The Environmental EVA: A Financial Indicator for EH&S Strategists

摘要

Does an EH&S organization really contribute to a company's bottom line? Within many companies, EH&S teams have reduced costs, avoided unnecessary investments, and achieved other financial gains. However, many of the activities within an EH&S organization are compliance driven and not easily linked to the company's profit objectives. These activities consume investment capital, reduce operating efficiency, and require considerable personnel time. In addition to ensuring compliance, effective EH&S leaders promote value generating activities and decrease (or preferable avoid) the coasts of compliance driven activities or "value consumers." Identifying and managing these activities requires a value driven strategy. Most EH&S organizations could significantly enhance their economic contribution by explicitly identifying and tracking the operating results that are directly linked to financial results. A few companies such as Georgia-pacific are taking this value driven strategy a step further and measuring the financial performance of EH&S and other staff organizations. This effort operationalizes the concept of Economic Value Added (EVA) and can be the cornerstone of a group's strategy. This paper shows how an EH&S organization can apply a new, robust yet straightforward, financial indicator, namely the Environmental Economic Value Added (E2VA), to report its financial contribution.