Business Standards Magazine

Painting business green

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Courtesy of Business Standards Magazine

In the past ten years, environmental concerns have taken centre stage both in public perception and in business. Oliver Cann explores the growing call for change.

Business, government and the environment - to say nothing of the media - have to coexist, but it is not always easy. Governments for their part signed up to the Kyoto Protocol in 1997 and agreed to reduce greenhouse gas emissions to help lessen our impact on the environment. The burden then fell to business to do their share to meet these targets because in the UK, for instance, over 70 per cent of all emissions were attributed to business. And all the while, media reports continued to warn of impending catastrophe in the form of climate change.

For example, the National Oceanic and Atmospheric Administration (Noaa) in the US has been analysing air samples from around the world. In an interview with the BBC, Dr Pieter Tans, the chief carbon dioxide analyst for Noaa, stated that, 'We don't see any sign of a decrease; in fact, we're seeing the opposite, the rate of increase is accelerating.'

Nine years on and progress remains mixed. For example, the media made much of a government report published in March 2006 that stated the UK was likely to miss the CO2 emissions target it had set for itself when it signed up to Kyoto.

However, while the UK might miss its proposed target of a 20 per cent reduction in CO2 emissions by 2010, the government's Climate Change Programme projects that it will hit 15-18 per cent by the end of the decade. And this exceeds the 12.5 per cent reduction required by the Kyoto Protocol.

Meanwhile, a report - Climate Change Policy in the UK: Leader or Laggard - published in May 2006 by the Institute for European Environmental Policy (IEEP) claims that current efforts are not doing enough to curb emissions from businesses, transport and homes. It also highlights the fact that 'the greatest reductions in carbon emissions from business took place in the early nineties but these are now rising again.'

And with popular naturalist and veteran broadcaster Sir David Attenborough recently adding his voice to the debate (arguing that scientific data proving climate change is now beyond doubt), it's clear the demand for something to be done is only going to grow louder in the years to come.

Shifting winds
Certainly the dynamic relationship between business and the environment is changing. The past decade has begun to see standards for implementing an environmental management system (EMS) enter the business mainstream. Meanwhile changing stakeholder attitudes, and priorities in regard to climate change and the environment, look set to further accelerate this momentum towards environmental sustainability in the future.

Whereas once upon a time businesses, collectively speaking, would have viewed environmental initiatives as a burden (weighing them down with unwanted red tape) and a brake on growth (constraining their ability to extract natural resources), by and large the environment is now seen as an area where substantive gains can be made, both financial and reputational.

Not only does the implementation of an EMS, be it ISO 14001 or its European progeny Eco-management and Audit Scheme (EMAS), offer guidance on saving money from an operational standpoint, but it also offers the possibility of drawing out top line sales growth. In many industries, firms that highlight their compliance with environmental standards and their willingness to act as responsible corporate citizens attract a new class of environmentally-aware consumer.

There are signs that environmental savvy is penetrating all strata of business, from the world's largest multinationals to the smallest start-ups. Among multinationals, Rolls-Royce and BP are just two organizations that use ISO 14001 to ensure environmental best practice and maximize energy efficiency throughout their businesses.

An innovative environment
At the other end of the scale, entrepreneurs are coming up with ever more imaginative - and profitable - business ideas that harness the Earth's natural resources with minimal environmental impact. On the streets of Queens in New York, for example, solar powered trash bins compact rubbish as a means of reducing collection frequency.

Environmental start-ups now account for between six and seven per cent of all US venture capital funding, according to some estimates, while a proliferation in recent years of 'Green MBA' programmes at US business schools show there is no shortage of talent looking to harness the power of clean technology.

While environmental consciousness is an opportunity for business, it also helps mitigate against likely regulation further down the line and this is another area where standards can really add value.

'Environmental issues are becoming more important,' says Tim Sunderland, global product manager - sustainability at BSI Management Systems. 'Organizations that implement ISO 14001, for example, are able to look at their operations and see how they are managing these issues before they come under the scrutiny of the regulator. Effective implementation of ISO 14001 prepares you for environmental legislation and regulation that is coming down the pipeline: a company without it would probably find itself struggling to monitor and manage these issues.'

Ten years old this year, ISO 14001 has been the model and inspiration for other follow-on standards, including the suite recently published on climate change (ISO 14064:1-3) and work on social responsibility. Worldwide registration to ISO 14001 now exceeds 90,000 and has dramatically accelerated over the past two years. If anything, it is more relevant today than at any other time in the last 10 years.

Having started out as a BSI initiative in the early nineties as a follow-up to the existing quality management standard (ISO 9001), ISO 14001's aim was to provide both the public and private sector with a blueprint for minimizing environmental impacts and achieving greater operational efficiencies. Its format was unique in that it specified continual improvement as a prerequisite, a mechanism that has been much borrowed in its wake.

'ISO 14001 provides the framework for companies to work towards better environmental management,' says Sunderland. 'Its real value lies in its emphasis on evaluating the environmental risks associated with an organization's activity. In essence, it is a risk assessment model and it has become a concept that's been taken into a lot of new areas.'

Nigel Marsh, company head of environmental management at Rolls Royce, is unequivocal about the benefits of ISO 14001: 'We have enormous savings from reductions in waste and water use, as well as lower energy consumption. And we have better risk management with prevention of business interruption, such as prosecution, where the direct costs are only the tip of the iceberg. ISO 14001 has supported our efforts and helped facilitate the process.'

Terry Bridgewater, director of environment, health and safety at engineering company Smiths Group, agrees that ISO 14001, which is currently in place at 83 of the firm's 110 major manufacturing locations worldwide, delivers benefits: 'Where ISO delivers value is in risk management, improved compliance and I believe it can be a differentiator in winning new business: if we're pitching the same cost and technology as a competitor, I believe clients view having a long term environmental management system in place as a real plus.'

Moreover, the standard continues to evolve. Ossie Dodds, chairman of ISO/TC 207/SC1 EMS and one of the people responsible for developing ISO 14001 back in the early nineties, believes recent amendments have strengthened its ability to tackle pressing issues such as climate change.

'We went back to basics when we developed ISO 14001. The idea was not to write a performance standard, but to give a framework that an organization can adapt to suit its circumstances: to have taken a uniform approach would have meant disadvantaging certain industries and even countries. However, stakeholders need to see robustness otherwise they won't use it, so we have made improvements in the second edition, ISO 14001:2004, relating to continual improvement.'

Continual improvement means the standard keeps on working after implementation and certification to ISO 14001 is achieved. Here, BSI has been breaking ground once more, this time with the publication of BS 8555:2003 Environmental management systems - Guide to the phased implementation of an environmental management system including the use of environmental performance evaluation. BS 8555 offers a six-phase approach to implementing an EMS, be it 14001 or EMAS, and is aimed at organizations that lack the resources to introduce the standards in the current format or would prefer to implement it on an incremental basis.

The six phases begin with the commitment of management to implement an EMS and establishing a baseline (phase 1), then moving on to identifying and ensuring compliance with legal and other requirements (phase 2), developing objectives, targets and programmes (phase 3), implementation and operation of the EMS (phase 4), checking, audit and review (phase 5) and finally EMS acknowledgement and registration (phase 6). In order to ensure authenticity, the standard contains performance evaluation. This standard is currently informing part of the debate for the development of an international standard on the phased implementation of an EMS, which is under development and has already gained acceptance by the likes of Rolls Royce, where the company has already begun a BS 8555 pilot to educate its suppliers on the benefits of an EMS.

BSI Management Systems has developed a scheme that involves the assessment and recognition (by a Certificate of Achievement) of each phase of the implementation of an environmental management system as laid down in BS 8555.

By maintaining the right balance between inclusiveness and effectiveness - encouraging entrepreneurism but at the same time reining in excess - greater emphasis on measurable improvement will mean deeper benefits are achieved by holders of environmental standards, just as wider benefits are achieved by its accelerating take up.

As Dodds puts it: 'Standards are not about 'greenwashing' for the sake of a company's reputation, I believe in improving performance. There are 90 million legitimate businesses and I want them all in.'

Laying greener foundations
When George Wimpey UK set out to seek external certification of their implementation of ISO 14001 with BSI Management Systems, it became the only UK volume house builder to earn the certification.

Growth in consumer awareness of environmental issues and rising use of brownfield sites for developments contributed to the move, but there was also a genuine willingness among management to generate sound environmental credentials and improve efficiency levels.

Edward Woods, director of health, safety & environment for George Wimpey UK, comments: 'George Wimpey takes its environmental management responsibilities very seriously. We are well placed to meet the increased requirements of government to build sustainable communities.' While the company already had a formal health and safety and environmental management system in place, senior management found that more work would be required in areas such as record keeping and documentation systems to bring themselves up to ISO standards.

To date, ISO 14001 has delivered many benefits, including financial savings related to waste reduction, and competitive advantage as the only UK volume house builder to have ISO 14001 certification.

And by having the EMS in place, process improvements have led to better working practices and helped pre-empt government regulations such as the Landfill Directive and Hazardous Waste Regulations.

Finally, the shift to greener working practices has benefited the environment and improved the firm's reputation, an important factor given the shift towards ethical and environmental consciousness in consumer spending patterns.

And the standard's continual improvement principle puts George Wimpey in a leading position to tackle future environmental challenges head on.

A question of regulation
According to the European Commission's website: 'European companies face many different environment-related regulatory requirements in relation to permits, monitoring, reporting and inspection (as a result of both EU and national legislation).... However, many such requirements have been introduced over time and insufficient attention has been paid to their overall coherence, their proportionality and the accumulation of administrative burdens and costs. Many countries are therefore putting measures in place to streamline environment-related requirements.'

As part of the streamlining process, the European Commission is hosting a conference on 22 June 2006 in Brussels to examine 'best of' initiatives that will streamline and simplify environment-related regulatory requirements for companies. This conference will see the launch of a BEST report, which will help to focus high-level political attention on key issues to bring about concrete changes in national policies and practices.

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