Shades of green

• By Howard Lentzner
• Apr 01, 2000

Environmental issues pose a significant challenge for today's businesses. With lawmakers, regulators and a civic-minded public watching, more companies are making sincere efforts to clean up their manufacturing processes to reduce their negative impact on the environment. In fact, most companies know that protecting the environment is a necessary cost of doing business.

Despite this reality, many businesses become entangled in, and even paralyzed by, the massive, intricate web of regulatory obligations. For some manufacturers, it is virtually impossible to be in full compliance all the time. Getting a handle on environmental laws and regulations can be more than a full-time job for even the best environmental manager or department. Any company wanting to move to the next level of compliance, or beyond it, faces a daunting challenge. It is not, however, an impossible one.

The ISO standard

A voluntary international standard — ISO 14001 — was published by the International Organization for Standardization (ISO) in 1996 to help companies implement an environmental management system (EMS). ISO 14001 is the cornerstone of the ISO 14000 series of standards designed to help organizations manage their environmental impact. Companies can use ISO 14001 to implement an EMS. A third party can audit the system and certify it is in conformance, or the organizations can self-declare their EMSs in conformance with the standard. The third-party audit is considered more credible within the ISO 14000 arena.

Many companies report using ISO 14001 not only as a compliance tool, but also as a tool of revolution for their corporate culture. For them, the necessary cost of doing business — spending money on the environment — becomes a tremendous return on investment. Companies are spending money to implement an EMS, but through waste minimization are recovering the dollars spent and turning a profit as well. For example, Acushnet Rubber Co. of New Bedford, Mass., discovered it was clearing about $2 million annually from its proactive environmental initiatives.

ISO acceptance

Companies around the globe have embraced ISO 14001, with Asia being among the certification leaders. To date, nearly 3,000 certifications have been reported in Japan, with nearly 750 certifications in North America. But ISO 14000 experts agree that certification is only part of the picture for several reasons.

Many companies have chosen the self-declaration route for the sake of confidentiality. For instance, a highly secure plant that manufactures top-secret spy planes has implemented ISO 14001, but its managers could not allow a third-party auditor to examine the system without clearance. Those plants that have self-declared are not counted in the above certification figures.

Countless other organizations have implemented an EMS that conforms to ISO 14001, but have stopped short of paying for the third-party stamp of approval. Those companies have reaped the full benefit of an EMS without securing a certificate, because strong industry drivers for adding certification do not exist. Recent signs indicate, however, that this could be changing.

Supplier requirements

The Big Three automakers — Ford Motor Co., General Motors Corp. (GM) and DaimlerChrysler Corp. — have made noise about greening the supply chain. Both Ford and GM announced last September that they were making ISO 14001 certification a requirement for their suppliers who want to continue doing business with them. DaimlerChrysler is considering the possibility of a similar move, according to the January 2000 issue of International Environmental Systems Update.

Ford is requiring ISO 14001 certification from all of its suppliers with manufacturing facilities, which affects about 5,000 suppliers. They must certify at least one manufacturing site by the end of next year and their remaining locations by July 1, 2003.

"This requirement reinforces Ford's commitment to the environment," said Carlos Mazzorin, group vice president of purchasing at Ford of Mexico. "We have extended that commitment to thousands of other companies — exponentially increasing the benefits of this rigorous environmental certification."

GM is asking its suppliers to implement an EMS by Dec. 31, 2002. While voicing preference for certification, the GM requirement allows for self-declaration.

"Working together with our suppliers, we can accomplish much more to improve the environment than GM can alone," said Harold R. Kutner, group vice president of worldwide purchasing and North American production control and logistics. "We believe it is in all of our interests to make improvements in the environmental arena. We know our suppliers share the same concerns and will work with us on this effort as they have in the past to improve quality, service, technology and value."

Whether DaimlerChrysler joins the other two big automakers remains uncertain, but one thing's for sure — the ISO 14001 requirement of Ford and GM will have tremendous impact across the world.

The supply-chain movement is not restricted to the automobile industry. Other major corporations, such as IBM and Bristol-Myers Squibb (BMS), have encouraged their suppliers to implement EMSs as a method of managing their environmental initiatives, but neither has yet to make it a requirement.

"BMS encourages you to align your environmental management systems with the requirements of ISO 14001, and to consider the benefits of certification to that standard," according to a Nov. 5 letter BMS sent to its suppliers. "If you align your organization with ISO 14001 requirements, this would be mutually beneficial."

Customer satisfaction

In addition to supplier letters, other companies reportedly have begun to get inquiries from potential customers about whether they have an EMS. While most of these reports are anecdotal, they indicate that customers may become increasingly concerned that manufacturers of products they use conform to ISO 14001, or a system like it, as part of securing and keeping their business.

Although the standard is still relatively new, observers continue to speculate as to whether it will ever be as popular as ISO 9000, the series of quality management systems that has heightened the profile of the International Organization for Standardization in Geneva, Switzerland. Many believe that it is far too soon to make accurate predictions or draw comparisons between the two standards' acceptance throughout the world. However, if ISO 14000 is to explode around the globe like ISO 9000, one of the keys to that success will be a green supply chain.

Resources

American Society for Quality: www.asq.org

BSI: www.bsi-inc.org

CEEM Inc.: www.ceem.com

ISO 14000 and Environmental Management Systems: www.trst.com

Parry, Pam. The Bottom Line: How to Build A Business Case for ISO 14001, St. Lucie Press, November 1999.

Registrar Accreditation Board: www.rabnet.com

The ISO 9000 Network: www.isonet.com

U.S. Department of Energy: www.doe.gov

U.S. Environmental Protection Agency: www.epa.gov

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This article appeared in Environmental Protection magazine, Vol. 11, No. 4, p. 56, April 2000.

This article originally appeared in the 04/01/2000 issue of Environmental Protection.