by  Stanley Fielding

Prior to the introduction of ISO 14001 more than four years ago, U.S. companies developed internal environmental management systems (EMSs) primarily to increase profitability. Due to the lack of guidance and structure and the added costs of creating an EMS, few companies chose to implement one. Today, however, the world has changed dramatically. Approximately 10,000 companies worldwide, including large U.S.-based companies such as Ford and IBM, have been registered to ISO 14001. As market pressure takes over, more companies are considering the international environmental standard a necessary business tool.

Pre-ISO 14001

 Before 1996, companies implemented EMSs to increase profitability and to reduce the risk of Environmental Protection Agency (EPA) penalties. In the 1980s, environmental regulations on hazardous waste disposal at both the local and national levels became more stringent. This forced companies to change their method for hazardous waste disposal from placement in landfills to treatment and recycling. As a result, the cost of hazardous waste disposal increased dramatically.

 This price increase motivated companies to look for ways to reduce waste production as well as disposal costs. Their search resulted in the development of pollution-prevention techniques and company-specific EMSs. 3M Corp.'s "Pollution Prevention Pays" program is an excellent example. This renowned program led to many innovations, such as using water to apply adhesive to tape. Since the program began in 1975, 3M has saved more than $810 million and continues to reduce air emissions, water discharges and solid waste. In its September 1999 issue, Manager Magazine reported that 3M ranked second for its environmental performance among the 50 largest chemical manufacturers and chemical users worldwide.¹

ISO 14001's first steps

 ISO 14001 got off to a slow start in the United States. By 1997, less than a year after the standard was published, only 17 companies in the United States had been registered to it.² Companies that did pursue ISO 14001 registration did so for one or more of the following reasons:

  The company was proactive and/or socially responsible.

  The parent company set a goal of registering all facilities to the standard.

  An EMS was in place that could be converted easily to the standard's framework.

  The company wanted to gain recognition for its EMS and for its leadership in the industry.

 Acushnet Rubber, located in New Bedford, Massachusetts, is a good example of a company that was registered during this time. The company custom-molds rubber and elastomeric products, employs 1,100 people, and has $100 million in annual sales. Jack Bailey, director of environmental health and safety for Acushnet Rubber, explains that the company registered its system in November 1996 to anticipate customer demand, save money and reduce potential compliance issues. It also intended its ISO 14001 registration to be useful as a marketing tool. As a result, Acushnet obtained more business from European customers and won the EPA's Environmental Merit Award, and Bailey has given approximately 25 presentations showcasing Acushnet Rubber's EMS.

 Another leader is Canon Virginia Inc. (CVI), located in Newport News, Virginia. CVI primarily manufactures laser-beam printers, copiers and related components. The company was registered to ISO 14001 in early 1997 at the request of its parent corporation. CVI has always had an EMS to minimize its impact on the environment, and its existing EMS was very similar to the ISO 14001 standard. To maximize the effectiveness of the company's ISO 14001 system, emphasis was placed on the EMS's contributions to the bottom line as well as on its environmental benefits.

 CVI's Chemical Manufacturing Division, which manufactures and assembles components for toner cartridges used in laser printers, successfully applied this new approach. During ISO 14001's aspect identification phase, the division identified manufacturing waste as having a significant effect on business, due not only to the excessive depletion of natural resources but also to the added cost of lost production time and defective parts. Lou Dossie, director of CVI's Chemical Manufacturing Division, found that a large portion of this waste was due to equipment maintenance being performed after a problem occurred. A goal was set to emphasize preventive maintenance and reduce reactive maintenance by 50 percent. The percentage of work orders sent to the maintenance department due to equipment failures on the manufacturing lines decreased from 85 percent in June 1998 to 28 percent by December 1998. During this same period, the percentage of work orders for preventive maintenance increased from 2 percent to 20 percent. The percentage of work orders for process improvements, an even more important activity, increased from 4 percent to 35 percent. This change in thinking from reactive to preventive caused an already low defect rate to drop by more than 60 percent from the first half to the second half of 1998. It dropped another 10 percent in the first quarter of 1999. The increase in manufacturing equipment reliability has resulted in significant reduction of the division's environmental impact and also produced substantial cost savings due to the increased yields.

 United Chemi-Con Inc.'s Lansing, North Carolina, Capacitor Manufacturing Division, with 350 employees and annual sales of more than $70 million, is also registered to ISO 14001. With an environmentally friendly culture and a push from its Japanese parent company, the decision to register to ISO 14001 was a foregone conclusion. The company is now seeing rewards in reduced operating costs, use of newer technologies for water purification and heating, and a reduced potential for accidental releases of hazardous materials.

Ford embraces ISO 14001

 ISO 14001 came of age in the United States when Ford Motor Co. became the first automotive company to certify all of its facilities worldwide to the standard. Ford began registering facilities to ISO 14001 in 1996 and by 1999 had registered all 140 facilities in 26 countries. "Achieving ISO certification highlights Ford's philosophy that environmental excellence is an element of both good business and corporate citizenship," says Jim Padilla, group vice president of manufacturing. "We feel it's important to be environmental leaders in the communities where we live and do business."

 The following examples show that ISO 14001 is very valuable to Ford:

  Ford's Michigan truck facility reduced water consumption by almost one million gallons per day. The facility also saves $66,000 a year in electricity by having replaced 1,975 fluorescent bulbs with metal halide bulbs.

  The company implemented a process to reduce the amount of disposed paint sludge in 10 plants. Approximately 17,000 tons of paint waste has been recycled since 1995.

  Ford reduced the quantity of disposable packaging that came into the plants by 163 million pounds by replacing cardboard and plywood boxes with reusable plastic or metal containers.³

Market pressure now dominates

 Market pressure is now the dominant force driving ISO 14001 registrations in the United States. This is no surprise, considering that many of the 10,000 companies worldwide registered to ISO 14001 are asking suppliers if they're registered to the standard. To maintain their customer base and continue to compete in a global economy, many companies must register to ISO 14001. There are numerous examples even within the United States:

  On Sept. 9, 1999, Ford Motor Co. became the first U.S. automotive company to require all of its production and nonproduction suppliers to become certified to ISO 14001. Ford's deadline for certification is 2003.

  Two weeks after Ford's announcement, General Motors Co. announced that all of its suppliers will be required to register or self-certify to ISO 14001, with a deadline of Dec. 31, 2002.

  In an April 1998 letter, IBM urged approximately 1,000 of its suppliers to develop an EMS similar to ISO 14001.

  In November 1998, Xerox asked all of its 30,000 suppliers to implement and conform to ISO 14001. Xerox suggested that suppliers work toward third-party certification.

  Honda of America asked all of its major suppliers to register to ISO 14001 by the year 2001.

 The cumulative nature of these customer requests is starting to be felt. By early June 1998, there were 93 ISO 14001 registrations in the United States.⁴ By May 1999, the numbers had jumped to approximately 235 registrations.⁵ By August 2000, there were 873 registrations.⁶ Within a few years, there will likely be thousands.

Market pressure is not the only reason

 Even though market pressure is the primary reason most companies have sought registration, profitability and social responsibility are still very compelling reasons for some companies to become registered to ISO 14001.

 Profits are the lifeblood of every company. Companies fight for every drop. Because profits commonly represent 5 percent to 10 percent of sales, even small increases in the bottom line can be significant. For example, Tytex Inc., the first company in Rhode Island to achieve dual ISO 14001 and ISO 9002 certification, is a world-class leader in knitted medical textile products, with $5 million to $10 million in annual sales. "ISO 14001 helped Tytex Inc. decrease electricity usage by 26 percent, gas usage by 24 percent and water usage by 21 percent," says Dave Gaspar, business analyst and ISO management representative for Tytex. "Production waste was reduced by nearly 3 percent, while our recyclable waste collection soared nearly 30 percent. Production volumes also increased 21 percent. All of these changes have saved Tytex Inc. nearly 25 percent on our total energy and water costs since ISO 14001 was introduced in 1996. The payback period on implementing our integrated ISO management systems is only 3.5 years. In addition to our increased environmental awareness and performance, ISO 14001 also makes perfect business sense and has helped us improve our bottom line and overall profitability."

 There are still some industries whose leading companies look beyond themselves to see the effect their company's processes have on the world and those about them. They believe they can make a difference by leading the industry in an environmentally responsible direction. For example, BP plans to register all of its facilities to ISO 14001. BP's chief executive, Sir John Browne, also set a company goal to reduce greenhouse gas emissions to 10 percent below the amount generated in 1990 by the year 2010.

The future of ISO 14001

 For the foreseeable future, customer demand will be the dominant reason for implementing ISO 14001. In addition to this market pressure, state and federal governments are starting to use initiatives and reductions in fines to encourage companies to adopt ISO 14001 EMSs. State governments are increasingly taking the initiative to evaluate the usefulness of ISO 14001 and encourage its use by industry. One example of this increased interest is shown by the activities of the Multi-State Working Group (MSWG). Ten states started the group in 1996. Now there are 14 member states, 30 observer states, the EPA, public interest groups, universities and businesses involved.

 The purpose of the MSWG is to conduct research and collect data on the ability of EMSs to improve the environment and the economy. At this time, the group sponsors 75 pilot projects to research answers to questions important to regulatory agencies and businesses, such as "Do EMSs offer a less bothersome way to achieve compliance with laws?" "Can EMSs produce 'high performers' that merit less regulatory attention?" and "Should an EMS organization be considered different (in terms of audit immunity) than an organization without an EMS?"

 The answers to these questions and the economic performance data were discussed at the EMS Research Summit sponsored by MSWG in the fall of 1999. The general consensus was that EMSs could be used in regulatory reinvention, although more information will be needed before federal and state environmental policies can be changed.

 The EPA also participated in the MSWG pilot projects by helping nine public sector organizations implement ISO 14001 EMSs. Types of organizations included wastewater treatment facilities, public works departments, a utility and a prison. The EPA marked the end of the project by holding a meeting with the participants in July 1999. The EPA and municipalities were pleased with the project's success and allowed the EPA to act as a source of information instead of a regulator. The municipal organizations found EMSs to be beneficial in changing how people think of the organization, which allows changes to take place in the organization's operations.

 As a follow-up to the pilot project, the EPA recently prepared a report titled "Aiming for Excellence--Actions to Encourage Stewardship and Accelerate Environmental Progress" to make recommendations on how the EPA can encourage companies to implement EMSs. The report states the EPA will increase the promotion of EMSs by assisting companies in implementing them. The EPA plans to develop an office dedicated to EMS policy and planning, develop programs to increase the use of EMSs, and continue to conduct research on the value of EMSs.

 Requiring the implementation of an EMS or registration to ISO 14001 is becoming popular in settlements with state agencies. General Motors and the Delaware Department of Natural Resources and Environmental Control (DNREC) negotiated a settlement for GM's assembly plant in Wilmington, Delaware. DNREC reduced a $400,000 proposed fine by $200,000 in exchange for GM's agreement to register the plant to ISO 14001 by 2000.⁷

In short

 When ISO 14001 was first published three years ago, companies voluntarily sought registration to the standard for various reasons, such as increased profitability. Today, many large multinational companies are asking their suppliers to

comply with or register to the standard. Once registered, many companies find that the EMS has many financial benefits, and this increased profitability becomes the impetus for keeping the system operating well.

 State and federal environmental agencies are also gaining information on and confidence in companies that use ISO 14001 so that future decisions will be based on hard data.

References

1. Manager Magazine, September 1999: the National Management Association.

2. "The Environmental Management Report," vol. 2, no. 7. July 1997: The McGraw-Hill Companies.

3. "Ford Plants Lead the World in Environmental Performance," Ford Motor Co. press release, January 6, 1999.

4. "The Environmental Management Report," vol. 3, no. 7. July 1998: The McGraw-Hill Companies.

5. May 1999: The McGraw-Hill Companies.

6. "International Environmental Systems Update," Extra Edition. September 2000.

7. "The Environmental Management Report," vol. 3, no. 12. December 1998: The McGraw-Hill Companies.

About the author

 Stanley Fielding worked for 17 years as an environmental consultant helping companies comply with environmental regulations as well as assessing and remediating chemical releases. He is the ISO 14001 business unit manager for National Quality Assurance USA Inc. He is an IATCA-registered senior quality auditor, an RAB EMS lead auditor and an American Society for Quality certified quality auditor. E-mail Fielding at sfielding@qualitydigest.com .