4 Industrial EHS Departments

“We never like to admit to ourselves that we have made a mistake. Organizational structures tend to accentuate this source of failure of information.”

• Kenneth E. Boulding[1]

Before delving into the size, structure and organizational location of EHS departments and personnel, an organization should first define EHS and identify what the EHS department and personnel are responsible.  This will vary from organization to organization especially depending on how the organization defines EHS personnel.  For example, is a wastewater treatment operator considered in the EHS department or operations department? 

4.1            EHS Charter or Structure

If an EHS charter or structure doesn’t already exist, consider developing one:

“Departmental organizational structure refers to how a business delegates specific tasks and responsibilities to its personnel. Creating a clear, formal structure helps employees understand their specific roles within the company so they can focus on completing their tasks with minimal confusion. When every member of an organization knows their role, it allows them to focus on performing their duties, which contributes to the overall success of their department. Having a formal structure helps businesses assess their personnel needs, manage a hierarchy of employees and ensure that it has the right staffing to support its key goals and functions.[2]”

4.2            Defining Responsibilities

In the EHS charter or structure, you should address their responsibilities including, but not limited to:

• Scope
• Regulations or regulatory agencies
• Parts of the organization
• Physical locations
• Tasks
• Conducting EHS training
• Compiling EHS data
• Preventing EHS incidents
• Preparing EHS policies

One of the fundamental concepts to address is defining responsibility for preventing releases, injuries, fires, explosions, and non-compliance.  This may sound absurd, but depending upon how you have defined your EHS staff it is critical to organizational alignment on EHS efforts.  For example, if the wastewater treatment operator is part of the operations department, the responsibilities for preventing excess releases/non-compliance from the wastewater treatment plant might be identified as:

• Operating the wastewater treatment plant in a manner that prevents releases and non-compliance: operations department
• Designing the wastewater treatment plant so it can operate effectively: engineering department
• Submitting for a wastewater discharge permit: EHS department
• Maintenance and upkeep of the wastewater treatment plant: maintenance department

This delineation as not meant to assign blame, but rather provide clear lines of responsibility to help align the organization in its EHS efforts.

I have seen numerous different delineations, but do not have data showing which is best.  One recommendation from the book “Eight Habits of a Highly Effective Safety Culture” by Rod Courtney is to make safety the responsibility of operations and the safety department is advises, audits, monitors and reviews[3].  The book “Essential Practices for Creating, Strengthening and Sustaining Process Safety Culture” recommends the following to demonstrate an imperative for process safety:

“Operational aspects of process safety are integrated into operations, but corporate oversight for process safety maintains independence. This helps align process safety with operations, while helping avoid conflict of interest.  Smaller organizations with limited staff with multiple functions should think this through carefully…[4]”

4.3  Size of EHS Staff, System and Programs

In the middle of an Occupational Safety and Health Administration (OSHA) settlement negotiation after a worker fatality, an Occupational Safety and Health Administration (OSHA) representative asked us how many safety personnel and sites we had.  After we responded, they said that we did not have enough safety personnel for the number of sites.  We obviously were not in a position to argue even if the fatality were unrelated to our safety personnel-to-site ratio.  However, since that time, I have always paid attention to that ratio and thought about its significance. 

Unfortunately, I have not run across a quantitative answer or a good rule-of-thumb and have come to believe that there are too many variables to have a single correct answer.  However, I found a good safety benchmark in “EHS Today” magazines ranking of America’s safest companies.  EHS Magazine included the total number of employees, the total number of sites and the number of EHS personnel.  The following table illustrates these numbers and provides the ratios of employees to EHS personnel and sites to EHS personnel.

Obviously, a company that is willing to spend resources on EHS staff has some management commitment, but that alone may not improve EHS compliance and issues.  Additionally, the number of EHS personnel will vary depending upon:

• The industry type: The regulatory burden and potential hazards can vary significantly by industry.
• The total number of employees and sites: A company with one site might need fewer EHS personnel than a company with the same number of overall employees at multiple sites.
• The company’s risk tolerance: A company with a low tolerance for injuries, environmental impact and violations, as discussed further in Section 2.6.1, may require more EHS staff.
• Delegation of EHS responsibilities: A company that delegates EHS duties to personnel that might not be considered EHS personnel (i.e., they are not in the EHS department) will have lower numbers of reported EHS personnel.
• The EHS personnel experience level: I was able to hire a number of experienced and highly capable EHS managers (e.g., personnel who could write permit applications and prepare plans) allowing me to have a smaller EHS staff than I would have needed otherwise.  A company with less experienced EHS personnel may require more EHS employees.
• Outsourcing of EHS duties: Some companies rely on EHS consultants for some or all of their EHS needs (e.g., audits, permit applications, etc.) and therefore have fewer EHS personnel.

EHS Today Magazine’s 8 Companies Celebrated as America’s Safest[4]

Industry Category	Number of Companies	Employee to EHS Average	Employee to EHS Maximum	Employee to EHS Minimum	Site to EHS Average	Site to EHS Maximum	Site to EHS Minimum
Construction	36	108	750	15	7.9	50	0.16
Construction and Engineering	5	54	120	18	20	80	0.60
Consulting	4	808	2,333	35	5.0	7.7	2.3
Data Center	1	725	725	725	73	73	73
Engineering	6	168	340	41	2.7	10	0.71
Laboratory	4	139	300	50	1.8	3.5	1.0
Manufacturing	47	265	1,167	32	2.8	38	0.015
Retail	5	1,039	2,800	409	95	281	15
Service Providers	4	299	448	35	9.2	29	0.20
Specialized	4	32	53	4.6	2.3	8.1	0.0015
Utility	4	261	433	78	0.61	1.1	0.33
Waste Management	2	251	459	44	5.0	6.0	4
Wholesale	1	120	120	120	8.0	8.0	8
All Industries	123	243	2,800	4.6	10	281	0.0015

The table above shows a wide variation between the companies that EHS Magazine considered some of the safest companies in America.  These companies have widely varying hazards ranging from a consulting company to a chemical weapons handling operation so one would expect variability.  As I have compiled these over the years, the average has changed dramatically from an average employee to EHS professional ratio of 200 in 2013 (i.e., averaging the 2012 and 2013 data) to 300 in 2014 (i.e., averaging the 2012 through 2014 data) and an average number of sites to EHS professional ratio of 1 in 2013 to 13 in 2014.  This probably reflects the addition of a number of low EHS risk companies (e.g., retailers) that moved the results upward.  After this change, I decided I needed to attempt to put the industries into categories, which are shown in the table above along with the totals for all industries in the bottom row.

If you want to get a feel for how important EHS is to a given industry, you can learn this from analysis of the industry’s trade journals and conferences. Although this does not provide you with the EHS personnel needs, it does allow you to compare one industry to another.  I look at a general industry trade journal (i.e., one devoted to the industry in general and not EHS issues specifically) and count the number of pages devoted to EHS issues, including advertising, compared to the overall length of the trade journal.  You can do the same evaluation for number of EHS presentations at a general industry conference.  

4.4  EHS Staff Organizational Location

Other common questions related to EHS staff are:

• Where should they be located within an organization?
• What authority level they should have?
• To whom should they report?

Based on my experience and available information, the proper location and reporting level of the EHS staff can improve compliance, limit fines and potential for officer incarceration, and prevent willful blindness.

I have located several regulatory drivers and guidance documents for the EHS reporting location such as the Department of Justice (DOJ)’s Environmental Sentencing Guidelines.  I believe these environmental guidelines have shaped a number of companies’ EHS organizational structures since the guidelines offer both rewards and penalties, especially the Department of Justice (DOJ)’s environmental-specific organizational guidelines which state:

“..the proposed guidelines created a “sweeter carrot” and a “larger stick” than the organizational guidelines. Not only would effective compliance programs result in a greater reduction in fines under the proposed environmental guidelines than was available for other kinds of corporate crime under the existing organizational guidelines, but failure to implement any such program could also result in a substantial fine increase[6].

The Responsible Corporate Officer (RCO) doctrine may have also shaped some EHS organizational structures.  Corporate officers are at greater risk from environmental non-compliance issues since the Clean Air Act (CAA) and Clean Water Act (CWA) refer to the Responsible Corporate Officer (RCO) doctrine[7].  Under the Responsible Corporate Officer (RCO) doctrine, corporate officers do not have to know about environmental violations to be held personally responsible[8].  Establishing independent environmental personnel at a high level within an organization could show that the officer took action to prevent violations, the officer does not have a nexus to the environmental violations, and the office cannot influence corporate policies and activities[9].

However, separating EHS personnel from operations could increase the potential personal liability for high level EHS personnel depending upon their responsibilities and it could increase company liability if the high level EHS personnel oversee multiple subsidiaries[10].  Under CERLCA liability, case law demonstrates that high level individuals with responsibility for health and safety and/or hazardous waste practices could meet an “authority to control” test[11]. 

Prevention of willful blindness may be another reason companies have structured their EHS staff[12].  Separating EHS staff from the groups that they regulate (e.g., operations) may prevent and protect an organization from willful blindness:

“Willful blindness may also have been encouraged by business models that are based on inherent conflicts of interests…”[13]

4.4.1  Typical Organizational Locations

I have not been able to locate historical data, but in my experience EHS staff historically reported up through operations/line management.  However, as EHS programs and regulations matured, and companies took EHS more seriously, organizations treated EHS programs as equals to other non-revenue generating company programs such as accounting, finance, human resources and legal.

I know others that perceive EHS staffs reporting to operations as arcane or old-fashioned.  The general impression is that operations could be subverting EHS compliance and that EHS is not considered important.

I have identified a number of advantages to EHS staff reporting outside of operations, but there are a few disadvantages.  The operations department may not take ownership of EHS policies and requirements if they do not have involvement.  Therefore, the organization needs a mechanism that assures the operations department has a voice in the development and implementation of EHS policies.

It’s also important to note that smaller organizations may not be able to separate out operations because EHS staff conduct operational activities as well as EHS activities (i.e., policy-making, etc).

Several studies have evaluated where the EHS departments are currently reporting.  A 2011 AON survey of safety departments noted the following percentages of safety department reporting:

• Senior operational management (Corporate Executive or Operating Officer): 23%
• Risk management: 19%
• Human resources: 17%
• Operational management: 17%
• Other: 17%
• Finance: 7%[14].

Another 2011 survey noted the following percentages for EHS department reporting:

• Legal department: 30%
• Operations: 22%
• Engineering: 10%
• Other departments: 38%[15]

This study showed the EHS audit group primarily reported to the following departments along with their 2006 results in parenthesis:

• A separate corporate EHS department: 65% (64% in 2006)
• Internal audit: 15% (4% in 2006)
• Legal department: 5% (9% in 2006)
• Operations: 4%(4% in 2006)
• Compliance: 3% (7% in 2006)
• Other departments: 8% (11% in 2006)[16]

This study shows an increase in the number of companies with an internal audit program.

The AON study requested information on whether the surveyed safety personnel felt the reporting location was successful.  The results are listed below which shows the position that the safety personnel report and the percentage that felt it was a successful reporting relationship:

• CEO: 100%:
• Engineering: 100%
• Quality: 100%
• Risk Management: 94%
• Operations: 63%
• Legal: 50%
• Multiple Departments: 50%
• Treasury: 33%
• Human Resources: 28%
• Security: 0%[17]

The AON study states that the majority of study participants felt the best reporting department for the safety department was Risk Management.

4.4.2 Organizational Location

Some of the reasons for the organizational location of the EHS staff include, but are not limited to:

• Protecting the company from organizational criminal prosecution by having trained and EHS auditors who report outside of operations
• Improving EHS compliance through improved EHS influence
• Increasing the company’s ability to recruit and retain quality EHS personnel
• Providing an external contact for complaints and issues
• Independent funding

4.4.2.1  Independent Environmental Auditors

Although no regulations specify where EHS staff should report, a number of regulatory guidelines point towards separate environmental experts to conduct internal audits.  The Department of Justice (DOJ)’s Environmental Sentencing Guidelines imply at least a portion of the environmental responsibility (i.e., environmental auditors) should lie outside of operations:

“…frequent auditing (with appropriate independence from line management) and inspection (including random, and when necessary, surprise audits and inspections) of its principal operations and all pollution control facilities to assess, in detail, their compliance with all applicable environmental requirements and the organization’s internal policies, standards and procedures, as well as internal investigations and implementation of appropriate, follow-up countermeasures with respect to all significant incidents of non-compliance;”[18]

The Environmental Protection Agency (EPA), in their audit policy list “an environmental auditing function independent of audited activities” as one of the elements of an effective environmental auditing program:

“The status or organizational locus of environmental auditors should be sufficient to ensure objective and unobstructed inquiry, observation and testing. Auditor objectivity should not be impaired by personal relationships, financial or other conflicts of interest, interference with free inquiry or judgment. or fear of potential retribution.”[19]

Without an independent EHS auditing group, a company may not be able to receive reduced penalties from self-disclosure of audit findings:

“In fashioning enforcement responses  to violations, EPA policy is to take into account, on a case-by-case basis, the honest and genuine efforts of regulated entities to avoid and promptly correct violations and underlying environmental problems.[20].

Other government and non-government organizations specify some type of independence, integrity or objectivity for company environmental audit groups:

• Guidance on the Implementation of Effective Compliance and Ethics Programs and the Federal Sentencing Guidelines notes that “Independence is established by the organizational and reporting structure..”[21].
• The Department of Justice (DOJ)’s Environment and Natural Resources Division Guidance also emphasizes audit integrity[22].
• The Environmental Protection Agency’s (EPA) Office Of Criminal Enforcement, Forensics And Training requires objective inspections[23].
• The Board of Environmental, Health & Safety Auditor Certifications (BEAC®) an international association for environmental, health and safety auditing profession, specifies that environmental health and safety auditors should be independent of the audited activities and free of influence:

“G3. In order to preserve independence the auditor must not be within the part of the line function that is being audited and specifically not be answerable to anyone in that part of the organization for compensation or performance evaluation.”[24]

• The “Environmental Health, and Safety Auditing Handbook” chapter on “Environmental Auditing and the Law” also emphasizes independence:

“The auditors should also be sufficiently independent of the facility and personnel whose performance they are assessing that their objectivity will not be compromised…The most thorough audit will be of little value and will carry little weight with enforcement agencies if the independence of the auditors is uncertain.”[25]

Although this would not require the entire EHS be organized outside of the operations department or group (i.e., or other departments that EHS personnel audit), the EHS auditors would need to be independent to take advantage of potential penalty reductions and avoid penalty increases afforded by having a “Commitment to Environmental Compliance.”  Meeting this guideline appears to be one of the regulatory reasons companies situate their EHS outside of operations department.

I have worked with other large and low risk tolerance companies that have entirely separate EHS audit departments in addition to their EHS departments.  However, smaller companies may choose to have one department of EHS staff outside of operations to conduct audits and other EHS activities.  The Environmental Protection Agency’s (EPA) 1986 Environmental Auditing Policy Statement discusses this issue as well:

“Audits can be conducted effectively by independent internal or third party auditors. Larger organizations generally have greater resources to devote to an internal audit team, while smaller  entities might be more likely to use  outside auditors.”[26]

I have not seen case law on this issue, but it would seem that using outside EHS consultants to conduct audits might also meet the independent audit definition.  In this case, you may want to have the EHS consultants provide the reports to someone outside of the operations department.  However, since the audits need to be “frequent,”, it may be more economical and efficient to use in-house EHS personnel to conduct the audits.

4.4.2.2 Trained and Experienced EHS Auditors

Although no regulations specify what personnel conduct EHS audits, a number of policies and regulatory guidelines require the auditors to have some level of expertise and experience.  Companies may have financial audit groups that report outside of operations, but a financial auditing group likely lacks the expertise and experience necessary to conduct EHS audits, which is a requisite according to a number of policies and regulatory guidelines.

The Environmental Protection Agency’s (EPA) Environmental Audit Policy Statement has a section on adequate team staffing and auditor training that says:

“Environmental auditors should possess or have ready access to the knowledge, skills. and disciplines needed to accomplish audit objectives. Each individual auditor should comply with the company’s professional standards of conduct. Auditors, whether full-time or part-time, should maintain their technical and analytical competence through continuing education and training.”[27]

The “Regulatory Expertise, Training and Evaluation” section of the Department of Justice (DOJ) Sentencing Guidelines also has requirements for auditor training[28].  The Environmental Protection Agency’s (EPA) Office Of Criminal Enforcement, Forensics And Training Compliance-Focused Environmental Management System – Enforcement Agreement Guidance also specifies that:

“… personnel responsible for meeting and maintaining compliance with environmental requirements are competent on the basis of appropriate education, training, and/or experience.”[29]

4.4.2.3  Better EHS Compliance

An independent EHS staff may provide better compliance with EHS requirements: Employees responsible for implementing EHS requirements may take these EHS requirements more seriously if they feel:

• Operational goals will not over-ride EHS requirements
• They will be held accountable by part of the organization outside of operations

4.4.2.4 Improve the Company’s Ability to Recruit and Retain EHS Personnel

A 2005 article by the Phylmar Group discusses how the location of the EHS staff in the organizational structure can influence the desirability of that company’s EHS jobs[30].  Companies that have their EHS staff under their operations department may be seen as old fashioned with the operations subverting EHS programs and regulations.  However, companies that treat their EHS staff in the same manner as finance, accounting, legal and human resources are likely viewed as proactive with desirable EHS positions.  During recent interviews, I was impressed how many interviewees asked where the EHS department reported: It became obvious that this is an important issue with EHS personnel.

4.4.2.5  Providing an External Contact For Complaints and Issues

Having an external contact (e.g., outside of the applicable department) for EHS complaints and issues may increase the likelihood that these issues are brought to light.  Some companies establish internal reporting or whistleblowing channels (e.g., phone numbers, e-mails, etc.) that allow employees to identify issues they have observed or experienced (e.g. EHS issues as well as other problems like sexual harassment, discrimination, etc.).  These channels may be internal departments (e.g., human resources, legal) or an external organization that specializes in handling issues for the company.  The problem with these channels is the issue will likely need to be brought to the attention of the EHS personnel and if those personnel are within the applicable department where the complaint or issue originated, it might be difficult to maintain anonymity.  The NASA identified this issue in their Columbia accident investigation noting their anonymous safety reporting system was ineffective[31].  Even if you can maintain the anonymity, employees might not perceive that their anonymity will be preserved, which could deter reporting.  Having a separate EHS department may be an advantage so employees feel comfortable complaining about EHS issues knowing that the person receiving the complaint understands the issue and can maintain the employee’s anonymity.

4.4.2.6 Independent Funding

If the EHS department lies within the operations group, their funding may also be tied to the operations group budget.  In NASAs investigation into the Columbia accident, they identified this as an issue stating:

“the lack of centralized independent funding may also restrict the flexibility of center safety managers.[32]“

From a safety standpoint, it seems logical that the budget for labor would go hand-in-hand with the safety department budget (e.g., more employees equals more safety risk, less employees equals less safety risk), but this is not always the case for all operations especially for process safety.  A potentially common issue would be where a company installs automation to replace some employees, which might reduce the labor budget, but as discussed by Lisanne Bainbridge in “Ironies of Automation”, the automation may increase the potential for human error[33].

4.4.3 Authority and Reporting Level

Some of the reasons for the authority and reporting level for the EHS staff include, but are not limited to:

• Protecting the company from organizational criminal prosecution by providing the EHS department with sufficient authority
• Improving EHS compliance through improved EHS influence
• Increasing the company’s ability to recruit and retain quality EHS personnel
• Improving the company’s image with regulators
• Involving EHS personnel in planning to avoid project delays

4.4.3.1  Sufficient Authority

I have not identified a specific requirement that states a company needs to have EHS personnel at a certain authority within the organization (e.g., manager, director, vice president) or report directly to a certain level.  However, some of the guidance on effective compliance programs implies certain levels, but these would likely be dependent on the size of the company.  The Department of Justice (DOJ) Environmental Sentencing Guidelines require that:

“The organization has designed and implemented, with sufficient authority, personnel and other resources…”[34]

“The new amended criterion requires that “organizational leadership … be knowledgeable about the content and operation of the program to prevent and detect violations of law” and “organizational leadership” embraces both “high-level” and “substantial authority personnel.”

Companies may situate environmental professionals to higher levels since the expectations are that they need both a high-level operations employee to meet the “substantial authority personnel” and an environmental employee who is “knowledgeable about the content and operation of the program”. 

Other guidance implies an officer-level EHS position for large companies that have substantial EHS needs (i.e., EHS is a substantive area):

“Larger organizations often designate individual compliance officers by substantive areas and may utilize a compliance committee in lieu of a single compliance officer, United States Sentencing Commission “Report from Advisory Group on Environmental Sanctions” Memorandum dated December 6, 1993 from Phyllis J. Newton, Staff Director “(a) Minimum Factors Demonstrating a Commitment to Environmental Compliance (3) Auditing, Monitoring, Reporting and Tracking Systems, page 20or a combination of an individual compliance officer who is supported by a committee from different areas.”[35]

With reference to EHS auditing departments, private auditing guidance states:

“The director shall be responsible to an individual in the organization with sufficient authority to assure independence and to ensure appropriate conduct of audits.”[36]

4.4.3.2 Better EHS Compliance

A higher EHS reporting level may provide better compliance with EHS requirements: Employees responsible for implementing EHS requirements may be more likely to be compliant if a high-level EHS employee rolls out and oversees the enforcement of EHS policies and procedures.

4.4.3.3 Improve the Company’s Ability to Recruit and Retain EHS Personnel

The 2005 Phylmar Group article also discusses how the EHS staff reporting level in the organizational structure can influence the desirability of that company’s EHS jobs[37].  In the same manner discussed in Section 1.5.2.4, companies with higher-level EHS reporting would be seen as proactive while low-level EHS reporting may be seen as old fashioned and undesirable[38].  However, current and prospective employees would also likely factor the size of the company and EHS risks: A small company or company with lower EHS risks may not be expected to have a corporate EHS compliance officer.

4.4.3.4 Improve the Company’s Image with Regulators

In addition to the perception of employees and potential employees, the EHS reporting level also affects regulators’ perception of the company.  Inspectors, negotiators and other regulatory agencies may be influenced by the EHS reporting level: An EHS representative with a high-level position will reinforce the impression that the company takes EHS compliance seriously.

4.4.3.5  Involvement in Planning and Communication

The Environmental Protection Agency’s (EPA) Office of Criminal Enforcement, Forensics and Training Compliance-Focused Environmental Management System – Enforcement Agreement Guidance requires environmental planning involvement in corporate decisions on at least an annual basis[39].  This guidance does not apply to all organizations and would not require EHS personnel with high authority and reporting, but high authority and reporting would lend itself to this planning involvement.

Because of EHS specialization and complexity and the timeframes needed for implementation of some EHS requirements (e.g., air construction permits, wastewater permits), EHS involvement in planning can help avoid project delays since they will be able to start implementation early in the planning stage and manage expectations.   In my experience, high level employees are more likely to be involved in initial planning discussions.

4.5 EHS Strategies

I have seen a number of strategies for addressing compliance including:

• An EHS department that does all the work
• A decentralized system where managers and employees do the work
• A small EHS department that utilizes consultants

4.5.1 Risk Philosophy

I have seen companies fail to address and manage environmental health and safety (EHS) risk in an organized manner.  This is not an uncommon issue according to “The Economist”, which notes that companies frequently manage environmental risk management in an ad hoc fashion[40].  To assist companies in evaluating EHS risk, I prepared the following table that helps to define various environmental health and safety implementation philosophies from the following sources:

• “The Three Levels of Environmental Governance” by Richard MacLean “Environmental Protection” magazine, 1105 Media Inc. March 1, 2003 (http://eponline.com/articles/2003/03/01/the-three-levels-of-environmental-governance.aspx).
• “Relative Culture Strength A Key to Sustainable World-Class Safety Performance”, Mike Hewitt, Vice President, Global Workplace Safety Practice, DuPont Safety Resources, Wilmington, DE (http://www2.dupont.com/Sustainable_Solutions/en_US/assets/downloads/A_Key_to_Sustainable_World-Class_Safety_Performance.pdf)
• “The Corporate Environmental Profile” from “Environmental Health, and Safety Auditing Handbook”, second edition by Lee Harrison, McGraw-Hil, Inc. New York, 1995
• “The Five-Stage Environmental Developmental Continuum” from “Proactive Environmental Management: Avoiding the Toxic Trap” by Christopher B. Hunt and Ellen R. Auster, MIT Sloan Management Review, January 15, 1990 (http://sloanreview.mit.edu/article/proactive-environmental-management-avoiding-the-toxic-trap/)

This selection of an EHS risk level can be “al a carte”: It is not necessary to have to implement all of the items for each philosophy.  I grouped the risk philosophies into similar, but somewhat independent risks.  I think that presenting the risks in this fashion is more palatable than quantifying injuries, releases and fines.

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Environmental Health and Safety Risk Management Table

Philosophy	Overview	Advantages	Disadvantages
Reactive/ Problem Solving	Overview React to regulatory inspections Safety by natural instinct EHS Management No written management system or components of a management system Organization Limited EHS staff Responsibilities delegated to EHS staff and limited involvement by anyone outside of EHS staff Policies and Programs Limited or no EHS policies and training	Waiting until regulatory issues surface, limits routine expenditures of time and money (e.g., operating costs) Smaller EHS staff saves on salary costs Reduced EHS programs save time and expenses on permitting, recordkeeping, plans, and programs.	High potential employee injury rate and environmental impact from spills, releases, etc. High potential employee turnover leading to increased hiring and training costs[36] High potential insurance (workman’s compensation, environmental if held) High potential for the number and cost of violations High potential for negative publicity due to the number of violations, injuries, spills and releases If EHS compliance measures are missed, catching up may require extra costs or create issues[37]
Passive/ Dependent/ Managing for Compliance	Overview Focus on known compliance issues only Safety and environmental value shown EHS Management No written management system Audits and incident investigations not conducted or not conducted routinely or consistently Lagging indicators used to evaluate EHS status Organization Some EHS involvement by company leadership Some reporting by EHS staff to company leadership Compliance achieved primarily through policies and discipline Policies and Programs Policies written to comply with regulations, protect the company from regulatory violations and provide a basis for discipline. Training conducted where required	Waiting until regulations are vetted allows for clearer understanding and maturation of technologies Operating costs are higher than reactive, but still minimized	Potential increased employee injury rate and environmental impact from spills, releases, etc. Potential increased employee turnover Potential increased insurance (workman’s compensation, environmental if held) Potential increase in the number and cost of violations, but likely less than reactive companies Potential for negative publicity due to violations, injuries, spills and releases Audits and investigations may be used against company if not properly conducted and addressed.
Active/ Independent	Overview Address known compliance requirements Attempt to identify and address potential unknown issues EHS Management Formal written management system EHS tracking system implemented Routine internal audits with follow-up EHS planning conducted Leading indicators used to evaluate EHS status Organization EHS reports provided to leadership Some employee participation in EHS Compliance achieved through management commitment Open EHS communication EHS recognition Policies and Programs Policies are written to comply with regulations and address other potential issues Training conducted by non-EHS personnel	Reduced potential for violations Reduced potential for negative publicity	Staff and compliance measures will have higher operating costs than passive and reactive Increased number and complexity of EHS programs may increase the difficulty of implementation.
Aggressive/ Inter-dependent/ Managing for Assurance	Overview Address potential regulatory changes prior to implementation by regulatory agenciesImplement initiatives that go beyond the regulations such as corporate social responsibility, learning teams, etc. EHS Management Formal written management system, and compliance and ethics programEHS tracking system implemented Routine and random internal and potential third party audits EHS planning conducted including measures that go beyond regulationsLeading indicators used to evaluate EHS status Implementation of an EHS Management System standard (ISO 14001, 18001, 45001) Organization Company leadership participation in EHS activities and processes EHS direct reports to senior leadership Employee participation in EHS encouraged Employee EHS responsibilities are defined EHS staff report outside of covered functions EHS considered in major decision processes Compliance achieved through management commitment and strong EHS culture Open EHS communicationEHS recognition and rewards implemented Organizational pride in EHS Policies and Programs Policies are written to comply with regulations and include proactive EHS measures Reward systems tied to EHS performance/leading indicators Some training conducted by non-EHS personnel including hourly employees (employee participation)	Low potential for violations Company is shielded against fines and corporate officers are shielded from criminal prosecution by compliance and ethics programs, EHS management system, and EHS organizational structure[38] [39]. Low potential for negative publicity and better reputation with customers and investors[40] Proactive measures may make it easier for the company to initiate or participate in riskier projects (i.e., work in environmentally sensitive areas and third world countries where treatment of employees might be questioned). Periodic and random audits allow for the “unavoidable employee misconduct” defense[41]. Increased employee productivity and reduced voluntary turnover from sustainability measures[42].	Staff, compliance measures and measures that go beyond the regulations will cause increased costs and if not effectively implemented may waste money[43]. Increased number and complexity of EHS programs may increase the difficulty of implementation and may require use of multiple implementation systems. Implementation of programs that go beyond the requirements may dilute the message and divert focus from required EHS programs.

4.6 For Additional Information

EHS Today Magazine’s 8 Companies Celebrated as America’s Safest
“Organizational Benchmarking Study Results” by James Margolis, EHS Journal, March 24, 2011
“Relative Culture Strength A Key to Sustainable World-Class Safety Performance”, Mike Hewitt, Vice President, Global Workplace Safety Practice, DuPont Safety Resources, Wilmington, DE (http://www2.dupont.com/Sustainable_Solutions/en_US/assets/downloads/A_Key_to_Sustainable_World-Class_Safety_Performance.pdf)
“Safety Management Function – Organization and Responsibilities, an AON Survey”, Aon Global Risk Consulting, September 2011.
“The Corporate Environmental Profile” from “Environmental Health, and Safety Auditing Handbook”, second edition by Lee Harrison, McGraw-Hil, Inc. New York, 1995
“The Five-Stage Environmental Developmental Continuum” from “Proactive Environmental Management: Avoiding the Toxic Trap” by Christopher B. Hunt and Ellen R. Auster, MIT Sloan Management Review, January 15, 1990 (http://sloanreview.mit.edu/article/proactive-environmental-management-avoiding-the-toxic-trap/)
“The Three Levels of Environmental Governance” by Richard MacLean “Environmental Protection” magazine, 1105 Media Inc. March 1, 2003 (http://eponline.com/articles/2003/03/01/the-three-levels-of-environmental-governance.aspx).
Under the Spotlight the Transition of Environmental Risk Management” “The Economist, Economist Intelligence Unit, © 2008 The Economist Intelligence Unit Limited
United States Department of Justice “2012 Federal Sentencing Guidelines Manual”, Chapter Eight – Sentencing Of Organizations, Part B – Remedying Harm From Criminal Conduct, and Effective Compliance and Ethics Program.8B2.1. Effective Compliance and Ethics Program, Introductory Comment, November 1, 2012

4.7 References

[1] AZ Quotes website, Organizational Structure Quotes (Thttps://www.azquotes.com/quotes/topics/organizational-structure.html)
[2] “How To Organize Departments (With Steps and Examples)”, Indeed website accessed February 3, 2024” (https://www.indeed.com/career-advice/career-development/how-to-organize-department)
[3] “Eight Habits of a Highly Effective Safety Manager” by Rod Courtney, Gatekeeper Press, August 24, 2022, page 44.
[4] “Essential Practices for Creating, Strengthening, and Sustaining Process Safety Culture” American Institute of Chemical Engineers, Center for Chemical Process Safety, John Wiley and Sons, New York, New York, June 1, 2018, page 27.
[5] Compiled from EHS Today Magazine’s America’s Safest Companies for 2012 through 2021.
[6] “Gauging Organizational Exposure to Environmental Criminal Liability: A Comparison of the Proposed Environmental Sentencing Guidelines to the Organizational Guidelines and the Department of Justice’s Revised Principles of Federal Prosecution of Business Organizations” by Marcellus A. McRae and Matthew D. Taggart, Gibson, Dunn & Crutcher LLP, Los Angeles, California
[7] “Environmental Crimes Bulletin – The Latest on the “Responsible Corporate Officer” Doctrine”, Venable® LLP Newsletters, April 1999.
[8] “The Responsible Corporate Officer Doctrine: One More Reason for a Corporate Environmental Policy (and this time, it’s personal)” by: Jason J. Kelroy Vorys, Sater, Seymour and Pease LLP – Columbus Office, September 9, 2003.
[9] ”Case Law Update: Responsible Corporate Officer Doctrine” by Kristina M. Tridico, Ice Miller Corporate Practice Group, January 2002.
[10] “Indirect Owner/Operator Liability Under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)” FindLaw for Legal Professionals website, Sidney S. Arst v. Pipefitters Welfare Educ. Fund, 25 F.3d 417 (7th Cir. 1994) and Jacksonville Elec. Authority v. Eppinger & Russell Co., 776 F. Supp. 1542 (M.D. Fla. 1991) cases, accessed August 3, 2022 (https://corporate.findlaw.com/law-library/indirect-owner-operator-liability-under-cercla.html)
[11] Ibid
[12] “Personal Liability Of Corporate Officers And Directors Associated With Your Company’s Environmental Activities, An Outline of Current Trends” Presented by Kenneth Anspach, Natural Gas & LP Industry Litigation Conference, October 31, 2005, Chicago, Illinois.
[13] “How the Financial Industry Can Cure Its Willful Blindness” by Michael McMillan, CFA, Enterprising Investor website, July 10, 2013
[14] “Safety Management Function – Organization and Responsibilities, an AON Survey”, Aon Global Risk Consulting, September 2011.
[15] “Organizational Benchmarking Study Results” by James Margolis, EHS Journal, March 24, 2011
[16] “Organizational Benchmarking Study Results” by James Margolis, EHS Journal, March 24, 2011
[17] “Safety Management Function – Organization and Responsibilities, an AON Survey”, Aon Global Risk Consulting, September 2011.
[18] Department of Justice Memorandum from  Phyllis J. Newton, Staff Director titled “Report from Advisory Group on Environmental Sanctions” Dated December 6, 1993, Part D, Section 9d1.1(a)(3)(i)
[19] “Environmental Auditing Policy Statement: Notice”, Environmental Protection Agency, Federal Register Volume 51, Number 131, July 9, 1986, page 25009.
[20] “Environmental Auditing Policy Statement: Notice”, Environmental Protection Agency, Federal Register Volume 51, Number 131, July 9, 1986, page 25007.
[21] “Corporate Compliance Answer Book 2012–13” Chapter 2 “Implementation of Effective Compliance and Ethics Programs and the Federal Sentencing Guidelines” by Steven D. Gordon, page 57.
[22] Factors In Decisions On Criminal Prosecutions For Environmental Violations In The Context Of Significant Voluntary Compliance Or Disclosure Efforts By The Violator, United States Department of Justice website, July 1, 1991.
[23] “Compliance-Focused Environmental Management System – Enforcement Agreement Guidance” (EPA-330/9-97-002R) United States Environmental Protection Agency Office Of Criminal Enforcement, Forensics And Training, National Enforcement Investigations Center, Denver, Colorado, Revised June 2005, Section 5c
[24] “Performance And Program Standards For The Professional Practice Of Environmental, Health & Safety Auditing” By The Board of Environmental, Health & Safety Auditor Certifications, Altamonte Springs, Florida, 2008, page 8.
[25] “Environmental Health and Safety Auditing Handbook” Second Edition by Lee Harrison, McGraw-Hill, New York, Page 296.
[26] “Environmental Auditing Policy Statement: Notice”, Environmental Protection Agency, Federal Register Volume 51, Number 131, July 9, 1986, page 25006.
[27] “Environmental Auditing Policy Statement: Notice”, Environmental Protection Agency, Federal Register Volume 51, Number 131, July 9, 1986, page 25009.
[28] Department of Justice Memorandum from  Phyllis J. Newton, Staff Director titled “Report from Advisory Group on Environmental Sanctions” Dated December 6, 1993, Part D, Section 9d1.1(a)(4)
[29] “Compliance-Focused Environmental Management System – Enforcement Agreement Guidance” (EPA-330/9-97-002R) United States Environmental Protection Agency Office Of Criminal Enforcement, Forensics And Training, National Enforcement Investigations Center, Denver, Colorado, Revised June 2005, Section 7c
[30] “The “Right Home” for EHS” blog by the Phylmar Group, October 5, 2013.
[31] “Columbia Accident Investigation Board Report”, by Gehman, Harold W., Jr., Barry, John L., Deal, Duane W., Hallock, James N., Hess, Kenneth W., Hubbard, G. Scott, Logsdon, John M., Osheroff, Douglas D., Ride, Sally K., and Tetrault, Roger E., Columbia Accident Investigation Board Arlington, VA, United States, August 1, 2003, page 183.
[32] “Columbia Accident Investigation Board Report”, by Gehman, Harold W., Jr., Barry, John L., Deal, Duane W., Hallock, James N., Hess, Kenneth W., Hubbard, G. Scott, Logsdon, John M., Osheroff, Douglas D., Ride, Sally K., and Tetrault, Roger E., Columbia Accident Investigation Board Arlington, VA, United States, August 1, 2003, page 179.
[33] “Ironies of Automation” by Lisanne Bainbridge, “Automatica” Elsevier, Volume 19, Issue 6, November 1983, page 775
[34] “Gauging Organizational Exposure to Environmental Criminal Liability: A Comparison of the Proposed Environmental Sentencing Guidelines to the Organizational Guidelines and the Department of Justice’s Revised Principles of Federal Prosecution of Business Organizations” by , Marcellus A. McRae and Matthew D. Taggart, Gibson, Dunn & Crutcher LLP, Los Angeles, California, Page Q-12, No date provided (https://www.gibsondunn.com/wp-content/uploads/2017/08/Q2_McRae_Environ_Crim_Liab.pdf#:~:text=The%20general%20fine%20provisions%20set%20forth%20in%20the,where%20they%20offer%20the%20most%20comprehensive%20framework%20available.9)
[35] “Corporate Compliance Answer Book 2012–13” Chapter 2 “Implementation of Effective Compliance and Ethics Programs and the Federal Sentencing Guidelines” by Steven D. Gordon, page 50.
[36] “Performance And Program Standards For The Professional Practice Of Environmental, Health & Safety Auditing” By The Board of Environmental, Health & Safety Auditor Certifications, Altamonte Springs, Florida, 2008, page 7.
[37] “The “Right Home” for EHS” blog by the Phylmar Group, October 5, 2013.
[38] “Gauging Organizational Exposure to Environmental Criminal Liability: A Comparison of the Proposed Environmental Sentencing Guidelines to the Organizational Guidelines and the Department of Justice’s Revised Principles of Federal Prosecution of Business Organizations” by Marcellus A. McRae and Matthew D. Taggart, Gibson, Dunn & Crutcher LLP, Los Angeles, California
[39] “Compliance-Focused Environmental Management System – Enforcement Agreement Guidance” (EPA-330/9-97-002R) United States Environmental Protection Agency Office Of Criminal Enforcement, Forensics And Training, National Enforcement Investigations Center, Denver, Colorado, Revised June 2005, Section 8a
[40] “Under the Spotlight the Transition of Environmental Risk Management” “The Economist, Economist Intelligence Unit, © 2008 The Economist Intelligence Unit Limited (http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200805/EIU_Under_the_spotlight_FINAL.pdf), page 1
[41] “Key Terms Employee Turnover” Recruiter.com ( http://www.recruiter.com/turnover.html)
[42] “Paying EHS Compliance Fines: Buying Time, or Plain Bad Business?” by Alex Chamberlain, ERA Environmental Management Solutions Blog (http://info.era-environmental.com/blog/bid/56110/paying-ehs-compliance-fines-buying-time-or-pl), 2012 ERA Environmental Consulting, Inc
[43] United States Department of Justice “2012 Federal Sentencing Guidelines Manual”, Chapter Eight – Sentencing Of Organizations, Part B – Remedying Harm From Criminal Conduct, and Effective Compliance and Ethics Program.8B2.1. Effective Compliance and Ethics Program, Introductory Comment, November 1, 2012 page 488 and 496 (http://www.ussc.gov/Guidelines/2012_Guidelines/Manual_PDF/Chapter_8.pdf).
[44] “Gauging Organizational Exposure to Environmental Criminal Liability: A Comparison of the Proposed Environmental  Sentencing Guidelines to the Organizational Guidelines and the Department of Justice’s Revised Principles of Federal Prosecution of Business Organizations” by Marcellus A. McRae, Matthew D. Taggart, Gibson, Dunn & Crutcher LLP, Los Angeles, California, page Q-11 (http://www.gibsondunn.com/fstore/documents/pubs/Q2_McRae_Environ_Crim_Liab.pdf).
[45] “Under the spotlight The transition of environmental risk management” “The Economist, Economist Intelligence Unit, © 2008 The Economist Intelligence Unit Limited (http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200805/EIU_Under_the_spotlight_FINAL.pdf), page 6.
[46] “How to Create Unavoidable Employee Misconduct Defense to Occupational Safety and Health Administration (OSHA) Citations“ By Mark A. Lies II, Seyfarth Shaw Attorneys LLP (http://www.demolitionassociation.com/Portals/0/pdfs/MarkLies2.pdf).
[47] “CSR Efforts and Employee Engagement Drive Business Results” by Bob Willard, October 5, 2010 (http://sustainabilityadvantage.com/2010/10/05/csr-efforts-and-employee-engagement-drive-business-results/)
[48] “Is CSR Dead? Or Just Mismanaged?” by Bruce Rogers and guest post by Kasper Nielsen, Executive Partner, Reputation Institute, Forbes Insights: Thought Leadership In Action, December 11, 2012 (http://www.forbes.com/sites/forbesinsights/2012/12/11/is-csr-dead-or-just-mismanaged/).

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