ISO 14001 (Environmental Management)
IThe issue of environmental protection has been contentious for a long time across the world. Environmental Management Systems (EMSs) comprise of ISO 14001 certified and non-certified EMSs. Although EMSs vary across organizations, some researchers identify specific attributes which are commonly adopted. First, both certified and non-certified EMSs involve establishing environmental goals and developing environmental policies. Secondly, employee training programs are provided to ensure that established objectives and responsibilities are clearly communicated within organizations. Thirdly, the relevant regulatory requirements imposed by governments are identified. Fourthly, monitoring and measurement procedures are in place to control and evaluate environmental impacts, and in turn, achieve environmental objectives and targets. Finally, review and audit procedures are implemented to determine the effectiveness of EMSs. While the adoption of EMSs is widely advocated by practitioners and academics, low adoption rates have been reported in studies. This raises concerns on whether an EMS is an effective environmental management tool to bring about the desired environmental change.
ISO 14001 was established by ISO, an international NGO based in Geneva. The aim of the organization is to devise standards across the globe, and these standards allow trade across borders without trade barriers. ISO does not create goals or limits, but establishes management system plans helping firms to ensure conformity with customers or industry limits. During the UNCED conference, the United Nations (UN) expressed the need for improved environmental quality. Because of the need for a standard, ISO decided in 1993 to establish a technical committee to develop a voluntary management system that could be acknowledged and employed across the globe. ISO 14001 did not focus on the outcomes (reduced pollution), instead it was made as a management tool for managers to capitalize on the potential cost reduction that effective pollution reduction programs could give. ISO 14001 is a process standard, and not a performance standard, so there are no stated performance goals in the standard, however companies set up their own goals and these have to be followed and audited.
There are different governmental and private certification bodies that are able to certify facilities and organizations according to ISO 14001 standard. The certification bodies are separate from the ISO organization, and do not have to be accredited by the ISO. However, the ISO recommends companies to use accreditation firms that are accredited by ISO. In Sweden, for example, the major accreditation organization is Swedac. Swedac is the governmental organization that has the authority to certify companies and facilities in Sweden according to ISO 14001.
Rationale for EMSs
The advent of capitalism and industrial development has caused severe environmental damage such as acid rain, global warming, as well as depletion of the ozone layer. This has led to the environmental concerns becoming a norm in the society. For instance, governments increasingly impose stringent legal requirements regarding environmental issues, customers are in favor of environmentally friendly products, financial institutions consider environmental risks of an organization when conducting risk evaluations and approving loans, and shareholders place higher expectations on organization’s environmental performance. In order to meet the prospects of various stakeholders and obtain competitive advantage in the market, many organizations go beyond complying with environmental regulations and adopt a proactive environmental management approach, which systematically incorporates environmental concerns into their production decisions in an attempt to reduce the negative impact on the environment from their commercial operations. One way of organizations being perceived as more environmentally friendly is through different types of eco-labeling and certifications. There are different environmental certifications depending on industrial sector. Some are more consumer-specific while others such as ISO 14001 and the Eco Management and Audit Scheme (EMAS), are certifications for organizations’ EMS.
The impact of stakeholder pressure on the adoption of EMS practices has been extensively deliberated in the literature with studies suggesting that organizations that are undergoing greater pressure from government, customers, shareholders, media, local communities, environmental activist organizations and competitors are more likely to adopt environmental management practices. Customer demand was an important factor in determining environmental management practices. Additionally, pressure from clienteles, shareholders and the community motivates the adoption of EMS practices. In particular, consumer pressures are found to influence the quality of the EMS practices adopted: for instance, the influence of stakeholder pressures such as customers, shareholders, employees and society on the adoption of EMS practices especially within the Spanish automotive industry. In addition to consumer pressures; pressure from the media, regulators, corporate headquarters and environmental activists also influence the adoption of EMS practices. With respect to the pressure from competitors, competition exists with the impact of a competitor’s past environmental management activities on the focal organization’s environmental management activities stronger for more profitable and smaller sized organizations.
Top management support
Top management backing has been identified as a crucial possibility factor in supporting several management practices. For instance, in order to achieve the effectiveness of Activity Based Costing (ABC), top management must provide adequate levels of resources and facilitate effective communication to lower level employees, and use authority with caution to overcome obstacles during the implementation processes. Prior studies on Performance Measurement Systems (PMS) also identified top management support as a key success factor for EMS design and implementation. Top management backing is significant with respect to the effective implementation and continuing tradition of a PMS.
Studies have examined whether change management efforts improve the implementation of environmental management systems and found that change management efforts increase organizational environmental performance, primarily due to top management support efforts to institutionalize and implement environmental management initiatives. Staff attitude and commitment in relation to environmental issues align with top management’s positive attention and actions towards such issues. In addition, the studies have suggested that supportive supervisory behavior increases the likelihood that employees will attempt environmental initiatives. On the other hand, previous research has highlighted the importance of investments in training in improving organizational performance. Studies have indicated that organizations perceive the high value of training in relation to improving performance and achieving organizational goals. One of these goals is the effectiveness of performance measurement systems (PMSs). Training is important in enhancing the awareness and skills of employees in regard to implementing the performance measurement system, with a positive association found between training and the effectiveness of PMSs.
This is in line with the argument that training is necessary as the adoption of environmental objectives requires a fundamental change in organizational culture. Research further asserts that while environmental improvements depend on the adoption of environmental management initiatives, these go hand in hand with training to upsurge the environmental responsiveness of employees and to incorporate environmentally friendly practices in daily operations. Employee participation has been cited as one of the critical success factors for business processes. Research has suggested that employee participation leads to higher levels of satisfaction among staff that will then provide faster and kindlier service. Prior research has confirmed a positive link between employee participation and the effectiveness of performance measurement systems (PMSs). Employees should be encouraged to participate in the process of selecting measures and designing performance measurement systems. In order to achieve the effectiveness of PMSs, lower level employees should be involved in the formation of PMSs. Studies have explored the association between employee involvement and environmental performance and found that employee involvement is a key source of improvement in environmental performance. In addition, employee participation is a crucial factor if environmental management is to be effective. Empowered employees who are able to make decisions independently are likely to be involved in improvements in environmental performance.
Teamwork is another mechanism to generate improvements in organizational performance. In the environmental management literature, it is proposed that teamwork has a progressive influence on ESM processes in organizations. Specifically, team members with common values share ideas when environmental risks arise and strive to find the best practices to resolve environmental issues. Teamwork is critical due to the varying environmental knowledge and values that each member brings to the effort. The establishment of green teams helps bring members from different parts of the organization together, thereby breaking down narrow departmental perspectives and improving the flow of ideas and information required to improve environmental performance.
Benefits of ISO 14001 certification
Compared to companies that adopt non-certified or in-house environmental management systems, the ISO 14001 certification process is both monetary costly and time consuming. However, ISO 14001 has the potential to confer external legitimacy and profitability for the certified companies. ISO 14001 EMS could lead to a competitive advantage in the future. In addition, the most important benefit from ISO 14001 implementation is that it increases corporate image. However, there are different reasons why companies choose to not certify their EMS. If a company chooses to certify their EMS according to the ISO 14001 standard, the initial cost for implementation and third party auditing can be costly. Nevertheless, the size of the initial cost depends on whether the company in question had an uncertified EMS prior to seeking certification, and if so, the cost should be considerably lower. The problem is that EMS results and implications are seen as confidential information, and therefore does not have to be reported. This might cause problems with transparency towards different stakeholders, as they might perceive ISO 14001 certification as an assurance that the companies are environmentally friendly, However, the truth is that the environmental objectives might be relatively easy to meet.
Organizations should strongly consider and analyze the relevant stakeholders. Identify them, analyze their needs and wants, establish and maintain relationships with them, make sure they act in a way which pleases the stakeholders in order to achieve certain required legitimacy which is vital for the success of the organization. It is important for organizations to not become passive. Nevertheless, some companies may fail to embrace the issue of ISO 14001 since when a company is certified according to the ISO 14001 standard, there are also costs occurring during the process. These costs are not only monetary, but also include time and preparations for future external auditing processes. However, it is important to constantly be reactive and aware of the thoughts of stakeholders and the changing standards and expectations, and consider the organization’s legitimacy in such terms in order to understand the actual strength of the company. Furthermore, there are some practical recommendations relating to the implementation of an environmental certification such as ISO 14001. This review helps managers understand the benefits of a well-structured environmental management system, and the effects it can have on the company’s operative and financial operations, as well as relationships with stakeholders and related legitimacy. Implementing ISO 14001 is an effective and also quite obvious way for companies to show their environmental awareness and thus establish good relationships with many stakeholders simply by showing that they are taking positive ‘corporate social responsibility’ (CSR) action in some way.
There are many benefits that come along with the successful and honest implementation of an environmental certification, which is why this is something that can be used as an easy environmental CSR tool to achieve many benefits, both in terms of relationships with stakeholders and legitimacy, and also subsequent strategic benefits. There is also pressure from the market on the companies to adopt certain environmental standards. Customers are more concerned with the environment today, and are therefore able to pressure companies in certain markets to be more environmental friendly. In fact, studies have documented that, according to many organizations, environmental management is a consumer-driven initiative. Thus, it is paramount that organizations embrace any incentive that would ensure customer needs with the need for environmental sustainability being one of them. While this review may not recommend ISO 14001 solely, it still recommends positive environmental CSR activity in relation with all of the aforementioned, as that could have beneficial effects for an organization.