The Step-by-step Sustainability Scheme

For the inclusion of currently valid standards
in a graded qualification process

by Dr. Georg Winter

Chairman,
International Network for Environmental Management (INEM)

and
German Environmental Management Association (B.A.U.M.)


Introduction

Any company manager who can operate successfully in today's competitive environment deserves our respect. And any company manager who also demonstrates a sense of responsibility for the maintenance of the biosphere deserves our admiration.

The first pioneering activities in environmental management by companies date back to the seventies. Before that, environmental protection in companies was regarded almost exclusively as a matter for the technical people. I remember the incredulous or even amused reactions produced by the idea of making environmental protection a matter for top management, and systematically involving all areas of the company, from materials management through human resources to marketing.

But despite this relatively early start, environmental management is spreading much too slowly even now, at the beginning of the 21 century. In Germany at then end of January 2001 there were only about 2400 companies certified to the international ISO 14001 standard, although there are more than a million companies in this country. Of course, this may be because the standard itself was not introduced until September 1996.

Once a company has achieved certification, there is a danger that it will simply rest on its laurels and fail to make use of improvement potentials, and also fail to recognise that there is still a quantum leap to make before it achieves truly sustainable management.

Environmental management systems

Since April 1995, there has been a voluntary EU standard in existence for environmental business management systems (EMAS, the Community Eco-management and Audit Scheme) and a corresponding, likewise voluntary international standard ISO 14001, both aimed at international propagation of such systems. But there is still a need for rapid increase in the number of companies willing to seek such qualification.

This goal can only be achieved by adding two stages upstream of the qualification level of the EMAS and ISO 14001 standards. In other words, before they achieve the "implementation level" demanded by these standards, companies can qualify at activation level and advanced level. These two levels have to lead towards the implement-ation level.

It is essential for each level in itself to provide benefits not only for environmental protection, but also for business goals. At every level, there must be a convincing answer to the rational economic question put by company management: "What is the benefit for my company?"

Each level has to be defined in such a way that it includes measures giving short-term benefits. Each level must also provide its own quality label, which may also be used with advantage in company publicity.

The model presented here ensures that the benefits of each level (entry level and advanced level) can be achieved with a reasonable amount of effort. This helps to boost motivation and persuade companies to take up the challenge; it also helps to combat fatigue and any temptation to quit in the course of further intensification of their efforts. The use of this model is likely to give a significant increase in the number of companies willing to seek these qualifications.

A proposal has been put forward by the Irish Poductivitiy Center and delivered in the UK under license to BSI with sponsorship by the DTI. This proposal includes four qualification levels that lead to EMAS and ISO 14001. It is probably going quite far in terms of differentiation, but the basic idea is along the right line.

Beyond environmental management systems

To relieve the burden on the environment, it is important that the implementation level (Level 3) should require compliance with both EMAS and ISO 14001. This would prevent companies from simply taking the path of least resistance.

For example, they could not get around the establishment of "good management practices" and the publication of an environmental declaration (both EMAS requirements) by choosing the ISO procedure. The quality label of the implementation level would thus be equivalent to a "combined EMAS-ISO standard" and give corresponding benefits in terms of image and competitive advantage.

But EMAS and ISO 14001 must not be misinterpreted by companies as the end of the line. EMAS and ISO 14001 are merely stations en route, with a longer trail just beginning. The aim of these standards is to promote development, not to put a lid on further upward movement.

And nor is it sufficient for companies to keep meeting these standards, to acknowledge a requirement for continuous improvement and then to introduce such improvements on a point-by-point basis.

What is needed is for the standards organisation to add a "dynamic level" after the implementation level, specifying systematic application of modern improvement tools such as bench-marking, creativity circles, suggestions schemes, etc. At this level, companies can make much greater use of the competitive benefits from the environmental business management system, and at the same time contribute considerably more to reducing environmental pollution than they can at the implementation level.

Moving towards sustainability

And even that is not enough. The introduction of the dynamic level is still not enough to meet responsibility for the conservation of the biosphere. Even if a company has improved its environmental management system in accordance with the requirements of this level, it may still be continuing on the path of increasing environmental destruction.

While the dynamic level does improve the relationship between production and resource consumption, there is nothing in it (let alone in EMAS and ISO 14001) to stop growth in the consumption of non-renewable resources and in pollutant emission. Recognition that a company meets the standards of the dynamic level is not necessarily a certificate of ecological virtue.

Under the present macro-economic framework conditions, even if all the companies on earth were to meet the minimum requirements of EMAS and ISO 14001, and even if they were to use the systematic improvement tools, this would only slow down the growth in resource consumption and emissions on this planet. It would not be enough to reverse the trend to destruction of our biosphere. Industry would be quite capable of destroying the biosphere – while complying with the standards – and would thus destroy itself and all human civilisation.

Any standard which permits that is obviously screaming out for a higher level of qualification. It is evident that the implementation level and the dynamic level have to be followed by a further level with criteria that can be fulfilled only by measures which help to reverse the overall economic trend.

This higher level requires absolute reduction in emissions and in the consumption of non-renewable energy resources and raw materials. It still applies the yardstick of relative reduction per product unit, and adds the requirement for absolute reduction.

This fifth level may be described as the "sustainability level", that is the level which makes the company (and ultimately society) fit for the future. It requires compliance with a further requirement – the company has to contribute with the means available to it to ensuring sustainable continued development of the macro-economic framework conditions.

The company must strive for the national government to implement plans to increase the economic incentives for use of renewable energy sources and raw materials and for reduction of emissions, until it becomes uneconomical to continue consuming non-renewable energy sources and raw materials and emitting pollutants.

This second sustainability criterion requires the company to exert political pressure to make the achievement of the reduction goals economically advantageous or even indispensable. In other words, this micro-economic standard requires qualifiers to exert influence at macro-economic level. That is something new.

The traditional standard setters and those who call for companies to be politically abstinent will criticise this as a "fall from grace". But is it really better to stand by and watch, to refrain from action and to blame others for inactivity?

All too long, entrepreneurs with a sense of the environmental necessities have been satisfied to conduct their activities in their micro-economical ivory towers. All too long, they have exercised their optimisation skills this side of the power socket, without ever looking beyond it at the framework conditions which determine how power is generated in the first place.

All too long, they have limited themselves to mopping up in their bathroom on the Titanic; they have certainly shown their expertise at mopping up, but they have completely failed to open the captain's eyes and show him how fast the iceberg is approaching.

All too long, they have complained about environmentally unfriendly signals, which are thus ultimately unfriendly to business, but they have not told the politicians the different signals that they want.

Compared with the disaster which is approaching for the biosphere, the current standards for environmental management systems are no more than the "Prologue to the Theatre", to cite Goethe's Faust, while the "Tragedy Part I" (the overburdening of the bio-sphere) and the "Tragedy Part II" (the exhaustion of resources) are just around the corner, unless the decision-makers in business finally assume their macro-economic responsibility and persuade the decision-makers in politics to act.

The individual entrepreneurs, managing directors and board members have different ways of acting to meet that responsibility. They can act through their professional associations, their environmental associations and the relevant political bodies; they can also appeal to the civic responsibility of their employees.

In Germany, for example, two thirds of all employees are on the payrolls of small and medium-sized businesses. The way these employees vote, for example in general and local elections, can certainly have an impact on the way overall economic framework conditions develop.

Any company owner or manager who claims to be implementing an environmental management system at the very highest level, that is at the sustainability level, must be willing to look not only to the needs of the company itself, but also beyond its limits.

Political influence on environmental control of the overall economic framework conditions must not remain the private affair of just a few entrepreneurs, because practically all entrepreneurs – and I include managing directors and board members in this definition – are condemned by these framework conditions to contribute to the destruction of the biosphere in the work their company does.

This forces many entrepreneurs to act against their own better conscience, and many of them are furious and desperate about this. Their dearest wish is to do the work of their companies without the burden of guilt. And that is why it is right for a standard of this kind to include political commitment for sustainable macro-economic conditions.

Pre-EMS levels

The procedure proposed here is that there should be two further qualification levels below EMAS and ISO 14001 and two more above them. The two lower levels would lead companies towards EMAS and ISO 14001, and the two upper levels would continue beyond. This would give a five-stage ladder of qualification. This ladder is rather like a salmon leap – it is designed for going up to a much higher level, with carefully controlled input of energy and time.

Participation in the proposed procedure is voluntary. Companies may also skip levels, provided they meet the qualification requirements of the levels they miss out. If a company decides to quit the procedure, this is possible at any time.

The achievement of each individual level entitles the company to use the relevant description, including use in advertising. In ascending order of merit, the descriptions are "properly run company" (entry level), "good company" (advanced level), "very good company" (implementation level), "excellent company" (dynamic level) and "sustainable company" (sustainability level).

Each of these descriptions corresponds to a quality label which may be used in commercial practice. The quality symbols go from one tree for the entry level to five trees for the sustainability level. This system is modelled on the star system of the hotel industry. The Five-Tree Company is the equivalent in environmental protection to a Five-Star Hotel in the tourist industry.

Requirements

There are general quality requirements which are applicable to all levels. At every level, the quality requirements of all previous levels also have to be met (accumulation principle) – at the first level, where there is no previous level, the company has to meet the statutory environmental protection requirements.

In addition, the company has to accept as goals the requirements of the next level up (anticipation principle); at the highest level, the company is required to set itself goals which become significantly tougher at regular intervals.

Each level also has its own specific requirements. The first level (activation) is successfully concluded when the company fulfils the general requirements mentioned above, when it has included continuous environmental development of the company in its corporate philosophy, when it has declared the introduction of an environmental management system to be a corporate goal, and when it has established a motivation and training programme.
The second level (advanced) is achieved when the company has completed a company environmental audit, established an information and documentation system, and conducted a motivation and training programme for management and staff.

The third level (implementation) requires the company to put a functioning environ-mental management system in place, to have obtained both EMAS and ISO 14001 certification, and to have trained management and staff in system networking.

The requirements of the fourth level (dynamic) are fulfilled when the company has institutionalised benchmarking and systematically mobilised its staff for the use of improvement tools (e.g. company suggestions scheme and creativity circles).

As already indicated, the fifth level (sustainability) requires reduction of emission and of consumption of non-renewable raw materials, both in absolute terms and per product unit. The company must also show commitment to sustainable development of the macro-economic framework conditions, working via environmental associations and political bodies, and work systematically to promote the civic responsibility of its staff.

Cost-benefit ratios

The potential success of this qualification model is confirmed by cost-benefit ratios, which make reasonable short-term economic sense at every qualification level. Inclusion of long-term benefit would give a still better cost-benefit ratio at all five levels.

At the activation level, the short-term economic benefit for the company comes from examination of whether or not the company is complying with environmental protection legislation. This is an inexpensive way of eliminating a serious liability risk. The cost-benefit ratio is "good".

The cost-benefit ratio is also "reasonable" at the advanced level, because in most cases the environmental inspection (conducted at moderate expenditure) identifies medium savings potentials that can be achieved in the short term, for economies of energy, water and raw materials. This is a case of "low hanging fruits".

At the implementation level, there is again only medium expenditure to achieve the major rationalisation potential from the environmental management system which is now fully functioning, so that the cost-benefit ratio improves suddenly to become "excellent ".

This "excellent" is at least maintained at the dynamic level, which is ideal for implementation of opportunities of all kinds, including short-term rationalisation measures.

The fifth level (sustainability) is where the company needs to move with great care in the present macro-economic conditions. For example, there are very few cases where the replacement of fossil fuels by renewable energies can be done with a reasonable cost-benefit ratio. The desired changes in macro-economic conditions should bring about a continuous improvement in the cost-benefit ratio, so that eventually they will become "excellent".

Conclusions

Any company which does some rational calculations will find it worthwhile to embark on the five-stage qualification process and to move steadily through it. There are decisive image and competitive benefits both in the short term and the long term, for companies that advance level by level, acquiring the new quality ratings and making use of them in publicity. There are many customers whose purchasing policy will require their suppliers to have reached at least a certain minimum level.

This five-level qualification model not only promotes environmental protection, but also meets the economic needs of the companies themselves. This means it has high probability of success, despite the fact that participation is voluntary.

This model is firmly based on human psychology – and that is perhaps one of its specific strengths. Its five levels are directed at overcoming lack of interest and threshold anxiety; promoting perseverance; rewarding decision; activating the quest for improvement; and encouraging innovative leaps. The individual levels are small enough to be understood as self-sufficient goals. They are less daunting than a one-shot all-or-nothing model.

The feeling of success for the entrepreneur, the board, the managing director and the staff is renewed as the company moves to each new level, climbing a new rung on the ladder. The company gets into the habit of working simultaneously for improvement of business success and environmental protection. "Look after your habits", says the Talmud, "for your habits will become your character; and look after your character, for your character will become your destiny".

Environmental Company Development

Qualification Requirements of a Five-Level System
for Voluntary Upgrading and Success Enhancement

Activation
level
Advanced
level
Implementation
level
Dynamic
level
Sustainability
level
Properly run company
Good
company
Very good company
Excellent company
Sustainable company
1.
Continued environmental development of the company included in corporate philosophy
1.
Company environmental audit completed
1.
EMAS and ISO 14001 implemented
1.
Environmental programmes implemented
1.
Emissions and consumption of non-renewable energy and raw materials reduced in absolute and relative terms
2.
Introduction of an environmental management system included in corporate goals
2.
Information and documentation system introduced
2.
EMAS and ISO 14001 certified
2.
Benchmarking institutionalised
2.
Actively influencing macro-economic framework conditions, e.g. via

- Professional associations

- Environmental associations

- Political bodies

3.
Motivation and training programme specified for management and staff
3.
Motivation and training programme implemented for management and staff
3.
Management and staff trained in system networking
3.
Staff systematically trained for use of improvement tools
3.
Systematic appeals to the civic responsibility of staff
4.
Complying with statutory requirements
4.
Meeting the requirements of all previous levels
4.
Meeting the requirements of all previous levels
4.
Meeting the requirements of all previous levels
4.
Meeting the requirements of all previous levels
5.
Subsequent level established as a goal
5.
Subsequent level established as a goal
5.
Subsequent level established as a goal
5.
Subsequent level established as a goal
5.
Continuous improvement established as a goal