Situational Awareness: Connecting Environmental, Social, Governance (ESG) Performance to Long-Term Stewardship
On a recent sales call to a prospective client, the client was focused on one of the use-case slides in our presentation. “Your Terradex platform would bring situational awareness to our business.” As an environmental director for the corporation, he felt a strong responsibility to be aware of any community activity in the vicinity of their sites. He loved the slide.
Our prospect spoke further, explaining why situational awareness is important to their company. “We need to engage early in the land development process to ensure we understand community sentiment and remain an engaged, active, and responsive participant. When we actively participate, we are better situated to meet our Environmental, Social, Governance (ESG) goals, satisfy our ISO 14001 requirements, and address emerging environmental justice obligations. At the same time, we continue to meet our traditional needs, such as sharing our interests in the project planning process, or maintaining compliance and preserving institutional controls.“
What is Situational Awareness? Situational awareness is a new term in Terradex’s stewardship lexicon. Situational awareness is being aware of your surroundings. Organizations that practice situational awareness are fully engaged in identifying and anticipating actions and activities that could impact their organization. Situational awareness also helps companies measure and achieve important ESG goals. If a company fails to proactively ensure the safety of its facilities, land portfolios, and adjacent communities, it jeopardizes not only its compliance status, but it also gives rise to “reputational risk,” as the entity may be viewed as an irresponsible corporate actor at a time where ESG performance is being scrutinized by consumers, shareholders, and investors alike. This risk is real, and has a host of negative consequences for companies that do not integrate ESG performance into their day-to-day business operations and risk management strategies.
My partner Peter Biffar recounted the traditional view of situational awareness in Germany serving BASF. Growing up in Germany, Peter recalled the old days when the plant boss lived in the community, and knew the mayor (Bürgermeister). The “boss” tracked and participated in all current and future developments that might impact the plant. This direct communication served as old-fashioned traditional “situational awareness.”
The Need for Communication, Proactive Participation: The modern-day workforce is generally decentralized, and the view of the “plant boss” is nostalgic. This is a realm that BASF and other distributed corporations find themselves in. Still, the value of anticipating change and proactively participating has never been more important and has grown even more strategic through the need to satisfy ESG obligations for the reasons described above. Corporate obligations now go beyond compliance.
While Terradex’s service to BASF was not framed by situational awareness, it provided the basis for the slide of the prospect’s focus. Terradex provides LandWatch monitoring services to BASF around the perimeter of their facilities and pipeline in Germany. If BASF does not detect prospective changes, it may affect current and future operations, and damage its reputation, and impact the company’s bottom line.
How Do We Apply LandWatch? The client’s goal is to detect and track land development activities in close proximity and at the facility itself to be aware of any potential onsite risks or negative impacts to surrounding communities. Land development occurs across a life cycle sequenced by distinct land activities: selling a property, leading to a purchase confirmation, which might then trigger search for an architect, which might trigger a planning review, ultimately a building permit and finally construction activities. If the development could pose an adverse impact either on the community or the facility, the corporation would choose to communicate (aka, the boss talking to the Bürgermeister). Absent that arrangement, LandWatch can be utilized to facilitate critical communication of potential risks. A client’s discretion enables directing risk communication to either the governing agency or to the individual project proponent.
The Terradex LandWatch process monitors for all of these activities, and groups any activities that might impact facilities into projects. A monthly project report is sent to the client providing a status update on their portfolio of facilities and associated nearby projects. Typically, the client, informed of the goings on, then takes any necessary action from there. Our prospective client observed the business process presented on the slide, and envisioned how the process encompassed broader situational awareness.
Beyond Traditional Risk Management – ESG and EJ: Our prospective client holds a comprehensive view of situational awareness, expanding beyond land development to monitor and protect any new occupancies or activities, while tracking community sentiment for concern around the facility. Broadly, the prospect envisioned LandWatch as an ESG intelligence platform that could be used to implement smart and effective community engagement. Initiating this engagement could also logically extend to satisfying ISO 14001 requirements as well as addressing emerging environmental justice considerations and concerns.
LandWatch for ESG. This initial blog post on situational awareness plants some seeds for future discussion. How can ESG communication be optimized? Where is the intersection between environmental justice and monitoring of proximate land uses? At Terradex we sense the opportunity to extend the LandWatch model to not only corporations that have hazardous materials triggering community engagement, but to any portfolio-based corporation looking to measure and bolster their ESG performance. Terradex has the opportunity to efficiently bring situational awareness to the corporation, allowing them to effectively participate in the community perhaps as deftly as the company boss of days gone by.