SUCCEEDING IN THE MARKETPLACE
Implementing ISO 14001 around the world
As this new standard becomes more widely accepted, it
may become a de facto requirement for international trade. It remains
to be seen whether Russia and republics of the former Soviet Union will
join the global bandwagon.
S
ince September 1996, organizations
that desire to achieve and demonstrate accomplishment in environmental
management have a new option: independent third-party registration to
an internationally recognized environmental management system (EMS)
standard known as ISO 14001 (see sidebar, Key features of ISO
14001). Registration to this standard attests to an
organization's commitment to comply with applicable national
regulations, to assess the significant effects of its activities, and
to develop or improve its EMS.
The 14000 series of standards is the second set of standards for
management systems adopted by the International Organization for
Standardization. ISO 9000 (quality management systems), published in
1987, comprised the first ISO series of standards that were not
essentially technically or scientifically based. These standards have
been adopted and recognized worldwide as adding value to
organizations' quality management programs. Indeed, in some
countries of Europe, registration to the standard has become a de
facto requirement for trade. A similar outcome has been widely
predicted for ISO 14000-based environmental management systems.
Already there are regions (e.g., Europe and eastern Asia) where ISO
14000 has demonstrated its importance for trade and industrial sectors
(we identify these sectors later). In the first year and a half after
the publication of ISO 14001, approximately 4000 companies and/or
facilities in more than 50 countries around the world have earned ISO
14001 registrations--and the trend continues.
Demand for global environmental standards
While the International Organization for Standardization was
earning recognition for its quality standards during the 1980s,
environmental issues were gaining ground. In 1987, concern about
certain ozone-depleting chemicals led to the Montreal Agreement, which
banned their production. The need to preserve biological diversity was
highlighted in the conclusion of the Convention on International
Trade in Endangered Species (CITES). In short, by the early
1990s, international demand for attention to environmental concerns was
apparent and growing.
Also in the early 1990s, national and regional environmental standards
that could negatively affect trade were emerging. Standards
proliferated in areas such as labeling, environmental management, and
life-cycle assessment. These national and regional standards often
differed from one to another and sometimes had the potential to cause
serious marketplace disruption. Furthermore, such inconsistencies
created "harmonization problems" for international enterprise; for
example, lack of uniform product labeling and product assessments
yielded differing results for the same or similar products--a situation
that led, at best, to confusion; at worst, to marketplace
discrimination. The need to measure an organization's good-faith
efforts to achieve reliable and consistent environmental protection
became apparent. The criteria for assessing such efforts eventually
were embodied in ISO 14001.
Thus, with a history of success based on ISO 9000 and because of
increased interest in environmental issues, it is not surprising that
the International Organization for Standardization entered the
environmental arena. The impetus came in 1991, when the United Nations
announced its Conference on Environment and Development (Rio de
Janeiro, June 1992). Before the conference, the International
Organization for Standardization was asked to create international
environmental management standards. By January 1993, it had impaneled
Technical Committee 207 to develop EMSs and tools in several
environmental areas.
First in the ISO 14000 series
The first results were ISO 14001 (environmental
management systems) and ISO 14004, its companion guidance document.
Other standards in the 14000 series address general principles for
environmental auditing (ISO 14010), audit procedures (ISO 14011), the
qualification of auditors (ISO 14012), and life-cycle assessment (ISO
14040 et seq.). Some standards in the series still under development
include product labeling and declarations (ISO Draft International
Standard 14020 et seq.).
ISO 14001 provides organizations with a framework for achieving more
consistent and reliable environmental management. Its specification
outlines an EMS designed to address all facets of an organization's
operations, products, and services. Some of these elements include
environmental policy, resources, training, operations, emergency
response, audits, measurements, and management reviews. The system
approach recognizes that the manner in which an organization protects
the environment is as important as the goals it is expected to meet. In
fact, how organizations go about meeting those requirements determines
whether or not they can consistently succeed in protecting the
environment and complying with existing regulations.
The requirement in ISO 14001 to build and operate an EMS focuses the
organization's efforts on establishing reliable, affordable, and
consistent approaches to environmental protection that engage all
employees in the enterprise. The environmental protection system
becomes part of the total management system, receiving the same
attention as the quality, personnel, cost control, maintenance, and
production functions. Reliability is achieved through the continual
awareness and competence of all employees, rather than the
extraordinary or isolated efforts of specialists. Thus, ISO 14001
potentially can provide consistent environmental protection through
better management, at an affordable price.
Worldwide acceptance
In the first year-and-a-half since registration under the ISO
14001 standard became an option, organizations in different parts of
the world have embraced the standard relatively quickly. Initial data
indicate rapid movement toward registration in Europe and Asia, a
slower pace of adoption by industry in the United States, and a
"wait-and-see" approach by organizations in countries in transition
(such as Russia). Of the more than 2000 first-year registrants, the
United Kingdom and Japan have the most registrations (440 and 425,
respectively); U.S. companies account for only 55. The leader in
registered sites per capita is the Netherlands, with 230 registrations
for its comparatively small population. Russia has not yet established
a functioning ISO 14001 infrastructure, and no organizations there have
achieved registration to the standard (see sidebar, Spotlight on
Russia).
Organizations are motivated to implement ISO 14001 for three main
reasons: cost savings from efficiency gains, competitive trade
advantages, and improved environmental performance. It is no surprise
that European organizations would take the lead in conforming to the
new ISO standard. Many European countries have a tradition of
innovation in setting environmental standards, and members of the
European Union are used to receiving directives from Brussels.
An early model for ISO 14001 was the British Standard 7750 (BS 7750),
and the European Commission's Eco-Management and Audit Scheme (EMAS)
regulation may be considered ISO 14001's main European rival. Both
standards take a process and a performance approach to environmental
management.
Unlike ISO 14001, BS 7750 and EMAS are full-system standards; that is,
with these systems, almost no other regulation is needed. They both
include the key elements defined in ISO 14001 - requirements for
developing policy statements, setting environmental objectives and
targets, assessing environmental impacts of activities, providing
training, and documenting environmental procedures. However, they
surpass ISO's process requirements in that they include other
specifications for continuously improving environmental
performance, communicating goals and attainments to the public,
and maintaining comprehensive environmental registers. In the time that
registration to ISO 14001 has been available, European organizations
obtaining first-time registrations have tended to prefer ISO
14001 to EMAS. The perceived advantages of ISO 14001 lie in its
currency as a world standard and the fact that companies adopt it
voluntarily.
The EMAS-type approach was not acceptable to U.S. representatives
to Technical Committee 207; they favored the development of
process-type standards. With this kind of approach, ISO 14001
standards are meant to complement national regulatory regimes, not
replace or duplicate them.
Furthermore, ISO 14001 recognizes the role for adherence to the
nonregulatory environmental guidelines to which a company subscribes.
Thus, when seeking conformance registration, a company that belongs to
the Chemical Manufacturers Association would provide third-party
auditors with evidence of compliance with the Responsible Care
guidelines, and a member of the American Forest and Paper Association
would demonstrate its adherence to the Sustainable Forestry Initiative.
Implications for international trade relations
Just as adherence to ISO 9000 quality management standards has
become a de facto requirement for manufacturers in many sectors
worldwide and a widely discussed topic in Russia, ISO 14001 EMS
standards may become a necessary condition of international trade. The
Taiwanese Air Force and the Inchon Airport in South Korea have taken
the first step in this direction by requesting information about the
ISO 14001 certification status of their suppliers. These examples are
probably only the beginning of a trend that will appear first in one
industrial sector, then in another, and eventually in most or all
sectors. Trendsetting sectors in ISO 14001 implementation currently
include electronics, pharmaceuticals and chemicals, and automobiles.
As international consensus standards, the ISO 14000 series will unify
countries in their approach to eco-labeling (i.e., labeling
products as ecologically sound), environmental management, and
life-cycle assessment. Such a unified approach will remove trade
barriers, facilitating trade. In addition, the drafters of the ISO
14000 series were careful in the wording and intent of the standards to
ensure that they will not unduly or unnecessarily hamper trade.
The ISO 14000 series has the potential to play a major role in shaping
the application of environmental considerations in international trade
agreements. As response to the North American Free Trade Agreement
(NAFTA) demonstrated, public debates will arise concerning
the role of sanctions against parties that do not conform
to the environmental expectations or standards of their trading
partners. The countries with higher standards often will strive to
protect their own environmental quality, that of the global commons,
or, in some cases, that of the less-concerned trading partner.
Negotiations have been difficult so far, for many reasons - including
some that touch on questions of national sovereignty, the lack of
scientific consensus, and the general reluctance to tie the enormous
advantages of free trade to what some parties believe are political or
subjective views on quality-of-life issues, cultural values, or (some
claim) the heightened sensitivities of activists.
The standards advanced during international trade discussions often
deal with performance levels: One party asks another party to meet a
given environmental performance level. Attaining such a level might
call for the use of a specific technology, product design, or
production method, or of requirements for process emissions. If the
second party is unwilling or unable to meet those demands, trade
negotiations can become very complex and usually will not be
productive.
The ISO 14000 standards offer a more promising approach than
performance level-based negotiations to resolving issues involving
trade and the environment. Specifically, because of what it
requires, ISO 14001 can be used as an indicator of a country's desire
and commitment to foster environmental protection through better
environmental management in its organizations and enterprises. The
advantage of this approach is compelling, because it avoids all
the above-mentioned pitfalls of setting and imposing externally
established performance levels. The usual objections of
sovereignty, scientific consensus, and cultural values disappear,
because these are not in play with management systems, not nearly to
the degree they are with performance standards.
Outlook for the new standard
Successful promotion of ISO 14001 within individual countries
will bring about environmental progress that is reassuring to the world
community. The standard requires that companies know, understand, and
make good-faith efforts to comply with national laws and regulations.
It asks for the allocation of resources, personnel, and management
focus to systematize environmental care. It promotes audits,
performance measurement, and management review as well as
third-party assessments to ensure that the standard is being
implemented in good faith and with success. All of this can be
accomplished without imposing performance edicts from outside and
without touching on sensitive matters of national pride or sovereignty.
It seems reasonable to assume that, as ISO 14001 is implemented
worldwide, registration to the standard will increasingly satisfy
requirements for environmental protection in trade discussions and
agreements.
ISO 14001 promotes the development of processes to maintain
environmental compliance. Although compliance with all applicable laws
may be difficult or elusive in some countries, under ISO 14001,
organizations are expected to implement processes to maintain such
compliance. Where enforcement is strict, compliance processes are a
part of doing business and simply can be integrated into the overall
management system. Where enforcement is either lacking or ineffective,
ISO 14001 will provide the needed (in some cases, the only) impetus to
develop processes to reach and maintain compliance. In effect, the
standard encourages compliance processes, even in countries where
compliance and enforcement traditionally have been weak. Of course,
knowledge of the applicable laws is a prerequisite for establishing any
compliance process.
In some developing countries, compliance options will be limited
by deficiencies in organizational resources and available
infrastructure; it is very difficult to achieve regulatory compliance
without the necessary infrastructure. For instance, it is difficult, if
not impossible, to comply with a law that requires recycling if there
are no recycling facilities in that area. In such cases, organizations
may be at a disadvantage in meeting the requirements of ISO 14001,
because the implementation of credible compliance processes may require
greater efforts to overcome the lack of national infrastructure. If
there are no reasonable ways to be in compliance with the specific laws
of a country, an organization will not be able to implement a
compliance process to meet those laws.
Conceivably, this situation may stimulate some countries, including
Russia, to redraft their environmental laws to reflect their existing
resources and capabilities. Although redrafting laws this way may
weaken the legal framework in the short term, organizations will be
able to better comply with legal requirements in the long term. As the
infrastructure of a country improves, laws can be made progressively
stricter. The overall effect would be to increase the credibility of
all parties involved with environmental progress, including
legislators, organizations, and enforcement authorities.
In contrast, a country with an economy strong enough to provide an
environmental infrastructure should opt to build this infrastructure to
match the requirements of its existing laws. Such a step could improve
environmental performance immediately and obviously is preferable to
weakening existing laws to reflect the poor infrastructure.
It must be remembered that under ISO 14001, no proof of actual
compliance is required for an organization to obtain
registration. ISO 14001 requires only evidence of working processes
designed to maintain compliance. The expectation is that efforts to
implement such processes eventually will lead to more consistent
compliance and more supportive infrastructures where they are needed.
ISO 14001 may serve to equalize environmental regulations between
countries. Although this may take many years to accomplish, we believe
that implementation of ISO 14001 ultimately will pressure
countries to create more parallel environmental laws.
An international accreditation and registration system will highlight
the relative status of national capabilities, including legal
frameworks and enforcement programs. ISO 14001 registrars will
increase their expertise in comparing environmental requirements around
the world. As ISO 14001 becomes the global standard, the strengths and
weaknesses of national regulatory schemes will become apparent. It is
reasonable to assume that certain countries will feel compelled to
bring their regulations to a higher level. In particular, countries
that have the technical infrastructure for managing pollution and waste
(e.g., hazardous waste management units, recycling facilities, and
abatement control systems) will come under subtle pressure to upgrade
their legal structures.
No one in the regulated community wants ISO 14001 to become an
engine for more regulation. To the contrary; the desire is to promote
voluntary management systems that have far better benefits than those
derived from mere compliance with regulations and that will ultimately
supplant the command-and-control model. In the interim, management
standards will coexist with country laws and regulations, which still
provide the major performance incentive for many organizations.
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