The benefits of an environmental management system

Tuesday, July 25, 2006

MANAGING FOR SOCIETY, THE MANILA TIMES By Evelio G. Echavez The benefits of an environmental management system

There are four drivers why companies go green, name-ly: legislation, stakeholder pressures, economic opportunities, and ethical motives. In going green, a company usually decides to install and implement an environmental management system (EMS). An EMS is a formal set of policies and procedures that define how an organization will manage its potential impacts on the environment and public health. The two EMSs that are commonly in use are the European Eco-management and Audit Scheme (EMAS), which is being used by many European companies, and the worldwide standard of the International Standard Organization known as ISO 14001. In the Philippines, ISO 14001 is the standard that many companies have implemented with 144 companies registered (certified by a third party) to the said standard as of the year 2004 based on The Philippines Directory 2004 published by ISOPhils. The number of companies that have implemented an EMS patterned after ISO 14001 or other standards but have opted not to be certified by a third party is unknown. The implementation of an EMS provides several benefits to the company. First, it shows good-faith effort to comply with regulations. This means that companies with existing EMS show the willingness to comply with all laws related to environment protection. Many countries are more receptive to standards such as ISO 14001, as an alternative to prescriptive command and control requirements because it is voluntary and focuses on management. As a result of implementing such standards, regulatory compliance is enhanced and reduction of environmental impacts is achieved. In some countries, regulatory agencies are known to go easy on companies with certified EMS or to reduce inspection visits to their facilities. Second, it assures customers of the company's commitment to environmental management. Some companies that are registered to ISO 14001 like Ford, IBM, Xerox, Toyota and others, have been requiring their suppliers to also register to the standard. Green consumers, who patronize products of companies that adopt environmentally safe practices in their operations, are starting to have their presence felt; and having an EMS would certainly show that a company is environmentally pro-active. Third, it provides economic benefits resulting from the reduction of wasted input materials and energy, and waste disposal and treatment cost. The improvement in process control and the prevention of pollution result in improved efficiency that ultimately causes the reduction of cost through the production of a higher output for the same input. Since profits commonly represent 5 percent to 10 percent of sales, even small increases in the bottom-line are always welcome. Fourth, the resultant reduction in environmental impacts improves the company's image with its publics, particularly its immediate community. Companies that have successfully eliminated or reduced the impact of its operations on the environment usually find the community and other stakeholders more responsive partners in its programs including the application and renewal of permits and authorization. Fifth, a properly functioning EMS reduces the potential for environmental incidents and associated liabilities or payment due to damages or violations. This in turn results in lower insurance premium and preferential treatment by bankers who provide access to capital. Some banking institutions now require the attainment of specific requirements of environmental protection before any request loan request is processed. Moreover, environmental accidents such as those that happened in Bhopal, India and in Marinduque could have been prevented, or its extent at least minimized, with an EMS effectively in place. ISO 14001, for example, clearly requires the company to have emergency preparedness and response procedures that prepare a company for any conceivable emergency or disaster, thus minimizing the extent of environmental damage if an accident occurs.