Handing over ESG to EHS Doesn’t Solve the Tick-Box Problem

ESG is often discussed in the context of a “tick-box exercise,” and statements such as “ESG should not be a tick-box exercise” are now commonplace in corporate conversations. This raises an important question: what is the first instinct companies display when they attempt to move beyond box-ticking? Companies tend to assume that the department most familiar with environmental management and employee safety should naturally take ownership of ESG. The logic appears straightforward— avoid ESG becoming “everyone’s job and therefore no one’s job,”. Therefore, the EHS (Environment, Health and Safety) function is positioned as the frontline owner, while other departments contribute by supplying the necessary data.

While this may create the ownership, it often results in ESG remaining constrained within the boundaries of compliance and operations. Processes such as materiality assessments, leadership alignment on priorities, and agreement on ESG targets are driven at the functional level, with limited and inconsistent involvement of senior leadership. Discussions that are meant to give enterprise-wide direction often remain operational in nature. The impact of this approach becomes visible in ESG disclosures, as reflected in sustainability and BRSR reports.  BRSR reports show an emphasis on compliance metrics, with limited disclosure of long-term targets and alignment with overall strategy. While disclosures may be complete in form, they often lack the depth that signal ownership of the leadership.

Having witnessed this approach in practice, the author can identify several limitations that explain why ESG, when driven predominantly through EHS in companies can struggle to achieve its intended purpose.

Nothing Beyond Compliance

EHS, by design, is a compliance-driven function. Its primary responsibility is to ensure adherence to environmental laws, safety regulations, and permit conditions. For e.g. emissions must remain within prescribed limits, effluent parameters must meet regulatory norms, fire extinguishers must be inspected quarterly, and statutory reports must be submitted on time. Traditionally, EHS teams protect companies from regulatory breaches, legal exposure, and operational shutdowns.

Accordingly, success in EHS is generally measured in negative terms: no notices from regulators, no reportable accidents, no penalties or fines. This compliance-first mindset is not a flaw, but it is a necessity. However, it also defines the boundaries within which the function operates. ESG, on the other hand demands a mindset that goes well beyond regulatory boundaries. For instance, ensuring water discharge meets statutory norms is fundamentally different from setting and achieving a goal of water positivity. The former is about meeting minimum requirements; the latter is about strategic ambition.

As a result, ESG implementation under a EHS-led model becomes a compliance-plus model, rather than purpose-driven. While regulatory risks may be well managed, opportunities for innovation and long-term value creation remain unexplored. The company may appear ESG-compliant on paper yet fall short of embedding sustainability into its strategic objectives and business decisions.

Operationally Focused

The EHS function is inherently designed to be deeply embedded in operations. Its priorities involve management of process inherent risks, site-level controls, incident prevention, and regulatory adherence. While this operational depth ensures discipline and consistency on the ground, it also restricts the ability of the company to view ESG from a broader, enterprise-wide perspective.

In addition to this, ESG reporting frameworks require forward-looking disclosures, scenario-based thinking, and narratives that are beyond operational data points. Translating operational metrics into insights that are presentable to investors or customers requires a fundamentally different approach from the approach used to engage with EHS related regulators. Expecting EHS teams, to meaningfully engage with such diverse stakeholder groups using these varied lenses (in addition to their operational responsibilities) is neither practical nor justified.

Weak on Governance

While EHS is the most significant portion in ESG (even literally!), the true differentiator in effectiveness lies in governance.

Consider this analogy. A young boy is crossing the road when the pedestrian signal suddenly turns red. A speeding truck is approaching the crossing from a distance. A man standing at the crossing can see the boy and the signal, but he notices the truck only when it is dangerously close. Across the road, on the second floor of a building, a woman observes the same situation with a loudspeaker in hand. From her vantage point, she can simultaneously see the boy, the signal, and the approaching truck—and she has the means to warn the boy in time.

EHS is like the man on the ground: closest to the risk and acutely aware of immediate hazards but constrained by limited visibility and influence. Governance is like the woman on the second floor: equipped with a broader perspective and the capacity to intervene early and effectively.

Setting KPIs and targets for ESG parameters requires authority beyond the EHS function. Similarly, decarbonisation of products and operations, arguably the core of long-term value creation, cannot be driven by EHS alone, as it must be embedded within the company’s overall business strategy.

What Should the Ideal Governing Structure Look Like?

For ESG integration to be truly effective, ownership must begin at the Board level. Without clear board accountability, ESG initiatives, regardless of intent, are unlikely to move a stone. ESG cannot be treated as a functional initiative; it must be accepted as a strategic priority that shapes risk management, capital allocation, and long-term value creation. Unless this responsibility is visibly owned by the Board, ESG efforts tend to remain vision-less and limited to short-term operational priorities.

To enable this, companies should constitute a Committee of Directors, (not a single Board Member) to oversee ESG matters. This committee should ideally be headed by the Chairman of the Board, signaling the seriousness of intent and ensuring alignment with overall corporate strategy. The committee should build the ESG strategy, objectives, and targets. It should also regularly assess progress ensuring that both risks and impacts are identified early and addressed in a timely manner.

Supporting the Board should be a dedicated Sustainability function, (independent of the EHS function). The primary role of this function is coordination and integration. It should be responsible for assessing and adopting appropriate ESG metrics and targets, identifying and mobilising the resources required to implement the ESG initiatives. This function should also lead materiality assessments, determine suitable reporting frameworks, and act as the primary interface with external stakeholders such as investors, customers, and rating agencies.

At the operational level, ESG execution should be enabled through a cross-functional team comprising line managers from across business divisions and functions (including EHS). These teams are best positioned to collect and assess sustainability data, track progress against metrics and targets on a regular basis and identify emerging ESG-related risks and opportunities.

This organisation structure ensures a continuous flow of information—from ground-level execution to strategic oversight—without overburdening any single function or diluting accountability.

Ultimately, an effective ESG governance structure relies on alignment across the company. Tone at the Top ensures clarity of intent and accountability, Mood in the Middle translates strategy into managerial priorities, and Buzz at the Bottom embeds ESG into everyday actions. Only when all three are present can ESG truly move beyond a “tick-box” exercise and deliver meaningful, long-term outcomes.