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ISO 14000: Should your Company Develop an Environmental Management System?
By: Susan Graff
Questions to Ask before investing company time &
resources in EMS development:
1. Are your customers and stakeholders likely to demand
you have an environmental management system in place?
2. What are the costs associated with your product that
is lost to the environment?
3. Are environmental impacts of your processes creating
a liability that put you or your company at risk?
Environmental Management Systems:
ISO 14000 Requirements
An environmental management system identifies the
significant environmental impacts of a company’s process
and opportunities to conserve materials and energy. The
system also establishes linkage to your business
planning process. There are several different
environmental management system models to choose from:
Sweden’s Natural Step (TM), the Chemical Manufacturer’s
Association Responsible Care (TM), and ISO 14000 are
some examples.
The ISO 14000 environmental management system model was
developed to meet the demand for a single international
standard, and it was developed through consensus by an
international technical advisory committee of industry,
government, consumer interest groups, and the general
public. ISO (the International Organization for
Standardization), a worldwide federation of national
standards bodies, issued the final specification
standard in the fall of 1996. While 14000 is the series,
14001 is the actual specification that companies either
self-declare or register to through 3rd party
confirmation. Demonstration of successful implementation
of 14001 can be used by any organization to assure
interested parties that an appropriate environmental
management system is in place.
The ISO 14001 environmental management system model
follows a logical progression of steps that begin with
developing a company Environmental Policy. The most
prescriptive part of the model, 14001 requires the
environmental policy include commitments to prevention
of pollution, regulatory compliance, and continual
improvement. Next Planning begins, and the first step is
critical - identification of significant environmental
impacts from the organization’s activities, products, or
services. Companies are using a variety of methods, from
brainstorming to risk ranking schemes, to prioritize
these environmental impacts and plan budgets and
schedules to address the most significant. Legal and
other requirements the company complies with are also
identified during Planning. Objectives and targets are
developed for the significant impacts, and an action
plan for accomplishing them is required. Implementation
puts the plan in action through alignment of resources
and development of documentation to minimize
environmental impacts. Checking, Corrective action, and
Management Review further reinforce the Deming model of
Plan-Do-Check-Act that 14000 is based upon to ensure
continual improvement.
ISO 14000 represents a marriage of quality systems with
preventive environmental management. Many companies that
implemented an ISO 9000 quality system realized
significant improvements but objected to the burdensome
documentation requirements. The authors of ISO 14000
have taken this into account, requiring written
documentation of policy and/or procedures in only four
or five instances in the model. In addition, companies
that are ISO 9000 registered have administrative
elements such as document control and record keeping
systems already in place and are at a major advantage in
implementing 14000.
Why Companies are Developing Environmental Management
Systems
The major driver behind the environmental management
system trend is the marketplace. In a 1995 survey of 99
U.S. businesses considering 14001 implementation, 50%
reported customer demand or a competitive advantage as
the reason for certification. Companies with a high
percentage of sales in Europe or Asian markets should
investigate what their customers expect - for example,
China, the home for 20% of the world’s population,
recently adopted ISO 14000 as state policy. Xerox
Corporation states customer demand drove their decision
to seek registration. On the U.S. front, the "Big Three"
auto manufacturers are expecting their Tier 1 suppliers
to have environmental management systems. Other global
companies are making similar demands on suppliers,
including leaders in the pulp and paper industry.
According to one corporate manager of environmental
affairs, the supplier who inappropriately manages their
environmental aspects or ignores opportunities for
pollution prevention may pass significant environmental
liability and a negative image on to their customer.
Improved risk management and the reduced liabilities are
other important reasons U.S. companies are implementing
environmental management systems. In 1996, U.S. EPA
reported the highest level of enforcement activity in
the history of the agency. Over $172 million was
collected in fines and penalties. Furthermore, state and
federal environmental agencies often use corporate
penalty structures that put the CEO and top management
at risk personally in the event of a release to the
environment. Environmental management systems are
preventive, and several elements contain spill
prevention and emergency preparedness procedures that
help manage risk and influence liability. Companies have
received monetary relief in federal penalties for having
certain environmental management system elements in
place such as self-audits. In a recent landmark case
involving GTE, $2.3 million was reduced to $53,000 in
penalties because the company conducted self-audits.
Companies are also receiving reductions in insurance
premiums - Akzo Nobel Chemicals and Synthetic Industries
reported premium reductions after ISO registration.
Finally, internal efficiencies and waste reduction are
driving the trend. Product lost to the environment
equates to dollars down the drain or up in smoke.
Unnecessary waste of natural resources is a major
business concern of progressive companies. For example,
Southwire Company annually reports significant cost
savings from the pollution prevention programs essential
to implementing their environmental policy. Most often
the best ideas come from within, which also results in
enhanced employee satisfaction. Team-based management
studies have shown that having input to and ownership of
company goals enhances employee job satisfaction and
decreases the likelihood of employee turnover.
What will an Environmental Management System Cost?
The cost of implementing an environmental management
system is highly variable, but often proportional to the
size and complexity of the operation. A range of costs
between $15,000-$150,000 per site have been reported.
Formal registration adds to these costs as a 3rd party
audit program and surveillance are required to maintain
the registration.
Companies are finding the major environmental management
system development cost is employee time. ISO requires
all employees are informed about the company’s
environmental policy, and specialized knowledge among
those whose job may have a significant environmental
impact. Training programs can be resource intensive in
time lost from production plus costs of instruction, and
it takes time to document procedures for certain
critical operations. Companies with high employee
turnover or multiple sites may find knowledge transfer
intranet/extranet technologies and self-directed
learning tools effective to develop and maintain
employee capabilities and minimize some of these costs.
Capital costs of environmental management system
development are relatively small in comparison, assuming
companies already have appropriate control equipment and
monitoring instrumentation in place to be in compliance
with federal, state, and local requirements.
The costs and benefits of environmental management
systems can be difficult to measure. How do you measure
the value of a preventive system? The costs incurred in
the course of complying with regulations such as
monitoring and permit requirements are potentially
hidden among other items, such as overhead accounts.
Intangibles such as enhanced consumer response indeed
have value, but that value may depend on how your
company is currently positioned on these issues and it’s
goals.
Consider Stakeholder Concerns and Sustainable
Development Needs
Environmental performance is important to many consumers
and stakeholders. Evidence is found by noting the push
on parliaments and congresses around the world to effect
a culture change, or perhaps even a 2nd industrial
revolution, towards sustainable development. Simply put,
sustainable development is providing goods and services
to meet the needs of current generations without
compromising the ability of future generations to meet
their own needs. The President’s Council on Sustainable
Development was appointed in 1993 to lay the groundwork
for a national strategy. 25 leaders from business,
government, environmental, civil rights, and Native
American organizations are looking for new ways to
achieve this goal through performance-based solutions.
21st century manufacturers are looking at ways to reduce
the consumption of materials and energy in production
processes, and recycle their waste product into new
product uses. Ray Anderson, CEO of Interface, Inc., a
major manufacturer of floor coverings, cites staggering
figures in use of raw materials: 1.2 billion pounds of
materials extracted per year, with 2/3 of it burned up
in fuel consumption. Ray and Interface are pioneering
changes in technology to become completely sustainable
by the year 2000. Use of solar energy, providing raw
material needs by harvesting and recycling carpet and
other petrochemical products, and eliminating waste and
harmful emissions are all part of Interface’s strategy
to attain this goal.
Environmental management systems that employ tools such
as life cycle assessment and performance measures can be
used to accomplish sustainable manufacturing goals and
report meaningful results to your key stakeholders.
Conclusions
The trend towards environmental management systems is
well established. While your company may already have a
few key elements of a system in place, many companies
are finding considerable value added through
implementing a complete system that integrates
environmental aspects into business planning. As is true
with other areas of industrial management, planning and
prevention on the front end may translate to significant
gains in the long run.
Think about your company’s goals, marketplace, and the
bottom line . . . numerous studies over the past few
decades have shown a positive correlation between
financial and environmental performance. But also think
a few steps beyond today’s bottom line, and the needs of
future generations we all should be considerate of. The
time is here to make an informed business decision.
For Further Reference
- ANSI/ISO 14000 Series Environmental Management Systems
and Environmental Auditing, American Society for Testing
& Materials, American Society for Quality Control, NSF
International - the international series, some of which
have been finalized, including 14001, the final
specification standard for environmental management
system development, 1996.
-
www.ISO14000.net - an Internet resource for information,
training, and online services; includes a list of
companies who have registered to 14000; some information
requires subscription.
- "Environmental Management Systems: An Implementation
Guide for Small and Medium Sized Organizations";
Stapleton, Cooney and Hix Jr., NSF International, 1996 -
a guidance document for any size organization developing
an EMS, 156 pages.
- ISO 14000 Questions and Answers, Third Edition,
Hemingway, CEEM Information Services, 1997 - Simple
straightforward answers to the most frequently asked
questions companies have regarding ISO implementation;
56 pages.
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