Gain a competitive edge: adopt ISO 14000 standard
April 23, 2001
by Sime Curkovic
As residents of planet earth, environmental responsibility makes excellent sense. But as business owners and managers, does it also prove beneficial?
Thankfully, the answer is yes. Traditional, reactive methods for dealing with environmental issues have proven highly inefficient. Businesses that implement environmental management systems reap tangible benefits, including reduced costs, improved stakeholder satisfaction and, in many industries, a marketing edge.
One way businesses are documenting their environmental efforts is through ISO 14000 certification. Created in 1996 by the International Organization of Standardization, ISO 14000 is the only internationally recognized environmental management standard that is verified by independent auditors. To become certified, corporations must:
- designate responsibility for achieving objectives and targets;
- provide the means for fulfilling those objectives and targets; and
- designate a timeframe to achieve their goals.
More than 20,000 businesses in some 50 countries around the world have adopted the ISO 14000 standard. At the end of 2000, the United States was still lagging behind Japan, Germany, Britain and Sweden with just over 1,000 registered sites. Those numbers could soon jump, however, as Ford Motor Co. has ordered some 5,000 suppliers to certify their manufacturing facilities, and General Motors says it will require all its suppliers to conform to ISO 14000 requirements by next year.
In addition to the obvious marketing benefits, corporations that are ISO 14000 certified are, on average, subject to fewer inspections by the Environmental Protection Agency. Furthermore, the EPA reduces penalties for organizations convicted of noncompliance if they can show that an effective environmental management system-such as ISO 14000-was in place at the time of the violation.
Other advantages cited by certified businesses include reduced overhead and insurance costs, improved access to capital, elimination of some trade barriers, and improved company image.
Despite the benefits, ISO 14000 is surrounded by controversy. The most pervasive and persistent criticism is that the certification process is not directly connected to environmental performance. Companies devise their own goals and strategies, and they are not required to demonstrate compliance. Therefore, the system obviously cannot be compared to the quality management programs applied to other areas of business.
Additionally, a focus on documentation has prompted some managers to protest the extra paperwork requirements. And the cost/benefit tradeoff is still unclear-the benefits offered by ISO 14000 certification may not be sufficient to offset the costs incurred to meet the program's requirements.
Regardless of the concerns and objections, ISO 14000 can be an invaluable tool for companies striving to remain competitive and improve their environmental systems. As consumer demand for environmentally friendly products grows, the need for ISO 14000, or a broader quality management system based on its principles, will also expand. This environmental management trend cannot be ignored, and managers would be wise to take notice. ISO 14000 may give them the competitive advantage they need in the increasingly fierce international marketplace.
Dr. Sime Curkovic is an assistant professor of supply chain management. This column was originally published in the April 11 issue of MiBiz Southwest and is reprinted in WMU News with their permission. The article is the first in a monthly MiBiz series featuring professors from the Haworth College of Business.
Media contact: Jessica English, 616 387-8400, jessica.english@wmich.edu