University of Greenwich

BSc (Hons) Occupational Safety, Health and Environment

Environmental Industry Management

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Implementing ISO 14001:

Benefits and Costs
Including Discussion of positive and negative value both at
corporate and environmental policy
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Octavius Kaduka
2013

1. Introduction to ISO

ISO is the International Organization for Standardization, it is the world recognized

organization known to develop and publish international standards. Founded in 1947, ISO
“since then have published more than 19 500 International Standards covering almost aspect
of technology and business” (Source: About ISO, ISO, n.d). ISO helping industries becoming
more productive, effective and efficient in delivering of quality products, services and good
practice of health and environmental to communities. With the increasing of awareness and
responsibilities towards environmental worldwide, International Standard have releases ISO
14001 (comes from ISO 14000 Series) in order to “make an attempt to develop an
international standard for environmental management” (Bozena Poksinska, Jens Jorn
Dahlgaard and Jorgen A.E. Eklund,2002). Despite the effort, ISO to standardize
environmental management internationally through ISO 14001 might be end with either
positive or negative outcome. How far the standard itself would ensure the effectiveness of
implementation environmental Management? Is the ISO 14001 will be accept positively? The
discussion will bring out cost, benefit and other associated with ISO 14001 from business
perspective, how companies view the standard as the tool to enhancing profits and
environmental perspective.

2. A brief of ISO 14001

“Control and reduce its impact on the environment” (Ken Whitelaw, 2004)

It is clearly stated above that the main purpose of ISO 14001 is to require any
organizations register for the standard, to absorb a good practice of keeping their products or
services to be environmental friendly based, in other word, to control and reduce environment
impact that is produced by organizations. ISO 14001 is the standard that requires
participation of top management of the organizations such as CEOs and Managers to be able
of demonstrating the policy thus, creates commitment to all organization members to
implement the EMS more deep throughout the entire organization management; this is
because the “EMS itself will not improve environmental performance” (Bozena Poksinska,
Jens Jorn Dahlgaard and Jorgen A.E. Eklund, 2002) without participating of all members of
the organization. A proper planning of organization to apply the standard into their
environment management as well important to develop proper assessment of their
environment situations. The effectiveness and efficiency of ISO 14001 is depending on
management review and continual improvement of organization’s management thus, to
ensure the EMS to show its maximum performances of controlling and reducing
environmental impact that is produced by organizations.

3. Benefits of ISO 14001

With the rising of awareness and rapid implementation of environmental regulation

internationally by environment enforcer, organizations that is adopting with the standard are
influenced and interest towards increasing in competitiveness, this is either through
enhancing and polishing their quality standard of products or services, Thus, “leading to
increased profit, more efficient processes, reduced costs and a more credible image” (Alberto
Petroni, 2000). Quality and standard products or services obviously attracts more consumer
and costumer, indirectly leads to profit increased. Again, organizations have to refine their
EMS processes and procedures which leads to efficient performance thus “reduced costs of
waste management, savings in the consumption of energy and materials” (ISO 1998, cited in
Bozena Poksinska, Jens Jorn Dahlgaard and Jorgen A.E. Eklund, 2002) resulting
organizations to be recognize and reputation increased.

Organizations adopting ISO 14001 will realise itself increase in market share, both
internationally and domestic field of business. The standard opens a door to multinational
trade by creating legal agreement between nations under one rule of the policy itself, thus
positively; the trade will creates connections between companies and their customers
worldwide, helping them to develop trading more efficiently and effectively, thus, the
companies itself able to expanding its wide range of products or services throughout the other
nations without having difficulties with such local regulations, national borders, and permits,
because “ISO 14001 may provide a systematic transnational approach to coordinating various
national environmental programs and regulations and help the firm develop global
capabilities” (A. M. Rugman and A. Verbeke 1998, as cited in Pratima Bansal and William C.
Bogner, 2002)

ISO 14001 can give positive approach towards organizations associates members such
as employer and employee; this is because the “EMS has the potential to enhance awareness
of environmental issues among employees.” (Alberto Petroni, 2000). The awareness that is
demonstrated and promote by employer within the organization creates inspiration,
motivational and responsibility to its employee to become more productive, thus producing
rapid deployment of operations and quality productions of either in products or services.
Indirectly, the employee itself participates in implement the standard throughout the
organization for following the good practice of the EMS. Furthermore, ISO 14001 creates the
positive possibilities of cooperation between top management and employee; thus, also will
boost the productivity and creates good workforce relationship within the organization.

Any organization that are registering to ISO 14001 are to ensure taking seriously
regarding customer welfare, this is to urge any organizations to improved their customer
satisfaction towards quality of products or services. Again, ISO 14001 has promised of giving
quality of assurance recognition and certification to any of organizations that is registering
under its standard to improve their customer trust. ISO 14001 also as well promotes
organizations to enhance their management to towards green image, thus to improve their
relationships with stakeholders (Azzone 1997, as cited in Bozena Poksinska, Jens Jorn
Dahlgaard and Jorgen A.E. Eklund, 2002)

Perhaps, the most important part and purpose of ISO 14001 is to enhancing risk
management systems and practices of organizations. As the EMS are environmental based,
organizations or companies that is adopting ISO 14001 into their system must improved their
emergency preparedness and responses towards environmental pollution prevention. Thus,
“the EMS is to Increase in the attitude towards environmental responsibility” (Kuryllowicz K
1996, as cited in Alberto Petroni, 2000). Again, by enhancing risk management system,
organization as well able to followed existed environmental law and regulations “may
actually improve a firm’s compliance management and enhance its ability to maintain
regulatory compliance” (Kitazawa S, Sarkis J 2000, as cited in Alberto Petroni, 2000) and
according to (Ken Whitelaw, 2004) that he believed compliance with legislative requirements
is the baseline for certification to ISO 14001.

4. Cost of ISO 14001 implementation

Every organization registering with the standard is different in terms of products and
services line, size, budget, facilities and number of personnel or employees, thus, this will
ensure the exact cost lists need by organization or companies for the standard to be
implemented. The costs also “depending on the scope of registration and the nature of
environmental management system in practice” (Alberto Petroni, 2000). The cost that will be
the first is registration fee for gaining ISO 14001 standard. The cost will involving audit
group from ISO itself and other associated payments, including site visit audits and days of
the registration process and procedures. Every management system has to be review and
revise; each setup, modification and management of changes will involve cost, this is as well
including the maintenance of the EMS itself. Furthermore, “In addition to the costs of
certification, firms must factor in the annual costs of maintaining the documentation”
(Pratima Bansal and William C. Bogner, 2002).

Each change in organization must be provided with proper training, thus, requires cost
to ensure it is implement. The training will covers all associate with ISO 14001 certification
and environmental management which requires training materials and sources to ensure
participant fully understand and acknowledge about the training is all about. Research and
assessment are needed for identifying of which company’s management system should be
assess with ISO 14001 implementation, thus, it is add into the cost lists as well. Others, such
as promoting of the EMS within organization to all management members, managers,
supervisors and employees require cost. Above are all major costs that is needed to ensure
the effectiveness and efficiency of ISO 14001 to be implement in organization, however,
there is other cost that must be notice about, such as product or service labelling, liability,
certification, recognition and third-party review as (McCreary JH 1996, as cited in Alberto
Petroni, 2000) strengthen reason of the statement that “third-party review of documents
required for ISO 14001 registrations”

5. Discussion of ISO 14001 implementation in companies perspective

The ISO 14001 benefit and cost of implementation have been described and elaborate
above shows result that both perspective are aiming towards the good of organization and
environmental. However, research into many of writer’s journal and article regarding ISO
14001 that, “Writers typically tout the potential for lower costs, increased competitiveness,
market share growth, higher profits, and regulatory compliance” (Pratima Bansal and
William C. Bogner, 2002) shows that the EMS is likely to support organizations or companies
more into improved organizational management, good relationship establishment with
customers and regulatory enforcer and reducing costs. Even though that the EMS is
supposedly leading to ‘win - win’ situation for both business and environment, but it slightly
not that quite true. To strengthen the statement, the EMS is reported that “the most commonly
reported benefits are related to improved relations with stakeholders and improved
organizational control. Only a few studies indicate environmental improvements” (Bozena
Poksinska, Jens Jorn Dahlgaard and Jorgen A.E. Eklund, 2002).

As Olivier Boiral and Jean-Marie Sala (1998), Stated:

Although IS0 14001 provides a universal model for environmental management, some
managers believe its implementation may have more draw- backs than advantages. The
most frequent criticism has to do with its effectiveness in achieving the fundamental
purpose of any green effort: reducing waste discharge into the natural environment.
Unlike investments in technology, investments in implementing the IS0 14001
management system do not guarantee any improvement in environmental quality.

As the list goes on, the statement above are too obviously shows that ISO 14001
implementation is not somehow agreed. It is true ISO 14001 provided broad opportunities for
organization or company towards environmental impact reduction, however, the statement
above as well stating that probability of the EMS to shows its ‘win – win’ potential are again,
not convincing. However, this is not to tell that ISO 14001 doesn’t meet any specification or
requirement of its own standard of EMS, but, to discuss that the potentially ‘win – win’ is
arguable.

Despite the consequences, argument are made to shows that the EMS is taking both
business profit and environment as ‘win – win’ potential to organization register with the
standard. For example, 3M is the company that certified with ISO 14001; they reported and
claimed that “its 4,700-plus projects have reduced 807,000 tons of pollutants and cut costs by
$827 million, since it launched the program in 1975” (3M Worldwide, as cited in Pratima
Bansal and William C. Bogner, 2002), with such behemoth organization as 3M itself, the
company have shows that they are able to reduced environmental impact and cut costs in big
amount, thus, ‘win – win’ statement is still considered giving ISO 14001 the opportunity to
shows everyone that the standard are able to enhancing profit making with cost reduction and
at the same time minimize the environmental impact that the company have produced.
Furthermore the another example of company is “Ford Motor Company claims to have saved
millions of dollars and reduced substantially its environmental impact as the result of having
adopted ISO 14001-certified EMS for its plants worldwide” (Wilson 2001, as cited in David
Morrow and Dennis Rondinelli, 2002), thus, there is a hope that ISO 14001 are consider of
‘win - win’ potential to organization. Again, a report of “Honda plant recorded noticeable
improvements in environmental performance in the areas of waste and wastewater
generation, recycling, improved lighting control, and adoption of reusable packaging” (David
Morrow and Dennis Rondinelli, 2002).
6. Conclusion

There is a bright side and dark side of which ISO 14001 can brings to organization
that is adopting its standard. The EMS can be very beneficial to organization’s environmental
improvement, this can be seen clearly with cost reduction over organization’s expenses, new
‘go green’ policy which brings into environmental awareness, directly giving motivation and
commitment to workforce, thus creates positive cooperation. Enhanced company’s image and
reputation allowed them to multinational trade with ease. Even though with numbers of
consequences, which includes unclear outcome of the result in ISO 14001 implementation
and even it as well mark as ‘unfair’ because the EMS more concentrating onto organization’s
side and not environmental, thus, ISO 14001 is still an environmental standard and orientated.
Lastly, it is concluded that ISO 14001 have the potentially of maintained its systematic and
comprehensive approach, thus, strengthen the statement of ‘win – win’ of which the EMS
taking both business and environmental important, and ensure both are taking action equally.
It is ISO 14001 purpose of enhancing the framework of management performance and
improvement, but as well adapting environment into the management system.

(2000 words)

7. References

Alberto Petroni, 2000. Developing a methodology for analysis of benefits and shortcomings
of ISO 14001 registration: lessons from experience of a large machinery manufacturer.
Elsevier [Online]. Available at:
http://www.sciencedirect.com/science/article/pii/S0959652600000779 [Assessed 26 October
2013].

Bozena Poksinska, Jens Jorn Dahlgaard and Jorgen A.E. Eklund, 2002. Implementing ISO
14000 in Sweden: motives, benefits and comparisons with ISO 9000. Emerald Group
Publishing Limited [Online]. Available at:
http://www.swetswise.com/FullTextProxy/swproxy?url=http%3A%2F%2Fwww.emeraldinsi
ght.com%2Fthirdparty.do%2F%3Fini%3Dswets%26ident%3D0265-
671X%2820030101%2920%3A5L.585%3B1-
%26lkey%3D111111%26rkey%3D999999&ts=1384071884325&cs=236891959&userName
=wetha7cn&emCondId=5653630&articleID=166323192&yevoID=2045776&titleID=10420
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David Morrow and Dennis Rondinelli, 2002. Adopting Corporate Environmental

Management Systems: Motivations and Results of ISO 14001 and EMAS Certification.
European Management Journal Vol. 20 [Online]. Available at:
http://gse.cat.org.uk/downloads/iso-emasmotivation_paper.pdf [Assessed 26 October 2013].

ISO 14000 - Environmental management. ISO [Online]. Available at:

http://www.iso.org/iso/home/standards/management-standards/iso14000.htm [Assessed 2
November 2013].

Ken Whitelaw, 2004. ISO 14001 Environmental Systems Handbook Second Edition. Elsevier
[Online]. Available at: http://www.rpd-
mohesr.com/uploads/custompages/ISO%2014001%20Enviromental%20Systems%20Handbo
ok.pdf [Assessed 2 November 2013].

Olivier Boiral and Jean-Marie Sala, 1998. Environmental Management: Should Industry
Adopt IS0 14001?. Business Horizons [Online]. Available at:
http://www.sciencedirect.com/science/article/pii/S0007681398900659 [Assessed 26 October
2013].

Pratima Bansal and William C. Bogner, 2002. Deciding on ISO 14001: Economics,
Institutions, and Context. Long Range Planning [Online]. Available at:
http://www.sciencedirect.com/science/article/pii/S0024630102000468 [Assessed 2
November 2013].