Operationalizing Environment, Social, & Governance (ESG) Principles

Overview

Corporate responsibility is no longer something reserved for top management. It is now being pushed down and across the organization, as more companies are implementing and practicing Environment, Social, and Governance (ESG) principles enterprise-wide. Fortunately, there is a high level of correlation between ESG principles and asset management improvement programs, such as reliability engineeringThat set of design, development and manufacturing tasks by which reliability is achieved. See RELIABILITY. The main objectives of this strategic minded staff function performing reliability engineering are: (1) To apply engineering knowledge and specialist techniques to prevent or reduce the likelihood or frequency of failures. (2) To identify and correct the causes of failures that do occur. (3) To manage identified risk by determining the best ways of coping with (mitigating) the effects of failure if and when they do occur. (4) To apply methods for estimating the likely reliability of assets and for analyzing reliability data., criticality assessment, preventive maintenanceTime or cycle-based actions performed to prevent system functional failure. This proactive maintenance type generally includes scheduled restoration and scheduled discard tasks. Learn more: What is Preventive Maintenance? strategies, asset health (or condition) monitoring, and risk calculation.

Organizations must consider how their daily operations and decision making ensure:

• Respect for the environment
• Employee and public health and safety is the top priority
• Operational impacts on the community are understood and the public is engaged
• Management oversight systems represent the facts on the ground and enable course correction if needed

ESG from an Operational Perspective

There are many strategic activities that organizations should undertake to advance ESG; however, there are key asset management elements that can be considered foundational and common to all three streams of ESG:

• Criticality assessment
• Maintenance strategy design and optimization
• Asset health determination
• Risk calculation
• Risk-based decision making

Weaving ESG principles into these foundational elements are crucial to ensuring that these principles are operationalized, sustained, and pervasive in an asset-intensive business. The following chart summaries how ESG and asset management elements are connected to each other:

Achieving specific ESG objectives requires multiple asset management competencies. The identification of asset management competencies necessary to achieve ESG goals is not difficult; however, assessing present state, designing roadmaps, and deploying these competencies can be challenging for many organizations. Nevertheless, the prize is great. Doing due diligence of the ESG plan and its compliance is of strategic importance; and naturally, operational effectiveness, reliability, and profitability are important to all organizations.

Not Sure Where to Start?

This level of organizational involvement can be daunting; however, it can also lead to enhanced overall performance. There are roadmaps you can follow to connect the dots between asset management and ESG objectives, making this transformation easier. Allied Reliability can help align asset management processes, systems, data, and analytics to your ESG objectives.

____________

For more detailed information, refer to our white paper, Designing Environment, Social, and Governance (ESG) Principles within an Asset Management Framework.