ISO 14001 Certification in Multinational Firms: The Paradoxes of Integration1 Olivier Boiral Associate Professor

Management Department Faculty of Administration Pavillon Palasis-Prince, Office 1638 University Laval Cité Universitaire Québec City, Canada G1K 7P4

Tel.: (418) 656-2131 (ext. 4776) Fax: (418) 656-2624 Email: [email protected]

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Abstract The development of a new international standard for environmental management systems has given rise to numerous unavoidable questions for firms, in particular multinationals. Adopted by more than 15,000 companies around the world four years after its launching, ISO 14001 could become, in the same way as ISO 9000, a passport that opens doors to certain markets. Even though the number of certified companies varies considerably from country to country, numerous companies have decided to adopt the standard for all of their international activities. The motivations behind this choice are less environmental than they are commercial, institutional or organizational. If ISO 14001 meets genuine needs in certain companies and constitutes a first step towards an integration of environmental issues in daily management, its implementation creates new challenges for which managers are often poorly prepared. To begin with, the documentation demands and the standard’s intended universal application cannot always be easily adapted to the management philosophy of certain companies and the cultural differences in their management. Furthermore, the standard requires considerable documentation and traditional management, which consequently could lead to a ritual integration rather than a genuine questioning of practices and their subsequent environmental impacts. This article examines these challenges as well as the paradoxes between the internal and external outcomes of the ISO 14001 system. The standard’s foundations are presented, followed by an examination of the external pressure which motivated its adoption and the implications for companies, in particular multinationals. An integrated model that makes it possible to represent the different ways of integrating the standard in response to internal and external pressure is then examined.

Key Words -

ISO 14001

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Environmental management systems

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International management

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Motivations

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Paradoxes and contradictions

3 Adopted by more than 15,000 companies around the world, the ISO 14001 standard has grown rapidly since its launching in 1996, particularly in multinational companies. In the same way as ISO 9000, upon which it is modeled, the new standard for environmental management systems seems to be on the verge of imposing itself as a sort of passport that opens doors to certain markets. It also allows companies to demonstrate their social responsibility and provides them with a structured framework for the management of their environmental issues. Finally, the development of ISO 14001 is part of the growing globalization of the world economy, which requires the adoption of international standards that facilitate exchanges and communication between countries. Although numerous environmental management systems were developed in the past, ISO 14001 seems to be on its way to becoming the accepted model, taking the place of other systems which are not as well established.2

The integration of this new standard in company practices seems to be occurring effortlessly, because it addresses issues that have received considerable media coverage and allows companies to promote an image of social responsibility. However, this process gives rise to numerous questions and challenges, particularly for multinational companies. First, the adoption of the standard presently seems to be more motivated by a proactive attitude rather than by genuine pressure. To what extent will the standard become a new requirement on international markets? Will the standard make it possible to improve relationships with public authorities or take the place of certain regulatory controls? Are some countries more receptive to this standard than others. Second, even though environmental commitment is a mobilizing theme which appeals to the “citizenship” of the companies and their personnel, employee adhesion to the standard does not necessarily occur spontaneously. On top of the rather heavy documentation requirements, the guidelines put forward in the ISO 14001 system are not necessarily in agreement with the managerial philosophy of companies or their subsidiaries. Cultural differences in management practices or the institutional context may mean that certain countries are more or less ready for ISO 14001 requirements.

The above questions call for a better understanding of the foundations of this new standard and its implications for company management. The objective of this article is to contribute to this understanding by examining the motivations and the developmental issues of the ISO 14001 standard, particularly for multinational companies. This analysis is based on studies conducted since 1996 of environmental management systems and of the adoption of the ISO

4 14001 standard in Canadian companies.3 First, the main requirements of the ISO 14001 standard will be analyzed and put into perspective with respect to traditional management principles. The international development of this new standard as well as the main challenges that it presents to multinationals will then be examined. Finally, the expectations created by the standard and the paradoxes involved in its integration in companies will be discussed. By examining the standard in relation to internal motivations and external pressure, the different approaches to the implementation of the ISO 14001 system are highlighted, namely ritual integration, mobilizing integration, proactive integration and reactive integration. In conclusion, the implications for public authorities of this system’s implementation will be discussed.

1- Towards a Greening and Renewing of Management Practices? Since the end of the 1980’s, most discussions about “environmental management” have focused on the need to implement management systems which allow the environmental concerns of companies to be integrated into their daily activities. The goal of these environmental management systems is to provide formal and systematic policy in order to better respond to regulatory demands and control the company’s environmental impact.4 According to ISO 14001, an environmental management system is “that part of the overall management

system

responsibilities,

which

practices,

includes

organizational

procedures,

processes

structure,

and

planning

resources

for

activities, developing,

implementing, achieving, reviewing and maintaining the environmental policy”. This broad definition stresses the intended general application of environmental management systems, which are centered on management processes rather than on specific technical or environmental issues.

5 A New International Metastandard for Environmental Management

The unveiling of the ISO 14000 standards marked the conclusion of a long consultation process which was launched in 1991 by the International Organization for Standardization (ISO) to study the development of international standards in the area of environmental management. The consultation process was given shape with the creation of the Technical Committee on Environmental Management (TC 207), which was responsible for coordinating the work of various groups of international experts and for preparing the ISO 14000 series of standards. These standards were to cover various aspects of environmental management, such as environmental audits, labeling, environmental performance evaluations, life cycle assessments, and terms and definitions. However, only the ISO 14001 standard, launched in the summer of 1996, features a certification process. To achieve ISO 14001 certification, an organization has to guarantee that its management system conforms to the principles defined in the standard, this compliance being verified by an accredited independent organization. ISO 14001, the most important of the ISO 14000 series, is now considered to be the accepted model in the area of environmental management.

The implementation of this standard calls for much more wide-spread and demanding changes than those normally required by the specifications of traditional standards relating to inputs and outputs, namely performance measurement, material resistance, sampling procedures and technical specifications. Indeed, contrary to input and output standards with which companies have long been familiar, the implementation of the ISO 14001 and ISO 9000 standards should normally involve calling into question the entire management system. This questioning does not pertain to specific and already defined products or procedures but rather to management and organization principles upon which the companies’ activities are founded. Through its systematic and integrated environmental management approach, the ISO 14001 standard may thus be qualified as a “metastandard”: “ Rather than writing detailed instruction manuals, standards writers can create lists of design rules to guide the creation of entire classes of management systems. Since systems theorists use the term metasystem for lists of this type, it follows that this type of management standard should be referred to as a metastandard.”5

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A Traditional Framework to Promote New Environmental Practices

In order to favor the integration of environmental practices in company management systems, the requirements of the ISO 14001 standard are founded on five management principles, namely: -

commitment and policy: managers must implement a policy demonstrating their environmental commitment;

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planning: a company has to define its plans and objectives on the basis of an assessment of its environmental situation;

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implementation and operation: people whose work may have a significant impact on the environment must receive the required training and information, and appropriate, regularly updated documents must be provided concerning procedures and individual environmental responsibilities;

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checking and corrective action: discharges to the environment must be systematically measured and compared with targets, and non-conformance with the system must be rectified using corrective measures;

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Management review and continual improvement: regular environmental audits must be held and the environmental management system (EMS) must be reviewed periodically by company management.

Although they are most often presented as innovative practices6, these guidelines, as well as the management philosophy which underlies them, are in reality based on traditional management principles. The image often associated with organizations dominated by traditional management principles is that of a machine.7 The organization is thus comparable to a well-lubricated mechanism which functions predictably and in a perfectly rational way. In this functionalist view of organizations, the employees play a passive role like cogs in a machine. Their role is limited to mechanically carrying out orders and following procedures dictated by others. In order for this system to function harmoniously, the employees must submit themselves to the authority of executives, who manage the future of the company unilaterally. The organizational decisions and changes therefore follow a hierarchical path, from top to bottom. Management is seen as a science which obeys principles and its own laws. Henri Fayol is considered as the first theoretician to have attempted to understand and systematize these principles.8 Having become a company executive after time in the army and

7 a career as an engineer, Fayol decided to try to systematize the main principles of administration so as to turn management into a science that could guide the work of managers. These principles, namely planning, organizing, leading and controlling, are considered to be the foundation of traditional management and are the elements at the core of most introductory management manuals.

These principles likewise form the basis of the ISO 14001 standard which, through its use of checklists, conforms to the main guidelines of traditional management. Figure 1 summarizes these principles and proposes an integrated framework to help clarify the main areas of research in the EMS literature. The starting point of this literature is the development of an “environmental” policy based on an analysis of both the external pressure and the internal environmental situation of companies. This policy is embodied in plans, procedures, and a monitoring and measurement system. This control system provides input for the audits and review of a company's environmental management in accordance with a “continual improvement” process. The role and responsibilities of three types of actors are generally defined. First, the environmental commitment of the executives, which precedes the initial development process of the system, plays a fundamental role, most notably through the implementation of an environmental policy. Second, the employees are required to apply plans and procedures rigorously. Third and finally, the environmental department plays a major role in all of the technical aspects of the environmental management system, namely plans, procedures, measurement of “environmental performance”, auditing and advice for the management.

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Figure 1. General model of environmental management

The whole system is orchestrated by “plan-do-check” principles and by a mechanistic process modeled on traditional management. Considered as the “one best way” to conduct environmental management, all deviations from these managing principles must be treated as “non-conformities”. The requirements of the ISO 14001 management system, like those for the use of a new machine, entail substantial documentation that must be applied to the letter. Periodic auditing verifies whether or not the operation of the “organizational machine” conforms to the requirements set by the standard's designer, namely the International Organization for Standardization. Moreover, the ISO acronym comes from the Greek word “isos”, meaning that which is similar or identical to something else.9 The development of ISO metastandards thus contributes to the standardizing of management practices by following a predefined model. The ISO standards for management systems, or “metastandards”, do not take into consideration cultural differences, the complexity of organizational behavior, practices specific to certain companies or activity sectors. The employees are seen as performers in the implementation of a management system which is considered as a model to imitate.

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These ties with traditional management do not mean that the standard's requirements are, in themselves, outdated or irrelevant. For companies that have not developed an environmental management system, the ISO 14001 system may offer a structured framework which helps guide the main stages of the implementation and monitoring of an environmental policy. This framework’s simplicity and lack of innovation reflect, above all, the wish of the standard's designers to propose a management system that is easy to understand, use, and adapt to different sorts of companies. This includes small and medium-sized firms (SMFs), in which environmental management is often not well-structured.10 For companies that already have a well-established environmental management system, the standard may constitute a tool for the evaluation, recognition and improvement of the existing system. Finally, since ISO 14001 requirements are based on a “top-down” approach and on traditional principles of order and discipline, its implementation gives organizations considerable latitude. These organizations may thus request that employees participate, to a greater or lesser extent, in the definition of the plans, procedures and control mechanisms required by the standard. The mobilizing, rallying character of environmental issues, which constitute an important concern outside of the work place, facilitates this participatory approach.

The internal implications of the implementation of the ISO 14001 system are therefore not predetermined. They depend in particular on the role played by employees in this process and on how well the standard's requirements can be adapted to a company's culture and the leadership of its executives. However, the internal needs leading to the systematic development of environmental policies, programs, procedures and monitoring and measurement systems are not the sole factors involved in the implementation of an ISO 14001 EMS. This implementation is also part of a strategic approach whose objectives go beyond ecological concerns. The motivations leading a company to adopt an ISO 14001 environmental management system (see figure 1) generally involve two dimensions that are traditionally taken into consideration in a company's strategic analysis of its external environment, namely11: -

Ward off threats by responding to societal pressure, anticipating regulatory standards, reducing the risk of crises, etc.12

-

Seize opportunities by improving the companies’ image, meeting client demands, conserving resources and energy, reducing depollution costs, etc.13

10 These motivations cannot be solely explained in terms of local pressure. The intended international application of ISO 14001, its development in many countries and its adoption by a growing number of multinational firms suggest that adhesion to this standard is a response to concerns which transcend national borders.

2- The Next Passport to the Global Market? ISO’s recognition by international markets and its utilization as a new contractual requirement depend mainly on its development in the leading industrialized countries as both a system for internal company management and as a substitute for national standards. Indeed, in the same way as most of the other standards issued by the International Organization for Standardization, ISO 14001 was developed in order to reduce the risk that flourishing local and national standards, in this case in the area of environmental management, create unnecessary barriers for the growth of international trade. This is the objective that the International Organization for Standardization hoped to achieve when it proposed, in its mission statement, to “promote standardization and related activities in order to facilitate international exchange of goods and services”. This mission cannot be fully achieved unless two conditions are met: one, the 111 countries constituting the organization must reach a common agreement to accept the new standards as the universal model; and, two, the use of these standards must then become widespread in industry. Although the launching of the ISO 14001 standard is relatively recent, both these conditions are on their way to being met. On the one hand, most of the national standards dealing with environmental management, such as France’s X 30-200 standard, issued in 1993, Britain’s BS 7750, in 1992, or even Canada’s Z750 standard, in effect since 1994, are used less and less often by companies. Because it is recognized internationally, national companies now often prefer to adopt the ISO standard before their own national standards. Consequently, the ISO 14001 certification of companies is undergoing exponential growth.

11 Internationalization and Exponential Growth of ISO 14001

Since its launching, in September, 1996, the number of certified ISO 14001 companies has undergone rapid and steady growth. The novelty of the standard partly explains its exponential growth but also makes it difficult to make a long-term prediction. However, in addition to some 15,000 certified firms, numerous organizations are currently engaged in one stage or another of implementing this standard. Considering that certification is a process which can take two to three years, and that a number of companies are adopting a “followers” attitude towards the implementation of this standard, the growth in the number of firms obtaining ISO 14001 certification is likely to continue in the years to come. Furthermore, even though the ISO 14001 standard is still too recent so as to be a completely unavoidable requirement in certain market areas, there are a number of factors indicating that it will at some point, as is the case with the 9000 series, become a passport to the global marketplace. Indeed, efforts to obtain ISO certification are often motivated by demands written into contracts by international clients.14 These demands are, to a large extent, dictated by ISO standards themselves, which tend to trigger a cascade effect. As such, the ISO 9000 standards require that certified companies receive the assurance that their suppliers and subcontracting partners have already set a quality insurance system in motion, and that this system be documented. In order to avoid costly checking and audits, the latter are then urged to obtain ISO 9000 certification. The proliferation of the ISO 9000 standards is largely due to this positive feedback process as well as to the various intermediaries characterizing international commercial relations.

Even though the ISO 14001 standard requires no systematic procedures for the evaluation of suppliers, it does require that certified companies establish and maintain “procedures related to the identifiable significant environmental aspects of goods and services used by the organization and communicating relevant procedures and requirements to suppliers and contractors”. Although it is still too early to observe whether there is significant market pressure to obtain ISO 14001 certification, many companies have already begun the process. In a recent letter sent by IBM to more than 950 of its suppliers, the company invited them to begin the ISO 14001 certification process “because of the increasing interest for environmental matters in the international community”15. In Great Britain, a number of firms in the automotive sector, such as Toyota, Honda and the Rover Group, have made ISO 14001 certification or the adoption of another equivalent environmental management system a

12 formal supplier-selection criterion.16 In the printed-circuit-board industry, both European and American clients have required that their Asian suppliers be capable of proving that they are able to meet the international standard's environmental requirements.17

This type of commercial pressure is particularly being developed in sectors where ISO 9000 standards have already been established. Indeed, these standards are based on similar management principles and more and more companies are attempting to integrate them into a common system.18 The comparison of certified ISO 9001-2-3 and ISO 14001 companies by activity sector thus shows a strong correlation between the two standards. As figures 2 and 3 show, in roughly forty activity sectors described in the statistics of the International Organization for Standardization, the ranking of the first five sectors in terms of the number of certified companies is roughly the same for ISO 9000 and ISO 14001.19 In both cases, the electrical and optical equipment sector is the most receptive to ISO standards. This receptiveness is partially related to the commitment of numerous Japanese companies in the electric and electronic industries to the certification process and the ensuing domino effect of this commitment.20 The machinery and equipment sector as well as the construction sector are also among the first five sectors in terms of ISO 9000 and ISO 14000 certification. It is worth noting that the three above-mentioned sectors – electrical and optical equipment, machinery and equipment, construction – are not particularly sensitive to industrial pollution. This situation seems to confirm the hypothesis that environmental concerns do not constitute the main motivation for the adoption of the ISO 14000 standard, and that commercial pressure plays a decisive role. Given that these statistics were only collected two years after the launching of the ISO 14001 system, it is difficult to draw precise conclusions.

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Highest number of ISO 9 000 certificates by industrial sector (1998) Electrical and optical equipment

40000 30000

Basic metal & fabricated metal products Machenery and equipment Construction

20000

Wholesale and retail trade

10000 0 Figure 2 The five main sectors in ISO 9001-2-3 certification

Highest number of ISO 14 001 by industrial sector (1998) 2500

Electrical & optical equipment

2000 1500 1000

Chemicals, chemical products & fibres Machenery and equipment Other transport equipment

Construction

500 0 Figure 3 The five main sectors in ISO 14001 certification

New Challenges for Multinational Companies

Multinational firms play a key role in the growth and internationalization of the standard. According to a 1999 French study of ISO 14001 companies21, 75% of certified institutions22 exported and 59% were under foreign control. Indeed, most of these certified French

14 companies either exported or were subsidiaries of large multinational companies. For these companies, ISO 14001 not only represents a commercial argument but also an internal management tool. As explained by T. Tibor and I. Feldman in their work on the ISO 14000 standards, “The acceptance of a single international environmental standard can reduce the number of environmental audits conducted by customers, regulators or registrars. By avoiding conflicting requirements, multinational corporations could reduce the cost of multiple inspections, certifications, and other conflicting requirements. ”23 The ISO standard is thus tending to become a tool for the standardization, control and acknowledgement of environmental management. This tool is not only for external stakeholders but also for intramural practices. Certain large companies, such as Ford, IBM, Alcan, Bombardier, and Renault, have already decided to adopt ISO 14001 in their production facilities around the world. This standardization procedure and systematization of environmental management brings several economic, strategic and cultural issues to the fore.

First of all, though savings can be made by applying this standard, its investment costs are nonetheless considerable. The documentation, staff training, auditing, certification and development of tools to measure environmental performance make demands on time and resources that should not be underestimated. The overall implementation and certification process can cost from $100,000 up to $1 million for a large factory.24 A multinational company that intends to certify all of its sites must undertake detailed financial planning before doing so.

Second, the disparities observed in the number of certified companies among the various countries around the world (see figure 4) may undermine the undifferentiated overall implementation strategy of the ISO 14001 standard. Indeed, these disparities reflect the different levels of receptiveness and openness towards the standard. This standard may therefore be seen as a management system developed by and for certain rich countries that are trying to impose their practices in other parts of the world. Thus, European and Asian countries represent more than 80% of certified companies, whereas North American countries represent less than 7%. A comparison of countries illustrates these marked disparities.

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Figure 4. International distribution of ISO 14001 certified companies25

For example, in April 2000, the companies of the first four certified countries alone, that is Japan, Germany, Sweden and the United Kingdom, represented close to 50% of certified companies around the world. At the same date in time, Sweden had over 1,000 certified ISO 14001 companies, 33% more than in the United States. Japan had more than 60% of all the certified companies in Asian countries. Finally, in numerous countries in Africa, South America and Eastern Europe, the number of certified companies is often fewer than ten or even zero. It is quite likely that the globalization of economies and the political standardization adopted by numerous multinational firms will gradually reduce these differences. Moreover, the promotion of ISO 14001 in countries that have been impervious to the standard may be able to bridge these gaps and meet genuine needs. However, such a policy also risks appearing as overly centralizing or even as poorly adapted to local needs in as much as local requirements for environmental content can be very different from one country to another.

The third, remaining challenge is cultural and organizational. Inspired by a rationale that stresses the “plan, do, check” aspects, the ISO 14001 standard tends to impose a monolithic organizational mode that reflects Western views of rationality and order. As such, these values and management principles are not necessarily well adapted to the needs or specific activity sectors of the cultures in which the standard is liable to require implementation. The

16 re-examination of the intended universal application commonly attributed to many management methods is, incidentally, at the center of most of the research being conducted in the field of intercultural management.26 For example, Anglo-Saxon countries have a long tradition of written rules and contractual relationships. Explicit and formal communication styles are thus predominant in the business sphere.27 These “low context cultures”, in Hall’s terms28, provide fertile ground for the development of a process which is, by its very nature, contractual and wrought with procedure, as is the case with the process underlying the ISO standard. In contrast, the cultures found in African or Latin American nations, which are characterized by a more implicit communication context, are, initially, less open to the processes involving the implementation of standards. The high rate of illiteracy in certain countries may also compromise the implementation and monitoring of the documentation upon which ISO 14001 is based.

In order to circumvent these difficulties, multinational firms can adopt a progressive implementation policy which initially favors facilities located in countries which seem to show greater openness to the standard's requirements. Another approach consists in helping subsidiaries which are considering the implementation of ISO 14001 by providing advice, auditing, financing, etc., and then letting this decision be made by local authorities. This more decentralized procedure tends to favor the adaptation of the standard to local needs and reduces general implementation costs. Nevertheless, it risks appearing as a “laisser-faire” policy with regard to environmental issues, which are left to the discretion of the authorities in charge of the facilities and which are dependent on a local context that is not always sensitive to these issues.

The choice between the adaptation of an EMS to the local characteristics of each facility or the adoption of the same standard for the whole company is a strategic decision which depends on the degree of independence that the executives grant to the various subsidiaries.29 Whatever the strategy chosen, companies most ensure coherency between the internal and external issues associated with the implementation of an EMS.

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3- Reconciling Internal and External Issues of ISO 14001 If market pressure and the need for external recognition are often at the basis of the certification process, internal implications of such a process should not be neglected. What effects does the standard have on management practices and the motivation of the personnel? Are the standard's requirements adapted to the company's management philosophy? In what way would the implementation of this management system genuinely improve “environmental performance”? These kinds of questions not only concern multinational firms but also all organizations concerned with the intrinsic efficiency of the ISO 14001 system and its organizational implications. These internal implications are not always compatible with external pressure in favor of the standard. Indeed, reconciling these internal and external issues constitutes one of the main challenges of companies which choose to adopt the standard. As Rondinelli and Vastage point out in their study of environmental risks and the ISO 14001 system, “Both endogenous and exogenous dimensions of environmental risk are complex and they differ in their implications. The first dimension –environmental risks created by the internal operations of a company- is more clearly under the control of management and regulatory authorities. The second dimension –environmental risks created by externalities- usually is beyond the influence or control of either the company or regulators.”30 This distinction shows the importance of adapting management practices to the external context related to the company's location, namely the ecological sensitivity of the site, public attitude towards technological risks, population density, and so on. However, the implementation of a management system, such as ISO 14001, rarely has as its first objective to reduce environmental risks as they pertain to a local ecosystem's characteristics. The issues associated with the implementation of the standard must rather be seen in a larger perspective which takes into consideration the true motivations expressed by the executives.

18 Expectations for the Standard: Highly Contrasting Attitudes

The improvement of environmental performance does not constitute the main objective of the ISO 14001 standard. Since this system constitutes, above all else, a “metastandard” aimed at promoting management practices rather than obtaining precise results, it does not guarantee certified organizations that there will be a concrete improvement in their environmental situation. As the standard states, “It should be noted that this standard does not establish absolute requirements for environmental performance beyond commitment, in the policy, to compliance with applicable legislation and regulations and continual improvement. Thus, two organizations carrying out similar activities but having different environmental performance may both comply with its requirements.” In an empirical study of 80 executives and employees of the Alcan Smelters and Chemicals Ltd. (AS&C) involved in environmental issues, most of the respondents seemed to be very perplexed about the ecological benefits of the ISO 14001 standard.31 The expected advantages principally concerned the control of environmental practices (rigor, monitoring, cost control, etc.) and the meeting of external expectations (market pressure, company image, etc.). These motivations were found in a recent study of 85 French facilities which were certified or in the process of certification (see figure 5).

Figure 5. The main internal and external motivations behind the adoption of ISO 1400132

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The main external issues expressed by the respondents were: -

A response to the demands of public authorities: the implementation may be a way to improve relations with the authorities in charge of environmental protection or to meet requests to adopt this management system. It also makes it possible to confirm the executives' due diligence and to prove their good faith in case of law suits or inquiries related to environmental incidents33;

-

External recognition: ISO 14001 certification may constitute a public relations’ tool which helps improve the environmental image of the company in the eyes of citizens and environmental groups. For companies subjected to strong ecological pressure or suffering from a bad public image, the standard thus offers the opportunity to prove the social responsibility of their executives;

-

The development of a commercial advantage: in an ever more competitive and global economic context, the adoption of the standard may be perceived as a competitive advantage that proves the company's seriousness and its control of production operations;

-

Market access: the use of the standard by suppliers as a selection criterion seems to be on the rise, although this practice is still limited in most activity sectors.

The most often expressed internal motivations were: -

Management method: for certain executives, the guidelines of the new standard allow for a certain rigor and coherency regarding environmental management issues;

-

Personnel motivation: since it deals with concerns that transcend the companies’ borders and strictly economic objectives, the ISO 14001 standard is likely to mobilize employees around a common, social cause and thereby heighten their pride. This mobilization of the personnel is essential to the success of EMS implementation34;

-

Cost reduction: although it may represent a non-negligible investment when seen by itself, an EMS implementation could contribute to the reduction of certain expenditures associated with environmental problems, such as waste management, energy, water and resource consumption, and so on;

-

Technological innovation: the environmental commitment of the company can lead to a questioning of production methods and to the use of new, less polluting, more efficient procedures.

20 These motivations show that the ISO 14001 standard may meet quite varied expectations which are not shared by all executives. Consequently, public authorities and ecological groups do not attribute the same degree of usefulness and relevance to the standard. Similarly, commercial pressure in favor of the adoption of the standard still remains sporadic. In terms of the internal issues of the standard, the expectations regarding technological innovation and expenditure reduction are all relatively weak. Finally, executives are far from being unanimous in expecting improvements in management methods and in the motivation of the personnel.

Integration Paradoxes

Though the standard meets certain expectations, it also gives rise to a certain apprehension within companies. Empirical studies that we conducted in the aluminum industry 35 show that this fear primarily concerns the standard's unwieldy bureaucratic nature and possible conflicts with the company's management philosophy. The unwieldy bureaucracy particularly concerns the procedural and work instruction documentation required by ISO 14001. The implementation and the up-dating of this documentation inevitably implies the establishment of written rules to which individuals must adhere. According to many managers, this formalization is more advantageous for the auditors in charge of verifying the standard than for the companies themselves. As an executive of an electrolysis factory explained, “We should focus less on system bureaucratization and more on performance. If we start to use ISO 14001 only with certification in mind, it will mean auditing and auditors. And whenever you say auditor, you say proof and therefore paper work. The unwieldiness of ISO 14001 is in the paper work”.

The requirements of the standard seem to be in contradiction with several major tendencies in company management.36 The perverse effects of the formalist application of supposedly universal “recipes” modeled on traditional management have been thoroughly denounced.37 The development of a more participatory form of management, with the intention of reinforcing employee empowerment and appealing to their intelligence and creativity, is generally at the center of current debates on the renewal of management practices.38 Although managers dispose of a fairly large degree of flexibility in the implementation of the standard, there are no recommendations, for example, that encourage the participation or consultation

21 of personnel when addressing environmental issues. Rather, the proposed management system is limited to the expression of the commonplace precepts of traditional management that companies must follow to the letter if they wish to avoid any “unconformity” which could keep them from obtaining certification. Numerous executives that we met feared that conformity to the standard would compromise the team spirit, collaboration and assuming of responsibility that had gradually been developed among the employees: "There is a danger of cutting out all initiative. How can you implement ISO 14001 without calling into question the general orientation of company management towards more decentralization and employee responsibility? How can you reconcile the ISO standard with this management philosophy?

These perverse effects demonstrate that whatever the external issues are in the implementation of the standard, its requirements may be in conflict with the practices and internal needs of a company. Conversely, the standard may be perceived as a useful and efficient management tool without its implementation being the object of precise external pressure or incentives. The integration level of the standard in the daily practices of the company depends on the intensity of these internal and external issues. As shown in figure 6, four situations may be considered.

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Figure 6. Reconciling internal and external motivations and issues

-

Ritual integration: even though leaders or employees may not necessarily be convinced of the internal relevance of the proposed internal management system, the standard may be adopted in answer to external pressure or opportunities, such as client demands, a search for a competitive advantage or an improvement in the company's image or relations with public authorities. This attitude may be explained by the attainment of a low pollution level that is independent of any formalized management system. The demands of the standard may likewise be considered as incompatible with the management philosophy of the company or local culture. Whatever the invoked reasons may be, ISO 14001 is thus perceived more as a marketing instrument than as an efficient tool for environmental protection. The lack of a mobilized, committed personnel acts as an obstacle to the integration of the standard's requirements in the daily management of the company. Seen from this viewpoint, the certification process appears as a sort of “ceremony” (in Meyer and Rowan' terms39) which aims to ensure the social legitimacy of the company. As Catasus and Lundgren underline when discussing the “de-coupling” that occurs between environmental and organizational

23 issues, “These processes can be described as “rituals of double talk”, i.e., they are designed for the purposes of demonstration or for exhibition to the outside world. Procedures become more important than the results.”40

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Mobilizing integration: when the adoption of the standard meets internal and external needs, its integration into management practices is greatly facilitated. The ISO 14001 system then takes on a strategic dimension. On the one hand, it allows external opportunities or threats to be addressed, and, on the other, to satisfy internal management needs. This virtuous reasoning implies an active leadership on the part of the executives, who must be convinced of the relevance of ISO 14001. They must also communicate their conviction to employees in order to mobilize the latter and foster their commitment. This commitment will be all the more meaningful if the environment is an integral part of a company's mission. Take, for instance, the case of the Canadian company Stablex, which was the first in its sector in North America to adopt this standard. Specialized in waste treatment and located in an urban area, this company was committed to the certification process in order to build customer confidence and improve its public image. This process also allowed the integration of the ISO 9001 and 14001 standards into one single management system, thereby reducing procedures and bureaucracy. Finally, the calling into question of old habits and the improvements that ensued from the implementation of this system brought on substantial savings.

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Proactive integration: the lack of external motivation should not dissuade organizations from adopting the new standard. First, market or government pressure can eventually develop. The implementation of the standard may thus play a preventative role rather than aiming, in the short term, to obtain certification. Second, the standard's guidelines may primarily meet internal needs, such as training, internal communication, implementation of an environmental policy, or better monitoring of environmental procedures. For example, the Kronenbourg brewery of Obernai was the first brewery to be certified ISO 14001. In the absence of external pressure, the main objective of this process was that the company make a formal environmental commitment and recognize employee effort in this area. The possibility of implementing an EMS is sometimes put forward by employees. In an investigation of 425 large companies and the motivations behind their environmental commitment,

24 meeting the expectations of personnel came in third position after regulatory pressure and the responsibility of top management.41

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Reactive integration: when internal and external motivations are weak, the implementation of the standard becomes more difficult to implement, except in reaction to unexpected changes. These changes might occur with respect to customer demand, the attitude of public authorities or competition. Similarly, the opinions of executives and employees regarding this system are not fixed in stone and can change in favor of the standard.

Conclusions and Implications for Government Policy The development of the new ISO 14001 international standard meets the need to provide companies with a structured management system that fosters their environmental commitment and facilitates the recognition of this commitment by stakeholders. Despite its intended universal application, the formalist and monolithic character of this system cannot be adapted to all companies, since differences in culture, management practices and environmental problems can be too great to be covered by a single model. In many cases, the adoption of the standard runs the risk of turning into a “ritual integration”, intended, above all, to satisfy external expectations or pressure which are likely to develop with the increase in certified companies. This type of standard integration may eventually constitute a first step in a progressively increasing provision for environmental concerns in company practices. However, it risks creating, in the short- and medium-term, a rift between the environmental commitment displayed outside of the company and the internal management of environmental issues.

This potential rift does not only concern companies. Indeed, because they deal with environmental issues, the premises underlying ISO 14001 transcend organizational borders and concern the whole society, including ecologists, citizens, municipalities, governments, professional associations and firms. Very few activity sectors and social actors will remain untouched by the challenges and constraints inherent in the need to gain control over various kinds of pollution. The consequences of adopting ISO 14001 in order to improve

25 environmental performance therefore represent a major challenge for our societies. Although the standard's use is still too recent for us to know its exact contribution to pollution reduction, the subject has sparked interest, especially in North America. The Environmental Protection Agency (EPA) has sponsored a number of studies in cooperation with government organizations, municipalities and firms to evaluate what effect adopting environmental management systems such as ISO 14001 has on conformance to regulatory standards and on reducing the impact on natural habitats.42 The EPA has also undertaken a public consultation program focusing on the type of information that should be verified when evaluating the genuine effectiveness of environmental management systems. In addition to these government programs, a number of associations have undertaken similar research. NGO Initiative, an association formed to counterbalance the almost complete lack of non-governmental organizations in the ISO 14000 standard-setting processes, is a case in point. It brings together numerous institutions and ecological groups whose main concern is to monitor the impact of the standard on environmental management systems.

More is at stake in these questions about the effectiveness of the ISO 14001 standard than strictly environmental issues since political and regulatory matters also come into play. Indeed, environmental issues have become increasingly regulated since the early seventies. Even though regulatory constraints have played an important role in creating environmentally friendly attitudes within firms, current application still remains difficult to verify. On the one hand, the problem of measuring environmental performance and, therefore, the degree of conformance to environmental standards is somewhat complex, and, moreover, is also highly controversial.43 On the other hand, most environmental-protection agencies, including those in wealthy countries, do not have the means to enforce regulation. For instance, in Canada, a country which tends to view itself as a leader in the field of promoting sustainable development internationally, barely 3% of public spending, both at the provincial and at the federal levels, goes toward the environment. Deregulation and cutbacks have particularly harmed organizations dedicated to protecting the environment and, in general, have heightened existing difficulties. In fact, the ongoing development of environmental standards on a voluntary basis that is being brought about by globalization and that is resulting in external pressure for firms to obtain certification could, in all probability, represent a way for governments to promote environmental commitment at much lower costs than those involved in the complete underwriting of enforcement. Further development of this approach also represents a way to promote corporate self-rule. ISO 14001 certification has likewise been

26 applied more coercively. An illustrative case is that of General Motor’s Wilmington plant which, in 1998, was condemned to obtain ISO certification before the year 2000 or pay a fine of $200,000 for harm caused to the environment.44

Integrating ISO 14001 into the regulatory apparatus is therefore a double-edged sword. Contrary to regulatory standards, ISO 14001 is not based on any precise environmentalperformance objectives but rather on objectives that involve documenting and implementing management principles. The substitution of a “command and control” process based on a management system implemented by and for companies for a “command and control” regulatory process based on environmental performance represents a transfer of responsibilities from the public to the private sector. This transfer can only be justified if the intrinsic effectiveness of the ISO 14001 standard is proven and if the legislator maintains a strict regulatory framework. Otherwise, there will be little obligation for certified companies to take the regulations into account in their environmental policies, and ISO 14001 will become an “empty shell”. This danger is particularly present in developing countries which might consider using the new standard to help fill in gaps in their current environmental regulations. Government endeavors to promote the development of a voluntary standard whose effects on pollution reduction are still not well known must be developed with prudence. These endeavors must not endanger the upholding of traditional regulatory controls but rather must complement the latter and ensure that companies abide by them. The promotion of the standard as an efficient environmental tool rather than a subterfuge destined to provide ritual answers to external pressure constitutes a major challenge, as much for governments as for certified organizations worried about reducing their impact on the natural environment.

1

The author would like to thank Zhan Su, Marie-Josée Roy, Pierre-Lefrançois, Céline Poncelin and

Louicius Michel, professors at Laval University, and Anne Mesny, professor at HEC Montreal, for the relevance of their comments and suggestions. Thanks are also due to translator Richard Whelan. 2

Numerous environmental management systems have been developed since the end of the 1980’s by

professional associations, government institutions and companies. For example, the program Responsive Care, launched by the Canadian Chemical Producer’s Association, is based on an environmental and health-and-safety management system which was relatively successful in the chemical industry. 3

An empirical study of the ISO 14001 standard was conducted in 1996 with 80 employees from the

27

Alcan company. This study was comprised of individual interviews and visits to roughly ten companies. For a description of this study, see xxx and Sala (1998). More theoretical studies of the epistemological foundations of environmental management systems xxx (1998) and of the implications of their implementation for the improvement of "environmental performance" are also in progress. 4

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8

Fayol, H.Administration industrielle générale. Paris: Dunod, 1916. Contrary to popular opinion, “ISO” does not refer to the International Organization for

9

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Rondineli and Vastag, op.cit. p. 113.

31

xxx

32

De Backer. op.cit. In this study, each motivation was evaluated on a scale from 1 to 7 in terms of its

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29

The respondents were primarily employees responsible for environmental issues and company executives. 33 34

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xxx, op.cit.

36

For an analysis of these contradictions, see xxxx (1998).

37

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