7 Surprising Ways EHS Impacts Your Company's Bottom Line: Unveiling the Hidden Costs

7 Surprising Ways EHS Impacts Your Company's Bottom Line: Unveiling the Hidden Costs
Shiju Philipose
Insight article written date
13-07-2023
Insights written date
Blog

Picture this: It's a bright Monday morning, and you walk into your office with a sense of purpose and ambition. You've set your sights on boosting your company's bottom line, but what if I told you that the secret to achieving this lies in an unexpected place? That's right - Environmental Health and Safety (EHS) practices can have a profound impact on your company's financial success. Let us dive into seven surprising ways EHS can affect your bottom line, unveiling hidden costs that may be undermining your profitability.

  • Lost Productivity due to Accidents and Injuries:

Meet David, a dedicated employee who suffered a severe accident while operating heavy machinery. As a result, David is now on medical leave, and the project he was leading is delayed. The impact? Lost productivity, increased workload for his colleagues, and missed deadlines. Beyond the human toll, workplace accidents and injuries lead to increased insurance costs, legal expenses, and workers' compensation claims—all of which directly impact your company's profitability.

  • Reputation Damage and Customer Loss:

Imagine Emma, a loyal customer who has always supported your brand. However, she recently learned that your company has been involved in several environmental violations. Disillusioned, Emma decides to take her business elsewhere, spreading negative word-of-mouth about your company along the way. Your reputation takes a hit, leading to a loss of customers, reduced sales, and diminished brand value. EHS practices are essential for maintaining a positive public image and safeguarding your customer base.

  • Regulatory Non-Compliance Penalties:

Mark is the CFO of a manufacturing company. He receives a notice from the regulatory authority stating that the company failed to meet essential safety regulations, resulting in significant penalties. The financial blow not only affects the company's cash flow but also diverts funds that could have been invested in growth initiatives. Compliance with EHS regulations is not only a legal requirement but also a crucial aspect of financial planning and risk management.

  • Employee Turnover and Training Costs:

Sarah, a talented and experienced employee, decides to leave her job due to the lack of a safe working environment and inadequate safety training. Her departure results in increased recruitment costs, training expenses for a replacement, and a temporary decrease in productivity while the new hire gets up to speed. By prioritizing EHS, you can create a workplace culture that values employee well-being, reduces turnover, and minimizes the associated costs.

  • Productivity Impact of Poor Indoor Air Quality:

Imagine a scenario where employees in your office experience headaches, fatigue, and respiratory issues. Unknown to you, poor indoor air quality caused by inadequate ventilation and pollutants is to blame. As a result, productivity plummets, absenteeism increases, and employees are less engaged. Investing in EHS measures such as proper ventilation and air quality monitoring can help create a healthier and more productive workforce.

  • Environmental Fines and Remediation Costs:

Meet Rachel, an eco-conscious consumer who just found out that your company has been dumping hazardous waste into nearby water bodies. Enraged by this revelation, she takes to social media, sparking outrage and prompting an investigation by environmental authorities. As a consequence, your company faces hefty fines, legal expenses, and the significant cost of remediation efforts. By proactively implementing robust EHS practices, you can mitigate the risk of environmental violations and their financial repercussions.

  • Supply Chain Disruptions and Resilience:

Imagine running a manufacturing company that heavily relies on a single supplier for a critical raw material. Suddenly, a catastrophic incident occurs at the supplier's facility, disrupting the supply chain and leaving you in a desperate scramble for alternatives. The result? Production delays missed customer orders, and ultimately, a negative impact on your company's revenue. By incorporating EHS considerations into your supply chain management, you can enhance resilience, identify potential risks, and minimize the financial fallout from disruptions.

EHS is no longer just a matter of regulatory compliance or ethical responsibility—it is a strategic business imperative. By understanding and addressing the hidden costs associated with EHS, you can unlock opportunities for improved productivity, enhanced reputation, and ultimately, a healthier bottom line. Embracing a culture of safety, environmental responsibility, and employee well-being can help your company thrive in today's competitive landscape while ensuring long-term financial success.

Shiju Philipose
Head - MBA Programs

Author organization
UniAthena
Mr. Shiju Philipose has more than 17 years of extensive academic and operational experience in Professional Education and Training and has worked in academic institutions as well as corporates in India, Middle East, and Canada. He is a university rank holder with Master's in Industrial Engineering Management and Bachelor's in Mechanical Engineering.

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