Green Accounting – a Helping Instrument in European

Harmonisation of Environmental Standards

Authors:

Chiraţa CARAIANI, Professor Ph.D.,

Affiliations: Academy of Economic Studies of Bucharest,
Regular address: Calea Victoriei nr. 224, bl. D5, ap. 3, sector 1, Bucharest
E-mail: ccara@ew.ro

Camelia Iuliana LUNGU, Lecturer Ph.D., ASE,

Affiliations: Academy of Economic Studies of Bucharest,
Regular address: Str. Zboina Neagra, nr. 5, bl. 98, ap. 27, sector 6, Bucharest
E-mail: lkmy03@yahoo.com

Cornelia DASCALU, Senior Lecturer Ph.D., ASE,

Affiliations: Academy of Economic Studies of Bucharest,
Regular address: Aleea Botorani, nr. 8, bl. V84, sc 3, ap 84, sector 5, Bucharest
E-mail: dascalu_cornelia@yahoo.com

Abstract
In today’s global economy, organizations are increasingly called upon to demonstrate sound
business management that includes concern for economic, social and environmental issues.
The challenges created by global competition make it imperative for enterprises to continually
rationalize and improve all resources and processes. Separation of responsibilities for the
processes that underpin organizational outputs is unsustainable in today’s competitive
environment (Guido Guertler, 2001).
On the base of literature review, we assert that recent achievements proved that ISO’s
management system standards have a global relevance of and a capacity to benefit from the
very largest to the very smallest organizations in both public and private sectors. An
Environmental Management System (EMS) provides a solid framework for meeting
environmental challenges and realizing the above benefits.
Most environmental legislation now originates at the European level, where the main
legal instruments are EU directives and regulations. Traditionally, environmental regulation
has covered the environmental media. From the early 1990s, a more integrated approach has
been taken across all media with Integrated Pollution Control (IPC) and, more recently, the
Integrated Pollution Prevention and Control (IPPC) European Directive (EC, 1996).
We describe in our research the main types of environmental standards used across
Europe and their impact on businesses performance. In conclusion we analyse the future key
areas the environmental legislation is likely to be developed in.

Keywords: Green Accounting, Environmental Management Systems, Environmental

Statements, Environmental Performance

1
Introduction
Sustainable development policy and practice have attracted considerable attention and debate
in the past 20 years. Our understanding of and concerns about environmental and sustainable
development issues have evolved over time too. Evidence suggests that a focus on the triple
bottom line: economic, social and environmental issues results in advantages in financing,
insurance, marketing, regulatory treatment, and other areas. Business today is not just about
selling a product or service to a customer around the corner. In the rapid evolution to a global
market-place, having a set of common rules is critical to facilitating trade. At the same time,
these rules have to be flexible enough to be applicable to companies all over the world.
Increasingly in this single world market, an organization needs to be able to demonstrate
sound business management that includes concern for the environment. Recent achievements
proved that ISO’s management system standards have a global relevance of and a capacity to
benefit from the very largest to the very smallest organizations in both public and private
sectors.
An Environmental Management System (EMS) is a structured approach to addressing
the environmental bottom line. Businesses recognize that a focus on “command and control”
by itself does not provide the bottom line results desired. An EMS provides a solid framework
for meeting environmental challenges and realizing the above benefits.
A management system comprises several “layers” (enterprise functions), such as
research, development, production, sales, marketing, maintenance, service, personnel,
budgeting, investment, etc. The performance of each layer is determined by “factors” such as
customer and supplier relations, personnel qualification and motivation or human relations
(ISO, 2002b).
The challenges created by global competition make it imperative for enterprises to
continually rationalize and improve all resources and processes. Separation of responsibilities
for the processes that underpin organizational outputs is unsustainable in today’s competitive
environment (Guertler, 2001).

1. Implementing Environmental Management Systems: a

literature review
There is a certain consistency in the broad direction of the findings, even though some studies
adopt a generally more optimistic tone than others (Wagner, 2002). In general, researchers
found that a majority of respondents reported a moderate level of environmental effectiveness
stemming from EMS adoption, although a considerable variability between companies was
also observed (Steinle and Baumast, 1997). Key findings include (IEFE, 2005):
• In their survey of 27 German EMS registered companies and analysis of 200
environmental statements, the Research Centre on European Environmental Law found
that EMAS implementation brings an improvement in regulatory compliance). A survey
of German EMS companies found that the adoption of the management system has had a
positive impact in a range of areas (especially waste generation, resource use and water
consumption), but was unable to quantify the magnitude of improvement.
• Using the same list of environmental aspects in a survey of French EMS sites,
(Schucht, 2000) were obtained similar results (reduction of liquid effluents and water
pollution is reported as another important effect in the French case). While EMS
registration was seen as a driver towards environmental improvement, it was perceived
to have less importance than other factors such as regulatory or technological ones.

2
 • In their econometric analysis of the data obtained through a survey of 2000
European companies, Johnstone et al. (2004) found that EMSs (including both ISO
14001 and Environmental Management Audit Scheme - EMAS) played “a distinct role
in encouraging firms to undertake measures to improve their environmental performance
in a number of areas” (p. 703). The impact of EMS was particularly important in the
generation of waste-water and air emissions and in the reduction of environmental
impacts from accidents. On the other hand, those environmental areas with direct
financial implications (such as resource use or waste management) appeared to be less
affected by EMAS.
• Hertin et al. (2004) performed regressions and times series analysis on
European industrial companies and production sites with different EMS policies. Their
main finding was that the link between a company’s EMS and environmental
performance (measured with eco-efficiency indicators) is weak and ambiguous:
companies with a formal EMS performed better on a number of indicators, but worse on
several others and only a small number of correlations were statistically significant. They
were also unable to find significant eco-efficiency differences between EMAS and ISO
14001 certified companies. These findings were broadly confirmed in a subsequent study
of European firms in seven sectors (Sorrell et al., 2005).
• Analysing a sample of 306 German manufacturing firms, Wagner (2002)
found no significant differences in energy efficiency between firms with and without
EMS (EMAS and ISO 14001), neither for the year 2001 nor for the period 1991 to 2001.
• In their analysis of almost 800 production sites across England and Wales
(using assessments of operator performance made by Environment Agency enforcement
officers), Dahlström et al. (2003) found that “having an EMS improves certain
procedural aspects of environmental management” such as recording and use of
information, knowledge and implementation of authorization requirements, plant
maintenance, management and training and process operation. Crucially however, they
did not find a link between the presence of an EMS (including EMAS) and actual
performance measured as the likelihood, as assessed by enforcement officers, of
suffering from incidents, complaints and non-compliance events. The study also found
that “there is no conclusive evidence to show that EMAS is better at inducing continuous
improvement than ISO 14001, or vice versa” (p.196).
• The majority of Swiss managers of ISO 14001 certified companies surveyed
by Hamschmidt (2000) perceived the impact of EMS adoption on environmental
performance as positive but relatively small.
• Anton et al (2004), also found that ‘the adoption of a more comprehensive
EMS has a significant impact in terms of reduction of the intensity of toxic releases’ and
pointed out that the importance of these measures tends to especially visible on
companies with initially poor environmental records (p. 652).
• Ammenberg et al. (2003) found, after analysing a network of SMEs in the
Hackefors Industrial district in Sweden, that the improvements brought forward by EMS
certification were significant.
• Welch et al (2002) detected statistically significant differences between
Japanese fully ISO 14001 certified companies, those in process of ISO 14001
certification and non-certified ones regarding the implementation of environmental
measures and strategies such as green purchasing. However, the authors pointed out that
the direction of causality between ISO 14001 certification and environmental strategy is
not clear, as it could be the case that environmentally advanced companies are more
likely to become ISO 14001 certified.

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 • Researchers of the University of North Carolina concluded from a survey of
US facilities that have implemented EMSs that ‘results suggest strongly that the
introduction of an EMS does make an observable difference to a facility’s environmental
performance’ (NDEMS 2003, p. 286).
• Steger (2000) concluded that EMS support compliance but pointed out that it is
difficult to determine the actual environmental effects of better compliance because non-
compliance is often concerned with formal infringements rather than material breaches.
He found, however, little evidence that EMS is a strong autonomous driver for
performance improvement. Most respondents in his study held the view that objectives
of the company could also have been attained without an EMS. He also found that
external stakeholders tended to have a more positive view of the costs and benefits than
companies themselves.

2. European and national legislation

International treaties may or may not be binding legal requirements on signatories – usually
national governments. This may not be apparent at organisation, operator and site level
although one would expect organisations operating across national boundaries to be aware of
international obligations (IEMA 2005). Examples of international treaties 1 are:
• the United Nations Framework Convention on Climate Change and the subsequent
Kyoto Protocol (UNFCC, 2004);
• the Rio Convention on Biological Diversity (UN, 1992); and
• the United Nations Convention on Long-Range Trans-boundary Air Pollution (UN,
1979) and the subsequent Convention on Long-Range Trans-boundary Air Pollution on
Further Reduction of Sulphur Emissions (UN, 1994).
Most environmental legislation now originates at the European level, where the main
legal instruments are EU directives and regulations. European legislation is transposed into
national legislation by each member state. European regulations, on the other hand, usually
apply directly to member states; for example: the Eco-Management and Audit Scheme
(EMAS) Regulation (EC, 1993), the Trans-frontier Shipment of Waste Regulations (EC,
1994) and the Eco-Label Regulation (EC, 2000), and do not necessarily need to be transposed
through specific national legislation.
The environmental regulation of businesses and other organisations is intended to protect
human health and the environment from harm within the context of sustainable development.
Traditionally, environmental regulation has covered the environmental media (air, water
and land), together with wildlife protection and conservation.
It has focused on the control of polluting emissions and on maintaining and improving
water quality and waste management. From the early 1990s, a more integrated approach has
been taken across all media with Integrated Pollution Control (IPC) in England, Wales and
Scotland and, more recently, the Integrated Pollution Prevention and Control (IPPC)
European Directive (EC, 1996).
In the future, primary environmental legislation is likely to be developed in the following
key areas:
• management of the environmental impacts of products and associated activities and
services (such as manufacturing and transport) by adopting a lifecycle approach;

1
A list of all global environmental agreements published by the United Nations Environment Programme
(UNEP) is available at www.unep.org/DPDL/Law/Law_instruments/law_instruments_global.asp

4
 • efficient use of resources as part of the drive towards sustainable consumption and
production;
• maintenance and enhancement of biodiversity; and
• corporate and social responsibility.
Regarding Romania, the only choice for its development in the European Union is the
incorporation of an environmental protection policy. As a fact, the discussions for Romania’s
integration in the European Union the policy of environmental protection were forecast in
Chapter 22 Environmental Protection; this document was approved by the Romanian
Government on 18.10.2001. For the EU adherence, Romania finalized its strategies that
regarded the following items: waste management, chemical substances and genetically
modified organisms, environmental protection, civil protection, nuclear safety. In addition,
there is a starting point in the development of the harmonization of the legislation that
regarded the environment.
The first consequence was the establishment of the Environmental Guard in 2001 that
has the responsibility of monitoring the environment, the prevention and the banning of the
contraventions. The Environmental Protection Law, modified and completed in 2002, states
the way on how the assessment of the environment must be made, the regime of chemical
substances and dangerous chemical compounds; the toxic wastes; the pesticides; nuclear
activity; etc.
The 195 Urgency Ordinance from 22.12.2005 that regards the environmental protection
assures the fulfilment of Romania’s engagements in the process of European integration as a
base for the incorporation of the legislative field of environmental protection.
From this selective legislation results Romania’s concern for environmental protection
through the prevention, limitation and elimination of some effects that have a negative impact
on the environment. To prevent, restrict or eliminate the unwanted effects on the environment
there must be a special financial effort from all participants: government, all kinds of entities
and people.

3. What is an EMS?
An environmental management system (EMS) is “that part of an organisation’s management
system used to develop and implement its environmental policy and manage its environmental
aspects” (ISO 14001: 2004). Figure 1 shows a schematic of the key elements of an EMS. The
EMS process can be expressed in terms of environmental management techniques set out
below. Legal compliance is addressed at the stages indicated in brackets.

EMS ORGANIZATIONS

Environmental impact assessment (identify of Activities, products and services

legal requirements)

Risk assessment (assess legal compliance) of Environmental impacts

Control measures to mitigate environmental impacts (achieve legal compliance)

Systems and procedures - to operate and maintain control measures (manage legal compliance)

Figure 1 Key elements of an EMS

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 The main types of EMS in use in Europe are described below:
In-house EMS: many companies choose to design and implement an EMS to their own
specification. Regulators encourage the uptake of EMSs which help to manage risks and
establish environmental control measures. An in-house EMS may be as effective as any other,
but the main drawback for regulators is that it is more difficult to assess the effectiveness of
such an EMS in the absence of a standard approach, including assessment criteria.
Assessments of the value of an EMS start with the degree of conformance to a
recognised standard such as BS 8555 or ISO 14001:2004, or a scheme such as EMAS.
Judgements on each individual case may then be based on the degree of conformance and
whether this delivers regulatory requirements including legal compliance. Independent (third-
party) checks can be made via accredited certification, inspection and verification
assessments.
ISO 14001: 2004: This is an international standard, entitled: ‘Environmental
Management Systems: Requirements with Guidance for Use’ (ISO, 2004). The standard
specifies the different elements of an EMS and how they relate to one another based on a
methodology known as plan-do-check-act. The overall aim of the standard is to support
environmental protection and prevention of pollution in balance with socio-economic needs.
In common with all management systems, the standard provides a means for continual
improvement of performance.
Conformity against the requirements of ISO 14001:2004 can be demonstrated through
self-declaration, accredited certification or by other independent means.
To comply with ISO 14001:2004 an organisation is also required “to establish,
implement and maintain a procedure(s) to identify and have access to applicable legal
requirements and other requirements to which the organisation subscribes related to its
environmental aspects” and “to determine how these requirements apply to its environmental
aspects”. This requirement is intended to promote knowledge and understanding of legal
responsibilities. It does not require an organisation to establish libraries of legal or other
documents that will rarely be referenced or used, but to develop information that will help the
organisation to know what is legally required and how it relates to their organisation.
BS 8555: 2003: BS 8555 is a British Standard, entitled: ‘Environmental Management
Systems – Guide to the Phased Implementation of an Environmental Management System
including the Use of Environmental Performance Evaluation’ (BSI, 2003). The standard:
• provides guidance to organisations on environmental management and the use of
environmental performance indicators;
• describes a six-phase, incremental approach to implementing an EMS using
environmental performance evaluation;
• is suitable for any organisation, particularly small and medium-sized enterprises, to
implement an EMS – for example to ISO 14001 standard;
• may be used to demonstrate improved environmental performance to customers and
stakeholders.
The IEMA has developed a scheme for accredited inspection of conformance to any
chosen phase of BS 8555, known as the IEMA Acorn Scheme (IEMA, 2005) – the
Environment Agency is considering how it can be recognised under its OPRA scheme.
Eco-Management and Audit Scheme (EMAS): The Eco-Management and Audit
Scheme (EC, 1993) is a registration scheme, not simply a standard. It is a voluntary initiative
designed to improve organisations’ environmental performance. Its EMS specification is the
same as that of ISO 14001:2004 but it places additional emphasis on legal compliance and
environmental performance. It was initially established by European Regulation 1836/93,

6
although this was replaced by Council Regulation 761/01. This amendment incorporated ISO
14001:1996 (ISO, 1996) into the EMAS Regulation 2 as the specification for an EMS.
The European Commission and the Member States have tried to position EMAS as the
best standard for environmental management, especially by setting the following
requirements:
1) compliance with environmental regulations,
2) environmental statement,
3) employee involvement,
4) consideration of indirect effects and
5) setting up and maintaining a validation procedure.
Little evidence could be found in the literature that this positioning was successful. Some
evidence shows that EMAS is not seen as a benchmark. For instance, companies ranked
EMAS on the last position in a non-representative survey conducted in Germany in 2004,
aimed at analysing instruments applied for implementing sustainability in companies
(Biebeler, 2004).
In the EVER interviews, only 62% of the whole sample (including participants, non
participants and stakeholders) thinks that EMAS is regarded and used as “best practice” for
environmental management among industrial sectors or other types of organisations. Many
participants also mentioned that EMAS was little known in their sector and therefore not seen
as a benchmark. It seems that especially outside the EMAS-community, the advantages of
EMAS are not widely known.
Also, EMAS is seen as competing with ISO 14001. Many interviewees mentioned that
EMAS does not distinguish itself enough from ISO 14001. As a consequence, it is also
difficult for EMAS to present itself as a benchmark. Most interviewees believe that this can
be enhanced by making EMAS a real “standard of excellence”, e.g.: by strengthening the
requirements regarding the use of performance indicators, by making it a more “performance-
driven” scheme or by enabling benchmarking on performance between participant and non-
participant organisations.

4. ISO14000 Family – Management System Standards for

the Environment
Broadly stated, the ISO14000 standards have been designed to provide an internationally
accepted framework for environmental management, measurement, evaluation, and auditing.
They do not prescribe (a criticism by many) specific performance targets, but do provide, for
organizations of all sizes, tools to assess and control the environmental impact of their
activities. The standards in the series address such subjects as the following: environmental
management systems, environmental auditing, site assessments, environmental labelling,
performance evaluations, life cycle assessment, and terms and definitions.
Observers trace the origin of ISO 14000 to the 1972 United Nations Conference on
Human Environment held in Stockholm the report from which called for industry to develop
effective environmental management systems. With support for this report from a growing
number of world leaders, the United Nations convened the UN Conference on Environmental
and Development – the Earth Summit – in Rio de Janeiro in 1992. To prepare for this summit,
ISO established in 1991 the Strategic Advisory Group on the Environment (SAGE) to make
recommendations with regard to international standards. With the lessons learned by failing to

2
Further information about EMAS, including guidance and how to register, may be found at www.emas.org.uk.

7
engage early on in efforts that lead to ISO 9000, representatives from industry from the outset
joined the SAGE activities. And not too soon, as almost from the start of work by SAGE,
emphasis seemed to focus more on actual standards development than upon determining
which standards were needed.
In the autumn of 1992 the ISO Technical Management Board, following SAGE’s
endorsement for the development of management system standards for the environment,
established a new technical committee, TC 207, to address standardization in the field of
environmental management tools and systems. In approximately the same time frame, BSI
developed its BS 7750, Environmental Management Systems, a companion to its BS 5750
addressing quality management systems. The SAGE group studied thoroughly the provisions
of BS 7750 thus accounting for the similarities between it and the ISO 14000 document that
eventually emerged from TC 207.
The first meeting of the TC 207 plenary session was held in Toronto, Canada in June
1993 at which time its subcommittees and working groups were formed. Since that time and
2001, the series of standards, referred to as ISO 14000, have emerged. They comprise some
20 documents in various stages of development, release, and revision.
The capstone of the series, “ISO 14001: Environmental Management Systems –
Specification with Guidance for Use” defines the requirements for an environmental
management system (EMS) and is the one document in the series against which the
company’s EMS will be audited. Mandatory third party certification is not a requirement;
companies are permitted by ISO 14001 to self-declare. Whether customers are comfortable
with their suppliers doing so is another matter. Crucial to the successful implementation of its
provisions is active involvement by a concerned upper management. Intentional during the
development of the document was assuring its similarity in many respects to the structure of
ISO 9000. A principal reason for this was to lessen the impact on the company of the costs of
certifying to the requirements of both standards. ISO estimates that the total number of
certificates awarded to the 14000 family of standards at the end of 2000 was 22,897, more
than a 62% increase over the estimate for 1999.
The costs of implementation to these requirements are not inconsequential, a matter of
particular concern to the companies that, prior to ISO 14000, already had environmental
management systems in place. Published data on the actual implementation costs are few;
companies hold such information closely. However, the literature does suggest that the
average cost to achieve ISO14000 certification for a facility within a globally acting company
is about $100,000, while smaller organizations are reporting figures between $50,000 and
$75,000. Obviously, many companies, especially those in emerging economies, are finding
these costs prohibitive. Of the total costs, those imposed by the certifying agency, initially, are
the least, with those that arise from the efforts to prepare the company for certification the
greatest. However, as with all other costs endured by a business, the issue is not just the cost
but the return or value received from the investment. On this, not unexpectedly, the reports
vary widely.
ISO 14001 is the world’s most recognized EMS framework that helps organizations both
to manage better the impact of their activities on the environment and to demonstrate sound
environmental management. Since the publication of ISO 14001, many companies have
implemented the standard and, by the end of 2001, nearly 37 000 organizations in 112
countries had their EMS certified as conforming to its requirements (ISO, 2002b).
ISO 14001 is designed to be flexible enough to be applied to any sized organization in
both the private and public sectors. The bottom line is that certification to ISO 14001 can
improve environmental management and enables equal access to a growing “green” market
place. The standard has proven to be a useful tool to evolve from maintaining regulatory
compliance to a position of improved productivity and enhanced competitive advantage.

8
There is mounting evidence that companies which manage not only the standard economic
factors but also the environmental and social factors affecting their business show financial
performance superior to those which fail to manage all three.
How quickly and how effective the return for investment by an organization in ISO
14001 occurs is a function of a variety of conditions that include:
• the status and level of sophistication of its existing management system ;
• the degree of environmental challenge it faces, including the past, present and future
situations ;
• the amount and quality of resources it has access to, both internally or externally ;
• its state of preparedness – such as existing environmental management practices ;
• the knowledge, skill and ability of its staff with responsibilities relating to
environmental management and their relationship with those in other departments;
• the expectations that stakeholders have in relation to the EMS ;
• the current status of compliance with legal requirements;
• other requirements to which the organization may have made a commitment, and
• the level of verification required by the organization to meet market requirements or
the expectations of stakeholders.
By design, ISO 14001 is flexible: it is as applicable to the small business as it is to the
multi-national organization, enabling access to a global market-place where business and
environmental performance go hand in hand.
ISO 14001 is also the starting point for companies that want to use other environmental
management tools developed by ISO/TC 207. For example, ISO 14004 provides additional
guidance and useful explanations and complements ISO14001. Of course, an EMS will only
be of maximum benefit if it is properly implemented.
Environmental audits are important tools for assessing whether an EMS is properly
implemented and maintained. The new auditing standard, ISO 19011, is equally useful for
EMS and quality management system audits. It provides guidance on principles of auditing,
managing audit programmes, the conduct of audits and on the competence of auditors. ISO
19011 replaces the ISO 14010, ISO 14011 and ISO 14012 first generations of environmental
auditing standards in the ISO 14000 family.
Organizations implementing ISO 14001 can expect to improve their environmental
performance. ISO 14031 provides guidance on how an organization can evaluate its
environmental performance. The standard also addresses the selection of suitable performance
indicators, so that performance can be assessed against criteria set by management. This sort
of information can be used as a basis for internal and external reporting on environmental
performance.
Communication on the environmental aspects of products and services is an important
way to use market forces to influence environmental improvement. Truthful and accurate
information provides the basis on which consumers can make informed purchasing decisions.
The ISO 14020 series of standards address a range of different approaches to environmental
labels and declarations, including self-declared environmental claims, eco-labels (seals of
approval) and quantified environmental information about products and services.
ISO 14001 addresses not only the environmental aspects of an organization’s processes,
but also those of its products and services. Therefore ISO/TC 207 developed additional tools
to assist in addressing such aspects. Life Cycle Assessment (LCA) is a tool for identifying and
evaluating the environmental aspects of products and services from the “cradle to the grave”:
from the extraction of resource inputs to the eventual disposal of the product or its waste. The
ISO 14040 standards give guidelines on the principles and conduct of LCA studies that
provide an organization with information on how to reduce the overall environmental impact
of its products and services.

9
 ISO/TR 14064 is another tool; it allows environmental aspects to be taken in account in
the design and development of products. Although the ISO 14000 standards are designed to
be mutually supportive, they can also be used independently of each other to achieve
environmental goals.
The whole ISO 14000 family provides management tools for organizations to control
their environmental aspects and to improve their environmental performance. Together, these
tools can provide significant tangible economic benefits, including:
• reduced raw material/resource use ;
• reduced energy consumption ;
• improved process efficiency ;
• reduced waste generation and disposal costs, and
• utilization of recoverable resources.
Of course, associated with each of these economic benefits are distinct environmental
benefits too. This is the contribution that the ISO 14000 series makes to the environmental
and economic components of sustainable development and the triple bottom line.
5. Motivations and benefits for implementing ISO 14000: a
country/business sector survey
Most people, in referring to standards being global, would thing that the requirements of the
standard should be the same in whatever country it is applied, but would also expect them to
be adopted for similar reasons and in similar ways across countries, hence leading to similar
benefits.
To investigate the global characteristic of the environmental standards, we present the
results of a survey among certified firms in 15 economies, asking them about their
motivations for seeking certification, and about implementation issues and benefits
experienced. The survey is presented in the article Global perspectives on global standards -
a 15-economy survey of ISO 9000 and ISO 14000, by Charles J. Corbett, Anastasia M. Luca
and Jeh-Nan Pan. This article summarizes findings obtained from a survey of 5398 ISO 9000
and ISO 14000 certified firms in 15 economies in North America, Europe and Asia. It
compares motivations and benefits, and how these differ across countries and business
sectors. The survey was administered during 1999-2001.
Below, we present a summary of the survey sample, followed by an analysis of
motivations, implementation, and benefits, both by country and by sector.

Profile of survey sample

The survey was administered in 15 economies by a network of local partners who were
responsible for translating the survey, obtaining address lists of certified companies,
administering the survey, and entering the responses.
A total of 5 398 firms responded to the survey. Responses for some countries were
grouped together for the analysis presented here, as their sample size was too small to be
treated separately: Australia and New Zealand were combined and attributed the abbreviation
of ANZ; and Indonesia, Malaysia, the Philippines, Singapore, and Thailand were combined
into South-East Asia (SEA).
The economies surveyed were: Australia (ANZ), Canada (CA), France (FR), Hong Kong
(HK), Indonesia (SEA), Japan (JP), Republic of Korea (KR), Malaysia (SEA), New Zealand
(ANZ), Philippines (SEA), Singapore (SEA), Sweden (SE), Taiwan (TW), Thailand (SEA),
and United States (US). The business sectors included into the survey were: communications,
Computer equipment or peripherals, Electronics, Semiconductors, Mechanical, Automation,
Food, Plastic, Chemical, Textile, Metal, Pharmaceutical, others.

10
 The breakdown of responses by economy is shown in Table 1.

Country Number of Number of Response ISO ISO

forms mailed usable responses rate 9000 14000
received
Australia (ANZ) 2607 550 21,10% 540 92
Canada (CA) 561 198 35,29% 185 110
France (FR) 2000 445 22,25% 440 29
Hong Kong (HK) 1200 131 10,92% 124 20
Indonesia (SEA) 200 9 4,50% 7 3
Japan (JP) 5000 2261 45,22% 114 72
Korea (KR) 1361 120 8,82% 2221 575
Malaysia (SEA) 200 10 5,00% 10 4
New Zealand (ANZ) 288 61 21,18% 57 13
Philippines (SEA) 200 53 26,50% 51 16
Singapore (SEA) 200 15 7,50% 13 10
Sweden (SE) 268 135 50,37% 135 51
Taiwan (TW) 2142 456 21,29% 446 223
Thailand (SEA) 200 15 7,50% 15 4
US (US) 5000 939 18,78% 906 178
Total 21427 5398 25,19% 5264 1400
Table 1: Response rates by economy

Motivations for seeking ISO 9000 or ISO 14000 certification

Respondents were asked to rate, on a five-point scale, how important each of a set of 11
possible motivations was in their decision to seek certification.
In some countries, respondents have a tendency to report high scores across the board,
while others tend to be more modest. To correct for that, we compute “relative motivations”,
by dividing each respondent’s score for each motivation by the sum of the scores for all
motivations for that respondent.
The authors built a list with possible motivations by industry and by country.
The possible motivations for seeking ISO14000 certification, by economy and by
business, activity were:
• Cost reductions
• Environmental improvements
• Marketing advantage
• Customer pressure
• Many competitors certified
• Benefits experienced by others
• Avoid potential export barrier
• Capturing workers’ knowledge
• Relations with authorities
• Corporate image
• Relations with communities
The main motivations for seeking ISO14000 certification are “environmental
improvements” and “corporate image” and, to a lesser extent, “marketing advantage” and
improved “relations with communities”.
“Customer pressure” scores lower for ISO 14000 than for ISO 9000 (regarding quality
management). Firms in the industrial automation sector expect to achieve the highest
“marketing advantage”, and experience the most “customer pressure” to seek certification.
The communications and semiconductor sectors give the highest scores to “many competitors
certified”. Respondents in the pharmaceutical industry were considerably more motivated by

11
improving “relations with authorities” for both ISO 9000 and ISO 14000; they were also the
least motivated by achieving “cost reductions”.

Proportion of employees trained

The authors asked the respondents what percentage of their employees received training
– again on a five-point scale ranging from one, indicating 0-20% of employees, to five,
indicating 81-100%. The proportion of employees trained was generally similar for ISO 9000
and ISO 14000; overall, in most countries, the proportion trained for ISO 14000 was slightly
higher. This may reflect the fact that ISO 14000 more often covers an entire site or company,
while ISO 9000 certifications could have more limited scope.
More striking is the variation across countries: firms in Canada, Sweden, and the US
report training the highest proportion of employees, with those in Japan and Korea reporting
the lowest proportions. As always, one needs to be careful in interpreting such findings as an
indication that implementation has been more or less thorough in certain countries, as there is
always a possibility of country-level differences in survey response behaviour. For instance,
respondents in Japan may simply be more likely to provide a cautious estimate of the
proportion of employees trained, while those in Canada might apply a looser definition of
“training”. However, these differences are striking enough to warrant further investigation.
There is more consistency in the proportion of employees trained across sectors than
there is across countries. Again, most firms report slightly higher degrees of training for ISO
14000 than for ISO 9000.

Benefits of ISO 14000 certification

The respondents were asked how much benefit they had received from certification for
13 categories, on a five-point scale, ranging from one for “no benefits” to five for “very
substantial benefits”. Overall, the categories in which firms report receiving the highest
benefits from ISO 9000 certification are “quality improvements”, “customer satisfaction”,
“improved procedures” and “corporate image”.
The pattern is fairly consistent across countries, with some exceptions. Firms in the US
report relatively high benefits from “improved procedures”, followed by firms in Australia,
Canada, and France. Japanese firms report considerably higher benefits in “employee morale”
than firms in other countries. Respondents in Hong Kong report higher benefits from
“improved relations with authorities”.
The pattern is also quite constant across sectors, except that pharmaceutical firms report
considerably higher benefits from improved relations with authorities. This reflects the fact
that the pharmaceutical industry is subject to far more stringent quality regulations by
government agencies than firms in other business sectors.
Overall, the key benefits obtained from ISO14000 certification are improved
environmental performance and improved corporate image, followed by improved
procedures, relations with authorities, and relations with communities. Firms in Canada and
the US report the highest benefits from improved procedures. The same pattern arises when
broken down by sector. Textile firms report the largest cost reductions from ISO14000
certification. Pharmaceutical respondents report the highest benefits from improved relations
with authorities, and the lowest benefits with respect to employee morale and corporate
image.
In conclusion we may say that the patterns found by the authors are consistent across
countries, for most of the studied factors. Though there are, inevitably, variations across
countries, these differences are relatively small and certainly not large enough to indicate
substantially different “versions” of management systems built on ISO 9000 or ISO 14000.
The one notable exception is the proportion of employees trained. Here, there is substantial

12
variation across countries, which calls for further examination. If this reflects differences in
interpretation of the survey question across countries, there is of course no problem. However,
if it reflects true differences in breadth and depth of implementation of ISO 9000 and ISO
14000, that might cast some doubt on the assertion that the standards are truly implemented in
a standardized manner worldwide.
It is instructive to compare the motivations for seeking certification with the benefits
achieved. Recall that the main motivations for seeking ISO14000 certification were
environmental improvements, marketing advantage and corporate image. These expectations
are, by and large, met as the main benefits experienced are quality improvements, improved
customer satisfaction, and improved image. However, two points are worth noting for
business management. Firstly, the improved customer satisfaction does not appear to lead to
equally large benefits in terms of market share or profit margin. Having the certification does
not actually increase market share or profits, but not having it will lead to a decrease in
market share or profitability.
Secondly, perhaps the most important benefit of all is improved procedures. The survey
did not explicitly ask about improved procedures as a motivation for seeking certification, but
incidental evidence from interviews with certified firms suggests that, in many cases, these
benefits were not anticipated, but proved very helpful.
This is, in fact, characteristic of any structured process improvement effort: one does not
know in advance how the efforts will pay off, but following a structured and disciplined
approach almost inevitably does lead to valuable process improvements.

6. What can companies expect to derive from their

investment in ISO 14000?
The requirements for documenting their processes, which forces companies to question the
value of their embedded practices, keep records, and demonstrate improvement, for
companies previously lax in such rigor, can be of significant value in reducing the use of
unnecessary hazardous materials and in reducing the costs of using and storing those that are
necessary. In addition the discipline imposed by ISO 14000 can be expected to generally aid
the process of conserving productive resources – power, water, and space. That is to say,
companies implementing ISO 14000 are experiencing improved environmental performance
and reduced costs that are a consequence of such improvements. In addition, by implementing
ISO 14000, companies can expect to enjoy the intangible benefits of improved community
relations, improved customer and supplier relations, and the possibility of reduced penalties
from government agencies for departures from the company’s established environmental
policies.
However, the question remains, will the returns that can be expected by the
environmentally responsible company from implementing ISO 14000 justify the investment
required to do so? As would be expected, the responses to this question, based upon actual
experiences, constitute a broad distribution reflecting, in large measure, the prior
sophistication of the company population in environmental matters before the companies
implemented ISO 14000. While there is broad general agreement that companies indeed do
experience, to varying degrees, benefits from an environmental management system, there
remain questions as to whether the schemes deliver the degree of continuous performance
improvement expected over the long haul.
It is worthwhile in this regard to note the findings of a recent report, “How Effective Are
Environmental Management Systems”, published in The Ends Report, a journal produced by

13
Environmental Data Services of the United Kingdom. The report was based upon two
European studies of the experiences of many companies, some registered under EMAS, but
with the majority certified to ISO 14001.
The findings include the following observations: Only 58% of the ISO 14001 companies
achieved their emission or resource reduction targets; progress indeed, but less than that
hoped for, likely due to the absence of a requirement for regularly publishing performance
reports. In this regard, most companies reported that their market position had been
strengthened by the fact that they had publicized their adoption of an EMS. While most
companies reported that improvements in environmental performance had been achieved,
many companies questioned the value of having their environmental management system
externally certified. This observation allies closely with concerns often expressed by company
officials regarding maintaining the confidentiality of the information that is acquired by
external certifiers. It is suggested that an appropriate course is for companies to adopt an
environmental management system with clear targets and indicators for performance
improvement and to publish periodic, verifiable, performance reports. By electing this course,
the costs and problems with third party certification can be obviated.
Owing to its youth, the lessons of ISO 14000 are still being learned (ISO reports 257
certificates issued in 1995, growing to 22,897 by the end of 2000). Companies will derive
value to the extent to which upper management commits to the implementation. Little value
will accrue to those whose principal purpose is gaining the public relations benefits from
having received the certification; much greater benefit will be derived by those companies
who expect improved environmental performance and will not be content with anything less.
For those latter companies, of course, it can be asked whether such dedication really requires
ISO 14000, but global (peer) pressure may offer them little choice. For companies in general,
there seems to be no compelling evidence that would suggest performance will be improved
by external (third party) certification over that obtained by conscientious self-declaration.
Again, all such companies will be those that routinely publish comprehensive, verifiable
performance reports of the progress they are making.
To amplify on this latter point, it can be inferred, again, that the most compelling form of
motivation for superior environmental performance is market surveillance and the
accompanying and inevitable peer performance benchmarks. In the final analysis, it is not
unreasonable to assume that executive management will address ISO 14000 implementation
as a competitive issue rather than as a cost of compliance issue. The decision to implement an
environmental management system - ISO 14000 or a suitable alternative - is made all the
more palliative by the fact that an aggressive approach to environmental management will
produce cost savings and, therefore, perhaps a competitive edge.
Furthermore, experience has shown that ISO 14001 is a framework that inspires and
channels the creativity of all members of an organization, making them active agents of
change promoting environmental protection, resource conservation and improved efficiencies.
When all members in an organization are challenged to think differently, it leads to the
creation of innovative products and services. Innovation is a primary economic driver of
economic growth. This makes ISO 14001 a powerful tool in which to invest.

Conclusions
In summary, the reviewed research on EMSs broadly suggests that their adoption contributes
to a better environmental record of the organisation. This is particularly visible on
management indicators (e.g. implementation of environmental measures, environmental
management procedures etc.), but also seems to hold true for outcome indicators (e.g. overall

14
environmental efficiency and impact), although this is more difficult to show. What appears to
be important is the quality of an EMS (Coglianese and Nash, 2001) and the environmental
management style (Thornton, Kagan and Gunningham, 2003), rather than the presence of
such a system. Studies of EMS in operation show that most corporate EMSs focus on on-site
production efficiency. The most significant improvements appear to have been made in the
areas of waste management, energy use and water consumption.
There is also a widespread view in the literature that EMSs have largely failed to broaden
the scope of environmental management because they tend not to systematically address
wider environmental concerns, for example transport and logistics, sourcing of raw materials,
and product design.
There is a wide variation in standards of EMS implementation and certification. In
particular, there is often a lack of focus on maintaining and ensuring legal compliance and
improving environmental performance. Regulators still have a number of unanswered
questions in relation to EMSs; for example:
• What are the benefits to implementing organisations and to regulators of establishing
an EMS to standards such as BS 8555, ISO 14001 and EMAS?
• Does an organisation with an EMS have better legal compliance and improved
environmental performance than one without? Several academic studies suggest that sites
with an EMS do not necessarily deliver better compliance with permit conditions, have fewer
incidents or deliver better environmental performance than those that do not have them
(Dahlström et al, 2003).
• Does accredited certification add regulatory value? The standards of environmental
performance provided at a site with an EMS will be determined in part by the certification
body.
Regulators are concerned at the lack of consistency in approach between certification
bodies and that during assessments not enough attention is paid to compliance with
legislation. This is despite the existence of international standards and guidance for
accreditation.
Just as the existing ISO 14000 standards play an important role in helping organizations
to address today's priorities, so too can future standards help to address future priorities.
An integral part of an organization’s EMS is the commitment to continual improvement.
ISO/TC 207 takes this principle to heart and is constantly improving its process to identify
and respond to new standardization needs (Gagnier, Husseini, 2002). ISO/TC 207’s success in
continuing to work on relevant standards is evidenced by two new work items:
• ISO 14063 on environmental communication guidelines and examples will help
companies to make the important link to external stakeholders.
• ISO/TC 207 has responded to the challenge of climate change by agreeing to start
work on standards on measuring, reporting and verification of entity and project level
Greenhouse Gas emissions.

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