What EHS Budgets Will Look Like in 2023

How and where companies spend their money can reveal a lot about their priorities. In 2022, budget trends reveal that companies are prioritizing environmental, health, and safety (EHS) in a big way. 

Verdantix’s Global Corporate Survey 2022, which spanned 31 countries and 25 industries, found that the majority of organizations plan to increase their EHS budgets for 2023. 

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So how much are budgets increasing? And what's driving that growth? Let's take a closer look at what the data shows. 

Companies are planning to increase EHS spend in 2023 compared to 2022 

Given that EHS budgets have been increasing for the past few years, it may come as no surprise to learn that most companies are planning to spend more on EHS in the upcoming year.

What may surprise you, though, is how much budgets are increasing. Of the 300 EHS executives Verdantix surveyed, more than half (52%) said their organization is budgeting more for EHS in 2023 than they did in 2022. About a third (34%) expect budget increases of up to 9%, which is significant in a field where money is tight and budget cuts are the norm. Only a mere 1% of companies are budgeting less for EHS in the next 12 months. 

What this means for EHS professionals: Most likely you’ll be seeing some additional funding flowing into your department in the coming year. But if you’re among the 1% of companies that plan to pull back on spending, it may be time to take a cue from your competitors and make EHS budgets a top priority in 2023. Here’s how to ask for a bigger EHS budget. 

Environmental and ESG regulations are driving budget increases

While EHS budgets have been increasing for a while, the factors that are driving the increase have changed. In 2022, we're seeing a shift with COVID concerns taking a backseat to environmental issues.

Companies are facing more pressure from boards and investors on ESG issues. Additionally, new environmental and ESG regulations — such as those coming from the SEC — are creating more risk for companies. This is something we're hearing in our own conversations with EHS professionals as well. 

Interestingly, a 2021 survey from Industrial Safety & Hygiene News (ISHN) found that the majority of respondents anticipated cuts to their safety budgets in 2022. In other words: Every extra dollar is now being diverted to environmental and sustainability issues instead. 

This also mirrors government spending trends for OSHA and the EPA. While the White House has requested a 14.5% budget increase for OSHA in FY 2023, it is seeking significantly more (+24%) for the EPA compared to FY 2022. 

Now for the bad news: Inflation is going to gobble up a lot of the additional money being routed to EHS departments. Annual inflation in the US was a staggering 8.5% at the time Verdantix’s survey was released — which means if you’re among the one-third of EHS professionals expecting a 1-9% budget increase, you may not see much difference in spending power. As this trend doesn't look like it's going away anytime soon, EHS departments will need to make the most out of every penny.

EHS departments are allocating more budget to environmental compliance, chemical management

As the pandemic fades, the cost of PPE and other COVID-related safety supplies is less of a factor. This, along with the wide availability of vaccines, means that EHS departments won’t be spending their entire budgets on masks and hand sanitizer in 2023. What they plan to do in place is ramp up spending on environmental compliance, such as environmental assessments, regulatory reporting costs, new technology systems, and more. Almost half of organizations plan to double down in this category next year, according to Verdantix. 

Chemical and waste management is another area where many organizations are making planned budget increases in 2023. Since the cost of chemical management ranges from $1 to $3 for every dollar of chemical purchased, it’s important for organizations to ensure that they have the right systems in place to reduce waste and be as efficient as possible. New, stricter regulations around carbon emissions are also forcing organizations to look more closely at their chemical use. In order to make this happen, companies will require the proper tech and training to support chemical and waste management. Budgeting for this should be a top priority when planning for 2023. 

Now over to you 

As we enter the last quarter of the year, it's time to start thinking about your EHS budget strategy for the new year. Heading into 2023, ESG and environmental compliance issues are top of mind for organizations. And while EHS budgets are expected to increase, particularly on the environmental side, inflation is going to mean that EHS departments have to make the most of every dollar they’re given.

Next, learn some creative ways to stretch your EHS budget, including how EHS software can help reduce costs.

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