Implications of Mergers and Acquisitions on EHS Management Systems

Nov 23, 2021 1:45 PM ET
Blog

Growth and expansion through acquisition can be exciting and profitable, but maintaining focus on a strong and effective environmental, health, and safety (EHS) management system during the merging of the two or more companies can be challenging. While emphasis is much more likely to be placed on increasing the provision of goods and services during integration, ensuring a stable and structured EHS management system is in place is also crucial to reducing both risk and costs.

7 components of an effective EHS management system:

  1. Comprehensive written EHS programs compliant with applicable regulatory requirements and best management practices, with clearly defined roles, responsibilities, and record-keeping requirements
  2. Management commitment to the EHS management systems and programs
  3. Established processes for monitoring and verifying the effectiveness of the implementation of programs and making program changes, as necessary (i.e., management of change process)
  4. Strong hazard identification, analysis, and correction procedure and associated documentation (i.e., job hazard analysis)
  5. Comprehensive incident reporting and investigation process which includes a root cause analysis
  6. Detailed employee training programs
  7. A strong focus on continuous improvement of EHS compliance

Benefits of a strong EHS management system include:

  • Reduced injuries and incidents
  • Cost savings
  • Improved profitability
  • Improved reputation
  • Improved employee morale, employees will feel like they have a voice
  • Better Quality Control
  • Better Performance (audits and regulatory compliance)
  • Better informed decision making

Change Management Through Cultural Shifts

Several common EHS management challenges often arise during mergers and acquisitions including diverging programs and procedures, and conflicting operations, goals, personalities, and business cultures. For some acquisitions, the changes that will occur may conflict with how they previously conducted operations. This could include the introduction of new or modification of existing paperwork, including work permits, inspection checklists, and other documentation. Managing cultural shifts can be difficult, so it is important to include employees and managers of all organizations in decision-making processes. If they feel that they have a stake in the process and changes they will be much more likely to adjust and onboard more easily to these shifts.

Combining EHS Programs vs. Maintaining Local Programs

In the early stages of integration, effort should be placed on the assessment of the EHS programs and procedures from each company to identify gaps, best management practices, and to determine if there are processes or documentation that can be shared or replaced with the best practices of others. If it is impractical to integrate the organizations under the same programs, the organization should determine if a decentralized versus centralized EHS management system would be better suited for the combined organization. If the organization decides to decentralize the management system, EHS management programs and procedures would be managed at the local level and a process to monitor and manage EHS metrics from each organization should be implemented and maintained.

The concept of “one size fits all” should not be relied upon in all circumstances. When merging businesses that do not provide the same type of operations or services, it’s important to consider these differences. There should be an understanding established to ensure components of the EHS management system, such as policies and procedures, can be effectively applied across the differing organizations.

For example, if an acquiring organization conducts business in the manufacturing industry and purchases an organization that provides field services, such as pipefitting, it is unlikely that the manufacturing organization’s policies and procedures can be effectively implemented within the field services organization without significant modification.

Importance of EHS Programs

An aligned, stable, and structured EHS management system will promote efficient operations and reduce risk and costs during and long after merger and alignment. A number of approaches can be used to determine the type of EHS management system that will be most effective for the organization. Gap assessments, EHS program comparisons, and applicability matrices are just a few examples of methods to aid in this decision-making process.

Antea Group has the resources and experience to assist in determining what will work best for your organization as it continues to grow. For more information, please reach out to our Management Systems Service Line Team!

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About Antea Group:
Antea Group is an international engineering and environmental consulting firm specializing in full-service solutions in the fields of environment, infrastructure, urban planning, and water. By combining strategic thinking and multidisciplinary perspectives with technical expertise and pragmatic action, we do more than effectively solve client challenges; we deliver sustainable results for a better future. We serve clients ranging from global energy companies and manufacturers to national governments and local municipalities. Learn more at https://us.anteagroup.com/.