EH&S Risk in a Warming World and What Operations Leaders Need to Know

Adam Freedgood, Principal, Third Partners

Across the continental United States, 44% of states are in drought and, if current trends continue, the average global temperature will increase by at least 1.5°C (2.7°F) between 2030 and 2052. We tend to consider these realities as environmental issues, but really, these are health issues that can jeopardize workforce safety. 

In response, the White House has established new Heat Stress Rules to address climate-driven employee health and safety (EH&S) risk factors. Regardless of any future acts by the incoming administration, these risks demand attention from operational leaders to protect employees.

Operations leaders, in partnership with sustainability teams, finance and HR leads, will face unprecedented challenges in staffing, facility maintenance, and energy cost forecasting.

What is OSHA’s New “Heat Stress Rule”?

In August of 2024, the Occupational Safety and Health Administration (OSHA) proposed a new standard, Heat Injury & Illness Prevention in Outdoor & Indoor Work Settings, establishing yet another climate risk mandate for companies.

The proposed regulation applies to employers that conduct indoor or outdoor work anywhere OSHA has jurisdiction. Companies in the agricultural value chain including farmers, greenhouse growers, and retailers are especially impacted by this rulemaking. Heavy industrial manufacturing is also a key target.

Aiming to protect U.S. employees from hazardous heat, the standard mandates the creation of employer plans to assess and address heat hazards in the workplace. 

Business Impacts of OSHA's Heat Illness Prevention Standard

Upon implementation, the Heat Illness Prevention Standard will codify into law many of the measures OSHA currently recommends to protect workers from heat-related illnesses, initiating far-reaching implications for industries with outdoor or high-temperature work environments.

Likely impacts on businesses will include:

• Heat Illness Prevention Plans: The development and implementation of comprehensive plans to prevent and address heat-related illnesses will become mandatory, necessitating training and resources.
• Mandatory Rest Breaks: Employers may need to schedule regular rest periods for employees working in high temperatures, potentially affecting productivity and workflow.
• Acclimatization Procedures: Gradual acclimatization for new or returning workers to high-heat environments may need to be implemented, potentially impacting onboarding pace and staffing needs.
• Hydration Protocols: Providing adequate water and encouraging frequent hydration breaks will become essential, requiring additional resources and planning.
• Shade & Cooling Measures: Employers may need to invest in shade structures, cooling vests, lightweight uniforms, or other cooling equipment for outdoor workspaces.

The Cumulative Cost of Heat Stress

Evidence suggests that heat stress is cumulative which has significant implications for certain employers. If you're a plant manager or operations leader, all roads lead to higher costs related to climate change.

Frequent cost drivers associated with heat stress include:

• A/C System Installation & Maintenance: Installing air conditioning in unconditioned spaces will negatively impact energy and climate goals, increasing Capital expenditures (CapEx), operating expenditures (OpEx) and greenhouse gas (GHG) emissions.
• More Frequent Breaks: Direct impacts on shift schedules, and cascading impacts on labor coverage, lead to higher operating costs and resource inefficiency.
• Productivity: Heat stress can interfere with cognitive and physical performance, leading to reduced productivity levels and more errors or injuries.
• Employee Engagement: Companies may choose to invest in employee engagement efforts to provide training and accommodations to mitigate heat risks through, for example, the use of Employee Assistance Programs or Funds.  
• Legal/Compliance: Failure to implement new SOPs that protect workers may have an immediate impact on safety performance, lost time incidents, operating costs, and even fatalities. For instance, when employees live in homes without air conditioning, or travel to/from work in unairconditioned vehicles, an organization faces a higher risk of non-compliance with heat stress regulations. 
• Voluntary ESG Reporting: It is likely that certain customers will “cascade” compliance requirements to suppliers through the use of vendor scorecards, surveys, and similar reporting. Companies may proactively develop customer-facing materials to socialize their plans and KPIs.

How to Prepare for Heat-Related Risk

Conscious companies that have investor, CEO, or customer mandates to measure climate-related financial risks and/or minimize workplace injuries should start planning immediately, particularly if you report on sustainability to a buyer, retailer, investor, or customer.

Leadership teams that proactively manage EH&S risks can avoid unpleasant surprises and address their organizational impact on society and the environment.

7 risk management tactics to help you prepare:  

1. HVAC Technology: Consider optimal and suboptimal HVAC technologies, such as evaporative cooling, packaged HVAC, and split systems, as well as passive cooling technologies (shading, air sealing, landscaping) to make informed decisions and avoid unnecessary capital expenditures.
2. Energy Management Information System (EMIS):  Environmental data management has long been critical for brands and manufacturers. A lightweight EMIS offers better visibility and control of resource consumption, facility-specific energy cost and environmental trends. Companies that lack experience in energy cost tracking, whole building energy modeling should invest in EMIS (data systems) as needed to support CapEx and OpEx decisions. 
3. Environmental Data Dashboards: With a turnkey energy management dashboard, operations managers can directly visualize and quantify how the impacts of climate change affect the company’s finances. 
4. Program Design: Develop a heat stress management program with elements including training, facility planning, cost/energy modeling, and risk monitoring. 
5. Local Climate Implications: Facility by facility, see how weather trends correlate with energy consumption, GHG emissions, production output, safety performance, and more.
6. ESG Reporting: Get help modeling the impacts for your organization in order to comply with regulations such as CA SB 261 and CA SB 253, which together require companies to disclose GHG emissions and financial exposure to the physical risks of climate change, including heat stress.
7. Comprehensive Operating Procedures: Several states, including Washington, Oregon and Minnesota, already have similar heat stress regulations in place, creating a challenge for businesses with multi-state operations. Implement one set of operating procedures for national compliance.

Start Planning Now

Regardless of forthcoming changes to Federal policy, managers need to start planning today for increased heat and the corresponding reporting and mitigation measures. Employers should stay informed and prepare for potential adjustments to their safety protocols to ensure compliance and, most importantly, protect their workforce. 

Adam Freedgood is Principal at Third Partners and a sustainability expert with 15 years of experience.