ISO 14001 BRIEFING NOTE
Relevance of ISO 14001 to business strategy and general management
Using ISO 14001 to Support Value Creation in Business
There is growing recognition that the natural environment will limit or constrain the ability of businesses to create value in the future – environmental management is a strategic business issue. Climate change; growing demand for resources such as energy, water and other materials; biodiversity loss – all highlight a pressing need to reduce impacts on the environment. The predicted growth in world population between now and 2050 will also lead to increased pressure on the natural environment.
An environmental management system (EMS) is a framework that organizations can use to manage their impact on the environment and improve environmental performance. ISO (International Organization for Standardization) has published the international standard ISO 14001:2004 Environmental management systems – Requirements with guidance for use that describes the essential elements of an EMS. ISO 14001 is used by more than 200 000 organizations worldwide to support effective environmental management and can be used to support companies in addressing strategic business issues relating to the environment.
Business strategy – the importance of Environmental Management
There are sound business reasons why organizations should take a strategic approach to environmental management and improving their environmental performance. It is prerequisite for top management to recognise that environmental management is an indispensable element in an overall business management in today’s business environment, i.e. the global trends towards a low carbon and resource efficient economy which will pose various risks and opportunities for business strategy.
Environmental risk management is identified as one of the principles of environmental responsibility in ISO 26000 Guidance on social responsibility, and it will also inevitably be realized in the overall risk management process of an organization. Environmental risks include regulatory, physical and market/reputational risk. Environmental risk management is becoming more and more vital for the sustained success of business today. The ISO 14001 EMS standard includes language that looks beyond compliance by addressing all environmental aspects regardless of whether they are regulated or not. This means that ISO 14001 is the right tool for environmental risk management.
Financial Savings are achieved through more efficient use of resources, minimizing scrap and waste from operations and by recycling as much of these as was possible. By using EMS the organization can also find new ways to improve the operational efficiency of existing production processes.
Reputation is important to all kinds of organization, especially in relation to environmental issues. Awareness of environmental problems is growing in society, consumers are requiring organizations to demonstrate compliance and good practice in environmental matters. Organizations implementing cleaner production and greener products/ services are gaining more support from consumers and communities. Thus, in the current market, corporate image and brand is highly influenced by the level of their environmental management and an EMS makes a big difference.
New business opportunities are always in the interest of organizations. A solution to mitigate the environmental problems will be welcomed by society, customers and consumers. The organization which finds an innovative solution will be able to market it. An early response to an environmental problem will open the door for the organization to gain a competitive advantage.
To be successful, an organization should have enough knowledge of the environmental problem itself, then the solutions to that problem. Through the operation of EMS and its continual improvement process, an organization will be able to accumulate the necessary knowledge, which will form the basis for environment-related new business opportunities.
Many organizations view their impacts on the environment as being those associated with their direct operational footprint – including for example the on-site use of resources, discharges to air and water, energy consumption and compliance with environmental regulations.
However, a more strategic approach to environmental management looks across the whole value chain, including: supply chains, operations and logistics, design and development of products and/or services, use of products/ services by customers and consumers, end-use of product/ service and potential disposal/ recovery. This is more commonly called life-cycle thinking.
The strategic benefits of EMS fall into many different categories. What they all have in common is that they are brought about by greater employee awareness and commitment. Those are the primary agents for change that are established and nurtured by an ISO 14001 EMS.
An EMS is, therefore, more than a new technique to manage waste or avoid spills and contamination. It is more than just a new discipline to maintain compliance with regulatory requirements. While it can certainly address those tasks, it is foremost a framework for organizational change. It releases the environmental focus from its traditional, staff-dominated, narrow, legalistic boundaries to the open-ended operational, pragmatic and energetic domain of line functions with direct employee intervention and action. It channels the energies and creativity of all members of the organization and makes each an active agent for environmental protection, resource conservation and improved efficiencies.
An ISO 14001 EMS helps to define the path for bringing this about. The focus includes the traditional concerns for waste minimization, pollution avoidance and compliance, but is also likely to lead to operational improvements, resource substitution, product stewardship, and eventually to business strategies that can result in sustainable development for the enterprise and for society at large.