ISO 14000: Costs, Benefits and Other Issues.

The Benefits of ISO 14000 certification.

The environmental awareness and the documentation that are required by the ISO 14000 standards assist a company in conforming to environmental regulations. This means that a company, by diligently adhering to the standard, is less likely to violate envir onmental regulations and is always ready for inspection by a regulatory agency. In addition, the certification and documentation may aid a company in acquiring capital, in defending itself during environmental litigation and in receiving insurance or per mits.

A wider market for a company's goods and services may result from certification. Many corporations and governments will be looking for suppliers that are ISO 14000 certified in order to maintain their own certification and environment-friendly image. Al though the European Union claims that ISO 9000 certification is not required to do business in Europe, that was the message received by many non-European firms and lead to the amazing success of that standard. If ISO 14000 is similarly successful, the co mpanies who are already ISO 14000 certified will have an advantage in global markets. Also, producers of consumer goods may find that many consumers not only try to purchase goods from environment-friendly companies, but will spend a little more if they feel they are helping the environment. In order to reap this benefit, a company must make their environmental efforts known through advertising and labeling.

The process analyses that go along with ISO 14000 certification may result in streamlining processes and more efficient use of resources and raw materials and subsequently reduce a company's costs. Finding ways to capture emissions or recycle the product s may, in the long run, reduce the amount of raw materials and utilities used. Reducing the amount of potentially dangerous substances in an end product may result in less use of dangerous chemicals in a plant. This leads to a safer internal environment for employees and the possibility of reduced insurance premiums. Improved employee morale may result when employees feel that the workplace is safer and they are contributing to the environmental effort.

The Costs of ISO 14000 certification.

Companies that have sought ISO 9000 certification have complained that the extensive documentation introduces more bureaucracy into a company. Some say that ISO 14000 will build on top of ISO 9000 registration, but others point out that the ISO 14000 doc umentation requirements will only compound the already burdensome task and that the extra administrative costs will reduce profit margin. ISO 14000 requires not only additional personnel to take care of the documentation, but requires knowledgeable perso nnel with expertise in the technical processes of an organization and the effect they have on the environment

Investment in fixed capital may rise if a company must implement pollution reduction equipment. Other costs may rise if more environmentally friendly materials and processes lead to higher production costs. If a company passes the increase on to custome rs, it could result in reducing it's share of the market if competitors do not do the same.

A potential hazard of the certification process is the uncovering of potentially harmful current practices. If the analysis of the company reveals environmental risks, the ability of the company to attain capital, insurance and permits may be compromise d.

Other issues.

Implicit behind ISO 14000 and ISO 9000 is the assumption that a quality process will lead to quality products and a clean environment. However, both the ISO 9000 and the ISO 14000 standards focus on the management processes behind the product. There is no guarantee that a quality process will yield a quality product or a better environment. Additionally, despite the claims that these standards will help to reduce costs, there is no guarantee that certification in either or both will result in increased profits for a company.

The intent of an international standard is to avoid diverse and sometimes replicating standards. But the publication of international standards for quality assurance has not eliminated multiple standards. For example, the big three auto makers have impo sed QS 9000 standards on their suppliers. QS 9000 standards use ISO 9000 as a starting point but require even more extensive documentation on a wider set of processes. Now along comes ISO 14000 which is stricter than ISO 9000 in not only it's documentati on requirements but the number of people with technical and regulatory skills that will be required to analyze and maintain certification. This is leading some to ask when this onslaught of standardization will end. Bob Garvey, a chairman and CEO of Bi rmingham Steel who has been through both ISO 9000 and QS 9000 has been quoted as saying "I don't wish [QS 9000] on anyone." And Beryl Spiers of Stelco Fasteners says that they are "getting fed up with the whole standards process" and won't consider ISO 1 4000 certification "unless our customer base says so." (Both in Mullin, Rick and Sissel, Kara "Merging business and environment." Chemical Week. Oct 9, 1996 v158 n37 p52.)

The problem of multiple registration schemes is not limited to the United States. Antonio Silva Mendes, quality chief of the European Union Directorate-General III has also voiced concern over multiple registration schemes (Zuckerman, Amy "Stanching the flow of new quality standards." New Steel. Sep 1996 v12 n9 p82.). Despite this, there is already a movement underway for the development of international occupational health and safety standards on top of ISO 9000 and ISO 14000.

The whole question of third party certification does not sit well with many US companies. Some are complaining that third party assessment does not distinguish between barely meeting the standard and fully meeting or surpassing it. Others note that ISO 1 4000 certification does not currently reduce any customer or regulatory requirements. (However, the EPA is investigating how ISO 14000 standards can be linked to environmental regulations.) Then there is the question of who certifies the third party as sessment auditors. Standard certification has become a big business and some critics are now calling for standardization of the certification process.

Finally, many complain that the ISO standards do not reflect the variety of businesses in the world. For example, small businesses have difficult time dealing with the expense of certification and fear that they will not be able to compete internationall y. On the other extreme, some multinational companies which are highly decentralized and diverse complain that the standards do not coincide with the realities of the ways these companies function. Under the ISO 9000 and ISO 14000 standards, multisite r egistration of subsidiaries is permitted only if there is a common management and central control of each site. This violates the autonomous and decentralized approach taken by many multinational companies.

The general consensus is that organizations are being cautious before jumping on the ISO 14000 bandwagon. Many already have environmental management systems in place and, after experience with ISO 9000 certification, are adopting a wait-and-see attitude towards ISO 14000.

• I. Introduction
• II. A Brief History of ISO
• III. A Review of ISO 9000
• IV. An Overview of ISO 14000
• V. The Costs and Benefits of ISO 14000 Certification
• VI. More Information