ISO 14001

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Trade , Environment and Development
ISO 14001 Standards for Environmental Management
Systems

Module 6
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Background

• Environmental Management Systems (EMS) are a
  potential useful instrument for companies to
  reduce the environmental impacts of their
  operations and to gain competitiveness
• There is considerable interest in ISO 14000
  standards, developed by the International
  Organization for Standardization (ISO), including
  in devloping countries
• There is little empirical evidence of the trade
  effects of ISO 14001
• The private sector and Governments need objective
  information and analysis

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Objectives

• To raise awareness and enhance understanding of
  the possibilities and challenges that ISO 14001
  poses for developing country companies and their
  governments
• This should assist government policy-makers and
  industry associations
• To inform themselves about ISO 14001 issues and
  stimulate a dialogue at the national level
• To set priorities and shape policies and
  strategies concerning implementation issues at
  the national level

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Objectives

• TrainforTrade 2000 workshops may result in
  recommendations for follow-up actions in the area
  of EMS
• It should be noted, however, that this module and
  related UNCTAD or CBTF projects are not intended
  to assist companies in installing environmental
  management systems and/or achieving their
  certification against an international standard.
  Neither are they intended to develop pilot schemes

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Structure of this presentation 1

• How do environmental management systems operate?
• What are the costs and benefits of using EMS and
  ISO 14001?
• How could ISO 14001 affect trade?
• What are the key certification and accreditation
  issues for developing countries?
• Do small and medium sized enterprises (SMEs)
  have similar chances as large companies to obtain
  ISO 14001 certification?

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Structure of this presentation 2

• How can governments in developing countries
  promote the effective use of EMS?
• To what extent do transnational corporations
  (TNCs) use ISO 14001 and to what extent do they
  encourage their affiliates/or and suppliers in
  developing countries to implement an EMS?

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• How do environmental management systems operate?

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ISO 14000 series of international standards for
environmental management systems

• Environmental management systems
• ISO 14001 Specification with guidance for use
• ISO 14004 General guidelines on principles,
  systems and supporting techniques
• Guidelines for environmental auditing
• ISO 14010 General principles
• ISO 14011 Audit procedures - Auditing of
  environmental management systems
• ISO 14012 Qualification criteria for
  environmental auditors

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ISO 9000 and 14001 certified companiessource
ISO

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What is an Environmental Management System
(EMS)?

• A tool to manage environmental aspects of a
  companys operations
• Based on guidelines that a company can adhere to
  on a voluntary basis, in order to control its
  environmental impacts on the basis of
  self-determined environmental policy and
  objectives
• British BS 7750, 1992
• European Union Eco-Management and Audit Scheme
  (EMAS), 1993
• ISO 14001 has been developed as an international
  standard to avoid the proliferation of different
  EMS standards

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Core Elements

• Five core elements should be implemented
• an environmental policy
• environmental planning
• implementation and operation
• regular checking and corrective action
• a management review

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Environmental policy

• Statement by the organization of its intentions
  and principles in relation to its overall
  environmental performance.
• The environmental policy must commit the
  organization to
• regulatory compliance
• pollution prevention
• continual improvement
• It must also be appropriate to the nature and
  scale of the organizations operations

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Why do companies want to use EMS/ISO 14001?

• Environmental performance
• Economic benefits
• Trade considerations
• Corporate image

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ISO certified companies in the Republic of Korea

• Environmentally sensitive industries (e.g.
  chemicals) seeking to improve their environmental
  image
• Export-oriented industries (e.g. electronics)
  preparing to deal with potential trade barriers
• Large firms committed to maintaining high
  environmental standards and meeting shareholders
  expectations

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To what extent does ISO 14001 contribute to
environmental improvement at the company level?

• The ISO 14001 standard does not state specific
  environmental performance criteria
• An effective EMS assists an company in
  formulating an environmental policy and setting
  corresponding objectives, taking into account
  legislative requirements and information about
  significant environmental aspects of its
  activities

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What is the role of ISO 14001 in environmental
policy making?

• Complementarity between voluntary standards on
  EMS and regulatory measures
• Potential to improve regulatory compliance
• ISO 14001 has been criticised by some NGOs
• compliance
• measurable improvement in environmental
  performance
• third party verification of the audit
• public reporting
• public participation

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• What are the costs and benefits of using EMS and
  ISO 14001?

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Costs of implementing EMS and ISO 14001
certification

• The costs of installing an EMS or upgrading an
  existing management system to the requirements of
  ISO 14001
• e.g. setting up and maintaining an EMS, hiring
  consultants, meeting company-determined
  performance goals
• The costs of certification of the EMS against the
  ISO 14001 standard

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Costs of implementing EMS

• costs of installing an EMS vary considerably
  from case to case, depending on
• The initial conditions within an organization
• Conditions external to the organization

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Volvo claims that EMSs

• Provide a basis for effective environmental
  programmes
• Reduce costs in the longer term
• Encourage continuous improvement and reduce
  environmental impact
• Bring order to environmental activities
• Reduce the risk of legal contraventions
• Improve credibility through third-party
  inspection
• Are essential for securing certain orders,
  thereby generating revenue
• Reinforce corporate image  

Source VOLVO homepage
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More empirical evidence is needed

• As yet, not much empirical evidence exists about
  the actual costs and benefits of EMS, especially
  not in developing countries
• There is a need for more empirical studies on
  costs and benefits of installing and maintaining
  an EMS in the case of developing countries

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• How could ISO 14001 affect trade?

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Trade implications of ISO 14001

• Presence in the market place
• Market pressure
• Market opportunities
• Can ISO 14001 be a barrier to trade?

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Presence in the market place

• Some 23,000 companies
• ISO 14001 certification is growing quickly
• There is also considerable interest in developing
  countries
• Many companies appear to have adopted a wait and
  see attitude, in particular with regard to
  certification

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Market pressure

• Supplier requirements
• Although some large companies encourage their
  suppliers to certify against ISO 14001, there is
  scant evidence that ISO certification will become
  a supplier condition
• Suppliers and subcontractors may prefer to seek
  ISO 14001 certification to avoid plant visits or
  complex questionnaires
• Supply chain management of TNCs could have some
  effect
• Public procurement

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Market pressure

• UNCTAD Expert Group Meeting
• Pressures on developing country suppliers to
  demonstrate ISO 14001 certification could result
  in barriers to trade and/or detract from the
  environmental objectives of setting up an EMS
• Companies in developed countries should establish
  a supportive cooperation with their suppliers in
  developing countries in the area of EMS
  implementation.
• TNCs could play an important role in this regard

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Market opportunities

• Seeking ISO 14001 certification in the
  expectation that certification by itself may be a
  ticket to market access and increased market
  shares is not necessarily a good idea
• Do what extent ISO 14001 certification will
  assist developing country companies to strengthen
  market positions, even if customers do not
  require certification, is difficult to predict

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Can ISO 14001 constitute a barrier to trade?

• Despite being voluntary nature, ISO 14001
  certification may become a de facto condition for
  doing business, at least in certain sectors
• This may then result in a de facto barrier to
  trade if companies have difficulties in obtaining
  certification
• Associated costs?
• Do small and medium-sized enterprises (SMEs) face
  particular difficulties?

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• What are the key certification and accreditation
  issues for developing countries?

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Certification issues 1

• Costs of certification
• Acceptance of ISO 14001 certificates
• Mutual recognition
• Accreditation

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Certification issues 2

• Certification can be relatively expensive,
  particularly if national certification and
  accreditation bodies are non-existent, or if
  self-certification or certification by national
  bodies is not accepted in overseas markets
• The costs of certification carried out by local
  ISO registrars in developing countries tend to be
  much lower.
• Several developing countries have already
  established conformity assessment systems to
  enable certification by local bodies.

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Certification issues 3

• Pilot projects have played a useful role in this
  regard
• The international value of ISO 14001
  certification, however, depends on the confidence
  that others have in the body that performs the
  certification, and in the process it uses
• Non-acceptance is relatively small, but most of
  the reported cases affect developing countries

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Mutual recognition and harmonization

• Mutual recognition of certification systems could
  be promoted at the bilateral and regional level
• Initiatives are being undertaken to develop an
  internationally recognized certification system
• This would support universal recognition of ISO
  certifications.

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• Do SMEs have similar chances as large companies
  to obtain ISO 14001 certification?

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Small and Medium Sized Enterprises (SMEs)

• SMEs may face specific problems with EMS
• Lack of financial resources and qualified
  personnel
• Difficult access to information
• Resistance to change
• Costs of setting up the system and certification
• Few SMEs have an environmental policy in place
• Identification of environmental legislation
• Identification of environmental impacts of
  activities
• ISO has not recognized need for special EMS
  standard for SMEs

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SMEs and ISO 14001 2

• In the short run, the implementation of EMS will
  depend largely on demands by large organisations,
  e.g. TNC subsidiaries imposing requirements on
  local suppliers
• Large organisations, however, can also assist
  SMEs in complying with the requirements of ISO
  14001
• In addition, cooperation among SMEs may assist in
  resolving certain problems and in reducing costs.
  For example SMEs in specific sectors and
  geographical areas could cooperate in identifying
  the environmental aspects and impacts of their
  activities and information on legal requirements.
  Cooperation in staff training could also be
  explored

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• How can governments in developing countries
  promote the effective use of EMS?

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Promoting the implementation of EMS

• UNCTAD Expert Meeting recommended
• Awareness raising among stakeholders
• Identification of sources and dissemination of
  information
• Creation of infrastructure, training auditors and
  consultants
• Access to and transfer of environmentally sound
  technology
• Assistance in developing and implementing related
  legislation
• Support for participation in relevant forums and
  for sharing experiences with implementation of
  EMS

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Pilot schemes

• Pilot schemes may be an effective means to
  improve understanding of EMS and to gain
  practical experience
• They provide opportunities for mutual learning by
  certification bodies and the business community
• In several developing countries pilot, schemes
  were put in place prior to the official
  publication of ISO 14001 to prepare the national
  certification bodies and industry

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• To what extent do TNCs use ISO 14001 and to what
  extent do they encourage their affiliates/or and
  suppliers in developing countries to implement an
  EMS?

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Disclaimer

• This section examines, by way of example, the
  stated policies of some large TNCs regarding the
  use of EMS by their subsidiaries and suppliers in
  developing countries, based on a quick
  examination of their environmental reports
• Clearly, this annex does not result of empirical
  analysis and therefore it does not draw any
  conclusion on the extent to which TNCs in general
  contribute to the wider use of EMS and their
  continuous improvement in developing countries
• Rather it seeks to stimulate debate and research

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STRATEGIES OF TRANSNATIONAL CORPORATIONS (TNCs)

• Approaches towards the use of EMS by subsidiaries
  in developing countries
• Standardization
• Differentiation
• Approaches towards suppliers

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Management Systems of TNCs

• Many companies have added environmental
  considerations to existing management systems
  aimed at promoting health and safety they have
  developed integrated Health, Safety and
  Environmental (HSE) management system
• Several TNCs report that their internal EMS
  standards are largely compatible with ISO 14001
  or more stringent in the sense that they also
  include performance requirements

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Dow Chemical

• It is Dow Chemicals sated policy that all global
  operations meet Dows Environmental Management
  Standard or their countrys laws and regulations,
  whichever is more stringent

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Hoechst Marion Roussel

• Hoechst Marion Roussel (HMR) encourages all
  production facilities to develop an integrated
  EHS system
• It will be up to the local management to choose
  between EMAS, ISO 14001 certification or an
  internal EMS

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SHELL

• Shell has developed a Health, Safety and
  Environmental Management System (HSE-MS)
• Each year all Shell companies must submit a
  letter confirming the status and effectiveness of
  their systems
• Shell will make its HSE-MS compatible with ISO
  14001, enabling Shell companies to seek ISO 14001
  certification if they wish

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HENKEL

• Henkel developed an integrated, process-oriented
  management system for safety, health, environment
  and quality (SHEQ). According to Henkel, this
  system covers all requirements of
• The Responsible Care initiative
• EMAS
• ISO 14001
• ISO 9001
• An important follow-up step is the development
  of quantitative SHEQ performance indicators, as
  well as their group-wide application and
  harmonization

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Hoechst Group

• According to the Principles and
  Responsibilities, the Group companies will
  implement effective EHS management systems and
  develop EHS targets to work towards best practice
  in their industry group
• Hoechst AG will periodically audit the EHS
  management systems of the Group companies
• The operating companies are obliged to report
  externally and internally on their EHS performance

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ABB (Asea Brown Boveri)

• Its environmental report argues that
• the process of certifying companies to this
  standard is an important aspect of technology
  sharing in ABB today, particularly for companies
  in emerging markets which often have little
  experience with international certification
  procedures

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Supplier requirements

• Anecdotal evidence suggests that while most TNCs
  may not require there suppliers to be ISO 14001
  certified, several TNCs encourage their suppliers
  to seek ISO 14001 certification or to apply
  environmental management practices which are
  similar to their own

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IBM

• IBM has encouraged its suppliers to align
  their EMS with the requirements of ISO 14001 and
  to pursue registration under this international
  standard.

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Shell

• Shell has adopted a number of general business
  practices, including on Responsibilities to
  business partners Health, safety, environment
  and human rights
• We do not work with suppliers and contractors
  who are not able to meet Shell standards. In more
  than 100 countries, Shell companies screen
  suppliers for their ability to meet HSE standards
  and the human rights of their employees.
• In 1997, at least 95 contracts were canceled
  because contractors failed to adhere to our
  specified standards on HSE, or employee human
  rights.

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ABB

• ABBs Environmental Report, in a section on
  supply management, states that
• An increasing number of companies and other
  organizations are now requiring their suppliers
  to have ISO 14001 in place. This requirement
  will, of course, accelerate the implementation of
  ISO 14001 on a large scale
• Environmental performance is included within the
  formal process used to qualify suppliers within
  our computer-based cost evaluation models and in
  our training for supply managers.

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• Issues for discussion

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Conclusions

• Environmental management systems (EMS) are a
  potentially useful tool to assist companies in
  identifying and reducing the environmental impact
  of their operations as well as in achieving
  economic benefits
• Certification against the ISO 14001 may help
  companies to improve corporate image, gain
  customer recognition, increase export
  competitiveness and strengthen market positions

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Conclusions

• Would you agree with the following common
• places
• The Use of ISO 14001 is increasing rapidly?
• The use is heavily concentrated in particular
  sectors, such as electronics and chemicals?
• Other important sectors, in particular for
  developing countries, are forestry and mining?
• In most sectors ISO 14001 certification is of
  relatively little importance in the market place?

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Recommendations 1

• Do you agree with the following recommendations?
• Pro-active approach towards ISO 14001
• Companies should seek to implement EMS/ISO 14001
  for good reasons
• reduce the environmental impact of their
  operations
• obtain economic benefits
• EMS/ISO 14001 should not be implemented for the
  wrong reason, such as unjustified fear to lose
  business operations if certification cannot be
  shown

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Recommendations 2

• Do you agree with the following recommendations?
• Thus, decisions should be based on objective
  assessments of costs and benefits
• Governments can play a key role in promoting the
  wider use of EMS and in helping to reduce costs
• Business co-operation, including between large
  and small companies, can also play an important
  role
• Priority may be given to particular sectors

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Other issues for discussion

• What are the opportunities and risks for
  companies in developing countries
• Can ISO 14001 be a tool for environmental
  management
• At the company level?
• In environmental policy making?
• What are the trade implications of ISO 14001,
  particularly for developing countries?
• What are the needs of developing countries,
  particularly with regard to national
  implementation issues?

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• Thank you

TrainforTrade Trade, Environment and Development