Reimagining the EHS Function: Why traditional models are no longer fit for business

The Leadership Perspectives series brings together views from ERM leaders on the critical challenges shaping business today, offering actionable insights and solutions to navigate complexity and deliver impact.

Maintaining traditional EHS operating models is becoming more complex and costly as environmental and safety expectations rise, putting pressure on organizations to rethink established ways of working. Leading organizations are embarking on the transformation of how EHS work is delivered, shifting it from a compliance role to a strategic capability that enables safer, more resilient, and efficient operations.

Over the past three decades, organizations have built increasingly expansive Environmental Health and Safety (EHS) programs to manage regulatory compliance and protect their license to operate. These programs are typically organized under corporate governance frameworks, supported by locally embedded EHS teams responsible for site-level execution. 

That model worked well in an environment where regulatory expectations were relatively stable, operational complexity was lower, and external scrutiny was periodic. 

However, the context has changed significantly.

In response, many organizations have expanded EHS programs and added oversight and control. Yet we see that these investments often fail to improve risk reduction or operational consistency. In many cases, organizations expend more effort without gaining stronger confidence that critical risks are consistently controlled across the enterprise. 

Leading organizations are approaching the challenge differently. Rather than continually expanding traditional programs, they are redesigning how EHS work is delivered, shifting it from a compliance role to a strategic capability enabling safer, more resilient, and efficient operations. 

In our experience, four transformation levers underpin this shift:

Implementing these four levers is challenging. EHS priorities must be constantly reassessed through the lens of improvement, innovation, and long-term enterprise value.  

However, despite this urgency, day-to-day executive focus on operations, metrics, compliance, and protecting the license to operate often conflicts with transformation. 

Our analysis below shows why transforming traditional EHS systems is paramount and how functional leaders can navigate a complex, evolving environment to ensure successful EHS transformation.

Why traditional EHS models are no longer sustainable

In our work, many EHS programs have grown more complex, often requiring increasing headcount and budget simply to manage that complexity. In an ERM analysis of ten global corporations, we found that even among peer companies with similar risk profiles, EHS spend can vary widely when normalized by revenue and employees. The graphic below illustrates this significant variance.

Source: ERM

Over time, functions expand in response to incidents, regulatory developments, and reputational concerns with new policies, training, controls, and audit frequency.  

As these layers accumulate, requirements multiply, making programs complex, costly, and disconnected from true operational risk. Additionally, EHS performance is no longer assessed periodically, stakeholders now analyze performance in real time, and scrutiny is constant. Complexity, cost, and compliance alone cannot deliver the agility and transparency required.

The modern EHS operating model 

EHS transformation requires an operating model that improves performance while delivering improved EHS outcomes at the lowest sustainable cost. 

Leading organizations align effort with risk and ensure that critical controls operate consistently across the enterprise. To operationalize this transformation, they focus on the four levers to simplify delivery, strengthen confidence, and unlock digital scale. Below, we explore the levers in more detail.

Many organizations add layers of policies, training programs, audits, and reporting processes often investing heavily in low-impact activities while higher risks receive less attention. 

Leading companies redesign EHS workflows around operational risks, prioritizing activities that reduce risk and strengthen confidence in EHS controls.  

By aligning effort with risk, organizations shift resources toward the activity's  impact, resulting in lower costs and stronger confidence that critical EHS controls are functioning consistently across the enterprise. 

Standardization also lays the foundation for centralization, automation, and AI solutions that deliver value.

AI creates the most value when deployed within standardized and well-governed processes. In fragmented workflows or inconsistent data environments, AI will produce noise rather than insight and can introduce new risks.  

Leading organizations first digitize and standardize workflows, build strong data foundations and then embed AI and agentic capabilities to drive performance improvement.

The usefulness of centralization and standardization of EHS systems goes far beyond regulatory compliance. Priority use cases include automated regulatory intelligence, dynamic audit protocol generation, rapid document navigation, and visual intelligence systems that flag unsafe conditions. Human oversight remains essential. AI handles detection and prioritization, while experienced professionals exercise judgment and retain accountability. 

Over time, workforce seniority has increased, but task design has lagged, leaving skilled experts underutilized.

Further, in an ERM analysis of approximately 50 global corporations, we found that, a substantial portion of EHS resources - typically approximately 60% of total budgets - are dedicated to administrative and compliance activities (such as reporting, documentation, routine audits, and regulatory tracking). This significantly limits resources for critical controls that materially reduce operational risk.

Typical EHS budget allocation

Source: ERM

Leading organizations segment EHS work by complexity and align skills to tasks. Routine activities are routed to lower-cost roles, while senior professionals focus on escalation, interpretation, and high-impact decisions.

Standardized workflows enable this division of labor. Recurring, data-intensive work can be centralized within global EHS hubs, while on-site teams focus on risk-critical activities that require operational proximity and influence.

A modern EHS function uses risk-based cost models to allocate resources where they deliver the greatest value. By understanding the true cost-to-serve across activities, companies can shift investment from low-impact tasks toward material risks, capability building, and technology that improves control confidence.

Leading organizations begin by establishing a ‘current state’ baseline of EHS spend across internal resources and contractors, while assessing capabilities such as standardization, centralization, and digital enablement.

This baseline provides a fact-based view of where cost, risk, and complexity truly reside. Companies then identify EHS subprograms most suitable for transformation, typically large scale, repeatable activities where cost and effort are misaligned with risk.

EHS at a strategic inflection point

As organizations and the context around them continue to evolve, the traditional approach to EHS is no longer tenable.

Organizations that treat EHS transformation as a deliberate redesign will lead the next decade.

This includes standardized workflows, centralized governance, aligning EHS cost and capacity, modernizing operating models, and embedding digital and AI into execution. This result is a more resilient, efficient, and scalable EHS function.

The path forward is clear – move from complexity to clarity, from  unstructured activities to targeted outcomes, and from reactive compliance to an insight-driven, digitally enabled EHS model.