Due to changes in the global economy and larger impact of environmental protection, businesses around the world are deciding to adopt environmental management systems. Especially ISO14001 standard, that is known to bring benefits to organisations.
Let us explore potential benefits that the standard brings based on some widely available literature. We will look particularly at the effects on the environment, relevance to GRI standards and the business competitiveness.
Introduction
Change and forward thinking is an enviable part of a successful business management. Leaders and business management is continuously looking for ways to make their activities and products more competitive and attractive to customers. Growing awareness of environmental issues among the consumers and ever changing environmental regulations companies want to strengthen their position with ISO 14001.
The standard was first introduced in 1996. It was recognised at the time, that businesses need standards to prevent pollution as opposed to controlling it.
In short, when a business implements environmental management system it aims to improve its responsiveness to environmental challenges. The practice generally involves setting relevant environmental targets and framing business policies around them.
Businesses are required to recognise relevant environmental regulations and assess their impact. Procedures, monitoring and measurement metrics are set. This also incorporates documentation, training for employees and audits.
The standard sets guidelines and program that a business needs to follow.
Implementation of a standard proves that the business actions reduce the environmental damaging impact during the product or service life stages in accordance to circular economy. The main goal is to re-use, recycle and remanufacture materials where it is feasibly possible.
The question here, however, is why businesses decide to implement the standard. Some research identifies already several reasons:
- green corporate image to gain market share;
- reduce insurance risks;
- cost reduction;
- promote ethical investment;
- reduce risks of penalties and fines.
Researches identified already many benefits of the ISO14001 standard implementation. These include profitability, improved image, customer satisfaction, environmental protection, improvements to employee performance. Some companies who adopted the
standard notice reduction in energy costs, waste as well as material consumption. Based on the findings it is possible to conclude that it can have significant impact.
However, there are also studies which focus on potential drawbacks. These include the risks of bureaucracy as well as costs of certification.
Statistics
According to ISO Survey 2020, in the UK, 372 construction companies achieved ISO 14001: 2015 certification, followed by 234 in metal products industry, 179 in wholesale and retail trade and 170 in engineering services. We see a depletion in the construction and metal industry, whereas the wholesale/retail and engineering industries experience growth in certification.
The main reasons why companies implement the standard includes improved business performance, better image, regulatory compliance as well as employee performance and results. It act as a tool for reducing waste.
Process and improvements
Generally, the process of implementation would include determination of the environmental aspects of the business and defining the most critical ones. From there, goals are defined and program is implemented.
The aspects involve local and legal requirements, administration, setting of policy and possible pollution reduction activities.
Businesses, for example, inspect their waste and determine the level which is put back into production and sold to certified waste collectors. This actions produce businesses savings. It allows businesses to think about the environment.
Additionally, relevant national regulations are recognised that reduces the risks of prosecution. Because of assessment of different environmental aspects within the business natural resources are utilised in more efficient and ethical way. This results in better control of costs and innovation. It changes the process of thinking within the businesses that lead to savings allowing the business to be more competitive on the market.
According to BSI the standard recognises several benefits to organisations. These include independent auditing, increase of corporate client base, increase of efficiency as well as customer satisfaction. BSI Case Studies review that the standard aims to provide its credibility in terms of efficiency and performance to larger clients and clear evidence of commitment to environmental aspects. It allows companies to have a stronger position to target customers, but also governments, councils and other authorities. The standard is based on the ethos of continual improvement which allows to attract more customers.
Key Performance Indicators
Identifying the environmental aspects and their implications is the most important step of the implementation. As identified in ISO14001 aspects are defined as the elements of organisation's activities, products or services that may impact or does impact the environment. This encompasses both positive and negative interactions. These include emissions, water pollution, waste management, contamination, use of natural resources. Many organisations also categorise the environmental aspects. Generally, there are main six categories identified: Emissions to Air, Release to Water, Waste Management, Contamination of Land, Consumption of Natural Resources and Raw materials, Locality and Community issues (odour, noise etc). Some also evaluate the Chemical Release and Toxic Substances. These are than further categorised to sub-categories: Controlled, Influenced, Significant, Nonsignificant, Positive.
The standard requires to have a procedure for identifying the aspects among the business activities that are within the business control. Then, the aspects with significant impact should be prioritised. The aspects should be considered throughout the entire lifecycle process.
The KPIs need to be selected very carefully. For example, usage of water or electricity, paper. Pollutant parts per million measures, weight to landfill. Number of actual and potential incidents, as well as risk reduction measures and environmental audit scores.
ISO 14001 and GRI standards
NQA Global Certification Body makes a statement, that EMS and GRI (Global Reporting Initiatives) are very similar in their approach and it can be concluded that the GRI standards can compliment the reporting initiatives of the standard.
Further , Naidu (2020) explains that company can choose the reporting approach depending on the business environment to improve transparency and credibility. The author suggests that the GRI standards address all areas of sustainability including environment. The benefits of of the reporting for organisations could identify the risks and opportunities, influence long terms financial strategy, reduce costs and improve efficiency, eliminate negative environmental performance, improve reputation and brand loyalty. The GRI provides support to environmental sustainability. The reporting framework allows businesses to clearly and comparably identify, collect and report this information.
In order to link the two, a method called Relationship Matrix was used.
It concluded that the ISO14001 supports the following Sustainable Development Goals SDGS):
1- No poverty
2- Zero hunger
3- Good health and wellbeing
4- Quality Education
6 - Clean Water and Sanitisation
7- Affordable and clean energy
8- Decent Work and economic growth
9 - Industry, Innovation and Infrastructure
12 - Responsible Production and consumption
13 - Climate action
14 - Life below water
15 - Life on land
Further the relevant GRI standards were identified for each of the SDGs:
102 General Disclosures - SDG 4 and 8
103 Management Approach - SDG 1,8,12, 13,15
201 Economic Performance - SDG 2,7,8,13
202 Market Presence - SDG 8
204 Procurement Practices - SDG 12
301 Materials - SDG 8,12
302 Energy - SDG 7,8,12,13
303 Water and Effluent SDG 6,8,12
304 Biodiversity - SDG 6,8,12
305 Emissions - SDG 3,12,13,14,15
306 Effluents and waste - SDG 3,6,12,14,15
307 Environmental compliance SDG 12,13,14,15
308 Supplier Environmental assessment
401 Employment - SDG 8
402 Labour management - SDG 8
404 Training and education - SDG 8
413 Local Communities - SDG 1,2
417 Marketing and labelling - SDG 12
The understanding of GRIs is therefore imperative to be established, than when the environmental aspects are evaluated relevant categories of impact are evaluated (Direct positive, Indirect Positive, No impact, Indirect Negative and Direct Negative).
Conclusions
As the environmental conditions become more important businesses can increase the competitive edge by implementing environmental management systems. ISO 14001 is the most adopted and popular one in many industries. Latest issue of the standard focuses on ethics and achievement of balance between the society, economy and the environment.
Additionally, sustainability reporting creates a win-win situation for environmental improvements because they aim to built image of the organisation. The environmental management standard and GRI overlap while keeping in mind broader sustainability context. Both are similar in structure and allow competitive advantage. (Mileva, 2013)
Bibliography
Erceg A., 2017, "Why are companies implementing ISO 14001 - Example from Croatia", Research Gate, Conference Paper - November 2017
ISO, Certification and Conformity, The ISO Survey, accessed from https://www.iso.org/the-iso-survey.html [accessed on 21/12/2021]
Mileva, E., 2013 "Sustainability reporting and SMEs. From ISO to Global Reporting Initiative", Aalborg University, 2013 , accessed from https://projekter.aau.dk/projekter/files/77158193/Sustainability_Reporting_and_SMEs_From_ISO_14001_to_GRI.pdf [accessed on 22/12/2021]
Naidu, M, 2020, "Corporate Sustainability: How can GRI guidelines and ISO standards compliment each other and relate with the SDGs?", Halmstad University, accessed from http://www.diva-portal.org/smash/get/diva2:1444478/FULLTEXT02.pdf [accessed on 22/12/2021]
NQA, Global Certification Body, 2020, "Sustainability Statement Verification and ISO14001", accessed from https://www.nqa.com/en-gb/resources/blog/february-2020/sustainability-statement [accessed on 22/12/2021]
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