Managing Change in Environmental Reporting and Compliance

by | Nov 14, 2016

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Compliance with a vast variety of environmental regulations is the reality for companies. Many of these regulations require the tracking and reporting of air emissions as well as solid waste and water pollution amounts. Companies must be able to effectively track environmental data. They also have to make estimates and perform calculations using this data.

Of course, once a company has figured out how to do all of this, things change. Regulations evolve, new calculations emerge, employees transition into and out of jobs. And sometimes previously reported environmental results must be re-reported because of mistakes in how data was collected or the way results were calculated.

Dealing with this flux ends up being extremely challenging for the environmental managers and professionals responsible for environmental reporting and compliance. Here are smart strategies for managing these major changes:

Evolving Regulations. Regulations from the federal, state, province or municipal governments can — and do — change. First, a company wants to know about a regulation change as quickly as possible. Although there might be employees who subscribe to different systems and websites to stay informed about changing regulations, we are finding that depending on those people alone isn’t enough. Organizations benefit from implementing a system that proactively lets them know when an applicable regulation changes. The system should send an email alert or create a task list action saying which regulation changed and how many sites the regulation currently applies to throughout the organization.

In addition to receiving an alert, companies want to understand exactly what text within the regulation has been altered. A single regulation is voluminous and can be pages and pages long. We recommend that companies have a systematic way to quickly zero in on revised text.

It’s also important for companies to examine what tasks were previously done at their facilities and operations due to the regulation. Perhaps employees conducted weekly equipment inspections or regularly scheduled reporting. How will these tasks be affected? If the new rules allow the frequency of a report to go from monthly to quarterly, that kind of shift can actually save people power. More often, however, the updated regulation will require more frequently executed tasks or new tasks. This transition has to be propagated across all the sites where that regulation applies. New and higher-frequency tasks must be assigned at each site to the appropriate people.

Environmental Calculations. Consider how regulation changes affect the way you need to do environmental calculations. This could mean that you need to use a new method or equation for calculating air emissions for a particular type of equipment. A company must have the capacity to adjust the calculation quickly across its enterprise. For example, the EPA could announce that a more accurate equation for calculating emissions from an internal floating roof tank must be used instead of the old equation. That new equation will start applying to all internal floating roof tanks throughout the company on the same start date.

Making such an enterprise-wide calculation adjustment happen can be quite difficult depending on the systems and tools a company uses to manage environmental calculations. Returning to the tank example, if those calculations were being done in disparate site-specific spreadsheets or site-level homegrown systems, applying the update to every single spot needed within the company becomes nearly impossible. Instead, the ideal system is centralized and draws from the same library of equations to perform calculations. A company-wide change to the calculation can be made in one place.

Companies using disparate spreadsheets and homegrown systems also can’t be confident that all the updates were completed successfully in thousands upon thousands of local files. However, if you have a modern centralized database system, altering a calculation centrally instills confidence. Air emissions calculations then get calculated accurately using the right method going forward. In addition, a centralized system helps preserve history through effective dating on changes, showing how calculations were done at various points in time. When an auditor asks to see results from 2014, it’s straightforward to calculate emissions using the equation that was valid at that time.

Determining Materiality. Mistakes in annual environmental reporting can occur. They’re normal given the hundreds of facilities and employees that may be involved. Errors could come from an incorrect calculation or a simple data entry error. For instance, someone entering annual fuel usage for a boiler could accidentally put 1,000 gallons instead 100,000 gallons. In that case, the emissions calculated for the boiler would be off by many degrees of magnitude.

Companies need to have a formal systematic process for reviewing the materiality or significance of the changes in environmental reporting results caused by such mistakes. The changes must be sent through a proper materiality review and approval workflow. If the resulting decision from the workflow is that the changes are material, the company will have to go through prescribed steps for communication and report re-submission with the appropriate government agency or body. Having a formal, standardized, and well-defined materiality review and approval workflow process is crucial.

The system used for environmental calculations and reporting should also keep a full audit trail for anything that changes: who changed it, when it changed, what the old values were, what the new values are, and the reason for the change. Auditors expect to see this, and certain regulations around the world require this level of data-change auditing.

Personnel Changes. Personnel turnover is common at many companies, and this creates many challenges. When employees leave, the company must be vigilant about making sure all compliance tasks continue to be completed correctly. Consider how many employees perform tasks such as doing inspections, compiling reports, running calculations, and executing other work to meet regulations. When they leave or change roles, these tasks need to be quickly and efficiently re-assigned to others.

Even temporary changes in personnel availability due to vacations and leaves of absence can present hurdles to ensuring that all compliance tasks get done accurately and on time. Companies should have easy-to-use tools for monitoring, managing, and re-assigning work, whether for a new employee or someone who is filling in. Implementing systematic ways to assign and reassign tasks will avoid administrative nightmares later.

Change is a constant in our industry, but it doesn’t have to throw a wrench into operations. The right tools and strategies keep everything humming right along.

Neal Rosen manages the global solution engineering team at Sphera. He and his team are a group of subject matter experts with over 100 years of combined experience in solving business problems in the Operational Excellence & Risk Management area across large business verticals like oil and gas, chemicals, and metals and mining. Mr. Rosen has a degree in chemical engineering and over 20 years of experience in EHS data management and software solutions.

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