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UNCTAD. Trade , Environment and Development. ISO 14001 Standards for Environmental Management Systems. Module 6. Background.

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UNCTAD

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

TrainforTrade: Trade, Environment and Development


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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

TrainforTrade: Trade, Environment and Development


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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

TrainforTrade: Trade, Environment and Development


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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?

TrainforTrade: Trade, Environment and Development


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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?

TrainforTrade: Trade, Environment and Development


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How do environmental management systems operate?

TrainforTrade: Trade, Environment and Development


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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

TrainforTrade: Trade, Environment and Development


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ISO 9000

Viet Nam

ISO 9000

World

ISO 14001

Viet Nam

ISO 14001

World

1995

1

127,349

-

257

1996

1

162,701

-

1,491

1997

13

223,299

-

4,433

1998

29

271,847

2

7,887

1999

164

343,643

9

14,106

2000

184

408,631

9

22,897

ISO 9000 and 14001 certified companiessource: ISO

TrainforTrade: Trade, Environment and Development


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What is an Environmental Management System (EMS)?

  • A tool to manage environmental aspects of a company’s 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

TrainforTrade: Trade, Environment and Development


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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

TrainforTrade: Trade, Environment and Development


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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 organization’s operations

  • TrainforTrade: Trade, Environment and Development


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    Why do companies want to use EMS/ISO 14001?

    • Environmental performance

    • Economic benefits

    • Trade considerations

    • Corporate image

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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    How could ISO 14001 affect trade?

    TrainforTrade: Trade, Environment and Development


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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?

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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?

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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.

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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.

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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?

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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    Dow Chemical

    • It is Dow Chemical’s sated policy that all global operations meet Dow’s Environmental Management Standard or their country’s laws and regulations, whichever is more stringent

    TrainforTrade: Trade, Environment and Development


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    Hoechst Marion Roussel

    • Hoechst Marion Roussel (HMR) encourages all production facilities to develop an integrated EH&S system

    • It will be up to the local management to choose between EMAS, ISO 14001 certification or an internal EMS

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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”

  • TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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”

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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”.

    TrainforTrade: Trade, Environment and Development


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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.”

    TrainforTrade: Trade, Environment and Development


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    ABB

    • ABB’s 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.”

    TrainforTrade: Trade, Environment and Development


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    Issues for discussion

    TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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?

    TrainforTrade: Trade, Environment and Development


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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

  • TrainforTrade: Trade, Environment and Development


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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

    TrainforTrade: Trade, Environment and Development


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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?

  • TrainforTrade: Trade, Environment and Development


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    Thank you

    TrainforTrade: Trade, Environment and Development


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