude of specialists involved in this, but the process behind it, establishing the risks and in managing the entire ESG management process and inputs management and outputs of the ESG process, that's similar to managing the safety process.
And the other element that I'd like to highlight is that safety professionals, they've got the benefit of really being usually very close to the organization. They know what's happening on many different levels, not just in the boardroom. They know what's happening in the back offices, on the sites, in the darkest corners. They know the business, they know the clients, they know the customers, they know the complaints.
So they're very well-positioned to really understand what impacts business has on the wider stakeholders. I think they can play a really...make a really great contribution in helping with the materiality assessments as well because they really know the business.
- Yeah, that was actually my next question is that you had mentioned that safety professionals are ideally positioned. So I was going to ask you more about that. But what you mean is simply that they have access, not just maybe across silos, but also across the hierarchy, if you want to put it that way, like the C-suite down to the factory floor kind of thing.
- That's right. That's right. They've got touchpoints across and up and down. I agree with you with that. And therefore, it makes it easy for them to access the business and access different parts of it. And they've got knowledge on those different...they understand what those different levels and hierarchies in the organization often require and do because they need to interact with them from a subject matter speciality.
They already have that competence. And I think that can stand them in good way over time in making a big impact.
- So, you also encourage safety practitioners to seek out ESG training as professional development. So I'm curious, what does this kind of training look like, and why is it important for safety professionals? Like, what skills would they be developing and why, why do you think this is an important point?
- I think the most important thing for safety professionals is they need to be curious about the world around them and they need to be curious about the breadth of ESG. And I think when we talk about...there's two levels of training and self-improvement that we can focus on. And the more important one is almost the informal one, I would say.
There are so many articles being published on LinkedIn and on websites dedicating themselves, organizations dedicating themselves to sustainability or social elements with a broader ESG. And there's such wonderful articles being published. LinkedIn is a fountain of knowledge on this front, especially if you start following parties that are really thought leaders because they do all the research for you and they curate a wonderful newsletter that you can subscribe to, and then you get delivered all of this information in your inbox.
The thing is to make time to actually read through it deeply and not just skim over it and to start seeing what the trends are, how other parties are dealing with this. And then on the formal side of it, there are some universities and some professional bodies that are starting to do sort of later adult education in the sense that you may have graduated as something completely different.
But yes, there's whole new world of ESG that you might be interested in, and we offer some progression. It'll usually consist of multiple smaller courses making up some sort of a professional development route out there. They are still under development. There's not a lot of them out there. We had interaction with a U.S.
organized university that helped us with some research. Some of the students did research for us and I was very interested to hear that they're going to offer a program for professionals, you know, business professionals that are more interested in ESG and want to actually get some recognition that they understand ESG and that they can contribute to the ESG journey.
So that's quite interesting. And I think more and more organizations are going to start delivering this type of training that professionals would like to see. So, there's no straight answer. There's not a lot of it available yet.
- But it sounds like there's not a lot of it available, but if you were to take advantage of it as a safety professional, you could sort of pitch yourself as, look, you know, I've got this deep structure, this framework of risk assessment that I do all the time. Now I've got more about ESG, like I've learned about ESG with, you know, whatever certification or courses are available.
And that might be a good way to pitch to...
- It would be wonderful. I mean, that would give the safety professionals a structure in which to fill in the ESG ports and see where they lack and understand the relevance of those topics and how it relates to...how people are discussing it globally and why is it important. If you don't understand the why on these things and why they are important to the stakeholders, you never be able to create the correct control, the create mechanism to satisfy those stakeholders.
So it's really important to understand the issues at hand to formulate the correct controls and the correct reaction by your business against these things. Otherwise, you're going to be pitching on the wrong level and doing the wrong things and wasting your time and money, that's for sure. So I would encourage any safety professional to try and get some certification in this field.
It can only progress, progress your career wonderfully. And it's not going to be a topic that's going to go away anytime soon. So I would say you would be remiss if you didn't invest in yourself at this stage. This is going to be a burning topic for the next 7 to 12 years until it normalizes as part of business.
But for the foreseeable future, I think it's going to be a career point of distinction to show that you've got something that somebody else does not, going to be a good distinguishing factor.
- Getting in on the ground floor is an expression that comes to mind. In the article, speaking about the next, you know, sort of immediate future, you talk about what business leaders are seeing as priorities in the coming years, and I think there's a reference to some research, but these items are identified as ESG, digitization, and supply chain management.
And then you and Dr. Martin talk about how these are related to each other. So can you go through how those three kind of work together?
- Yeah. It's interesting that the CEOs are focusing on these things almost separately, but they overlap to such a large extent, that the one amplifies the importance of the other to a very large extent. So I would say that, well, digitization, that's obviously inevitable because we're in an age where, you know, remote work and all data is digital and data becomes a currency of our time.
So digitization of especially processes and utilizing platforms to manage those processes, that's inevitable. It's happening all around us, in some industries more than others. And I think it's accelerating quite dramatically. I think with introduction and the adoption of all of these new AI platforms, everybody's scrambling to get that done.
And that's digital. That's digital data being processed and becoming part of the business processes of organizations. So sure, digitization is going to be there. And when we talk about ESG, obviously that's getting pushed dramatically. And the reasons that it's getting pushed is because the capital markets are pushing it and legislators are now pushing it.
So, we have to distinguish between the voluntary elements thereof, whereby frameworks get created and companies can follow it should they wish. Typically, there's a big one that ISSB is going to be launching a voluntary framework pretty soon. They've been working on it for many years. And what they're doing is they're taking multiple other frameworks, making sure they're consolidating it in an attempt to try and consolidate the hundreds of frameworks out there into a framework that can be applied globally.
So, I think that would be a great convergence towards a particular framework. When would you use that? You would use that framework when you are not in a market that's formally regulated. So a market that's formally regulated like Europe, we have multiple companies that falls under the corporate sustainable reporting directors, and they have to do sustainability and other reporting, which is a large part of the ESG.
So that's the mandatory side of things. And then in the US, the SEC's been kicking this around quite a while, and it's a very hot topic. Are they going to do it? They're definitely going to do it, it's just a question of exactly what is going to be regulated and to what extent, who's going to be affected by it, and when they're going live with it. It seems it's getting pushed out a little currently because it's become such a politicized item in the U.S.
But at some stage, it's going to go live and it's going to become implemented. So we will have the mandatory reporting around that. So ESG is here to stay. It's becoming more and more important. And a lot of the data points around ESG, I mean, the way to track it is also to use digital platforms, digital programs platforms and mechanism.
Otherwise, it's impossible to track it in a wide organization because the elements are so wide and varied. The only way to do it is to use some sort of a platform. Now, when we look at supply chain, I think with COVID, our supply chain resilience has been tested so dramatically, and we've seen the results of a non-resilient supply chain when there were shortages of everything.
And then in comes ESG and in comes the voluntary and the mandatory rules. And many of them are now also introducing the requirement that companies have to look at the ESG data points and risks within their supply chains because that data gets reported into the ESG programs of organizations because they then need to pull all of it together and report to their stakeholders.
And a component of that are their supply chains. So we have a convergence of data points around ESG sitting in supply chains and needing to be delivered digitally. That's how the convergence of those three are playing into the hands of service providers that are ready to manage digital data across the supply chains into organizations so that they can get to the ESG data points.
I mean, in our experience, we see that for every single on-site contractor, there's around about five material suppliers in the supply chain of our organizations that we deal with. And the ESG data points are absolutely not just located with the contractors that physically come on-site. The larger body of ESG data points that needs to be collected and managed sits within the wider supply chain of the material suppliers of goods as well, not just the physical service providers on-site.
So that means that your supply chain and the reporting on the supply chain is suddenly grown maybe with a factor of five if we believe the number of the 1 to 5 ratio. So I think it becomes imperative to do this digitally and use platforms. Otherwise, it's just too much information to track and to report on and to pull in.
You have to do it digitally.
- Yeah. And so you just reminded me that as a subcontractor then, it makes sense that you would have your own reporting because that's a differentiator for larger companies that are maybe looking for contractors. If you have that reporting, it makes their job easier, especially if it's a similar framework, then they can track within their own reporting because they have to go out that extra level.
- Yeah, absolutely right. I mean, what you find is that if your organization company, if you don't put out a sustainability report or an ESG report somewhere on your website and make publicly available, companies that are interested in what your ESG score looks like before they want to do business with you, they'll go and they'll look at one of the commercial rating agencies to see how they rate your ESG posture.
And that data can come from anywhere. I mean, it comes from complaints on the internet, it come from completely incorrect reports. Your competitors can, you know, tarnish your reputation and put false information out there. If you do not control the narrative about what your ESG posture looks like, somebody else will.
And they're going to put you in a negative light. So basically get on the bandwagon and control your own destiny regarding what your ESG posture looks like. More and more we see our clients and the clients that we work with, they want to pick and choose suppliers in their supply chain that matches their requirement on these ESG metrics.
Because one client might have a high imperative to score really well on the DEI because one of their biggest stakeholders are requiring that, then they want their supply chain to reflect that value. And they only want to hire and work with supply chains that actually reflect that. Somebody else might have a big issue with climate and with climate change.
And they want to be...that's especially for oil and gas, right? Because like 90% of climate footprint in the oil and gas industries in your supply chain and not in the actual large companies. So for them, climate and Scope 3 emissions and carbon footprint, that's going to be one of the biggest things ever globally.
They all have net zero imperative that they are pursuing dramatically. 2030, 2035, we've heard the declarations by these big organizations that want to be net zero. How do you achieve that with 90% of your emissions in the supply chain? Well, you better select the right suppliers that's got a good footprint, otherwise, you are never going to achieve your net zero requirements.
So anybody saying that ESG's [inaudible] thing or what... No, it's absolutely embedded in the way companies are approaching the future and it's embedded in the whole climate conversation deeply. And there's no ways of separating that. So yeah, so imperative that organizations digitize, that they look widely, that they use tools, and that they look at their subcontractors and all of their contractors because those data points all roll up into their reporting and they need to visually see what their supply chains are doing.
So if you don't have a view on your supply chain, it's going to be really hard managing your ESG programs, and it's going to be impossible achieving your climate objectives if you don't have a view into your supply chain with good metrics and good data.
- Yeah, and I think that's an important point is you are being reported on. The question is, are you supplying the data, or is this like some we all know how information on the internet is not always entirely accurate? And scraping data from who knows where maybe isn't showing a very good picture.
- Oh, absolutely, yeah. So, it's in every organization's own best interest to get the correct data out there. Don't wait for your clients to ask for that data. Start building those reports, get it out on your websites. Submit it to some of these reporting frameworks where you can. Try fermenting and creating a positive image of what you're trying to achieve because people are doing a lot.
And as I mentioned earlier, one of the surprises that I had was how much people are already...companies are already doing on the ESG domain, they're just not reporting it as ESG. So you probably got 50% covered already or more, just put it in the correct buckets and report on it as an ESG element in easy points, easy brownie points.
- It also occurs to me when you were talking about the politicization of terms like sustainability, we tend to think of that as climate change or climate sustainability, which it is, but there's also sustainability within a business, right? And that's where the supply chain management comes in part, like, is this business going to last through pandemics, through hurricanes, through, you know, all these kinds of things?
There's two ways to look at sustainability, and I think they're both important here. I want to go on to how those three are connected to safety as well, like the supply chain management digitization. I actually had an interview with someone who specializes in the digitization of safety recently, so yeah.
How does safety kind of interact with these three pillars?
- Okay. The space that we play in is about your entire supply chain compliance through the life cycle of interacting with your supply chain. And in that, we see the trends and we see how companies are reacting and what they're looking at. And I would say, let's talk about the digitization first.
I see how mundane day-to-day tasks and the management of the data created by those tasks, there's just so much happening. There's so much data points. Currently organizations, they might have a club board, they might be doing a site inspection and hazard analysis every single morning.
They fill it in and if there's not something radically wrong that they've got action, all of that data just goes in a box and it lives there for a few weeks and it goes into deep storage and then it gets carted off into double-deep storage, and then it gets destroyed after five or seven years and then it's gone. Whereas there's a lot of technology where these manual processes are all being digitized. In other words, on the mobile device, a person having to do the job will know when they have to do what.
Quick access to an easy mobile app, do what you have to do, that automatically gets put in the correct hierarchy, in the correct place in a management system. That management system then gets made available to whoever needs to see it. It influences whatever metrics you need to report on. And that little data point flows up into this torrent of data and does it [inaudible 34:46] in the bigger organization.
And so all of the strands of safety management almost is being accommodated in digitization. So we see that happening a lot. Now, how does it relate to digitization? How does it relate to the ESG imperative? Well, as we said, ESG is nothing different from managing different an additional basket of risk. So what we see is that most organizations have some sort of ERP management system, enterprise risk management system, and often there's a sub-component of, they call it GRC, governance, risk, and compliance management, or companies have standalone governance, risk, and compliance management systems.
Safety is typically one of the main pillars of a GRC management system. One of the main disciplines that get managed. Safety gets managed, information security, environment quality, privacy data. These are typically the things that get managed in systems like this. So what we see is that the other elements that safety professionals can start managing and looking at, all that happens is that's another risk element that is pulled into your EHS management system, or your GRC management system, or your ERP management system.
It is just a system that manages the plan-do-check-act of organizations. So all you want to do is you want to digitize all of the elements to do with your ESG, because it is just an addition to your safety that you are already doing. So you do your risk assessment, identification of controls, implementation of that, checking whether it works, meaning training of your staff, deviation, in other words, your nonconformance and corrective actions.
Then you go and you do your reporting on everything to see, how are we doing and then we make a decision. Did we achieve our objectives and our targets or not? If we didn't, what has changed? How can we improve it? And so the continuous improvement cycle goes. Now, it doesn't matter which discipline it is in. It can be safety, it can be environment, quality, DEI, anti-money laundering.
These things all have to follow that cycle over and over again. So if you use...so what I'm referring to here is integration and standardization of your processes, just adding different risks to it. And that's how everybody should see this. In the beginning, it's a compliance exercise, risk identified, managed.
Over time, the output of this becomes business sustainability, improvement in bottom line, improvement in the company, staff morale. It's a net positive for everyone involved over time. If you keep those stakeholders happy, your staff going to be happy. Clients, they all stakeholders, they're all going to be happy.
So we see that safety, digitization, and ESG, they all are working together. And because of safety professionals central role in the organization working with established software and digitized processes, it's a no-brainer. We can really make this very efficient and quickly scale.
And the biggest things that we find is when we speak to our clients, they do not want to immediately roll out..or they want to roll out ESG into their supply chains. Their biggest concern is how is it going to affect small or medium guy that do not have the resources to really manage this.
Well, that's why we want...with such ardent supporters of the concept that, well, use your safety professional, make them, educate them a little bit more, get them to use the established processes, the established software, and just start with a materiality assessment. If we understand that process of what is material to the organization and if safety professionals can start getting good at that process, that's the kickstarter for the entire implementation of ESG, and then the reporting just follows because you already have the tools actually in place.
You just need to introduce the new topics into your established system and the system will take care of the rest of it. So I think with very little effort, one can quickly achieve a place where you've got good metrics on all of the ESG requirements for your particular industry that your stakeholders are expecting of you.
You just need to do it. I mean, life rewards action. It's one of the older adages out there and I absolutely believe in it when it comes to ESG and the role of the safety professional especially.
- So, the digitization specialist I was talking to was saying, you're already generating the data, you're just not capturing it. So, this is the same. It's that plus you're already doing these processes, you're just not...you know, you just haven't formalized adding a few of these in.
- Yeah. They're not leveraging the processes just to add more risks into it, and then you let the system and the process do its thing. Absolutely. I agree with you fully.
- So in the article...and you talked about this a little bit before, ESG expectations bring both risk and opportunity. So, we've talked a lot about the risk. Can you talk a little bit more about the opportunity? Is that in terms of high score or good scores are opportunities for business, or did you mean that in different ways?
- Yeah, we did mean it that way. I mean, often opportunity's just the inverse of the risk sometimes. But it's not only that, it's broader than that. It's like, if you don't do this, you're not going to get the business. If you do this well, you are definitely going to get more business. So the one is, yes, if you do it well, you'll get more business from one of your stakeholders, meaning it's a client.
But if you do it well, many of the unintended consequences and the reports coming back on ESG is just a fad or not. I forget, IBM just released a report. They've got a big consulting arm as well. And they did this report, quite a good report. And their finding was that a large number, it was almost half of the companies that have implemented ESG had unexpected benefits in how well the company was positioning itself for the future and how well they're doing financially, and how well the morale is in the company.
So I'm probably misquoting this horribly. So let your readers or your listeners, please, we can put it in the show notes if you have such a thing. We'll find the article and added for you. It's a really interesting read. So the numbers are proving that there are unintended benefits beyond compliance with ESG requirements. So the compliance is the risk side and the ratio of the opportunities is, oh, look how I'm improving.
Look how we growing. Look how we are strengthening ourselves for the future and becoming a really resilient and sustainable organization. So sustainable is not just, you know, climate debriefs, sustainable means a company that can withstand changes and that can capitalize on changes.
And if you position to do that, then you position for the future. And that's the type of companies that people want to work for and that the holders of capital want to invest in. And that's what the end result of ESG tries to achieve. It's about business sustainability. And to achieve that, you've got to satisfy the stakeholders. And hence, you've got to tick off all the little ESG and subtopic boxes as well.
- Yeah, it's nice to hear the phrase, unintended consequences, to mean something positive. Especially in the safety world, I think it almost always means something negative. But there are positive ones, too. Now, do safety managers want to take on ESG? Are there some do you think that feel that they've already...like I know burnout is high for safety managers.
That maybe feel like they've got a lot on their plate and might see ESG as like one more thing. And how would you respond to that kind of?
- I would think that could very well be a knee-jerk reaction. Anybody that's overloaded, has to get a lot done with very little resources, I think that many of them would feel that way. But I think there are two positives that go along with that. I think the investment in their own careers, if they really evaluate us and see how much they can contribute and how they can position themselves in the ESG side as well.
And what is interesting is it's almost like a new wave of interest and there's money behind this because these new initiatives need to be funded. One of the metrics that we had that 87% of EHS functions are going to get increased investment to respond to ESG initiatives. So as you know with all type of investments in process and technology, it spills over into other fields.
So maybe it introduces your burden on your safety side as well. Because ESG is so broad, maybe that's the incentive or the initiative that safety professionals need to get their world properly digitized and to get systems in place. That would be a win, a massive win.
If they can get their world digitized because they also now need to look at ESG, which you can't really manage without digitizing it, it's too wide, it's just too many elements to it, maybe that helps you in your safety world as well, maybe that lifts the burden for you and the rising tide floats all the ships kind of thing. Maybe we can have some of that in the safety space. So, more money will be coming into your world and more opportunity will be coming to you.
Now, if you are a person that sees the world negatively and you've had enough, well, then it's going to seem like a burden to you. But if you see it for what it is, it's not going to go away. It is going to land in your department and you can either take it on and really start educating yourself, turn this into opportunity and not stagnate and be forward-thinking, well, power to you.
- Yeah. That whole line of conversation reminds me of writers discussing generative AI and artists discussing it. It's like, well, you can bury your head in the sand or you can learn everything you can about it and find the opportunities because they are there.
So, where do you see the future of ESG and for safety's relationship with ESG, maybe in the next, you can define them, but like maybe 5, 10, 20 years?
- I think the next five years will be a period...even shorter, the next three years, it's going to have a period of frantic activity for organizations to understand what ESG means for them, and then starting to manage it and report on it. And that'll be the compliance side. And I think there'll be a slow marriage of safety professionals' role into what they do and do not take on in ESG.
And they'll start understanding as well where their limits lie. As they explore it, they'll find, I have no role to play in mitigation. I can say we have to get an expert to do it, but I'm not going to be involved in climate mitigation. No, that is a specialized field, right? Or I'm not going to be involved in HR where they are looking at gender specifics in the board. You know, obviously, it's not going to be, but it's going to be something that they're going to be reporting on, and they're going to be helping to drive the process so that it happens and it gets reported on any case measured.
Okay. So I think there'll be a convergence of the processes. I think there will still be a separate safety professional. I don't think they will ever be replaced by a broader just the compliance role. That'll be in the short and medium term. I think we'll see a lot of that. I think in the longer term, the concept of ESG I think will become normalized to the extent that I think as a distinct species of risk, I think it'll stop...I think it's going to disappear and it'll just become part of your normal business management.
It'll be there. It'll just be absorbed because it'll become commonplace in day to day. I think 10 years from now that'll be the status quo. You'll probably still have specialists that focus on climate and this and that and the other, but the process will be just part and parcel of managing a good business, a good business risk. Nobody will be arguing about it.
We should, shouldn't be. Everybody will do it. It'll be mainstream. And we'll be comfortable with it, and hopefully, we'll have beta and more resilient businesses because of that.
- So there are a few questions that I ask guests at the end of the podcast. And I would like to bring those up now. So if you were training tomorrow's safety professionals, where would you focus interrelationship skills or human skills? So I'm talking about non-technical skills, essentially. What do you think they most need to...the skill that they could use the most, or maybe it's the skill that you see the least currently?
- I think getting comfortable with unknown, with knowing that many people don't know exactly what to do and just acknowledging it. I think people feel that if they're on the spot, they always have to know all the answers. And I think one of the...in other words, maybe showing some vulnerability and acknowledging we don't know all the answers, but I know how to get there because I know safety and I know process.
Having confidence in your skillset and then bridging the gap of uncertainty with that skillset and knowing you can do it. I think speaking to that and speaking into that space when they get confronted with that, not just saying, oh, I can't touch it. No, no. Knowing that you have the process skills and the risk assessment skills and the skills into speaking into the broader business across the silos and across the layers.
I think if you have real confidence in that, you can introduce a new topic such as ESG and run with it. So I think it's about confidence even though you don't know the detail in that if you follow the process and the logic, you will learn and you will achieve, and you will be able to do a lot for your organization. So maybe it's self-confidence in your existing abilities.
- Sure, you don't know everything, but guess what? Neither does anyone else.
- Yes, comfortable with uncertainty. Comfort with uncertainty, and how do we breach discomfort with knowledge that you have, the systems, and training and processes behind you?
- Okay. So, if you could go back in time to the beginning of your safety career or your career, what piece of advice might you give to yourself? It's the hardest question, I'm sorry.
- It is because, yeah, I want things back and, you know, I have to evaluate whether I did it right or not. Maybe I didn't know enough. I think the willingness to listen to older people and experienced people, to listen to them, and to then try and apply it to your career path to see where they went right or wrong and why, and anticipate how you can apply it to your own world of career.
Because there's nothing new in the world of work really in the concept of relationship and how you establish yourself and gain credibility and create your persona or your person, your work person that you are, and then actuating it and being successful in that. That concept hasn't changed.
The media's changed and the channels have changed, sure, but I think learning from others earlier and maybe getting mentors earlier in your life. I think that is something that I could have done with. I wasn't in this field of environment and safety. I was a lawyer practicing law. So, it was a sideways move for me into the field of environmental law.
And then in time, I did get a mentor that assisted me vastly. And once I understood the value of a mentor, I then went and applied it. But it took me many years before I realized the value of getting a good mentor and building a good rapport and getting a cycle of chatting and establishing a cycle of meeting with him. So I think I would've gone down that route a bit more focused and diligently.
- That's good. That's not one that I've heard before, but it's a good one. How can our listeners learn more about anything that we spoke about today? Are there books or websites, anything in particular that you would recommend?
- I would say go on LinkedIn and look for groups and people that publish digests and emails like weekly emails. I would say the best information that I personally get is from several LinkedIn groups that I'm subscribed to or individuals that I'm subscribed to.
And then there are...am I allowed to mention one particular group? I think ESG Daily, or ESG Today or ESG Daily. They bring out a daily email that comes to your inbox. And there's a lot of information in there. You know, some of them I read in a lot of detail and some I don't. And newsletters like that and most of them are found via LinkedIn and I subscribe to many of them.
So I would say that if you are not on LinkedIn, get on LinkedIn, I think everybody is, and then start looking for sustainability and ESG channels and hosts that really know their stuff and start following them and then actually make time to read because if you are not reading widely, you're going to get left behind.
I spend at least an hour to two hours every single day of reading about ESG and what's happening in our space. Otherwise, there's no ways you can keep track. It's just too much and it just changes too quickly.
- Yeah. Good advice that I give myself all the time, but don't necessarily follow. What is currently exciting you most about safety, or is there anything else that you'd like to share that we didn't get to?
- I try and focus on the things that intersect obviously with my job responsibility. So, I think the two things that I'm very keen on at the moment is the role of the data, getting the data and the supply chain. So for me, looking at supply chains and making sure that...getting ahead of the curve and getting the baseline data of ESG metrics in the supply chain and inculcating the mindset with companies that you need to start sooner than later because you're going to get baseline data and it's probably going to be terrible and poor quality.
And then you're going to get better data over two years. And you can't improve that baseline if you don't know what it is. So, I'm keen on people starting to get into supply chains and ESG data in the supply chains soon as possible so they can start working with that and then aligning it with what their corporate objectives are, and then focusing on the important because you can't do everything in one go. Focusing on what's important for your organization and then go looking for it in your supply chains and making those critical decisions on what do I want my supply chain to look like in these particular ESG risk categories and starting to work with that.
So the ESG and the supply chain for me currently is, I think, my interest point and my burning point that I'm interested in and want to move that whole agenda forward in industry.
- So where can our listeners find you on the web should they wish to reach out?
- Yeah, I'm on LinkedIn. I'm available on LinkedIn. My name, surname on LinkedIn, you'll find it there. Happy to reach out. Please reach out to me and I'll try and answer any questions you might have or direct you to people who can if I can't. I'm not a specialist by any means. I just have a very burning passion and interest in this.
But I can connect you with people that if I can't, that they can help you.
- Thank you. All right. Well, that is it for today. Thanks to our listeners and to you, Nicolai.
- Thank you very much for the opportunity.
- And as always, my thanks to the "Safety Labs by Slice" team, working hard behind the scenes to bring you interesting topics and guests every week. Bye for now.