Throughout the world, standards have been traditionally seen as contributing to:
  • Improving economic efficiency – by ensuring compatibility and supporting variety reduction, allowing the development of markets for materials and components, as well as for complementary products
  • Limiting “market failures” – by reducing the asymmetry of information between buyers and producers through quality and safety standards
  • Promoting trade – helping to create new markets and to reduce the cost of accessing these markets.

However, organizations must now successfully tackle a range of longer-term strategic challenges. Business cannot focus only on satisfying direct customers’ needs – stakeholders in all their forms are becoming more critical of businesses that do not adequately address expectations of good governance, environmental stewardship, sustainability and social responsibility.

Support from shareholders, employees, customers and even public opinion can collapse if coherent efforts are not undertaken to effectively address these issues. In the face of such challenges, it is also expected that business deliver superior financial performance and ambitious returns, regardless of how well these “other” needs are met. People in business must juggle multiple objectives, exploit new technologies and provide innovative solutions. They must hire and retain top personnel that are constantly learning new skills to meet and anticipate market demands, and they must act ethically in an environment of change, uncertainty and ambiguity.

In short, businesses must master strategic challenges, and deliver operational results. Yet charting this “right” success course is not evident. Different markets require different solutions, with customer expectations varying from one region of the world to another. Well-founded, defensible business decisions can be daunting. It is therefore a powerful notion to consider that leading minds from around the world have debated issues such as strategic risk management, environmental performance, quality assurance, supply chain management and socially responsible behaviour to achieve global agreement on organizational best practices, expectations and guidance in the form of ISO International Standards.

Pressing issues

ISO standards now address some of the most pressing issues facing business today. ISO 31000 on risk management provides direction on how companies can integrate risk-based decision-making into the organization’s governance, planning, management, reporting, policies, values and culture. The well-known ISO 9001 standard on quality management provides a globally recognized way to enhance customer satisfaction and demonstrate how products meet customer and regulatory requirements. The series also includes best practices for the measurement of customer satisfaction (ISO 10004), customer complaints handling (ISO 10002) and dispute resolution (ISO 10003).

The ISO 14000 series provides tools for organizations to achieve and demonstrate sound environmental management (ISO 14001) as well as conduct product lifecycle assessments (ISO 14040), assess environmental labelling (ISO 14020 series) and address greenhouse gas/carbon footprint measurements, verification and validation (ISO 14064 and ISO 14065 series).

The upcoming ISO 50001 standard on energy management will provide requirements for energy supply, uses and consumption, as well as measurement, reporting, design and procurement practices for energy-using equipment, systems, and processes.

Emerging challenges such as determining the financial value of intangible “brand” assets are also addressed in the recently published ISO 10668 that describes brand valuation objectives, bases for valuations, approaches, methods and the sourcing of data and assumptions. Other management standards help to systematically address company information asset security issues (ISO/IEC 27000 series), traceability and security in the supply chain (ISO 28000 series) and approaches to effective food safety management (ISO 22000 series).

Standards deal not only with topical business issues, but can also provide rules and guidance for assessing how related business requirements are implemented. Such conformity assessment standards can provide benefits to all links in the value chain. Companies within the value chain, as well as end-use customers, use conformity assessment to provide confidence that the products and services that they purchase are fit for purpose (e.g. through inspection, certification). In many sectors, regulators also rely on credible, globally recognized conformity assessment results, based on ISO standards, as a basis for their acceptance.

Not all standards are created equal

Any organization may claim to have developed a “standard” and, even further, may subsequently establish a certification/ marking/labelling scheme that demonstrates conformance to the standard. However, not all standards are created equal.

ISO standards are international in nature, and developed on the basis of principles established by the World Trade Organization Committee on Technical Barriers to Trade (WTO TBT). These principles relate to the way in which an international standard development process is carried out, and include expectations of transparency, openness, impartiality and consensus, effectiveness and relevance, coherence, and addressing the needs of developing countries.

These are further complemented by the disciplines of Annex 3 of the WTO TBT Agreement “Code of Good Practice for the preparation, adoption and application of standards” – a code which ISO members are encouraged to comply with.

Concern over “private standards” has in recent years been a topic of WTO discussions. But what is meant by “ private standards ” and what is the role of such standards in supporting public policy and technical regulations that are designed to protect or enhance public health, safety and the environment ?

ISO has published a brochure that describes the formal international standardization system and clarifies its relation to private standards, specifically in the areas of information and communication technologies, the agri-food sector and on social and environmental issues. Ultimately, there is a need to strengthen linkages between private standards schemes and formal international standard-setting organizations, and achieve simple global solutions with the aim of “one International Standard, one test, and one certificate”.

ISO 26000: a new authoritative contribution to sustainability

On 1 November 2010, ISO published ISO 26000, Guidance on social responsibility. Publication of this standard was the culmination of an intensive five-year global stakeholder engagement exercise. Using and building on ISO’s development processes, the ISO Working Group on Social Responsibility included more than the 450 participating experts and 210 observers, from 99 countries and 42 liaison organizations.

As part of the effort, ISO established Memoranda of Understanding with the International Labour Organization (ILO), as well as the United Nations Global Compact (UNGC) and the Organisation for Economic Co-operation and Development (OECD). The primary objectives were to not amend their respective instruments in the social responsibility (SR) field, but to complement their work and provide authoritative, international, voluntary guidance on the breadth of this subject for all organizations (e.g. not just corporate social responsibility – CSR).

ISO 26000 is not a management system standard, nor is it intended or appropriate for certification or regulatory use. However, ISO 26000 effectively distils a global understanding of what social responsibility is, and what organizations need to do to operate in a socially responsible way. The standard specifically provides guidance on :

  • Concepts, terms and definitions
  • The background, trends and characteristics of SR
  • Principles and practices relating to SR
  • The core subjects and issues of SR
  • Integrating, implementing and promoting socially responsible behaviour throughout the organization and, through its policies and practices, within its sphere of influence
  • Identifying and engaging with stakeholders
  • Communicating commitments, performance and other information related to SR.

Linkage of ISO 26000 to “integrated reporting”

ISO 26000 effectively provides a global context for social responsibility, a context in which various existing tools and initiatives already provide important solutions. In the area of “reporting”, extensive input and expertise from key global players, such as the Global Reporting Initiative (GRI), has been provided throughout the development of ISO 26000. There are no fewer than 19 instances of the term “reporting” in the body of ISO 26000, intended to provide guidance on communicating results within the organization, with other stakeholders and with society as a whole.

However, no requirements for reporting are indicated in ISO 26000, nor are there requirements on how this could be done in a manner that integrates financial and non-financial information. Thus the utility and complementarity of ISO 26000 and GRI’s sustainability reporting principles and indicators is evident. The GRI has published a document on using the GRI sustainability reporting guidelines with ISO 26000, and ISO welcomes the development of this so-called linkage document.

The further proposed step of “integrated reporting” currently being discussed in various fora is a timely issue. Establishment of the International Integrated Reporting Committee (IIRC)1) presents a unique opportunity to raise awareness of the merits of measuring business success in a new, holistic and integrated manner.

The ambitions of the IIRC to discuss integrated reporting at the 2011 G20 meeting could provide needed public policy exposure and debate that can set the context for future international, voluntary standards and initiatives. ISO wishes to express its appreciation to the Harvard Business School for assembling a thought-provoking and informative workshop in October 2010 on this issue.

ISO, in collaboration with GRI and other players, is also pleased to participate in future discussions on this issue, and to potentially contribute to the development of related voluntary, consensus-based International Standards that can contribute to a more sustainable global business environment.