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Introduction

Although ISO 14000 was offi-cially released in October 1996,considerable confusion still existsas to what it is exactly. It has beenmistaken for the cataloguenumber of a new electronic com-ponent, and for ultra-fast photo-graphic film; others are closer tothe mark when they think of it as“5 000 more than ISO 9000” and,therefore, presumably better. It is,in fact, a new series of globalstandards for environmental man-agement, analogous to the widelyused ISO 9000 quality manage-ment standards, but with severalfundamental differences.

The ISO 9000 series was pub-lished in 1987, in an attempt toavoid suppliers from having tocomply with many different, andsometimes conflicting, sets of cus-tomer quality requirements. Bythe end of 1999, over 300 000firms worldwide had achievedISO 9000 certification, and new

ISO 14000: an agnostic’s reportfrom the front lineby Charles J. Corbett and David A. Kirsch

In brief

Three years after the official release of the first ISO 14000 environ-mental management system standards, well over 10 000 organiza-tions worldwide have already achieved certification to ISO 14001,a total which is increasing rapidly. By comparison, ISO 9000, thequality management predecessor to ISO 14000, was officiallyreleased 13 years ago and has since attracted over 300 000 regis-trations worldwide. By almost every measure, the USA is laggingbehind in ISO 14000 certification: in GDP-adjusted terms, the USis sandwiched between considerably less developed economies likeEcuador and Pakistan, and well behind Egypt and Slovenia.

The question is – as the manager of a US-based firm, should youcare? If your company is operating smoothly and profitably, incompliance with all local and national environmental laws – ad-mittedly some of the most aggressive and progressive anywhere –why would that not be enough? What do you really need to knowabout ISO 14000? In this article, we most definitely do not intendto argue against, or in favour of ISO 14000 certification; instead,we provide “an agnostic’s report from the front line”, based uponinterviews with numerous companies, auditors, government bod-ies and other parties across the world.

We provide a framework for thinking about ISO 14000, ratherthan a list of simple justifications for or against seeking certifica-tion. To do so, we review five common misconceptions about ISO14000, explore the evidentiary basis for these “myths”, and sug-gest possible directions in which ISO 14000 might evolve.Throughout, we emphasize the operational and strategic impactsof ISO 14000 more than the environmental ones.

Myths, folk tales and legends – like ones according to which the earthwas flat, or that there was ‘an end to the earth’ – exist in every culture.And that includes business culture! According to the authors, a numberof myths already shroud ISO 14000. This study, which while nottaking them to the ends of the earth took them to three continents,allows them to pinpoint five major ISO 14000 myths – which theydemolish. While ISO 14000 myths, if left unchallenged, can no doubthave harmful effects, myths in the sense that this word normallyconveys enrich our cultures and provide a visual theme for thisbusiness myth-busting article.

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registrations currently run at over60 000 per year. The US aloneaccounts for over 20 000 registra-tions, with 5 000 more each year1).

Despite this global embrace ofISO 9000, reactions to ISO 14000have differed remarkably be-tween countries. Figure 1 (page 7)shows the current numbers of ISO9000 and ISO 14000 registrationsby country, corrected for GDP.Denmark and Sweden form oneextreme, supposedly due to thestrongly proactive attitudes to-wards environmental issues inthese countries. An interestingcase is Japan, where sentiment iswidespread that its late start withISO 9000 caused significant eco-nomic distress, resulting in a con-certed rush for ISO 9000 certifica-tion in the early 1990’s and astunning rate of adoption of ISO14000 at present.

14000 folklore. We do not wish toargue in favour of, or against ISO14000, but instead we take an “ag-nostic” standpoint and provide areport from the “certificationfront line” based upon interviewswith numerous companies, audi-tors, government bodies and otherparties in a wide range of coun-tries across the world.

To help practitioners assess thepotential relevance of ISO 14000,we review five common miscon-ceptions about ISO 14000, ex-plore the truths and untruths un-derlying these myths, and suggestpossible directions in which ISO14000 might evolve. But first, letus briefly explain exactly whatISO 14000 is and how one be-comes certified.

Charles J. Corbett (top) isAssistant Professor of Opera-tions and Technology Man-agement and David A. Kirschis Assistant Professor of Strat-egy and Organization at TheAnderson School at UCLA.The Anderson School is thegraduate school of manage-ment at the University of Cali-fornia, Los Angeles, USA, andis consistently ranked amongthe top 15 business schools inthe world. The school offersfull time, part time and execu-tive MBA programmes, arange of short executive pro-grammes and a PhD program,in addition to a strong orienta-tion towards scholarly re-search.

The Anderson Graduate Schoolof Management at UCLA,110 Westwood Plaza,Box 951481, Los Angeles,CA 90095-1481, USA.Tel. + 1 310 825 1651.Fax + 1 310 206 3337E-mailcharles.corbett@anderson.ucla.eduE-maildavid.kirsch@anderson.ucla.edu

The authors

You might ask: “Whywould I care aboutISO 14000 at all?”

There are severalreasons why you

should, even if yourcompany does not

have severeenvironmental impacts

At the other extreme we findthe US, where ISO 9000 is nowaccepted by many – for better orfor worse – as a fact of life, butwhere ISO 14000 is still regardedwith suspicion2). Some of this sus-picion can perhaps be traced backto the traditional regulatory styleof the US Environmental Protec-tion Agency (as compared to themore collaborative and incentive-based approach prevalent in theEuropean Union, for example),leading to the fear of liability ex-posure if external ISO 14000 au-ditors are required to share theiraudit reports with the EPA.

The immediate question is:which view is the right one? In thisarticle, we provide an unbiasedview of the pro’s and con’s of ISO14000, by separating truth fromfiction in the various myths thathave become entrenched in ISO

ISO 9000 and ISO14000 are just theforerunners of a waveof future standards

What is ISO 14000?

Like ISO 9000 – a family of glo-bal, voluntary quality manage-ment system standards – ISO14000 is a family of global, volun-tary environmental managementsystem standards, the first of whichwere released by ISO in October1996. These first standards, ISO14001 and ISO 14004, deal withenvironmental management sys-tems (EMS). ISO 14001 is thestandard against which organiza-tions may have their EMS au-dited and “certified”, or “regis-tered” by an independent (“third

1) See International Organization forStandardization, The ISO Survey ofISO 9000 and ISO 14000 Certificates:Eighth Cycle, Geneva, 1999.The correspondence between ISO9000 and ISO 14000 is explored inmore detail in Corbett, C.J. and D.A.Kirsch, “International Diffusion ofISO 14000 Certification”, manuscriptunder revision for Production andOperations Management,The Anderson School at UCLA,January 2000.

2) For a wide range of views onenvironmental management ingeneral and ISO 14000 morespecifically, see US-AEP, GlobalEnvironmental Management: CandidViews of Fortune 500 Companies,1997.

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party”) body as conforming to thestandard’s requirements. Otherstandards in the family deal withareas such as environmental au-diting, life cycle assessment, envi-ronmental labelling and environ-mental performance evaluation.

ISO, the International Organi-zation for Standardization, basedin Geneva, Switzerland, wasfounded in London in 1947. It iscomposed of some 130 nationalmember organizations, each theprincipal national standards insti-tute in its country. Through ISO,these national member organiza-tions establish technical commit-tees that actually develop thestandards. For a general overviewof ISO 14000 practice, see Marcusand Willig (1997)3).

the national accreditation body,while also offering certificationservices. The implications of thisorganic structure are multiple andare perhaps best illustrated by ne-gation.

• ISO 14000 certification doesnot attest to the environmentalattributes of a product; it statesonly that the certified firm hassuccessfully demonstrated afunctioning and documentedenvironmental managementsystem (EMS) to an accreditedthird-party registrar.

• ISO 14000 certification doesnot represent that the certifiedorganization is in compliancewith any specific local or inter-national environmental regu-lation; it implies only that thefirm or organization has a sys-tem in place which will ensurecompliance with all relevantenvironmental regulations.

• ISO 14000 certification doesnot mean that any local or na-tional government has actu-ally inspected or approved thecompany’s environmental op-erations; as noted, the ISO14000 system is entirely vol-untary and non-governmental.

In practice, the certificationprocess – from initial consultationwith a prospective registrar to fi-nal certification audit – can lastfrom two to 12 months and costanywhere from USD 10 000 updepending on size of firm, extentof environmental impact associ-ated with its operations, and so-phistication of its existing EMS.

The important point to bear inmind about the foregoing is thatthe ISO 14000 system is an or-ganic one whose growth and op-eration is not governed by any sin-gle party. Like all ISO standards,ISO 9000 and ISO 14000 are vol-untary and they therefore succeedor fail in response to the per-ceived value that they offer. Inthe absence of customer demandfor audits and certification, theentire ISO 9000/ISO 14000 certi-fication system would fade away.However, at present there ap-pears little likelihood of that hap-pening, based on current rates ofISO 9000 and ISO 14000 certifi-cation. Clearly, ISO’s two fami-lies of management system stand-ards are creating value forsomeone (beyond just the audi-tors and consultants). The ques-tion that follows is – is ISO 14000valuable for you and your com-pany?

The folklore of ISO 14000

In light of the observation thatliterally millions of managers andemployees worldwide have beeninvolved in ISO 9000 and ISO14000 implementations, it comesas no surprise that between themthey have generated an extensive“folklore” surrounding thesestandards. Webster’s dictionarydefines “folklore” as a “body ofcustoms, legends, beliefs, and su-perstitions passed on by oral tradi-tion, including folk tales, dances,songs and medicine”. Much of thisapplies to the world of ISO stand-

3) Marcus, P.A. and J.P. Willig (eds.),Moving Ahead with ISO 14000:Improving EnvironmentalManagement and AdvancingSustainable Development, John Wiley& Sons, New York, 1997.

4) Little formal research existsexamining the motivations for seekingISO 9000; an exception is Anderson,S.W., J.D. Daly and M.F. Johnson,“Why Firms Seek ISO 9000Certification: Regulatory Complianceor Competitive Advantage?”Production and OperationsManagement, Vol. 8, No. 1, Spring1999, pp. 28-43. The exactrelationships between ISO 9000 andISO 14000 are not yet wellunderstood; the authors have exploredthese issues in Corbett and Kirsch,op.cit.

ISO 14000 is abusiness issue, not a

purely environmentalone, and too

important to relegateentirely to the

environmental, healthand safety, or quality

department

Firms that wish to have theirEMS certified as conforming toISO 14000, however, do not applyto ISO, which does not carry outISO 9000 or ISO 14000 certifica-tion. In fact, the registrars carryout their certification activities in-dependently of ISO. However,they are in many cases approved– or, in ISO parlance, “accred-ited” – by one or more nationalaccreditation bodies. ISO itselfdoes not control the activities ofeither accreditation or certifica-tion bodies, although it does de-velop voluntary standards andguides for these organizationswith the aim of promoting bestpractice internationally and en-suring consistency and coherenceof such activities worldwide.

Although ISO does not carryout either accreditation or certifi-cation, some of its national mem-bers include certification amongtheir activities, and some act asnational accreditation body oftheir country. At least one acts as

Many of the firmlyheld beliefs aboutISO 9000 andISO 14000 turn out tobe myths, generallyconsisting of a kernelof truth concealedbeneath dense layersof fiction

ards too (with the possible excep-tion of the song-and-dance com-ponent). Upon closer inspection,many of the firmly held beliefsabout ISO 9000 and ISO 14000turn out to be myths, generallyconsisting of a kernel of truth con-cealed beneath dense layers offiction4). Below, we review thefive most common myths we en-countered, containing succes-sively weaker arguments againstcertification:

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1. “ISO 14000 is irrelevant for usas it’s strictly an environmen-tal standard.”

2. “Getting certified is a pain andeats resources.”

3. “It’s a waste of time as thereare no benefits.”

4. “The standard is meaninglessbecause foreign competitorsget it more easily than we do.”

5. “We’ll get it, but only becausewe export to Europe.”

Our aim is not to convince any-one to seek ISO 14000 certifica-tion; rather, we hope that by theend of this article, readers will beable to arrive at a more well-in-formed judgement about the po-tential value (or lack thereof) ofISO 14000 to them, their suppli-ers, and their customers.

the new standard. But, as alreadynoted in the introduction, the un-derlying reality is that ISO 14000is not an environmental standard,or, more accurately, not solely anenvironmental standard. Rather,ISO 14000 is a broader businessstandard intended to help certi-fied firms integrate, gain controlover, and ultimately improveoverall, company-wide environ-mental performance.

When we say that ISO 14000 isa business standard, rather thanan environmental standard, wemean the following: the costs andbenefits of seeking ISO 14000should be evaluated in the sameway and according to the samecriteria as any other decisionabout business process manage-ment. In fact, most of the reasonsgenerally cited for seeking certi-fication are more business-or-iented, or organizational in na-ture, rather than environmental.Although gaining control overand improving environmentalperformance is one obvious moti-vation, others we encountered in-clude cost reduction, marketingadvantage, improved relationswith authorities and communities,capturing and formalizing organi-zational knowledge, and em-ployee motivation.

Below, under Myth 3, we ex-plore the benefits of certificationin more depth, and conclude thatmany of the benefits are not di-rectly tied to the environment –ISO 14000 is not a social and en-vironmental welfare programme.But we also use the term “busi-

ness standard” to suggest thatstandards like ISO 9000 and ISO14000 are emerging norms formany successful enterprises. Theyare, in some contexts, becomingqualifying criteria for doing busi-ness. Several government agen-cies, including federal and provin-cial bodies in the US and Canada,have made ISO 9000 and some-times also ISO 14000 certificationa precondition for contractors’bids to be considered.

In terms of this discussion, thereality behind Myth 1 suggests thatevery manager should ask himselfor herself the following question:under what circumstances wouldwe get ISO 14000? What develop-ment in the business climateshould I look for as a signal that it istime to act? And should we wait forthat signal, or should we anticipateit? Responding to this questionleads naturally to Myth 2.

Myth 1 might be restated as the“ISO 14000 is irrelevant to meand my business” myth. Surely,the reasoning goes, if EMS stand-ards were important to me, Iwould already know all about ISO14000 and have decided to seek it.Our business has nothing to dowith environment; therefore, wedo not need to bother with envi-ronmental management stand-ards. For instance, aBankAmerica executive inter-viewed by the US-Asia Environ-mental Partnership stated thatISO 14000 “sounds like a lot oftrouble, and who cares?”Monsanto, while an active partici-pant in the chemical industry’sResponsible Care programme,admits to “honest skepticism as towho is driving ISO 14001.”5)

As always, there is a kernel oftruth behind this myth. Companiesfor whom environment is an im-portant and recurring issue are in-deed among the early adopters of

Myth: Only firms with severeenvironmental impacts, orthose that wish to project animage of environmentalleadership need care aboutISO 14000.

ISO 14000 is astrictlyenvironmentalstandard

1

Myt

h

5) See US-AEP, GlobalEnvironmental Management: CandidViews of Fortune 500 Companies,1997.

Myth: Obtaining ISO 14000certification is a major,resource-intensive undertaking.

ISO 14000 isa pain2M

yth

Reality: for managers who ei-ther lived through ISO 9000 certi-fication, or have heard stories fromcolleagues who did, Myth 2 mayseem reasonable. However, noneof the companies we interviewedfelt that the ISO 14000 certifica-tion procedure was excessively ex-pensive or onerous. In fact, to ouramazement, one company eventold us that they enjoyed the auditand were appreciative of the inputand guidance that the auditorswere able to offer. But even if wedismiss this one report as non-rep-resentative and admit that there isundoubtedly some selection biasat work since we were (by defini-tion) only able to speak to leadadopters of ISO 14000, the generalfinding was quite robust. Fromsmall, single-site operations tolarge multinationals, companies onfour continents reported no prob-lems with the ISO 14000 certifica-tion process. As we probed deeper

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into this phenomenon, we uncov-ered several additional findingsthat may help to explain this pecu-liar observation.

Many of the same companiesthat were enthusiastic about ISO14000 readily admitted that whenthey first sought ISO 9000 certifi-cation, the process had indeedbeen expensive, complicated anddrawn-out. Receiving ISO 9000required, often for the first time,that companies gather, standard-ize and document practices thathad previously been spreadthroughout their organization, ornot formalized at all. But once theprocedures and documentationhad been put in place for monitor-ing quality, it was relatively easyto expand these same protocols toinclude monitoring and reportingof environmental practices. Theframework was already in place,and both internal and externalparticipants knew approximatelywhat to expect from the ISO14000 audit process.

words, auditors actually aim tohelp companies through the certi-fication process. Moreover, audi-tors noted that systems did notneed to be perfect to merit certifi-cation and that, in general,nonconformances (i.e. failed ele-ments of the audit) tended to bedocument-related and relativelyeasy to remedy.

The case of one electronics fa-cility in Silicon Valley is particu-larly instructive with respect bothto the similarities and the differ-ences between ISO 9000 and ISO14000. With ISO 9000, the com-pany had engaged eight differentISO 9000 registrars to audit andcertify different product lines andbusiness units of company opera-tions, resulting in a bevy of audi-tors crawling across a 8 500-personfacility, each with slightly differentrequirements for reporting anddocumentation.

The result was near chaos and aconsiderable extra work load forthe local quality team. However,the company learned its lesson forISO 14000 and engaged a singleregistrar to certify all its facilitiesworldwide. According to a localmanager of environmental pro-grammes, the firm saved up to30 % in direct audit and certifica-tion costs by actively managingthe registrar selection and certifi-cation processes. The companyrealized further efficiencies inimplementation due to the factthat both the internal teams andthe auditors were able to buildupon procedures that had beenput into place for ISO 9000.

This pattern was observedacross many different facilities.Most companies that seek ISO14000 already have ISO 9000 andare able to extend their existingmanagement systems to integratethe new standard. In practice, theprinciples and techniques in-volved in environmental manage-ment differ little from those re-quired for quality management:Plan, Do, Check, Act. Accordingto representatives at China Steelin Kaohsiung, Taiwan, the man-agement systems required tooversee the desired temperaturein their giant smelters are closelyrelated to those for managing theopacity of their smokestack emis-sions. Nevertheless, even if oneaccepts the argument that the paininvolved in ISO 14000 is often ex-aggerated, certification withoutbenefits would still be a waste oftime, leading us to Myth 3.

ISO 14000 is ageneral business

standard intended tohelp certified firms

integrate, gain controlover, and ultimately

improve overall,company-wide

performance

Similarly, because ISO 9000was the first process standard de-veloped within the ISO frame-work, the certification infrastruc-ture itself was experiencinggrowing pains during its earlyyears. Not only the companiesseeking certification, but also theauditors themselves were less ex-perienced and uncertain aboutwhat to look for with ISO 9000 thanthey now seem with ISO 14000. Inthis respect, the experience of thecompanies that enjoyed their auditmay be more common than onewould initially expect.

Several auditors with whom wespoke emphasized that the audi-tor’s role was that of a “ruler, not aknife”, and that the audit itselfshould be “a beauty pageant, not adentist’s appointment.” In other

Myth: ISO 14000 certificationdoes not lead to either finan-cial benefits or environmentalimprovements.

There are nobenefits toISO 14000certification

3M

yth

It is still too early to quantita-tively assess benefits arising fromISO 14000 certification, but an in-teresting range of benefits has al-ready been reported. We discussthe external benefits first, thenseveral types of internal benefits(organizational, financial and en-vironmental).

1. External relations with govern-ment and the public

Regulatory relief was thoughtto be an important benefit of ISO140006). As a result of the fact thatcertified firms have performed in-ternal environmental evalua-tions, established an environmen-tal management system, and beenaudited by a third-party registrar,these firms – the argument goes –have demonstrated their commit-ment to comply with all applica-

6) See, for instance, R. Begley, “IsISO 14000 Worth It?”, Journal ofBusiness Strategy, September/October1996, 17:5, 50-55.

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ble environmental regulationsand strive towards continuous im-provement. Accordingly, suchfirms require less intensive andless intrusive monitoring.

In theory, reduced surveillanceof certified firms should also liber-ate scarce monitoring and en-forcement resources to focus onthose firms that have not shownevidence of commitment to im-proving environmental perform-ance.

have offered to relax environ-mental surveillance in recogni-tion of ISO 14000 certification. InMexico, local regulators actuallyturned to the environmental staffat the local Philips site to learnabout ISO 14000, while in theNetherlands, the Ministry of En-vironment is promoting a “licenseon outlines” scheme giving certi-fied firms one single high-levelpermit rather than requiring sepa-rate permits for each type of emis-sion.

tional context and balance of or-ganizational power in any givencountry or region. There are ben-efits from regulatory relief to behad, but one must identify rel-evant political and institutionalstakeholders and evaluate whostands to win and lose from thegranting of regulatory relief forISO 14000 certification.

In the Dutch case, the nationalagency is moving ahead withregulatory relief, but local au-thorities that issue permits oftendo not have the knowledge or theincentives to participate and theyfeel bypassed. The opposite is thecase in Japan: the federal EPAopposes regulatory relief, but hasonly 800 employees. Virtually allissuing of permits takes place atthe prefectural level, which is ex-perimenting with reforms such asreduced audit frequencies. Evenwhen, as in the US, no explicitregulatory relief is given, Philipsstaff explained that the documen-

The authors’ ISO 14000‘myth-busting’ is based oninterviews with numerouscompanies, auditors, governmentbodies and other parties in a widerange of countries around theworld. Here, they are picturedduring a visit to China Steel,in Taiwan. From left: CharlesCorbett, China Steel VicePresident Samuel Lee, and DavidKirsch.

In practice, however, some na-tional environmental regulatoryinstitutions such as the Environ-mental Protection Agency, in theUnited States, and its Japanesecounterpart have reserved judge-ment on ISO 14000. Born andbred in the era of compliance andenforcement, established institu-tions have been hesitant to maketangible commitments to roll backregulatory oversight.

However, by contrast, nationalministries in Mexico, the Nether-lands, and Brazil – to name three– have made unofficial commit-ments to regulatory reform. Otherlocal regulatory institutions – forexample, prefectures in Japan –

Faster granting of permits –whether as a direct result of regu-latory relief, or as an indirect func-tion of improving relations withregulators through the ISO 14000process – seems widespread. ISO14000 certification can be an ef-fective signal of commitment, butit is not the only way to achievethis. Based on their long-standingrelations with authorities, anExxon facility in the Netherlandswas granted a “license on out-lines” without actually havingISO 14000 certification.

Trying to reap such externalbenefits from certification, yet re-maining outside the “official”certification scheme (i.e., pursu-ing so-called “ISO 14000-like” or“ISO 14000-ready” status) strikesus as viable only for a handful ofhighly advanced firms, and thenonly for a limited period of time.For most others, regulators andother stakeholders will expectfirms to back up their commit-ments through the formal certifi-cation process.

The extent of regulatory reliefwill depend largely on the institu-

The costs and benefitsof seeking ISO 14000should be evaluatedin the same way andaccording to the samecriteria as any otherdecision aboutbusiness processmanagement

tation required by ISO 14000makes it easier to demonstratecompliance.

A related group of reportedbenefits concerns the public im-age of the firm. Several firms inBrazil found that improved publicimage was one of the greatestbenefits of ISO 14000. WhenFormosa Plastics Corp. in Living-ston, New Jersey, USA, achievedISO 14000 certification after hav-ing incurred negative publicity re-sulting from numerous problemsin the 1980’s, the company felt ithad received the recognition itdeserved for the improvements ithad made7).

In Taiwan, the former state-owned industrial giant ChinaSteel received ISO 14000 for itshot and cold rolling mills both to

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set a high environmental standardfor the Taiwanese steel industry,but also to minimize the potentialrisks associated with environmen-tal mistakes.

China Petroleum Corp. – a sis-ter firm – has suffered both nega-tive publicity and repeated plantclosures due to refinery fires andother incidents throughout the1990’s8). China Steel executiveshope that ISO 14000 certificationand the commitment to environ-mental management that it repre-sents will make such incidents lesslikely to occur, and also that it willbuy a certain amount of good willfrom the public should such a dis-

and university departments havesought ISO 14000 certification.

Around the world, many firmsare using ISO 14000 as part of aproactive environmental commu-nications strategy. In this context,a US interviewee described ISO14000 as an excellent “stage onwhich to showcase changes in en-vironmental performance”. Thecertification can provide a frame-work for effective communicationabout environmental manage-ment, with enhanced credibilitydue to the third-party audits.

2. Organizational learning.

A second, more internal groupof benefits falls under the generalcategory of organizational learn-ing. For several companies, the

Almost all companies reportedthat the first step – identificationof environmental impacts or, inISO 14000 parlance, “aspects” –was the most difficult part of thecertification process, but oftenalso the most revealing. Follow-ing the dictum that, “If it’s chal-lenging, it must be valuable”,companies like Philips Electron-ics and IBM in the US and Sony inJapan reported that the identifica-tion of environmental impactsyielded important insights into theinterconnections among differentareas of corporate operations.

Formosa Plastics, havingsought ISO 14000 in a public re-lations-oriented move, experi-enced the unexpected benefit of“helpful housekeeping,” leadingto a 25 % reduction in manualsStandards like ISO

9000 and ISO 14000are emerging normsfor many successful

enterprises. They are,in some contexts,

becoming standardrequirements for

doing business

aster befall the company. Obvi-ously, there are no guarantees:bad things do happen to goodcompanies, but if ISO 14000 canhelp minimize the risk of such ac-cidents (see below) and convinceexternal stakeholders, such ascommunity organizations, unions,shareholders, and insurers, thatthe company has made efforts, ingood faith, to minimize such risks– so much the better.

Meanwhile, in Japan, repre-sentatives from Sony and IBMpointed out that the first firm to becertified in a given industrial sec-tor or region tended to receive fa-vourable publicity, whereas sub-sequent recipients did not. Thesearch for first-certification ad-vantage has become so extremein Japan that even public sectorinstitutions like city governments

ISO 14000 certification processwas the impetus for them to iden-tify the full range of their environ-mental impacts. Previous environ-mental management activities hadlooked only at individual pieces ofcompany operations, whereas ISO14000 explicitly requires a morecomprehensive approach.

7) Litsikas, M., “U.S. PerspectiveVaries on ISO 14000”, Quality,December 1997, 36:12, 28-33.

8) “An explosion at ChinesePetroleum Corp. gas line”, Oil andGas Journal, 95:38, September 22,1997, 43A.

A number of multinationalcorporations like Sony and IBMare encouraging suppliers on thepath to ISO 14000. This letterfrom IBM to its suppliersencourages them to align withISO 14001 requirements and topursue registration. The letter isposted on IBM’s Web site at thefollowing address: http://www.ibm.com/ibm/Procurement/html/supplier.html

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by discarding obsolete and incor-rect documentation9). A Brazil-ian site discovered previouslyunknown and unmonitored usesof mercury and CFC’s. In theNetherlands, Philips further re-ported that the exercise helpeddistribute responsibility for envi-ronmental management through-out the organization instead oftasking existing environment,health and safety staff with morework.

At Sony and IBM, for example,the inclusion of continuous im-provement in the standard servedto highlight the importance of cor-porate environmental manage-ment practices. Several compa-nies also welcomed the“discipline of ISO 14000” as away of enforcing rigour and con-trol over functioning, but poorlycoordinated activities.

The external reference – “Weneed to do this for ISO 14000” –helps focus the attention of a widerange of participants and stimu-lates healthy competition withinand between internal businessunits. Finally, formalizing exist-ing procedures reduces a compa-ny’s dependence on the few keyindividuals who are typically re-sponsible for all aspects of envi-ronmental management.

It is worth noting that beyonddocumentation of practices, sev-eral companies did report actualenvironmental, as opposed to op-erational benefits as a result ofISO 14000 certification. Internaland external audits helped avoidenvironmental crises by identify-ing problems ranging from irregu-lar calibration of environmentalmonitoring equipment to wastefuland hazardous uses of heavy met-als and CFC’s.

Viewed independently, thebenefits discussed so far might notwarrant seeking ISO 14000 certi-fication, but taken together, it isclear that firms are using the certi-

From small, single-site operations to

large multinationals,companies on four

continents reportedno problems with the

ISO 14000certification process

Training – another ISO 14000requirement – was also fre-quently cited as a benefit. Almostall companies mentioned trainingbenefits of one kind or another,and several executives werefrankly surprised by the level ofenthusiasm with which the train-ing sessions were received and bythe broader boost to corporatemorale that this training pro-duced. At Dole Foods Interna-tional, for example, the push forISO 14000 certification of theirCosta Rican banana plantationswas spearheaded by local work-ers, in partnership with the Ameri-can site manager, resulting in im-proved morale as well as the firstreported certification for an agri-cultural facility worldwide.

Philips in Mexico reported simi-lar benefits, as did OPP Petro-chemicals in Brazil. Additionally,companies that have adopted ISO14000 at the corporate level havethereby encouraged the diffusionof best practices across sites andthroughout areas of the firm.

Further organizational benefitsconcern future, rather than cur-rent operations. ISO 14000, un-like its ISO 9000 predecessor, ex-plicitly calls for firms to aim forcontinuous improvement of theirenvironmental management sys-tem (although the Year 2000 revi-sions will bring ISO 9000 into linewith its successor in this respect).

Most companiesthat seek ISO14000 alreadyhave ISO 9000and are able to

extend theirexisting

managementsystems to

embrace the newstandard

In practice, theprinciples andtechniques involvedin environmentalmanagement differlittle from thoserequired for achievingquality

3. Financial and environmentalbenefits

The foregoing categories ofbenefits are in addition to pre-sumed, but as yet unmeasurableoperational and marketing ben-efits of ISO 14000. These mightinclude: increase in market shareas customers seek suppliers whocan offer this certification; im-proved operating margins as ISO14000 trims costs associated withwaste processing and removal,and even lower costs of capital aslenders begin to view ISO 14000as an indication of lower risk. Sev-eral companies did report havingimproved competitiveness andreduced costs, but were unable toquantify these benefits.

fication process and the corre-sponding visibility to their benefit.A European electronics companyexecutive found that ISO 14000helped the firm move towards“crisis prevention” and awayfrom traditional “crisis manage-ment.” And a competitor notedthat ISO 14000 was allowing thedivision to collect valuable oper-ating data about environmentalmanagement that would, in turn,inform future resource allocationdecisions.

Most importantly, companieslike Sony and IBM – while en-couraging suppliers to evaluatethe potential benefits of seekingISO 14000 certification for them-selves – also participate in multi-ple and complex supply chainsand are preparing for the timewhen their own business custom-ers may require ISO 14000 certi-fication.

To date, no company that wehave spoken to regretted seekingISO 14000. Everybody seemshappy with the move, although theinevitable sample bias suggeststhat we should not read too muchinto these findings. Financial stud-ies, however, reveal no penalty9) Litsikas, M., op.cit.

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for being “green”, and while thecost of getting ISO 14000 certifi-cation is limited, the cost of nothaving it is likely to grow overtime in much the same way as thelast house on the block without ahome alarm sign on the front lawnis practically inviting would-beburglars10)!

Governments, non-governmen-tal organizations, consumers and,consequently, firms and their em-ployees are often genuinely moti-vated to improve their environ-mental performance and eager tofind a framework to help them doso, particularly as they have little,if any, history of environmentalmanagement. ISO 14000 is thenperceived as a ready-made

often thought and in a way that ismore a function of their politicalsystems11).

In Taiwan, for instance, the Bu-reau of Commodity Inspectionand Quarantine did originally pay50 % of certification costs for allfirms seeking ISO 9000. Now, theIndustrial Development Bureauis contributing 40-60 % of ISO

Myth: ISO 9000 and ISO14000 are not truly globalstandards as the requirementsfor certification are less strictin some export-driven Asiannations and emerging econo-mies than in many Westerneconomies.

the ‘Asian ISO9000 and 14000certificateprinting press’

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A commonly heard criticism ofISO 9000 is that the standard isnot really meaningful as too muchemphasis is placed on the piece ofpaper attesting conformity to re-quirements, rather than on the un-derlying management principles.This accusation is primarilyaimed at Asia (though sometimesat emerging markets in general),where it is supposedly easier forcompanies to achieve certifica-tion than it is in the West. Thiswould be due to a combination ofgovernment intervention in theform of subsidies to cover regis-tration costs and other pro-grammes, and to local registrarsapplying a less strict interpreta-tion of the standards.

Though the traditional kernelof truth may, as always, be presentwith respect to government inter-vention, it has not been found thatcertification requirements areless strict, and neither accusationstands up to careful scrutiny.While it is true that many (Asian)companies feel pressure to obtainregistration and display a logo toadvertise the fact, it would be un-fair to infer an absence of environ-mental motivations. In fact, inmany developing economies,awareness of environmental is-sues has accelerated in recentyears due to the combined effectsof improved standards of livingand increasingly visible signs ofenvironmental strain.

framework around which to struc-ture a new environmental man-agement system, rather than as anorm against which to benchmarkan existing EMS.

The situation with ISO 9000 inthese same countries was oftenquite different: the certificate wasseen as pointless or – as Sony inJapan suggested – as counter-pro-ductive where it conflicted withlong-established and well-func-tioning quality management sys-tems. The principles behind ISO14000 filled a vacuum and conse-quently met with less resistance.This use of ISO 14000 as a guide-line for EMS development is simi-lar to the way many thousands offirms in the US use the guidelinesfor the Malcolm Baldrige qualityaward for internal purposes tohelp structure their quality man-agement system.

“If certain governments are en-couraging and subsidizing ISO14000 certification to enhance ex-port competitiveness”, the argu-ment goes, “surely, the certificateloses much of its value?” Govern-ment involvement in ISO 14000may be more pronounced in someAsian countries than in the US,but on a more limited scale than

14000 preparation costs for amaximum of 50 SME’s per year,for demonstration projects only,in order to showcase the environ-mental benefits smaller compa-nies can reap. To qualify, such

10) Three papers studying the impactof environmental management onfirm performance are Cohen, M.A.,S.A. Fenn and S. Konar,“Environmental and FinancialPerformance: Are They Related?”manuscript, Vanderbilt University,1997; Klassen, R.D. and C.McLaughlin, “The Impact ofEnvironmental Management on FirmPerformance,” Management Science,42, 1996, 8, 1199-1214; and Konar, S.and M.A. Cohen, “Does the MarketValue Environmental Performance,”manuscript, Vanderbilt University,1997.

11) It has been argued (see N. Roht-Arriaza, “EnvironmentalManagement Systems andEnvironmental Protection: Can ISO14001 Be Useful Within the Contextof APEC?”, Journal of Environmentand Development, September 1997,63, 292-316) that, especially in theAsia-Pacific region, ISO 14000 alonewill not lead to improvement inenvironmental performance, but onlywhen combined with governmentregulation and public pressure.

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demonstration projects must in-volve working closely with an en-vironmental consulting firm be-fore actually seeking certificationitself.

Regulatory relief is also lessprevalent than is sometimes be-lieved: the Japanese EPA doesnot relax regulation for certifiedfirms (though local environmen-tal agencies sometimes do), and,overall, the mix of governmentinvolvement in pilot studies andthe limited extent of regulatoryrelief on offer (if any) does notsound radically different in Asiathan in Europe or even the US12).

body RvA (Raad voorAccreditatie) was present to wit-ness the audit. Regional registrarsoften choose European accredita-tion (EDF in Taiwan chose theBritish UKAS accreditation) todemonstrate their commitment tomaintaining high standards.

Finally, we did hear the term“drive-by audits” used to describethe superficial nature of some au-dits in Asia, but it was, in fact, alocal registrar levelling the accu-sation at a Western counterpart.A Taiwanese auditor admitted tomaking first-time certificationless daunting in order to drawfirms into the ISO 14000 system,but then to be very demandingwith respect to the continuous im-provement requirement. Certifi-cation, according to this view,should be “easy to get, but hard tokeep”.

Additional support for the be-lief that registration standards arenot being relaxed in Asia comesfrom a Taiwanese auditor’s state-ment that firms typically spendUSD 20 000-50 000 on capital im-provements in order to pass thecertification audit. This is in con-trast to our US interviewees, whoreported only very modest proc-ess changes and no capital invest-ments at all. All this suggests thatISO 14000 is being administeredin largely the same way world-wide and that claims of existenceof an Asian printing press for ISO14000 certificates are largely ex-aggerated.

There is a strong perception,especially in the US and the Asia-Pacific region, that ISO’s man-agement system standards wereinvented by Europeans for Euro-peans. The most hostile version ofthis myth links ISO 14000 to thecreation of trade barriers intendedto protect local markets from low-price, non-certified foreign pro-ducers. Certification is supposedlya requirement for doing businesswithin the European Union (EU).The truth is, ISO 14000 was notdeveloped by Europeans alone, itis not only Europeans who are in-terested in it, and ISO standardsare less likely to erect trade barri-ers than to level the playing field.

The best way toimprove

environmentalcompliance is to

improveenvironmental

management

The last accusation, that thestandards are applied less strictlyin Asia than in the West, is hard toprove or disprove. We do notknow to what extent the accusa-tion may have been justified forISO 9000, but our discussions withcertified companies, registrars,accreditation bodies and govern-ment agencies did not yield anyevidence to support it in the caseof ISO 14000.

Many registrations in emergingmarkets are awarded by localbranches of Western auditors suchas LRQA, BVQI, DNV, BSI, SGS,and others, who are supposed toapply the same criteria in theiraudits worldwide. This global con-sistency is audited as part of theaccreditation process. For exam-ple, while the Brazilian employ-ees of Houston, Texas-based reg-istrar ABS (American Bureau ofShipping) were auditing an OPPfacility in Sao Paulo, a representa-tive from the Dutch accreditation

12) For an overview of ISO 14000trends and infrastructure in Asia, seeAET, Environmental Management inAsia: A Guide to ISO 14001, 1997;that report is summarized in D.Tanner, “Updates and Trends on ISO14000 Implementation in Asia”,Corporate Environmental Strategy,Spring 1998, 5:3, 71-76.

Around the world,many firms are

using ISO 14000as part of aproactive

environmentalcommunications

strategy

Myth: in order for companiesthat currently market theirproducts in the EuropeanUnion to continue to do so theywill need to get ISO 14000certification.

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For severalcompanies, the ISO14000 certificationprocess was theimpetus for them toidentify the full rangeof theirenvironmentalimpacts

The International Organizationfor Standardization, though itsCentral Secretariat is in Switzer-land, is a federation of nationalmember bodies from around theworld. The ISO 9000 and ISO14000 standards are developedand maintained by technical com-mittees comprising national del-egations from all ISO membercountries that wish to participate.Both ISO/TC 176, which is re-sponsible for the ISO 9000 family,and ISO/TC 207, which is respon-sible for the ISO 14000 family,comprise participating delega-tions from some 60 countries, in-

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cluding the US. The ISO 9000 se-ries is partly based on the BritishStandard 5750, which in turn wasinspired by the quality standardsof the US Department of Defense(MIL-Q9858) from the late1950’s. The US representativesplay an active role in the develop-ment of the ISO 14000 family, in-cluding chairing one of TC 207’ssix subcommittees – on environ-mental performance evaluation.

be part of a larger political con-text; for instance, when Europeanorganizations started inquiringabout ISO 14000 certification forbanana growers in 1997-98, thiswas just part of a larger trade dis-pute that erupted in early 1999.The practical implication is thatone has to accept that non-tarifftrade barriers will always exist,sometimes in the name of envi-ronmental protection. Taking aproactive stance to ISO 14000certification can, in fact, help di-minish the exposure to such politi-cally induced barriers and giveslobbyists additional ammunitionto reduce such barriers.

At this time of writing, ISO14000 is not a national require-ment for trade in any country thatwe know of. Based upon the word-ing of the standard, it is difficult, ifnot impossible, for the standard tobe applied differentially to do-mestic and foreign firms, so it isunclear how national govern-ments in either the EU or Japanwould be able to use ISO 14000 asan effective non-tariff barrier totrade, even if they wanted to doso.

It is also not clear how an indi-vidual company would find it in itsown shareholders’ interest to en-force ISO 14000 requirements se-lectively upon foreign, but notupon domestic suppliers, and wefound no evidence to suggest thatany European, Japanese, orAmerican companies were con-templating such targeted action.What is more, in spite of thewidely shared concern among for-

eign – especially Asian – export-ers about the potential barrierposed by ISO 14000 require-ments, we did not find documentedinstances in which companiesbased in export-oriented coun-tries lost business opportunitiesbecause they lacked certification.

We attribute the fear of non-tar-iff environment-based barriers totrade to two possible sources.Firstly, many companies – espe-cially in Japan and Taiwan – didexperience considerable businessdisruption as a result of ISO 9000.Many Japanese companies werejustifiably proud of their achieve-ments in the realm of quality andtherefore slow to acknowledgeand adopt ISO 9000 and foundthemselves obliged to documenttheir quality system practices atshort notice.

Almost all companiesmentioned training

benefits of one kindor another, and

several executiveswere frankly

surprised by the levelof enthusiasm thetraining sessions

created

Although adoption of ISO 9000initially took off in Europe, bynow, many customers outside theEU, notably in Japan, are requir-ing it of their suppliers. One Euro-pean electronics manufacturingfacility acknowledged that its in-terest in ISO 14000 was sparkedwhen a Nokia audit team inquiredabout its environmental manage-ment system. Soon after, a Ger-man and a Japanese customerasked the same question. WithinMotorola, sites in England andFrance were the first to be certi-fied, in anticipation of customerdemand, but US sites were plan-ning to follow13). And some USfirms are also pushing suppliers toget certified, as the letter fromIBM in the box on page 11 shows.

The wide acceptance andstrength of the conviction that ISOmanagement systems standardsare trade barriers (whether delib-erate or not) is quite remarkable.The ISO 14000 series was in factintroduced to level the globalplaying field, to prevent firmsfrom exploiting lax environmen-tal enforcement in some countriesto compete unfairly with firms fac-ing stricter regimes.

Sometimes, what looks like anISO 14000-related trade barrierturns out, on closer inspection, to

Formalizing existingprocedures reduces acompany’sdependence on thefew key individualswho are typicallyresponsible for allaspects ofenvironmentalmanagement

Domestic registrars, accredita-tion bodies, and the other compo-nents of the ISO 9000 certificationinfrastructure were underdevel-oped, and the resulting certifica-tion “panic” left a legacy of watch-fulness and fear of possiblenon-tariff trade regulation. Indeed,with ISO 9000 now established as anear de facto standard for interna-tional business, the high absoluteand relative number of ISO 14000certifications in Japan, Taiwan,and South Korea can be attributed,at least in part, to the legacy oftheir experience with ISO 9000.This phenomenon is not limited toAsian countries; there is a strongcorrelation between export-pro-pensity, measured by exports as ashare of GDP, and ISO 14000 cer-tification14).

13) Litsikas (1997), op.cit.

14) See Corbett and Kirsch (1999),op.cit.

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Secondly, we discovered, atleast in Taiwan, that governmentregulators were actively toutingthe threat of ISO 14000-basedtrade requirements as a means toencourage adoption of the newstandard and thereby improve en-vironmental performance of do-mestic industry. We conclude thatfear of possible requirements isdriving firm-level behaviour, butthat there is no indication of na-tional action.

To summarize, it is certainlytrue that ISO 9000 has become apassport for global trade in someindustries, but not one that is usedselectively against non-Europeanfirms. The global push for ISO14000 is coming from local indus-try leaders, regardless of nation-ality, and they are exerting theirinfluence over suppliers world-wide.

pressed to justify not seeking cer-tification to the new standard.

Here’s the rub: like most myths,there is at least anecdotal evi-dence to support each of them.The mythology of ISO 14000 isnot entirely wrong, but reality ismore complicated than any singlemyth. The range of motivations,participants, and activities propel-ling the ISO 14000 system cannoteasily be distilled into simple an-ecdotal truisms, and in the span ofthree years, we have not yet accu-mulated sufficient experiencewith the standard to be able tospecify and test rigorous opera-tional hypotheses about its im-pacts.

In the interim, what attitudeshould practitioners take towardsISO 14000? We suggest the fol-lowing set of starting points.

Do not take any single ISO14000 myth as the whole truth.The logical chain motivating ISO14000 certification is more com-plex than can be explained by anyone collection of anecdotal evi-

dence. Over time, ISO 14000 isbecoming more and more of ageneral business standard, muchlike ISO 9000 before it. Thus, onfirst pass, ask if ISO 9000 is, orwas, an issue for your company? Ifyou answer in the affirmative, youmay well decide that you need, ata minimum, to be “ISO 14000ready,” for the same reasons asfor ISO 9000.

No company that wehave spoken to

regretted seeking ISO14000

Conclusions

We have gone to some length todemonstrate that many prevail-ing beliefs about ISO 14000 arenot supported by actual events onthe ground. In contrast to prevail-ing mythology, ISO 14000 is notsolely an environmental standard.Getting certification is not exces-sively onerous, especially if acompany has already receivedcertification to ISO 9000. Thereare benefits to certification, evenif many of them are intangible, ordifficult to measure thus far.There are sound reasons whycompanies in Asian countries areadopting ISO 14000 more rapidlythan firms in the United States,and high Asian certification lev-els are not, by any means, primafacie evidence of an inferior orinadequate certification process.Finally, ISO 14000 is evolving tobe much more than a “passport toEurope”. Some firms expect thatcertification to ISO 14000 maysoon become as essential for con-ducting international business asISO 9000 – a veritable “passportto anywhere.” Indeed, if all of themyths discussed above werewholly untrue, one would be hard

Acknowledgements

The authors gratefullyacknowledge the coopera-tion from interviewees inISO 14000 certified compa-nies in the US, Asia, LatinAmerica, and Europe, andto Dr. Reinhard Peglau ofthe German Federal Envi-ronmental Agency. Thisproject was supported bygrants from the AT&TFoundation, the Center forInternational BusinessEducation and Researchand the Center for LatinAmerican Studies atUCLA and from the PacificRim Research Program ofthe University of Califor-nia. All views expressed inthis paper are solely thoseof the authors and do notnecessarily reflect the opin-ions of interviewees or poli-cies of their employers. Theauthors are currently con-ducting deeper researchinto several of the prelimi-nary findings reportedhere; comments and feed-back on this paper aretherefore warmly invited.

While the cost ofgetting ISO 14000certification islimited, the cost of nothaving it is likely togrow over time

Are sound environmental man-agement and a well-informed per-spective on ISO 14000 both rel-evant for general managers? Wewould argue: yes, definitely, butdo not treat them as synonymous.Rather, think of ISO 14000 as abusiness issue: assess the varioustypes of benefits it can yield, inter-nal and external, hard and soft.Make a realistic estimate of theresources needed, taking into con-sideration that much of the painfulgroundwork has already beendone for ISO 9000. And then de-cide whether this is the right timeto prepare for certification, orwhether it is better to wait.

Do not make the mistake,though, of confusing ISO 14000with a signal of environmentalleadership: companies that haveit are not necessarily leaders(though early adopters are morelikely to be), and certificationmay make sense for very otherthan environmental reasons. Inaddition, do not make the mistakeof thinking: “Our environmentalimpacts are already so heavilyregulated, ISO 14000 is not goingto change anything”. Even inthose cases where that belief istrue, it misses the point: the rea-sons for certification lie else-where. Remember the Japaneseattitude that ISO 9000 was irrel-evant for them as their qualitymanagement practices were farsuperior to anything prescribed byISO 9000? When Japanese firmsstarted adopting ISO 9000 whole-sale, it was often less for quality-related reasons than in responseto customer pressure.

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For companies with operationsin less developed countries, ISO14000 takes on additional mean-ing. For obvious reasons, TheCoca-Cola Company takes greatcare to protect global brand eq-uity, and therefore encouragesfranchisees worldwide to adoptproactive environmental prac-tices. Despite the fact that thecompany has not yet received(and may not need) ISO 14000certification for its US operations,Brazilian bottler Panamco SPALis already certified and has expe-rienced clear benefits in terms ofcommunity relations and regula-tory relief; a Taiwanese Cokebottler has also followed suit.Even if certification may seemrelatively pointless in the homecountry, the internal and exter-nal benefits to offshore sites areoften far greater. In such cases,

15) For more discussion on therelationships between home and hostcountry standards, see e.g. Dennis A.Rondinelli and Gyula Vastag,“International environmentalstandards and corporate policies: Anintegrative framework.” CaliforniaManagement Review, v39, n1 (Fall1996):106-122.

Based upon thewording of the

standard, it isdifficult, if not

impossible, for thestandard to be applied

differentially todomestic and foreign

firms

the certification decision shouldbe made on a global basis, wherehome-country certification maybe called for simply to send theright signal to offshore facili-ties15).

Finally, just as ISO 14000 cer-tification will normally be lesspainful than ISO 9000 was, it willalso help make companies evenbetter prepared for the host ofother standards to be unleashedin future. The proliferation ofmanagement system standardsshows no sign of slowing. The

Some firms expectthat certification toISO 14000 may soonbecome as essentialfor conductinginternational businessas ISO 9000

choice is clear: either you take anarrow functional perspective oneach of them (“ISO 9000 is justabout quality”, “ISO 14000 justabout environment”, etc.) andfight them all the way if they donot seem immediately relevant;or you accept these standards as afact of business life. You focus onthe similarities between them,rather than the differences, andget adept at adapting to newstandards quickly and painlessly.

Q