NORTH CAROLINA JOURNAL OF

INTERNATIONAL LAW AND

COMMERCIAL REGULATION
Volume 22 | Number 1 Article 6

Fall 1996

The ISO 14000 International Standards: Moving

beyond Environmental Compliance
Christina C. Benson

Follow this and additional works at: http://scholarship.law.unc.edu/ncilj

Recommended Citation
Christina C. Benson, The ISO 14000 International Standards: Moving beyond Environmental Compliance, 22 N.C. J. Int'l L. & Com.
Reg. 307 (1996).
Available at: http://scholarship.law.unc.edu/ncilj/vol22/iss1/6

This Comments is brought to you for free and open access by Carolina Law Scholarship Repository. It has been accepted for inclusion in North
Carolina Journal of International Law and Commercial Regulation by an authorized editor of Carolina Law Scholarship Repository. For more
information, please contact [email protected].
The ISO 14000 International Standards: Moving beyond Environmental
Compliance
Cover Page Footnote
International Law; Commercial Law; Law

This comments is available in North Carolina Journal of International Law and Commercial Regulation:
http://scholarship.law.unc.edu/ncilj/vol22/iss1/6
 The ISO 14000 International Standards: Moving
Beyond Environmental Compliance

Table of Contents
I. Introduction ................................. 308
II. The ISO 14000 Standards ................................................... 315
A. The International Organization for Standardization ..... 315
B. ISO Quality Management Standards ............................ 316
C. Development of ISO 14000 .......................................... 317
D. Environmental Management System Standards ........... 319
E. ISO 14001 Requirements .............................................. 324
1. Establishing an Environmental Policy .................... 324
2. Planning an EMS ........................ 325
3. Implementation and Operation of the EMS ............ 327
4. Checking and Correcting the EMS ......................... 331
5. M anagement Review .............................................. 331
F. Auditing Under ISO 14010-12 Standards ..................... 332
1. ISO 14010 Auditing Guidelines .............................. 333
2. Steps in the ISO 14011/1 Auditing Process ............ 334
3. Third Party Auditor Qualifications
U nder ISO 14012 .................................................... 335
III. Factors Affecting Acceptance of ISO 14000 ...................... 338
A. Impact on the Company's Bottom Line ........................ 339
B. ISO 14001 Certification as a "Global Passport"........... 341
C. Contractual Requirements ............................................. 342
1. Government Contract Requirements ....................... 342
2. Certification as a Private Contractual
Requirem ent ............................................................ 342
D. Responses of Lenders and Insurers ............................... 343
E. Response of Regulatory Entities ................ 344
1. Regulatory Agency Incentives for Certification ..... 344
2. Potential Disincentives to Certification .................. 347
IV. Should My Company Implement ISO 14000? .................... 349
A. Costs and Benefits of Gaining
ISO 14001 Certification .......................................... 350
1. Simplify Compliance Matters ................................. 353
308 N.C. J. INT'L L. & COM. REG. [Vol. 22

2. Enhance Company Image ....................................... 354

3. Gain Competitive Advantage in Global
M arkets ................................................................... 356
4. Improve Profits ....................................................... 357
B. Conducting a Cost-Benefit Analysis ............................. 359
C. Potential Pitfalls of the "Wait and See" Approach ....... 361
IV . C onclusion .......................................................................... 363

I. Introduction
Since the early 1970s, environmental regulatory schemes
throughout the world have imposed increasingly strict and more
complex requirements on companies operating in the global
marketplace.' International environmental issues have received
heightened public attention in a wide range of forums.2 During the
historic United Nations Conference on Environment and
Development (UNCED) held in Rio de Janeiro in 1992, 3
participating nations recognized significant problems posed by the
lack of harmonization among widely disparate sets of national
environmental standards in place throughout the world.4
International organizations have more recently emphasized the
importance of developing international standards for corporate
environmental auditing programs.
These trends are occurring internationally, even as a wave of
anti-regulation sentiment is sweeping the United States.6 In

I RAO V. KOLLURU, ENVIRONMENTAL STRATEGIES HANDBOOK 68-69 (1994).

2 See, e.g., Charles G. Marvin, Total Environmental Quality, CERAMIC INDUS.,
Dec. 1994, at 19; Eric Pryne, Putting a New Spin on 25th Earth Day, SEATTLE TIMES,
Apr. 16, 1995, at Al.
3 See The Rio Declaration on Environment and Development, 1992, 31 I.L.M.
874 [hereinafter Rio Declaration];5 Nicholas A. Robinson, Agenda 21 and the UNCED
Proceedings (3d ed. 1992). More nations (176 in all) participated in UNCED, than in
any other international environmental conference held to date. See Ridgeway M. Hall,
Jr. & Kristine A. Tockman, InternationalCorporate Environmental Compliance and
Auditing Programs,25 ELR 10395, Aug. 1995. The UNCED proceedings, commonly
referred to as the "Earth Summit," were held June 3-14, 1992, in Rio de Janeiro. Id.
I Richard J. Kissel & John W. Watson, Voluntary Environmental Standards are
on the Way, PAPER, FILM & FoIL CONVERTER, Sept. 1995, at 61, 63.
5 JOHN T. WILLIG, AUDITING FOR ENVIRONMENTAL QuALITY LEADERSHIP 61-66
(1995).
6 See, e.g., Gareth G. Cook, Devolution Chic: Why Sending Power to the States
Could Make a Monkey out of Uncle Sam, WASH. MONTHLY, Apr. 1995, at 9; Brad
1996] ISO 14000 ENVIRONMENTAL STANDARDS

Washington D.C., lawmakers are responding to this regulatory

backlash with programs aimed at "regulatory reform" and
"reinventing government."7 Congress is rethinking the "command
and control" approach' that has characterized environmental
regulations enacted in the United States since the inception of the
Environmental Protection Agency in 1970. In the Congressional
debate over reauthorization of key. pieces of environmental
legislation such as Superfund, 9 freshmen Republicans have lead an
effort to make sweeping changes in the way environmental
liabilities are imposed on private industry." Further, industry
trade organizations are encouraging Congress to adopt market-
based environmental regulatory schemes which would allow a
greater degree of self-regulation.
Environmental budget allocations from the federal government
are shrinking as Congress attempts to eliminate the federal deficit.
Meanwhile, the distaste for government bureaucracy and
regulation is growing. In light of these trends, there is substantial
speculation about. whether the U.S. will fundamentally change the
complex and overlapping entanglement of existing environmental
regulations." The Environmental Protection Agency has already

Knickerbocker, Regulatory Reform Needs More Carrots and Fewer Sticks, CHRISTIAN
SCI. MONITOR, Mar. 21, 1995, at 13.
7 Allan Holmes, Reform Trickles In: Proposals to Overhaul Rule-Bound Federal
Service System Abound, GOV'T EXECUTIVE, Oct. 1995, at 46.
8 The "command and control" terminology is used.:.to describe legal and
regulatory compliance requirements and penalties as distinguished from the use of
market-based incentives to achieve desired environmental improvements.
9 Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. §§ 9607-75 (1986) [hereinafter CERCLA] (also known as "Superfund").
10Jennifer Silverman, Bliley to Offer Amendments On Liability, Brownfields to
CERCLA Reform Bill, 66 Banking Rep. (BNA) 165-67 (1996). This anti-regulation
sentiment also underlies the deregulation of financial services and telecommunications
industries, as well as the proposed privatization of government functions such as the
nation's air traffic control system. See Robert Poole, Jr., FederalPrivatizationAgenda,
Testimony PresentedBefore Senate Budget Committee, FED. NEWS SERV., Mar. 7, 1995,
at 50.
I See generally Jackie Prince Roberts, Note on Contingent Environmental
Liabilities, reprinted in FOREST L. REINHARDT & RICHARD H.K. VIETOR, BUSINESS
MANAGEMENT AND THE NATURAL ENVIRONMENT (1996) (discussing how companies can
manage their contingent environmental liabilities under the complex array of federal
statutes and regulations enacted during the 1970s and 1980s). Environmental legislation
enacted during the 1970s and 1980s relied primarily on setting specific pollution limits
and used "command and control" methods of enforcement by imposing civil and
criminal liability on violators, including payment of large fines and penalties. Id..
310 N.C. J. INT'L L. & COM. REG. [Vol. 22
begun to experiment with market-based mechanisms 2 through
programs such as the emissions trading system created under the
Clean Air Act." The environmental regulatory framework
currently in place in the United States has traditionally been
viewed as one of the most stringent in the world.14 Despite the
current anti-regulatory sentiment and the uncertain fate of budget
negotiations and regulatory reform efforts during an election year,
there is continued bipartisan public support for maintaining
5
strong
environmental protection laws in the United States.
What is evident, however, is an effort by many companies to
move beyond mere compliance with environmental legislation
towards a more proactive management of corporate environmental
assets and liabilities. This trend represents a paradigm shift
through which companies have recognized that shareholder value
can be created by managing environmental assets and impacts
more effectively. To manage for environmental quality, many
companies are now applying the same quality management
techniques used by manufacturers in the 1980s to improve
competitiveness. 6 Companies that have suffered large financial
losses due to environmental liabilities incurred under Superfund,
the Clean Air Act, the Federal Water Pollution Control Act, and
other legislative initiatives have learned the hard way that failing
to systematically manage the environmental aspects of their

12Rather than relying solely on disincentives such as fines, penalties and criminal
sanctions to control pollution, many countries have begun to experiment with market
based incentives. See WALDEMAR HOPFENBECK, THE GREEN MANAGEMENT
REVOLUTION: LESSONS IN ENVIRONMENTAL EXCELLENCE 11-13 (1993). Such programs
attempt to create an environmental market economy by using mechanisms such as eco-
taxes and tradeable pollution credits. Id.
13 ISO 14000 Standards To Influence EPA Toxics Regs, Pesticide & Toxic Chem.
News, Dec. 14, 1994, availablein LEXIS, Envirn Library, Curnws File.
'4 See Roberts, supra note 11, at 200-07.

15 In December, 1995, Peter D. Hart Research Associates, Inc. conducted a

telephone survey of 1200 registered voters (35% Republican, 39% Democrat, 7% other,
and 19% Unaffiliated) regarding environmental issues. Mark Wexler, Americans Speak
Out, NAT'L WILDLIFE, Apr.-May 1995, at 34-38. Among the results of the survey were
the following: 76% of respondents favored strengthening current safe drinking-water
laws; 41% said that current environmental legislation was generally not stringent
enough; 57% favored retaining Endangered Species Act requirements; and 64% said the
federal government should subsidize efforts of farmers to reduce pesticide use. Id.
16 See infra notes 54-56 and accompanying text.
1996] ISO 14000 ENVIRONMENTAL STANDARDS

operations has an enormous impact on a company's bottom line."

Proactive environmental managers no longer simply focus on
compliance requirements, but see that a company's environmental
resources, programs, and image as a good corporate citizen are
important assets to be managed carefully to ensure long term
growth and financial stability. 8 While these companies realize
they must achieve compliance with environmental regulations
applicable to the jurisdictions in which they operate, their ultimate
goal is to place these compliance efforts within the larger
framework of an effective long-term environmental management
strategy.
An important new private sector initiative on the international
horizon provides a systematic approach to proactive environmental
management. This new set of international environmental
management system standards is certain to impact any company
doing business in the global marketplace. The Geneva-based
International Organization for Standardization (ISO),"9 with
assistance from representatives of 50 nations, is in the final stages
of developing a set of international environmental management
standards for business known as ISO 14000.20 The ISO 14000
standards are not regulatory; instead they are voluntary standards
being developed by the private sector.2' These new standards are

17 This lesson is similar to the experience of American automobile manufacturers

during the 1970s. See John McElroy, Are We Out of Excuses Yet?, 168 AUTOMOTIVE
INDUS. (1988), available in LEXIS, Nexis Library, Autoin File. The strategy of planned
obsolescence adopted by U.S. automakers backfired by ruining their reputation for
quality, and opening the door to international competition from higher quality producers
in Japan and Europe. Id. It has taken decades for the U.S. auto industry to recover from
this past failure to manage for quality., Id.
'8 WALDEMAR HOPFENBECK, THE GREEN MANAGEMENT REVOLUTION 36-38 (1993).
19 ISO is a specialized organization based in Geneva, Switzerland whose members
include the national standards bodies of 111 countries. ISO seeks to develop various
categories of universally recognized international standards in order to facilitate more
efficient exchange of goods and services throughout the world. See infra notes 41-50
and accompanying text for a discussion of ISO.
20 DRAFr STANDARDS ON ENVIRONMENTAL MANAGEMENT SYSTEMS (International
Standards Organization, Technical Committee 207, 1995), available from American
Society for Quality Control (ASQC), Milwaukee; WI (1996). The term ISO 14000 does
not refer to a specific standard, rather it is a phrase used to designate the entire series of
environmental management standards. TOM TIBOR & IRA FELDMAN, ISO 14000: A
GUIDE TO THE NEw ENVIRONMENTAL MANAGEMENT STANDARDS xiv (1995).
21 See infra notes 93-97 and accompanying text.
 N.C. J. INT'L L. & COM. REG. [Vol. 22

designed to promote sound corporate management of

environmental matters by companies throughout the world.
ISO 14000 is a generic term referring to an entire series of
international environmental standards being developed by the
International Organization for Standardization. The cornerstone of
the ISO 14000 series is the development of an environmental
management system (EMS) using the specifications contained in
ISO 14001 and ISO 14004.22 Once an EMS meeting these
requirements is in place, a company may further implement ISO
14000 in several different ways." The company may self-proclaim
that it is in compliance with the EMS requirements of ISO 14001.24
Alternatively, the EMS may be audited by a customer as part of a
contractual agreement." To become formally certified under ISO
14000, however, an independent third party must audit the
company's EMS to ensure that it complies with ISO 14001
requirements.6 ISO 14010 contains the general guidelines on

22 ISO/DIS 14001, ENVIRONMENTAL MANAGEMENT SYSTEMS-SPECIFICATION

WITH GUIDANCE FOR USE (International Standards Organization, Technical Committee
207, Aug. 22, 1995), availablefrom American Society for Quality Control, Milwaukee,
WI [hereinafter ISO 14001]. At the date of publication, this standard was in draft
international standard (DIS) form. Id. at 1. It has been circulated for comment and
approval and is therefore subject to change. Id. It is expected that ISO 14001 will be
published in its final form in Fall 1996. An environmental management system (EMS)
uses quality management principles to develop an environmental policy, and to
disseminate that policy throughout all levels of an organization to meet specific goals
and objectives aimed at continuously improving the company's environmental
performance. See RICHARD WELFORD & ANDREW GOULDSON, ENVIRONMENTAL
MANAGEMENT AND BUSINESS STRATEGY, 76-84 (1993). For a discussion of ISO 14001
see infra notes 98-152 and accompanying text. ISO 14004 offers guidance on how an
EMS should be implemented. ISO/DIS 14004, ENVIRONMENTAL MANAGEMENT
SYSTEMS--GENERAL GUIDELINES ON PRINCIPLES, SYSTEMS, AND SUPPORTING
TECHNIQUES (International Standards Organization, Technical Committee 207, August
22, 1995) available from American Society for Quality Control, Milwaukee, WI
[hereinafter ISO 14004]. As of the date of this publication, this standard is in draft
international standard (DIS) form. Id at 1.It has been circulated for comment and
approval and is therefore subject to change. Id. ISO 14004 is expected to be published
in its final form in Fall 1996.
23 TIBOR & FELDMAN, supra note 20, at 45.
24 Id.
25 Id.
26 Id. at 45-46. The term ISO 14000 certification is commonly used to refer to this
process. Id. The standard specifically used in the certification process is ISO 14001.
Id. For this reason, this paper will refer to this certification process as ISO 14001
certification. See infra notes 98-150 and accompanying text for a discussion of the ISO
14001 certification requirements.
1996] ISO 14000 ENVIRONMENTAL STANDARDS

environmental auditing." The specific guidelines to be followed

in a third-party audit of a company's ISO 14001 EMS are set forth
under ISO 14011/1.28 Independent auditors must meet the
qualification criteria contained in ISO 14012 to be approved to
conduct such certification audits." The formal certification
process allows a company to demonstrate that it has adopted and
implemented a comprehensive and internationally recognized
regime of environmental quality and management standards."
The EMS and auditing standards will be the first standards to
be issued in the ISO 14000 series. ISO is planning the
development of additional standards in the ISO 14000 series to
address specific areas of concern such as environmental
performance evaluation, ecolabeling, environmental claims
verification, and product life cycle assessment.32 These standards

27 ISO/DIS 14010 outlines the general principles of environmental auditing.

ISO/DIS 14010, GUIDELINES FOR ENVIRONMENTAL AUDITING-GENERAL PRINCIPLES
(International Standards Organization, Technical Committee 207, Aug. 22, 1995)
available from American Society for Quality Control, Milwaukee, WI [hereinafter ISO
14010]. At the date of this publication, this standard is in draft international standard
(DIS) form. Id. at 1. It has been circulated for comment and approval and is therefore
subject to change. Id. For further discussion of these requirements, see infra notes 160-
63 and accompanying text.
28 ISO/DIS 14011, GUIDELINES FOR ENVIRONMENTAL AUDITING-AUDIT
PROCEDURES--PART 1: AUDITING OF ENVIRONMENTAL MANAGEMENT SYSTEMS
(International Standards Organization, Technical Committee 207, Aug. 22, 1995)
availablefrom American Society for Quality Control, Milwaukee, WI [hereinafter ISO
14011/I]. This standard is referred to as ISO 14011/1 because, as of publication, it
contains only Part 1, leaving additional parts open for other specific types of auditing to
be added in the future. TIBOR & FELDMAN, supra note 20, at 99-100. At the date of
publication, this standard is in draft international standard (DIS) form. It has been
circulated for comment and approval, but is subject to change. See ISO 14011/1, supra,
at . For further discussion of these auditing requirements see infra notes 164-76 and
accompanying text.
29 ISO/DIS 14012, GUIDELINES FOR ENVIRONMENTAL AUDITING--QUALIFICATION
CRITERIA FOR ENVIRONMENTAL AUDITORS (International Standards Organization,
Technical Committee 207, Aug. 22, 1995) availablefrom American Society for Quality
Control, Milwaukee, WI [hereinafter ISO 14012]. At the date of publication, this
standard is in draft international standard (DIS) form. Id. at 1. It has been circulated for
comment and approval and is therefore subject to change. Id. See infra notes 177-99
and accompanying text for a discussion of these auditor qualification requirements.
30 Kissel & Watson, supra note 4, at 61; see also Kathy Abusow, ISO 14000:
Global StandardforEnviornmentalManagement Practices,48 CANADIAN PAPERMAKER
30 (1995).
31 See TIBOR & FELDMAN, supra note 20, at 35.
32 Environmental performance evaluation (EPE) focuses on ways to measure,
document and report a company's environmental performance. The EPE standards will
 N.C. J. INT'L L. & COM. REG. [Vol. 22

are in the planning or early drafting stages and are not expected to
take shape until after the EMS and auditing standards are issued."
This Comment focuses on the ISO 14000 standards related to
implementing and auditing environmental management systems. 4
Part II of the Comment provides an overview of the ISO 14000
standards for implementing, auditing and certifying the EMS.35
Part III analyzes the factors which will determine the success of
ISO 14000, and whether it will become a required "global
passport" for doing business internationally. 6 Part IV addresses
the likely costs and benefits for companies deciding whether to
seek certification under ISO 14001." Part V concludes that
companies should evaluate their current internal environmental
programs in light of the new standards, and consider seeking

be contained in ISO 14031. TIBOR & FELDMAN, supra note 20,, at 36-37. General
principles for environmental labeling and certification procedures will be set forth under
ISO 14024. Id. International definitions and symbols to be used in ecolabeling will be
contained in ISO 14021 and 14022. Id. ISO 14023 is reserved for standards to address
verification of "self-declared" environmental claims for products, processes and
services, such as claims of "energy efficiency," "recyclability," and "biodegradability."
See California Verification Protocol to be Used in Development of International
Standard, 27 Env't Rep. (BNA) 614, 615 (July 19, 1996). The standards addressing
environmental life cycle assessment and methodology will be issued under ISO 14040
and 14041. TIBOR& FELDMAN, supra note 20, at 36-37.
33 Each of the planned ISO 14000 standards will go through many stages of
drafting and revision. The standards generally progress from "working document"
(WD) to "committee draft" (CD) form, then to "draft international standard" (DIS)
status, and finally to "international standard" status (after being voted on and passed by
a majority of ISO members). As of the date of this publication, the EMS standards (ISO
14001 and ISO 14004) and the auditing standards (ISO 14010-12) have already
advanced to DIS status and have been submitted to ISO members for final voting on
their passage as international standards. TIBOR & FELDMAN, supra note 20, at 45, 95.
These standards are expected to pass and become International Standards during 1996.
Id. By contrast, the standards on environmental performance evaluation are not
expected to reach DIS status until 1998. Id. at 114. Similarly, the life cycle assessment
standards are only in the early WD or CD stages, and may be subject to extensive
changes before reaching DIS status. Id. at 138-41. Finally, the ecolabeling standards
are expected to reach the CD stage in 1996, but may be changed substantially in future
revisions before finally achieving DIS status. Id. at 153-55. This comment focuses
exclusively on the standards related to implementing and auditing environmental
management systems, as the other future standards in the ISO 14000 series are still
under development and subject to change dramatically before reaching their final form.
31 See explanation supra notes 31-33 and accompanying text.
35 See infra notes 39-199 and accompanying text.
36 See infra notes 200-62 and accompanying text.
37 See infra notes 263-363 and accompanying text.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 315

certification under ISO 14001 in the future.

38

II. The ISO 14000 Standards

A. The InternationalOrganizationfor Standardization

The International Organization for Standardization (ISO) was
founded in 1946 to develop internationally accepted
manufacturing, trade and communication standards.39 ISO is a
specialized organization comprised of the national standards
bodies of 111 member countries, with varying levels of
participation by each of these members. 0 Some member countries
are represented by governmental or quasi-governmental standards
setting bodies, while others send purely private sector
representatives.4 ' Although ISO standards are intended to be
voluntary, member countries frequently adopt standards developed
by the ISO as mandatory national standards.42
The ISO is comprised of approximately 180 Technical
Committees, each of which specializes in drafting standards in a
particular area or industry. Once ISO identifies an area in which
standards are to be developed, the member nations will form a
Technical Advisory Group (TAG)"4 to provide input into the
standards development process. 45 Before promulgating a draft
standard, the Technical Committee receives input from interested
parties including government, industry, manufacturers, vendors,

38 See infra pp. 363-64.

39 See TIBOR & FELDMAN, supra note 20, at 27-28. Iso is the Greek word meaning
"equal." AMERICAN HERITAGE DICTIONARY 955 (3d ed. 1992).
40 Id. at 27-28.
41 Id. Canada is the Secretariat of Technical Committee 207, while the United
Kingdom, United States, Netherlands, Australia, France, Norway, and Germany each
head specific ISO 14000 Subcommittees and Work Groups. Id. at 36.
42 Id. at 27.
43 Id. at 28; see also the International Standards Organization Internet Site on the
World Wide Web at <http://www.iso.ch/cate/d23142.html> (updating the latest
information on development of various categories of ISO standards).
4 TAGs are advisory committees formed by ISO member nations who provide
input to the ISO technical committees in charge of drafting new international standards.
See TIBOR & FELDMAN, supra note 20, at 27-28. Incorporating the input of TAGs into
the standards development process helps to ensure that the new standards will be widely
accepted by member nations throughout the world. Id.
45 See id.
316 N.C. J. INT'L L. & COM. REG. [Vol. 22

users, consumer groups, research organizations, public, interest

organizations, and trade or professional organizations.' Once a
draft standard is voted on and accepted by a majority of member
nations, it is then published as an international standard. 47 Each
member nation is free to adopt a version of the standard as its own
national standard.48 ISO standards may also be adopted by
industry trade associations and other private sector organizations.49

B. ISO QualityManagement Standards

From the 1950s through the 1970s, ISO focused primarily on
the development of technical product standards." Beginning in
1979, however, ISO undertook a major initiative in the
development of quality management and quality systems
standards.5 This project represented a shift from ISO's product-
based focus to a process-based standards orientation, resulting in
the publication of the ISO 9000 international quality management
standards in 1987.52 ISO is best known for the ISO 9000
standards, and is generally held in high regard by the modem
business community due to their worldwide success and
acceptance. 3
The ISO 9000 auditing and certification program provides a
formal mechanism for guaranteeing that a company has fully
integrated quality management principles into all levels of its

46 See id. at 28-29.

41 See id.
48 See id. at 8.
49 See id. at 25.
50 See id. at 29.
51 See id.
52 ISO 9000, QUALITY MANAGEMENT AND QUALITY ASSURANCE STANDARDS:
GUIDELINES FOR SELECTION AND USE I (International Organization for Standardization,
1st ed. Mar. 15, 1987) [hereinafter ISO 9000]. ISO'9000 is a series of five standards,
including ISO 9000-9004. See also Susan Jackson, Certification of Environmental
Management Systems-for ISO 9000 and Competitive Advantage, reprintedin JOHN T.
WILLIG, AUDITING FOR ENVIRONMENTAL QUALITY LEADERSHIP 61 (1995).
53 See, Catherine Fahy, Eco-Tech Standards on Horizon, 13 MASS. HIGH TECH,
June 26, 1995, at * 1, availablein LEXIS, Envirn Library, Curws File. According to
Andrew Savitz, director of environmental services at Coopers & Lybrand, ISO 9000
certification is now a required passport for doing business in Europe. Savitz states, "ISO
9000 has become the Good Housekeeping Seal of Approval." Id.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 317

business operations.54 ISO 9000 'has become aglobal passport for

doing business internationally in many industries because major
multinational firms, non-governmental organizations, and
governmental agencies now widely require suppliers to achieve
ISO 9000 certification.5 Internationally, more than 70,000
companies, ranging from large multinational corporations to small
enterprises trading
6
in international markets, have gained ISO 9000
certification.

C. Development of ISO 14000

Following the Rio Conference of 1992,"7 participating nations
recognized the need for international standards to address
environmental management and quality issues. The Conference
produced a proliferation of national and regional environmental
management, labeling and audit schemes. It was feared that the
disparities between these various programs would have a severe
impact on international trade. 9 * The need to bring some
standardization to these conflicting programs became the basis for
developing the new ISO 14000 guidelines.60
In response to the proliferation of various environmental
standards worldwide, ISO formed the Strategic Action Group on
the Environment (SAGE) in 1991 to investigate the viability of

54 See generallyISO 9000, supra note 52.

55 See TIBOR & FELDMAN, supra note 20, at 31.
56 See id. at 30.
57 See Rio Declaration,supra note 3.
58 See TIBOR & FELDMAN, supra note 20, at 22-25.
59 A major concern was that the disparate guidelines established by regional and
national programs would create an uneven playing field in the arena of world trade.
Kissel & Watson, supra note 4, at 61. Costs of compliance would be higher in nations
having strict environmental standards. Such costs would be reflected in higher prices for
products produced in these nations, thereby making them less competitive on the world
market. See, e.g., Unequal Environmental Standards Pose Competitive Problem But
Solutions Vary, 17 Int'l Envtl. Rep. (BNA) (Nov. 16, 1994), availablein LEXIS, Envirn
Library, Curnws File [hereinafter Unequal Environmental Standards]. For example, a
National Petroleum Council report in August 1993 predicted that the industry would be
forced to pass on $18 billion in costs (ten cents per gallon of gasoline) to consumers in
order to meet new environmental regulatory requirements between 1991 and 2000. Id.
60 See Unequal Environmental Standards,supra note 59, at 943. The ISO 14000
standards development process seeks to rectify some of the competitiveness problems
faced by U.S. industries without resorting to the use of international pollution limits.
See id. at 941-42.
318 N.C. J. INT'L L. & COM. REG. [Vol. 22
drafting international standards in the environmental management
field.61 Specifically, SAGE focused on determining whether
international environmental standards could be used to achieve the
following objectives: (1) promoting a common worldwide
approach to environmental management in business and industry;
(2) increasing the ability of and incentives for organizations to
measure and attain improvements in environmental performance;
and (3) facilitating world trade and removing potential
environmental trade barriers.62 The members of SAGE concluded
that the development of international EMS standards could have
an enormous positive impact in each of these three areas.63
Technical Committee 207 was formed by ISO in June 1993 to take
over where SAGE left off, assuming the responsibility of
developing the uniform international environmental standards now
known as ISO 14000. 64
The universal acceptance of the ISO 9000 quality management
standards lent early credibility to the ISO 14000 project. 6' At the
first meeting of Technical Committee 207, more than 200
representatives from thirty countries expressed a strong desire to
move as rapidly as possible in developing new EMS standards.66
Currently, over fifty nations are actively participating in the
development of the ISO 14000 series of standards.67 While this is

61 TIBOR & FELDMAN, supra note 20, at 32. SAGE was established by ISO in 1991
to make recommendations regarding the viability of creating international standards for
the environment. See Jackson, supra note 52, at 64.
62 TIBOR & FELDMAN, supra note 20, at 32.
63 Id.

64 Id. Canada acts as the Secretariat of Technical Committee 207. Id. at 35-36.
The Committee is further divided into subcommittees. Id. The United Kingdom heads
Subcommittee 1, which has developed ISO 14001 and ISO 14004. Id. at 37.
Subcommittee 2 is in charge of drafting the specific standards related to environmental
auditing. Id. at 94. This Subcommittee is divided further into Work Groups, each of
which will focus on a different aspect of the auditing program. Id. at 95. ISO/DIS
14010, the standard on general principles of environmental auditing, is being drafted by
Work Group 1. See ISO 14010, supra note 27. Work Group 2 is currently drafting the
ISO 14011/1 procedures for auditing the Environmental Management System. See ISO
14011/1, supra note 28. Work Group 3 is drafting the ISO 14012 qualifications for
environmental auditors, aimed at ensuring the objectivity and competency of third party
auditors in the certification process. See ISO 14012, supra note 29.
65 TIBOR & FELDMAN, supra note 20, at 39-40.
66 Id. at 32.
67 Helen Gillespie, ISO 14000: What's Driving the New EnvironmentalStandard?,
37 R & D, Aug. 1995, at 29.
19961 ISO 14000 ENVIRONMENTAL STANDARDS 319

approximately the same number as were involved in the ISO 9000

development process, there is more active and visible participation
from the Japanese and Americans in the development of ISO
14000.68 High level participation by Japan and the United States
lends greater credibility to the new standards and increases the
likelihood of their widespread international acceptance.

D. EnvironmentalManagement System Standards

The initial focus of Technical Committee 207 has been on
developing the environmental management system (EMS)
standards contained in ISO 14001 and 14004.70 Under ISO 14001,
the same quality management principles underlying the ISO 9000
series of standards are applied to managing for environmental
quality. Thus, the first critical concept in understanding ISO
14001 is that it does not contain any regulatory performance
specifications such as numerical limits on environmental
emissions or discharges.7 ISO' 14001 is not a set of regulations to
attain certain pollution standards, and is not intended to be used as
such. Instead, the focus is on helping organizations develop a
comprehensive and well integrated EMS for managing the
environmental assets and impacts of the company's operations.
The EMS must take into account the relevant regulatory
compliance requirements that the company is legally obligated to
achieve, while managing the potential environmental impact of the
company's business operations.73
The decision to omit performance specifications from the new

68Id.
69Id. See also, Naomi Roht-Arriaza, Shifting the Point of Regulation: The
International Organizationfor Standardization and Global Lawmaking on Trade and
the Environment, 22 ECOLOGY L.Q. 479 (1995) (arguing that participation by a wide
variety of nations and by other interested parties in the ISO 14000 standards
development process is essential to the credibility of the standards). The American
National Standards Institute (ANSI) is the official national representative organization of
the ISO in the United States. New ISO Standards Said to Provide Test for Systems to
Detect, Prevent Violations, 18 Chem. Reg. Rep. (BNA), June 10, 1994, available in
LEXIS, Envirn Library, Cumws File [hereinafter New ISO Standards]. ANSI is a
private-sector-sponsored clearinghouse for voluntary standards in the United States. Id.
70 See ISO 14001, supra note 22; ISO 14004, supra note 22.
71 See Gillespie, supra note 67, at 29.
72 Id.
73 See Kissel & Watson, supra note 4, at 62-63.
320 N.C. J. INT'L L. & COM. REG. [Vol. 22

standards has not been. met with unanimous approval.74 Some

organizations have urged ISO to adopt international performance
standards to create a level playing field among all nations and
therefore promote fair trade." Indeed, environmentalists have
questioned how effective the ISO 14000 voluntary standards can
be in actually improving the international environment without
imposing strict emissions and discharge requirements and setting
environmental performance specifications.76 Despite the interest
by some participants in including performance specifications, they
were omitted -from the new standards. Rather than leveling the
playing field, the ISO technical- committee developing ISO 14001
determined that the new standards would likely run afoul of GATT
and World Trade Organization rules if performance specifications
were included and the standards are subsequently adopted by
member nations as national standards.77 Another obstacle to
creating a single set of international environmental compliance
standards is the inequitable burden that such standards would
impose on developing countries.78 Instead of trading on a. level
playing field, developing nations would be put at an economic
disadvantage if they were required to achieve the same
environmental compliance standards as the world's most
developed nations.79 While lesser developed countries (LDCs) are

74 See David Hunter, ISO and Level Playing Fields, CHEM. WK., Nov. 9, 1994, at
5.
75 Id.
76 See Committee Draft on Management Standards Addresses Pollution
Avoidance, Compliance, [1995 Transfer Binder] 18 Int'l Env't Rep. (BNA) No. 6, at
175-76 (Mar. 8, 1995).
77 See Third-Party Certificationfor ISO 14000 Meets Objections from Industry
Witnesses, [1995 Transfer Binder] 27 Env't Rep. (BNA) No.7, at 445 (June 14, 1996)
[hereinafter Third-Party Certification](Joseph Cascio, chairman of the U.S. delegation
to TC 207, states that the ISO 14000 standards must be strictly voluntary, as a country
would violate World Trade Organization rules by forcing all businesses importing
products to comply with the new standards).
78 See Voluntary Pollution Prevention Standards Emerge from ISO Session, 23
PESTICIDE & Toxic CHEM. NEWS, July 26,.1995, available in LEXIS, Envirn Library,
Curnws File [hereinafter Voluntary Standards Emerge].
79 Representatives of developing nations are concerned that they will not have the
economic resources to comply with the more stringent environmental requirements
being pushed by the United States and European nations, and that being forced to
comply rapidly with a new set of international pollution specifications might stunt their
economic growth. See Kolluru, supra note 1, at 894-96; see also Voluntary Standards
Emerge, supra note 78 (discussing input of lesser developed countries in TC 207
1996] ISO 14000 ENVIRONMENTAL STANDARDS

concerned that such international specifications may be set too

high, the developed nations have their own legitimate concerns
that erosion or backsliding of existing emissions and discharge
specifications will result from acceding to lower international
standards to accommodate the needs of LDCs.80 This tension
between the needs of industrialized and developing nations creates
bureaucratic barriers to negotiating a universally acceptable set of
environmental performance specifications. Due to the extreme
differences in the economic, political, social, cultural and public
health needs of various nations, it is very difficult to negotiate
between states a set of uniform performance specifications that
would be equitable both to developed and developing nations
alike."' Indeed, one criticism of the ISO 14000 standards has been
that the LDCs have been under-represented in the standards
development process. 2 Concerns that developing nations may be
unable to comply with uniform performance specifications set to
the higher standards of economically powerful nations,:, and the
likelihood that such specifications may violate international trade
regulations, have led TC 207 to omit them from the ISO 14000
series altogether.83 Instead, ISO 14001 focuses on helping
companies put in place a framework for systematically managing
environmental impacts. This approach to standardization is far
less controversial than forcing companies operating under quite
different economic and political systems to meet the same
universal emissions and discharge limitations.8 4 ISO 14000 does

seminars and subcommittee meetings).

80 See generally Voluntary Standards Emerge, supra note 78; Unequal
Environmental Standards, supra note 59. Henry Moore, an attorney representing the
Independent Oil Refiners Association, notes that some countries simply have inadequate
environmental protection laws. Id.
81 See UnequalEnvironmentalStandards,supra note 59.
82 See Roht-Arriaza, supra note 69, at 526 (1995) (noting that six of the twenty-six
delegations attending an ISO 14000 plenary meeting in May 1994 were from non-
OECD states, including Thailand, China, Korea, Malaysia, Brazil and South Africa. It is
significant, however, that four of these six participants are emerging Asian economies,
as this meeting was held in Australia to facilitate the attendance of industrializing Asian
nations).
83 See Interview, 19 Int'l Envtl. Rep. (BNA) (1995), available in LEXIS, Envirn
Library, Cumws File [hereinafter Interview].
84 See, UnequalEnvironmentalStandards,supra note 59. Joe Cascio, chairman of
the U.S. delegation to TC 207 cites political, physical, logistic and economic barriers
that would bar any rational attempts to craft international environmental performance
 N.C. J. INT'L L. & COM. REG. [Vol. 22

not attempt to replace or foreclose the possibility of adopting

international environmental performance specifications, however,
and such standards could still be negotiated between nations in the
future.85 Theoretically, the ISO 14000 standards could operate
alongside such negotiated international performance specifications
in the future. Due to the bureaucratic barriers previously
discussed, however, such politically negotiated emission and
discharge limitations are likely to be many years in the making.
Meanwhile, ISO 14000 provides an immediate opportunity for
companies to coordinate and harmonize disparate sets of existing
compliance requirements under one management system. Thus,
the ISO 14000 standards are expected to gain more rapid and
widespread international implementation and acceptance than
would be feasible for global environmental performance
specifications.86
The members of TC 207 have generally agreed that, if the ISO
14000 standards are to be universal, then they must exclude
specific compliance requirements and focus instead on providing a
useful framework for environmental management.17 It is the EMS
that companies will find most valuable in coordinating the wide
range of compliance requirements and operational changes which
must be made to continuously improve environmental
performance. Instead of setting specific emissions and discharge
limits for various industries and categories of pollutants, the ISO
14001 EMS gives companies the tools needed to set such goals
and achieve them using both their home country's regulatory
requirements and their own internal performance goals as a
guide.88
ISO 14001 attempts to give companies a framework for
managing regulatory compliance efforts, gaining efficiency, and
continuously improving environmental performance. The ISO
14001 EMS guidelines encourage companies to minimize or

specifications. Id.
85 TIBOR & FELDMAN supra note 20, at 25.
86 See Stewart Anderson, Introducing ISO 14000: New Standards Which Will.
Help Businesses Manage Environmental Performance, 48 CANADIAN PACKAGING
(1995), availablein LEXIS, Envim Library, Cumws File.
87 TIBOR & FELDMAN, supra note 20, at 34.

88 See id. at 62-63.

1996] ISO 14000 ENVIRONMENTAL STANDARDS

prevent pollution at all stages of their operations, rather than

simply evaluating environmental performance based on "end of
the pipeline" pollution output measures.89 ISO 14001 helps the
company put into place "internal corporate management programs
ultimately leading to responsible and verifiable operating
strategies that will result in the efficient use of natural resources
and protection of the environment."9 The overriding goal of ISO
14001 is to create a universally accepted corporate EMS
standard. 9' The standard helps companies develop the internal
capabilities not only to successfully manage their environmental
compliance matters, but also to continuously improve
environmental performance along the entire supply chain.92
Another reason that there will be fewer bureaucratic barriers to
acceptance of the ISO 14000 standards, as compared to
international environmental performance specifications, is that
they are being created for voluntary implementation by companies
rather than by governments.93 The new standards provide a tool
which allows companies to incorporate existing local, regional or
national environmental compliance requirements within a more
holistic environmental management framework.94 By doing so, the
ISO 14000 program becomes a vehicle through which companies
can demonstrate good environmental practices, and consequently
reduce their environmental liabilities.95 Indeed, ISO 14000

89 David Kirkpatrick, Guidelines Create an Opportunity to Excel, PULP & PAPER,

May 1996, at 186.
90 See Kissel & Watson, supra note 4, at 61.
91Id.
92 Id.
93 See Gillespie, supra note 67, at 29. Joe Cascio, program director for
environmental, health and safety standardization at IBM and chair of the U.S. Technical
Advisory Group to Technical Committee 207, says that detailing specific biosphere
standards is outside the scope of ISO 14000. Id. Cascio states, "ISO 14000 will not
contain start-up performance tests, final performance goals, prescribed performance
improvement rates, or mandated policy options, whether governmental or
organizational." Id.
94 See Edward Byrd, ISO Beefing Up Quality Standards, 47 DENW. Bus. J., at * 1
(1995), available in LEXIS, Envirn Library, Curnws File; see also Michael D. Flanagan,
ISO 14000: A New Environmental Standard with Ramificationsfor Wisconsin and the
World, 10 Corp. Rep. Wis. (1995), available in LEXIS, Envirn Library, Curnws File.
ISO 14000 promotes a management system that will help companies achieve compliance
with government regulations. Id.
91See Gillespie, supra note 67, at 29.
324 N.C. J. INT'L L. &COM. REG. [Vol. 22
standards may be distinguished- from government regulations
because the incentives to implement the standards are market
driven, rather than being unilaterally imposed by government."'
Companies should view the new standards as an opportunity to
achieve greater cost efficiencies rather than yet another burden
imposed by a government entity."

E. ISO 14001 Requirements

The specifications and guidelines for implementing an EMS
are contained in ISO 14001." This section previews the specific
requirements for developing and implementing an environmental
management system under ISO 14001 and 14004."9

1. Establishingan EnvironmentalPolicy
The first step in developing an effective EMS is to carefully
define and articulate a formal corporate environmental policy
statement.' 0 The ISO 14004 guidance standard advises companies
without existing environmental policies to start by focusing on
existing regulatory compliance requirements, limiting sources of
environmental liabilities, and identifying ways of using materials
and energy more efficiently.' ISO 14001 requires that the

96 Id. at 30. According to Thomas Quinn, CEO of the National Standards

Authority of Ireland, implementing the voluntary ISO 14000 standards will add another
layer of security, showing that a company has done all it can do to protect the public and
the environment. Id. He states, "You will probably find that companies will adopt it for
competitive or marketing reasons, just as they did with ISO 9000." Id. Jean McArtor,
an environmental lawyer and consultant to TC 207 notes, "Competition will push this,
and if it works, we won't need massive government regulation. If companies refuse to
buy from [suppliers] that are not ISO 14000 certified, that will also force adoption of the
standard." Id.
97 See ISO 14000: Needed for Global Business? Alternative to EPA, State Regs?,
WASTE Bus., June 19, 1996, at 9.
98 ISO 14001, supra note 22.
99 This comment is based on the most recent draft versions of the ISO 14001,
14004 and 140011-12 standards as of the date of this publication. Each of these
standards is subject to change until approved by a majority of ISO member
organizations and published by the ISO in final form. ISO 14001 and 14004 are
expected to be officially approved and published in final form later this year. See Thai
Companies to Take Part in Pilot Project on ISO 14000, 20 Chem. Reg. Rep. (BNA)
272 (1996); APEC Ministers Agree to Pushfor DramaticProgress on Ocean Cleanup,
19 Int'l Env't Rep. Current Rep. (BNA) 646, 647 (1996).
100 ISO 14001, supra note 22, § 4.1.
101Id. § A.4.1.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 325

corporate EMS policy include a commitment to compliance with

all applicable environmental laws and regulations, provisions on
pollution prevention, and a pledge of continual improvement of
the environmental management system itself."2 Thus, despite the
fact that ISO 14000 does not include performance specifications
within the standards themselves, it does mandate that companies
comply with such standards already in place within the
jurisdictions in which they operate. The environmental policy
statement is the basis of the EMS around which the company's
environmental management goals and targets will be developed.

2. Planningan EMS
Once the company formulates an environmental policy, it must
plan an EMS as the framework for effectively executing that
policy." 3 The first step in the planning phase is to identify all
environmental aspects of the company's operations, activities,
products and services, and then to determine which of these
aspects are likely to have significant environmental impacts.104 In
order to evaluate whether -an impact is "significant," ISO 14004
guidelines suggest considering: the scale of the impact, its
severity, the probability that the impact will occur, and the likely
duration of the impact. 5 Once all environmental aspects of the
company's operations, activities, products and services have been
identified, the planning phase also requires that the company
develop procedures for tracking all legal, regulatory, and other
requirements that apply to these aspects.0 6
ISO 14001 requires the company to define its overall
organizational objectives, and then to set specific and quantifiable
targets at all levels of the organization in order to meet these
objectives.' 7 Environmental objectives are the organization's

102 Id. §§ 4.4.1-4.4.2. See also TIBOR & FELDMAN, supra note 20, at 53-54.
103 ISO 14001, supra note 22, § 4.2. See also TIBOR & FELDMAN, supra note 20, at
56.
104 See TIBOR & FELDMAN, supra note 20, at 56.
105 ISO 14001, supra note 22, § 4.2.1.
106 TIBOR & FELDMAN, supra note 20, at 57.
107ISO 14001, supra note 22, § 4.2.3; see also Setting Objectives and Targets, 2
INT'L ENVTL. SYS. UPDATE, Oct. 1995, at 27-29 (providing interpretations of target
setting requirements under ISO 14001 § 4.2.3 by representatives of various industries
326 N.C. J. INT'L L. & COM. REG. [Vol. 22

long-term goals, while targets are measurable, short-term steps

taken to achieve the long-term objectives.' For example, if one
internal objective is to increase recycling, then the company might
target an increase in the percentage of recycled material used in
packaging.)°9
To ensure that an EMS will be successful, the employees who
will be responsible for achieving the objectives and targets should
also be directly involved in planning them.' It may also be useful
to seek feedback from interested external parties."' One of the
factors driving the interest in ISO 14000 is the expectation of key
stakeholders such as suppliers, customers and employees. By
gaining feedback from these parties during the goal setting
process, the company can be assured that their expectations will be
met.' 12
Many tools and methods are available to organizations for use
in planning and charting their progress towards specific
environmental targets in their EMS. Although not mandated by
ISO 14001, environmental cost accounting is one method many
companies find useful in tracking the costs and benefits of
environmental areas of operation such as pollution control, waste
disposal, and recycling programs." 3 It should be noted, however,
that environmental cost accounting methods often do not take into
account the intangible benefits of an EMS program, such as
improved community relations, enhancement of corporate image,
4
increased customer loyalty, or improved employee morale."
Thus, environmental cost accounting should not be the exclusive

who have implemented ISO 14001).

108 TIBOR & FELDMAN, supra note 20, at 58.
109 Id. Additional examples of specific environmental objectives might include a
reduction in the use of chemical solvents by substituting biodegradable cleaners, or a
reduction in the amount of waste produced per unit of finished product. Id.
110 ISO 14001, supra note 22, § 4.3.2.
"' See Warren A. Bird, ISO 14000: How To Decide What is Right for Your
Company, 102 CHEM. ENG'G 94, 95 (1995).
112 Id.

113 TIBOR & FELDMAN, supra note 20, at 59-60.

"I See William G. Russell et. al., Environmental Cost Accounting: The Bottom
Line for Quality Management, reprinted in JOHN T. WILLIG, AUDITING FOR
ENVIRONMENTAL QuALITY LEADERSHIP 107-12 (1995) (providing a matrix and methods
for implementing environmental cost accounting system).
1996] ISO 14000 ENVIRONMENTAL STANDARDS

basis upon which EMS targets are set." 5 Other methods are
available, including the adoption 'of specific environmental
performance indicators to measure progress towards stated
objectives over time. "6 A company may also set targets for
implementing certain types or levels of technology which are
recognized by regulatory agencies such as the EPA." 7
Once internal objectives and targets are set, the final step in the
planning phase is to actually set up and maintain a comprehensive
environmental management system that can be used to achieve the
company's stated objectives."' The EMS should: (1) detail who
is responsible for setting and achieving objectives and targets at all
levels of the organization; (2) outline how they are to be achieved,
and; (3) set a time frame and deadlines within which each
objective and target is to be achieved." 9 In addition, the EMS
framework should be flexible enough to be adaptable to changing
circumstances. 2 ' EMS planning can be separate from or integrated
into a company's existing management systems.'

3. Implementation and Operation of the EMS

Once the planning stage is complete, the most challenging step
in the EMS process is putting into place all the resources needed

115 TIBOR & FELDMAN, supra note 20, at 60-61.

116 Id. at 59. Specific examples of performance indicators include, (1) waste
produced per quantity of finished product; (2) percent of waste recycled; (3) specific
quantities of a pollutant released; (4) number of regulatory violations in a given period
of time; and (5) acres of land set aside for wildlife habitat programs. Id.
117 Id. at 59-61. The Annex to ISO 14001 makes specific reference to best available
technology where economically viable (EVABAT). ISO 14001, supra note 22, §
A.4.2.3 (Annex A).
118 TIBOR & FELDMAN, supra note 20, at 60.

119 Id.
120 ISO 14001, supra note 22, § A.4.0.
121 TIBOR & FELDMAN, supra note 20, at 61. In this respect, the ISO 14000
standards are consistent with ISO 9000 principles on quality management, and with
other business consulting frameworks which seek to decompartmentalize and break
down traditional functional barriers in the management of an organization to improve
efficiency and make the organization more responsive to its marketplace. Id.; see ISO
9000, supra note 52; see also Andrew C. Boynton & Bart Victor, Beyond Flexibility:
Building and Managing the Dynamically Stable Organization, 34 CAL. MGMT. REV. 53,
63-64 (1991) (integrating the EMS into the organization may involve decoupling
traditional barriers between functional areas and reorganizing the firm along horizontal
systems).
328 N.C. J. INT'L L. & CoM. REG. [Vol. 22
for implementation.' In this stage, top management should
appoint a specific management representative to act as the
"champion" of the EMS program. 123 The role of this management
representative is to oversee the maintenance and implementation
of the program124
and to report EMS performance to top
management.
Organizations should also consider creating an environmental
committee made up of managers representing each of the 21 5
functional areas of the company to share in these responsibilities.
It is critical to the success of EMS implementation that
management representative(s) be given sufficient authority,
autonomy, responsibility and resources to support effective
implementation of the EMS. 26 The organization must set out the
roles and responsibilities of persons within the organization who
will be responsible for achieving environmental goals and targets.
Once these roles and responsibilities are assigned, the organization
must provide the training necessary to ensure that these persons
are prepared to undertake their responsibilities.
Meeting ISO 14001 training requirements is critical to
successfully implementing the EMS. Compliance with training,
documentation and reporting requirements is perhaps the most
challenging step of implementing the EMS. 127 All personnel
whose job responsibilities have a significant impact on the
environment must receive appropriate training. 2 Specifically, all

122 TIBOR & FELDMAN, supra note 20, at 61.

123 ISO 14001, supra note 22, § 4.3.1.
124 Id.

125 See Bird, supra note 11, at 94-95. The assembled' ISO 14000 team should
include key stakeholders as well as members from various functional areas (such as
marketing) within the company. Id. For practical guidance on involving stakeholders in
implementing an ISO 14001 EMS, see ISO 14004, supra note 22, § 4.3 et seq.
126 See Bird, supra note 111, at 94-95. See also, ISO 14004, supra note 22, §§

4.1.2, 4.3.2.3.
127 Ronald Beglen, Environmental ISO Standard Adds to Management Tasks,

CHEM. WK., Apr. 5, 1995. Joel Charm, Director of Corporate Occupational Health and
Safety at Allied Signal and Chairman of a Sub-Technical Advisory Group for Technical
Committee 207 suggests that training is "the number one issue" faced by Allied Signal
in its current efforts to be prepared for ISO 14000 registration during 1996. Id. "Being
able to show training and demonstrating competency based on that training is a huge
task," states Charm, "[w]e've got a long way to go to document what we actually do
versus what we ought to do." Id.
128 TIBOR & FELDMAN, supra note 20, at 63.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 329

employees in the organization must be made aware of:

[T]heir roles and responsibilities within the context of the EMS;

[s]ignificant environmental impacts, actual or potential, of their work
activities; [the] importance of conforming to environmental policies,
procedures, and requirements; [e]nvironmental benefits of improved
personal performance; and [t]he consequences of violating EMS
procedures. 129

Meeting these training requirements will likely communicate

to the entire company that upper management takes the ISO 14000
program seriously enough to devote significant resources to its
implementation. Training should also instill the company's
environmental values in employees, and leave them with the
understanding that they will collectively determine the success or
failure of the program.
In addition, companies must establish and maintain
information describing the basic elements of the management
system. 30 Concern has been expressed by some companies that
the documentation required under the standard may become overly
burdensome."' The bottom line under ISO 14001 is that an
organization must be able to clearly demonstrate to auditors that
an EMS system is in place, functioning smoothly, supported by
upper management, and is subject to periodic management
review. 32 ISO 14001 does not require that complex
documentation systems be developed for their own sake.'33 Where
overlap occurs in documentation for the environmental and quality
management areas, the ISO 14001 Annex encourages using the
same documents for both areas and does not require unnecessary

129 Id.
130 Id. at 66. See also ISO 14001, supra note 22, § 4.3.4.
131 TIBOR & FELDMAN, supra note 20, at 67. In part, this was due to previous
complaints that ISO 9000 implementation had required a "paper factory" of
documentation. Id. at 68. Auto manufacturers, large chemical conglomerates, and other
companies who had already implemented the ISO 9000 quality management program
were particularly concerned about minimizing additional documentation requirements
under ISO 14001. Id.
132 Id. at 68.

133 See ISO 14001, supra note 22, § 4.3.5.

330 N.C. J. INT'L L. & COM. REG. [Vol. 22

duplication of efforts.'3 4 ISO 14001 does require the organization

to maintain records demonstrating conformance with the EMS
standard, including training records, results of internal and
external audits and reviews, and other relevant information.'35
Indeed, the biggest challenge to most companies in implementing
ISO 14001 will be setting up a36 system to document all of their
internal environmental systems.
Some companies fear that maintaining documentation of the
environmental management system could increase environmental
liabilities by providing a source of information that may be
subpoenaed by regulatory agencies or opposing parties in
environmental litigation.'37 ISO 14001 documentation guidelines
do not require that firms reveal the actual environmental aspects
and impacts of their activities and operations." Nor are
companies required to document the results of compliance audits
39
or actions taken to correct past violations.' Although many such
specific items do not have to be documented, conformance with
the ISO 40 14001 standard must be demonstrated to external
auditors. 1

134 Id. §§ A.4.3.4-.5 annex A.

135 TmOR & FELDMAN, supra note 20, at 72-73. The ISO 14004 guidance standard
states that such records should also include: "[l]egislative and regulatory requirements;
[i]nspection, maintenance and calibration records; [i]ncident reports; [r]eports of
environmental audits and reviews; [c]ontractor and supplier information; [and]
[e]mergency response records." Id.; see also ISO 14001, supra note 22, § 4.4.3.
136 Mary Buckner Powers, Companies Await ISO 14000 as Primerfor Global Eco-

Citizenship, 234 ENG'G NEWS REC. 31, 32 (1995) [hereinafter Powers, Companies Await
ISO 14000]. According to Thomas Ott, Manager of Corporate Environmental Affairs at
Motorola and chair of the U.S. subcommittee on ISO 14000 auditing standards. Id.; cf
Marie Godfrey, How To Document an ISO 14001 EMS, INT'L ENVTL. SYS. UPDATE, Oct.
1995, at 23, 24; James Margolis, Deciding on the Scope of EMS Documentation: Ask
an Expert, INT'L ENVTL. SYS. UPDATE, Oct. 1995, at 26-27.
137 William Hickman, ISO 14000 Environmental Standards May Aid Domestic
Violators, 7 ENv'T WK., Dec. 8, 1994, available in LEXIS, News Library, Newsletter
File.
138 Will Implementing ISO 14001 Destroy the Confidentiality of Environmental
Compliance Audits?, [1995 Current Developments Binder] 27 Env't Rep. (BNA) No.
18, at 427 [hereinafter Will Implementing ISO]; see also ISO 14001, supra note 22, §
4.4.3.
139 ISO 14001, supra note 22, § 4.4.3.
140 Id. See infra notes 252-62 and accompanying text for further discussion of the
confidentiality issues associated with the ISO 14001 auditing and certification process.
.19961 ISO 14000 ENVIRONMENTAL STANDARDS

4. Checking and Correctingthe EMS

Continual improvement of the environmental management
system is another required component of the ISO 14001
requirements. 4' A company must monitor and evaluate the system
itself, identify problems, and take corrective action at regular
intervals.' 42 In addition, the company must carry out audits of the
EMS. 43 Such audits are focused on evaluating the system itself,
and thus will look at whether the EMS is in conformance with its
stated objectives and targets and provide an excellent opportunity
to make reports to upper management on EMS progress. 144 Such
audits may be performed by internal or external auditors, provided
that the qualifications
45
of the auditors and their objectivity can be
assured.

5. ManagementReview
Finally, ISO 14001 requires that upper management review the
results of these regular audits of the EMS in light of internal or
external changes or other circumstances affecting the
organization.'46 The EMS must be regularly monitored and
adjusted to ensure it remains consistent with other management
strategies and initiatives within the organization. 7 Upper
management must take an active role in planning corrective and
48 Periodic
preventive action to continually improve the EMS.
management review may result in changes in the organization's
environmental policy which, in turn, may require changes in the
EMS. 149 In this respect, management review is the last step in an
141 ISO 14001, supra note 22, § 4.5.
142 Id. § 4.4.
143 Id. § 4.4.4.
144 Id. § 4.5.
145 Id. § A.4.4.4 (Annex A).
146 ISO 14001, supra note 22, § 4.5. Changing circumstances could include
internal changes, such as changes in products, services or activities of the organization.
TIBOR & FELDMAN, supra note 20, at 74-75. External changes could include: (1)
changes in marketing information; (2) changes in the expectations of interested parties;
(3) technological advances; (4) changes in legislation; and (5) feedback from
environmental incidents. Id. at 74.
147 ISO 14001, supra note 22, § A.4.5 (Annex A at 20).
148 See id. § 4.5.
149 TIBOR & FELDMAN, supra note 20, at 74.
332 N.C. J. INT'L L. & COM. REG. [Vol. 22

ongoing cycle of improvement, which begins anew as the

environmental policy of the organization is periodically revised. 5 °

F. Auditing Under ISO 14010-12 Standards

Once these five major implementation steps have been
completed and the EMS is in place, the company is ready to
undertake an audit. The company may decide to undertake an
internal audit. The company may also decide to undergo a third
party audit as a contractual requirement by .a purchaser or to gain
formal ISO 14001 certification.
Since the 1970s, companies have increasingly recognized that
environmental auditing is essential to ensure compliance with
environmental regulations. 5' Regulatory pressures, highly
publicized environmental accidents, huge increases in the amounts
of potential fines and penalties, as well as the imposition of civil
and criminal liability for environmental problems were some of
the factors pushing the movement towards environmental
auditing.' Auditing helps to demonstrate compliance by showing
that the company has a. system in place to measure and
continuously improve its environmental performance.
Organizations generally use environmental auditing as a means
of: (1) minimizing liability for fines and penalties by verifying
compliance with environmental laws and regulations; (2)
evaluating the effectiveness of systems put in place to manage
environmental responsibilities; and (3) assessing the risks involved
in the company's regulated and unregulated activities and facility
operations. 5 3 All of these goals are included in the scope of the
environmental auditing standards being developed under ISO

See id. at 74.

150
151See id. at 74; see also Ronald F. Black et al., Environmental Auditing at the
Crossroads:The EnvironmentalAuditing Roundtable's Response to ISO 14000, TOTAL
QUALITY ENVTL. MGMT., Autumn 1995, at 21, 24. The Environmental Auditing
Roundtable (EAR), a 900 member professional organization dedicated to promoting
environmental auditing, developed a set of environmental auditing standards in 1991
aimed at ensuring consistency and quality in auditing U.S. companies. Id. EAR has
also played an active role in the development of the ISO 14010-12 standards. Id. at 28.
Thus, companies will find consistency between the EAR standards and ISO 14010-12.
Id. at 28-30.
152 TIBOR & FELDMAN, supra note 20, at 93-94.
"I3Id. at 94.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 333

14000.1 4 In addition, the ISO 14000 standards may be used to

help the company move beyond compliance and recognize quality
management opportunities.' 55
The ISO auditing 'standards, ISO 14010-12, are guidance
standards only.'56 ISO 14001 certification does require regular
auditing; however, the required auditing does not have to utilize
the ISO 14010-12 standards.157 Rather, the standards are intended
to be a guide as to what the independent third party auditors will
be looking for. ISO 14010-12 provide an opportunity for
harmonization of disparate international environmental auditing
requirements. 5 ISO hopes, but does not mandate, that companies
over time will recognize
1 59
and implement these procedures as
international standards.

1. ISO 14010 Auditing Guidelines

ISO 14010 outlines the general principles of environmental
auditing.6 One of the most important factors in the auditing
process is ensuring the credibility and reliability of the audit. ISO
14010 requires that the members of the audit team be independent
of the activities which they are auditing.161 In addition, ISO 14010
requires that auditors set forth in advance of the audit what the
scope and objectives of the audit, and make certain that the
evidence evaluated and the results. reported do not include issues
outside the scope. 6 2 Finally; ISO 14010 also requires that all audit
findings be reported to the client in a detailed written report.163

154 Id.
155 WILLIG, supra note 5, at 16-20. A basic maxim of quality management is the
notion that "what gets measured gets done." By using the environmental audit to
measure and take stock of the company's environmental processes, the company can
identify opportunities for waste reduction, increased process efficiency, error reduction,
and energy conservation. Id.
156 TIBOR & FELDMAN, supra note 20, at 94.
157 See id. at 96.
158 See id. at 94-95.
159 See id.
160 ISO 14010, supra note 27, at 1.
161 Id. § 5.2.
162 Id. §§ 5.1, 5.6.
163 Id. § 5.7.
334 N.C. J. INT'L L. & COM. REG. [Vol. 22

2. Steps in the ISO 14011/1 Auditing Process

The ISO 14011/1 standard creates a framework for auditing an
EMS.' 64 The key steps under this standard process include: (1)
setting audit objectives; (2) identifying audit team roles,
responsibilities and activities; (3) initiating the audit; (4) preparing
the audit; (5) executing the audit; (6) documenting auditing reports
and records; and (7) completing the audit. 6 The lead auditor
begins the process by working with the company to define the
scope and objectives of the audit. 66 The primary objective is
generally to determine whether the company's EMS conforms to
ISO 14001 criteria, but other typical audit objectives may include:
(1) determining whether the EMS is being properly implemented
and maintained; (2) identifying areas for improvement of the
EMS; (3) assessing whether the internal management review
process is capable of ensuring continued suitability and
effectiveness of the EMS; (4) evaluating the EMS as part of a
potential contractual relationship; and (5) making
16
recommendations for corrective action. Once the auditor and
client agree on audit objectives, the lead auditor assigns specific
roles and responsibilities to audit team members and initiates the
audit by68
reviewing the preliminary documentation provided by the
client. 1
The next major step in the audit process is preparation of the
audit.169 This step involves designing a comprehensive but flexible
audit plan.' The audit plan outlines key aspects of the audit
including: (1) dates, locations, and duration of audit activities; (2)
audit objectives, scope, and criteria; (3) organizational and
functional areas to be audited, including identification of
individuals with direct responsibilities regarding the EMS in these
areas; (4) identification of EMS aspects that are of highest audit
priority; (5) auditing procedures and reporting language to be

164 See ISO 14011/1, supra note 28, § 1.

165 See id. §§ 4-6.
166 See id. §4.2.1.
167 See id. § 4. 1.
168 See id. § 5.1.2.
169 See id. § 5.2.3.
170 See id. § 5.2.1.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 335

used; (6) confidentiality requirements; (7) audit report content,

format and structure; and (8) document retention requirements. 7 l
Outlining these aspects of the audit in advance helps to ensure the
auditors expectations of the audit are consistent with those of the
client. When everyone is reading from the same page, the auditing
process is streamlined and the results are more relevant to the
client's needs.
Once the audit plan is 'approved by the client, the audit team
may proceed according to schedule with the steps of executing the
audit.' These steps include: (1) holding an opening meeting; (2)
collecting audit evidence; (3) recording the audit findings; (4)
holding a closing meeting to resolve any disagreements over the
findings; (5) preparing audit reports and records; (6) distributing
the report as appropriate in light of confidentiality agreements; and
(7) retaining audit documents in accordance with confidentiality
requirements. 73 The opening and closing meetings with the client
are critical steps in the auditing process.'74 By reviewing the scope
and objectives of the audit in the opening meeting, the auditor can
confirm that the audit will cover all of the areas most relevant to
the client's business.7 7 Because the client will be using the
auditing reports to demonstrate compliance with ISO 14001 to
interested parties, the closing meeting helps to ensure that the audit
reports are delivered in the format most useful to the company and
its needs. 76 The audit needs to be performed in manner consistent
with the client's need, while also ensuring that the objectivity and
credibility of the audit findings are maintained.

3. ThirdPartyAuditor Qualifications Under ISO 14012

One way to ensure the credibility of ISO auditing results is to
make certain that the auditors themselves have the proper
qualifications. ISO 14012 outlines key auditor qualifications.'77
171 See id.
172 See id.
173 See id. §§ 5.3.1-5.4.4.
174 See id. §§ 5.3.1-5.3.4. These meetings promote active participation by the
auditee and help to assure the auditee's clear understanding of the audit findings. Id.
171 See id. § 5.3. 1.
176 See generally id. § 5.4 et seq.
177 See ISO 14012, supra note 29, § 1.
336 N.C. J. INT'L L. & COM. REG. [Vol. 22

These requirements are divided into the following general

categories: (1) education and work experience; (2) formal and on-
the-job training; (3) personal skills and attributes; (4) professional
standard of care and code of ethics; (5) language and
communication requirements; (6) maintaining competence through 17
refresher training; and (7) additional criteria for Lead Auditors. 1
These requirements will apply to both internal and external
auditors, and to the selection of auditors to perform both the ISO
14001 third-party certification audits and the EMS audits
described in ISO 1401 /I.'
One of the primary goals of these requirements is ensuring that
auditors have adequate environmental training and expertise.'
ISO 14012's training requirements for environmental auditors
include both formal and on-the-job training. 8' Training guidelines
state that "formal training [of auditors] should address: (a)
environmental science and technology; (b) technical and
environmental aspects of facility operation; (c) relevant
requirements of environmental laws, regulations, and related
documents; (d) environmental management systems and standards
against which EMS audits may be performed; and (e) audit
procedures, processes and techniques."'8 2 These training
requirements are one component of the overall objective of
ensuring the credibility of the auditing process.
ISO 14012 also includes two useful annexes to assist
companies in selecting an environmental auditor.'83 Annex A helps 14
companies evaluate the qualifications of auditor candidates, 1
while Annex B anticipates the formation of an oversight committee
to ensure consistency in the registration of environmental
auditors. 5 Such a committee should establish a quality assurance

178 See id. §§ 4-11.

179See id. § 1.
180 TIBOR & FELDMAN, supra note 20, at 106.
181 ISO 14012, supra note 29, at § 5.1-.2; see also Lawrence B. Cahill & Dawne P.
Schomer, The Potential Effect of ISO 14000 Standards on Environmental Audit
Trainingin the UnitedStates, TOTAL QUALITY ENV'T MGMT., Spring 1995, 5, 7.
182 ISO 14012, supra note 29, § 5.1.
183 Id. §§ A.1, B.I (Annexes A & B)

184 Id. §§ A.2, A.3 (Annex A).

185 Id. §§ B.2 (Annex B).
1996] ISO 14000 ENVIRONMENTAL STANDARDS 337

process for evaluating auditors and maintain a register of auditors

who meet these quality, assurance criteria.8 6 The rapid deployment
of qualified auditors is essential to the credibility of ISO 14000
and its successful implementation. 7
Consistent and effective auditing will be essential for ISO
14000 to gain credibility and widespread acceptance."' While the
current versions of ISO 14010-12 create a strong foundation for
developing a credible international auditing system, there remain
issues to be resolved. 9 Many of the ISO' 14001 requirements are
somewhat generic, making an auditor's evaluation require a
certain level of subjectivity. 9 The auditing standards have also
failed to address whether auditors could be compelled to report
noncompliance to regulatory authorities. 9 ' There is a thin line
between evaluating whether an internal EMS contains the required
elements, versus evaluating the environmental performance of the
company in light of compliance requirements.' 92 Many of these
remaining issues may have to be worked out as ISO 140001 is
implemented and auditors gain more practical experience in EMS
auditing.
Another issue that has arisen in the United States is
determining which organization will be given the authority to
audit and certify a corporation's ISO 14000 EMS.'93 The Registrar
Accreditation Board (RAB) is currently under contract with the
American National 'Standards Institute (ANSI) to administer
accreditation services for ISO 9000 certification programs.'94 Until

186 Id.
187 Black et al., supra note 151, at 32. EAR has resolved to launch a national
program to rapidly accredit the organizations who will train and certify environmental
auditors in the United States. Id.
188 TIBOR & FELDMAN, supra note 20, at 110- 1l.

189 Id. at 111-12.

190Id. at 110.
191Id. at 112.
• Id. at 110. The goal of an EMS audit is to ensure the company has the proper
systems in place to manage its environmental compliance programs and the other
environmental aspects of its business operations. Id.'
"'Dueling U.S. Accreditation Schemes Possible as ANSI Breaks Off Negotiations
with RAB, 2 INT'L ENVTL. SYS. UPDATE, Oct. 1995, at 1-4.,
11 Id. at 1. ANSI is the national accreditation body which acts as the United States
representative to the International Organization for Standardization. Id.
338 N.C. J. INT'L L. & COM. REG. [Vol. 22

recently, ANSI was expected to allow RAB to offer these services

for ISO 14000 in the United States.'95 It was hoped that awarding
the ISO 14000 contract to RAB would allow a single accreditation
body to offer both ISO 9000 and ISO 14000 certification programs
in the United States. 9 6
However, ANSI and RAB have been unable to resolve their
differences as to what roles should be played by each organization
in administering the ISO 14000 accreditation scheme.' 97 In the
meantime, EAR has stepped in by offering to team up with ANSI
to provide both company EMS certification under ISO 14000 and
accreditation of other certification bodies, in addition to the other
services it is planning to offer in auditor training and
registration.'98 These details as to who will administer the
certification program in the United States are expected to be
worked out quickly, and the members of TC 207 do not believe
this will be an obstacle to implementing ISO 14000 across the
United States.'99 Most importantly, the ISO 14012 auditor
qualification standards will help ensure that, whatever
organization administers the accreditation scheme, there will be a
high level of credibility inherent in the certification process.

III. Factors Affecting Acceptance of ISO 14000

The success of the ISO 14000 series of standards depends on
whether companies have sufficient incentives to expend the
resources needed to achieve EMS certification."' If ISO 14000
becomes the de facto standard accepted by multinational
corporations and other business entities, it has the potential to have
a far-reaching and significant impact on the improvement of the

195 Id.
196 Id,
197 Id. at 2-3.
198 Id. at 2.
19 Id. at 1. The U.S. Technical Advisory Group is confident that such
administrative details of the U.S. accreditation system will be resolved quickly and will
not adversely affect companies seeking certification in 1996. Id. (detailing reassurances
made by Joe Cascio, chairman of the U.S. Technical Advisory Group to ISO Technical
Committee 207, that companies seeking ISO 14000 certification in 1996 will not be
adversely affected by disputes over who will administer the program in the United
States). Id.
200 See generally Will Implementing ISO, supra note 138, at 427.
19961 ISO 14000 ENVIRONMENTAL STANDARDS 339

environment internationally. Because ISO 14001 is a voluntary

international standard providing an environmental management
framework for private companies, its adoption and implementation
will be driven primarily by market forces.20 '
Based on private sector experience with ISO 9000, it is
expected that ISO 14000 will gain widespread international
recognition and acceptance in a relatively short time period.2"2 The
development of ISO 14000 has closely paralleled the development
of the ISO 9000.203 However, the ISO 14000 standards are
expected to proliferate at a much faster rate than ISO 9000.204 How
quickly ISO 14000 becomes accepted by the international business
community will depend on several important factors. The
following paragraphs address the key factors which will influence
a company's decision whether to undertake ISO 14000
certification, and thus determine whether the new standards have a
significant international impact.
A. Impact on the Company's Bottom Line
An important factor leading to the widespread implementation
of the ISO 9000 quality management program was that many
companies saw a clear and positive impact on the bottom line.2 5
Companies who can foresee a bottom line result similar to that
obtained after gaining ISO 9000 certification will have a major
incentive to seek certification under ISO 14001. The main
difference between ISO 14000 and ISO 9000 certification in this
respect is that ISO 9000 provided quality-based product standards,
whereas ISO 14001 sets forth process-based requirements for
implementing a comprehensive environmental management
system.2 6 Because of the way costs are generally measured, it is
201 TIBOR & FELDMAN, supra note 20, at 7-8.
202 See Anderson, supra note 86; see also Fahy, supra note 53.
203 See Anderson, supra note 86.
204 Id. Dr. George Connell, chair of TC 207, predicts that ISO 14000 has the
potential to make an even greater impact in terms of sheer interest and numbers than was
seen with ISO 9000. Id. Connell expects ISO 14000 standards to proliferate at a faster
rate than the ISO 9000 standards, which became universally recognized within six years
of publication. Id.
205 See generally Bird, supra note 111, at 96-97 (discussing reasons and strategies
for implementing a quality management plan).
206 Gabriel G. Crognale, Environmental Management: What ISO 14000 Brings to
 N.C. J. INT'L L. & COM. REG. [Vol. 22

relatively easy for company executives to predict how product-

based quality management principles can be used to control
production costs. By contrast, it is more difficult to quantify how
proactive management of environmental aspects of business
processes will improve profits." 7 Companies who take a long-term
view of managing for quality, however, are learning that improved
environmental performance generally corresponds to improved
financial performance.
Many organizations inappropriately view environmental
improvements as cost centers with no direct impact on the bottom
line, and thus are less likely to see the economic value of
implementing an ISO 14001 EMS. 28 The EMS helps employees
identify many opportunities for a company to improve its financial
performance using the following methods: (1) waste reduction, (2)
pollution prevention; (3) improved product and process efficiency;
(4) reduced environmental remediation costs; (5) reduced risks and
liabilities for health and environmental effects; (6) increased
industrial recycling revenues; and (7) improved asset management
techniques. 9 Proactive environmental management involves
maximizing the value of the company's environmental assets and
minimizing potential environmental liabilities."' Implementing an
ISO 14001 EMS allows a company to integrate environmental
values into its management processes.' Ultimately, such
environmental considerations become an important component of
a central corporate strategy aimed at ensuring the long run

the Table, TOTAL QuALITY ENVT'L MGMT., Summer 1995, at 5, 10.

207 See Bird, supra note 111, at 96-97. See generally Rodger A. Jump,
Implementing ISO 14000: Overcoming Barriersto Registration,TOTAL QuALITY ENVTL.
MGMT., Autumn 1995, at 9, 12-13 (discussing ways of quantifying the various benefits
gained by implementing ISO 14000).
200 See Bird, supra note 111 at 95-96.
209 See Bird, supra note 11, at 96-97; Marsha Zabarsky, MIT Environmentalists
Treat Business as Friend, Not Foe BOSTON Bus. J., Mar. 15, 1996, at 30'(discussing
how private codes like ISO 14000 promote sustainable development industrial
recycling, and asset management); see also Byrd, supra.note 94.
210 See Bird, supra note 111, at 96-97. For a discussion detailing how proactive
environmental management strategies can be used to improve competitiveness, see
Michael E. Porter, Green and Competitive:.Ending the Stalemate, HARv. Bus. REV.,
Sept.-Oct. 1995, at 120.
211 See Bird, supra note 111, at 96-97 and Table 3..
1996] ISO 14000 ENVIRONMENTAL STANDARDS

financial health of the organization."

B. ISO 14001 Certificationas a "Global Passport"

Companies will move quickly to gain ISO 14001 certification
if they receive clear signals that their customers intend to require
such certification in the future."' As multinational firms begin
mandating that their suppliers become certified, the market based
incentives for certification will increase. 214 Once the larger
multinational firms begin to require ISO 14000 certification of
their suppliers, a domino effect will lead to a widespread adoption
of the standards along the supply chain of various industries."5
Certification will at first be viewed as a means of gaining
competitive advantage within a particular industry, but will
ultimately be perceived as a de facto "passport" for doing business
internationally. 6 Over a relatively short period of time, a
dramatic increase in the number'of ISO 14000 certified companies
is expected.2

212 See id. For more insight on corporate environmental strategy, see What Is

Environmental Strategy? An Interview With Dow Chemical CEO and Chairman Frank
P. Popoff, McKINSEY Q., January 1, 1993, at 53.
213 See, e.g., Using ISO as a Screen, Bus. & THE ENV'T, Oct. 1995, at 4-5
[hereinafter UsingISO].
214 See Sam Samdani et al., ISO 14000: New Passport to World Markets, 102

CHEM. ENG'G 41, 41-42 (1995). Large multinational firms have already demonstrated
an interest in gaining ISO 14000 certification. Powers, Companies Await ISO 14000,
supra note 136, at 32. IBM, 3M, Allied Signal, Eastman Kodak Co., and Motorola, are
members of the Technical Advisory Group negotiating the U.S. position on ISO 14000.
Id. at 30. See also Rick Mullin & Kara Sissell, Managers Gear Up for Global
Standards, CHEM.. WK., Oct. 11, 1995, at 65, 68. Indeed, in December 1995, an SGS-
Thompson facility in Sancho Bernardo, California became the first U.S. site to meet the
requirements for formal ISO 14001 certification under the draft standard. SGS-
Thompson Microelectronics: First U.S. Facility Certifies to ISO 14001 and EMAS, 3
INT'L ENVTL. S-S. UPDATE, Feb. 1996, at 1, 22 [hereinafter SGS-Thompson]. Their
certification will be finalized as soon as the current draft standard meets final approval.
Id. At the time of this publication, final ISO 14001 approval is expected in late 1996.
Id.
215 See Marvin, supra note 2, at 19. A recent study by the Global Environmental

Management Initiative (GEMI) reflects that nearly 75% of multinational companies have
already established some type of environmental management system. Id.
216 Henry R. Balikov, Developing Global Environmental Management Standards:

Progress and Implications of the-New Wave, TOTAL QUALITY EN~vTL MGMT., Spring
1995, at 1,3.,
217 Powers, Companies Await ISO 14000, supra note 136, at 33. Dorothy Bowers,

vice president of environmental and safety policy for Merck & Company states, "At first
[ISO 14001 certification] will be a competitive advantage for those who have it. But
342 N.C. J. INT'L L. & COM. REG. [Vol. 22

C. ContractualRequirements

1. Government ContractRequirements
National and international government or quasi-governmental
entities, such as the World Bank and the U.S. Agency for
International Development, are already encouraging borrowers to
implement environmental management systems and may
ultimately require ISO 14000 certification as a way to demonstrate
environmental responsibility. 18 In addition, the U.S. Department
of Defense, the U.S. Department of Energy and the British
Defense Ministry intend to require that suppliers under their
government contracts become ISO 14000 certified."9 If key
governmental agencies in the United States and abroad outwardly
endorse ISO 14000 certification, then the trend of government
acceptance is likely to become more widespread.2 As an
increasing number of government contractors become certified,
there will be significant incentives for companies in industries
which are heavily dependent on government contracts-such as
electronics and aerospace--to gain the certification.

2. Certificationas a Private ContractualRequirement

Because markets are driven by stakeholder expectations,
companies are increasingly using environmental responsibility as a
factor in screening potential suppliers.2 ' In addition to enhancing a
company's consumer support, ISO 14001 certification may

ultimately, it may well be a necessity." Mary Powers, ISO's New Global Enviro Specs
Seen Creating Major New Consulting Market, HAZARDOUS WASTE Bus., July 12, 1995,
available in LEXIS, Envirn Library, Cumws File [hereinafter Powers, ISO Enviro Specs
Create Consulting Market]. Bowers further concludes that corporations will expect the
firms with which they do business to comply with the new standard. Id. She states,
"Large corporations will look at the firms they do business with-consultants,
construction companies, suppliers, and others-to see if they too have set up an
organization to address environmental issues." Id.
218 See In Brief, 2 INT'L ENVTL SYS. UPDATE, Oct. 1995, at 3-4; see also WORLD
BANK, THE INDUSTRIAL POLLUTION AND PREvENTION HANDBOOK (1995).
219 See Mullin & Sissell, Managers Gear Up, supra note 214, at 65; Beth W.
Orenstein, New Global StandardTargets Environment, E. PA. Bus. J., Jan. 9, 1995, at I,
2. The use of ISO 9000 and ISO 14000 quality management systems has been
specifically endorsed by the secretary of defense. See ISO 9000/ISO 14000 Symposium,
COMMERCE Bus. DAILY, Special Notices, Aug. 1, 1996.
220 Hickman, supra note 137, at 104.

221 Abusow, supra note 30, at 31-32.

1996] ISO 14000 ENVIRONMENTAL STANDARDS

ultimately be required in supplier relationships as evidence of

sound environmental management."' Major auto manufacturers
are leaning toward implementing ISO 14000 and requiring that
their suppliers become certified.223 Indeed, industry analysts
predict that ISO 14000 may become a de facto requirement for
doing business with the "big three" automakers.224 There are
growing signs that ISO 14000 certification may ultimately become
a written requirement of supplier contracts in a wide range of
industries.225

D. Responses of Lenders and Insurers

Lenders and insurers, who need to know a company's
environmental performance record and assess potential
environmental liabilities, are expected to begin requiring or
looking favorably upon ISO 14001 certification.226 After more
than twenty years experience with Superfund and the Resource
Conservation and Recovery Act (RCRA), lenders and insurers
have become acutely aware of the substantial environmental
liabilities that may be involved in business and real estate
transactions.2 These industries are already responding with new
environmentally driven financial products such as specialized
pollution liability insurance.228 It is only reasonable to expect

222 Byrd, supra note 94, at * 1.

223 GM Preparingfor QS 14000, 2 INT'L ENvTL. SYS. UPDATE, Oct. 1995, at 2
[hereinafter GM Preparing]. For example, Darrell Peebles, Divisional Coordinator of
ISO/QS-9000 quality systems for Delphi Harrison Thermal Systems (a major supplier to
General Motors) notes that GM views "the ISO 14000 series as a means of measuring its
own and its suppliers' environmental performance in the same way [that] QS-9000 [(the
version of ISO 9000 adopted by the auto industry)] is used to measure quality
performance." Id. at 1. He states, "GM recognizes the possibility that ISO 14001
certification will become a prerequisite for conducting business in other parts of the
world." Id.
224 ISO 14000 Standards May be Substitute for Differing Regulations in Many

Nations, 18 Int'l Env't Rep. (BNA) 326, 327 (1995) [hereinafter ISO StandardsMay Be
Substitute]. The "big three" include Ford, Chrysler and General Motors. Cornelius
Smith, Director of Environmental Management Services for ML Strategies predicts, "[i]f
the Big Three [automakers] say that all their suppliers must be certified under ISO
14000, then it becomes a defacto requirement for doing business." Id.
225 Id.
226 See Flanagan, supra note 94.
227 See id.
228 See, e.g., Scott Harper, Companies Can Buy, Sell the Right to Pollute,
344 N.C. J. INT'L L. & COM. REG. [Vol. 22

insurers and lenders to manage credit risks by offering companies

incentives to better identify and manage their own environmental
liabilities.229 For example, insurance providers are expected to
offer discounts to firms who achieve third-party ISO 14001
certification, because companies with an effective EMS in place
should face a lower risk of environmental liabilities.23 Support of
ISO 14000 by financial institutions will provide another powerful
incentive for companies to initiate formal EMS programs and gain
ISO 14001 certification.23' If companies perceive opportunities for
improved access to capital or more favorable credit and insurance
terms, it becomes easy for managers to see a direct impact on the
bottom line to be gained through certification.232
E. Response of Regulatory Entities

1. Regulatory Agency Incentives for Certification

As the EPA and various state environmental regulatory
agencies begin to offer formal recognition of ISO 1400.1
certification, companies will have a powerful incentive to
implement an ISO 14001 EMS.233 For example, it has been
proposed that companies certified under ISO 14001 might receive
credit from the EPA for demonstrating good faith compliance
efforts in the event that the company is cited for a violation.23 4 The
EPA has been promoting internal environmental auditing for more
than a decade, beginning with the promulgation of its 1986
auditing policy.235 The EPA has recently updated its auditing
policies to provide additional incentives for companies to conduct
VIRGINIAN-PILOT, Feb. 12, 1995, at DI; Janet D. Moylan, Browsing Through the
Environmental Marketplace: Choosing the Best Insurance Policy to Manage
EnvironmentalLiability Risks, 42 RISK MGMT. 53 (1995).
229 Harper, supra note 228, at Dl.
230 See Third-Party Certification,supra note 78, at 445.
231 TIBOR & FELDMAN, supra note 20, at 12-13.
232 Id.
233 Firms Accredited Under ISO 14000 Might Garner Credit Under Sentencing
Guidelines, 17 Int'l Env't Rep. (BNA) (Nov. 16, 1994), available in LEXIS, Envirn
Library, Cumws File [hereinafter Firms Accredited].
234 Id.
235 Environmental Auditing Policy Statement, 51 Fed. Reg. 25004 (EPA July 9,
1986) (final policy statement). For a general description of EPA auditing policies from
1986-1995, see TIBOR & FELDMAN, supra note 20, at 219-23.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 345

regular reviews of their operations to ensure ecological soundness

and environmental compliance.3 6 Under the EPA's most recent
1995 draft auditing policy, the agency will eliminate or reduce
penalties by up to 75 percent for companies that conduct certain
voluntary policing and self-disclosure activities.237
ISO 14001 certification may also be one way for companies to
demonstrate to EPA and state regulators that regular internal
auditing mechanisms are in place.23 The EPA officials have
already indicated that ISO certification will be looked upon
favorably by the EPA as a way for companies to demonstrate their
good faith and environmental due diligence.239 By demonstrating
that proactive environmental business practices are in place,
companies can dramatically reduce potential fines and penalties
for violations in the sentencing phase of environmental
litigation.2 40 Both the Department of Justice and the U.S.
Sentencing Commission have issued guidelines that recognize
self-auditing and/or the implementation of an EMS as mitigating
factors in prosecution and sentencing for environmental
violations.24' Thus, by demonstrating good faith compliance

236 Restatement of Policies Related to Environmental Auditing, 59 Fed. Reg.

38,455-60 (EPA July 28, 1994) [hereinafter Restatement of Auditing Policies]; see also
Firms Accredited, supra note 233, at 987-88.
237 See TIBOR & FELDMAN, supra note 20, at 221. In order to be eligible for any
EPA auditing policy penalty reductions, the company must meet all or most of the
following conditions: (1) the violation is discovered through a voluntary environmental
audit; (2) the company discloses th violation fully in writing to appropriate state,
federal and local agencies; (3) the company corrects the violation within 60 days or as
soon as practical; (4) the company quickly remedies any condition that may create a
danger to public health or the environment; (5) the company remedies any
environmental harm and acts to prevent a recurrence; (6) the violation itself was not a
failure to take appropriate steps to prevent recurring violations; (7) the company
cooperates with EPA in providing information. Id.
238 Id. at 223.
239 Firms Accredited, supra note 233, at 986. Although ISO 14000 participation
will not guarantee compliance of a company with environmental regulations, Cheryl
Wasserman, Associate Director for policy analysis in EPA's Office of Federal Facilities
Enforcement, states that the EPA does expect it to lead to improved environmental
performance generally. Id.
240 Id. at 986.
241See TIBOR & FELDMAN, supra note 20, at 223-26; see also, Organization
Sentencing Guidelines, 56 Fed. Reg 22,762, § 8A1.2, Comment K (U.S. Sentencing
Comm. 1991); Draft Corporate Guidelines for Environmental Violations, §§ 9C1.2,
9DI.1 (U.S. Sentencing Comm. 1993). The sentencing guidelines recommend that a
company's sentence be "reduced by up to 90 percent for having an environmental
 N.C. J. INT'L L. & COM. REG. [Vol. 22

efforts, companies may be able to avoid punitive damages and

prevent criminal charges from being filed against company
officers when environmental violations do occur.242 The EPA may
also provide more flexible payment options for companies
demonstrating good faith, such as paying fines into environmental
projects from which the company can gain positive community
and public relations mileage.243
In addition to garnering credit under sentencing guidelines,
there is speculation that the EPA may consider relaxing certain
regulatory requirements for companies who gain ISO 14001
certification. 2" Specific proposals for giving credit to firms
certified under ISO 14001 include reducing the number and
frequency of EPA inspections, streamlining current permitting
requirements, and ameliorating penalties for violations that are
disclosed and corrected. 245 Relaxation of such requirements may be
especially likely in light of the recent budget impasse between
Congress and the President. The EPA may promote voluntary
auditing and certification programs such as ISO 14001 2as a way of
conserving limited financial resources for enforcement. "
In 1995, the EPA announced new Regulatory Reinvention
(XL) Pilot Projects to allow participating companies greater
flexibility in regulatory compliance matters in exchange for a
commitment to excellence and leadership in environmental
goals.24 7 The XL Pilot program is intended to allow companies to
test alternative, voluntary strategies for achieving environmental

management [system] and compliance program in place." TIBOR & FELDMAN, supra
note 20, at 226.
242 Hickman, supra note 137, at 104.

243 See generally Kolluru, supra note 1, at 299-307.

244 See Jennifer Ouellette, 9000's HeirApparent: ISO 14000 Quality Standards are

Near Completion, Adding Environmentalism to Quality Management, 247 CHEM.

MARKETING REP. 1 (1995); Samdani et al., supra note 214, at 42.
245 See Third-PartyCertification,supra note 77, at 446. In a recent hearing before

the House Science Subcommittee on Technology, Rep Vernon Ehlers (R-Mich.) and
various industry representatives expressed support for reduced inspections, streamlined
permitting and penalty amelioration for ISO 14001 certified companies. Id.
246 See generally Firms Accredited, supra note 239, at 986; Allan Holmes, Reform

Trickles In, Gov'T ExEcutnvE (Oct. 1995), available in LEXIS, Envirn Library, Curnws
File.
247 Regulatory Reinvention (XL) Pilot Projects, 60 Fed. Reg. 27,282-83 (EPA May

23, 1995) [hereinafter XL Pilot Projects].

1996] ISO 14000 ENVIRONMENTAL STANDARDS

goals.24 In its XL Pilot Program announcement, the EPA

specifically encouraged participation by companies seeking to
"pilot the application of upcoming ISO 14000 voluntary
environmental standards within a specific, industry sector. 2 49 The
EPA has yet to determine, however, whether the protections of its
1995 auditing policy will be extended to violations discovered
while implementing an ISO 14001 EMS as part of an XL Pilot
Project.25 The XL Pilot Projects generally reflect EPA's increased
willingness to consider self-regulatory alternatives for achieving
environmental goals.25 '
2. PotentialDisincentives to Certification
One of the disincentives for ISO 14001 certification is the
concern that national regulatory agencies may require reporting of
information learned by a company during its initial certification
review and/or audit stage, and then use such information to the
detriment of the company.252 From a litigation standpoint, some
companies have hesitated to initiate a formal environmental
management program for fear that a large amount of internal
documentation will be created that may be subject to discovery by
regulatory agencies or other potential opposing parties. 253 Third-
party auditors could also be required by regulators to disclose
compliance problems uncovered during an EMS audit.254 The EPA

248 Id. at 27,282.

249 Id. at 27,286.
250 See No Guarantee of EPA Audit Policy Protections for Company Using

International Audit Standard, [1995 Current Developments Binder] 27 Env't Rep.

(BNA) No. 6, at 913 (Aug. 23, 1996). Lucent Technologies, a microelectronics firm, has
submitted a Project XL proposal to EPA under which it would implement an ISO 14001
EMS. Id. Lucent is seeking assurances that EPA would reduce or eliminate penalties
pursuant to its 1995 auditing policy if violations are discovered and corrected during the
ISO 14001 implementation process. Id. Debra Hennelly, Lucent's Senior
Environmental Attorney, states that the company intends to use the ISO 14001 EMS as a
means of "streamlining [its] reporting requirements under the Clean Water Act and to
make [environmental] improvements on a facility-wide, multimedia basis" that would
increase efficiency while producing better environmental results. Id.
251 XL Pilot Projects,supra note 247 at 27,282-83.
252 See Peter Fairley & Michael Roberts, Pilot Projects and ISO 14000 Moving

Forward,But CredibilityRemains Elusive, CHEM.WK., July 5, 1995, at 34, 37.

253 Hickman, supra note 137, at 104.

254 Fairley & Roberts, supra note 252, at 37.

348 N.C. J. INT'L L: & COM. REG. [Vol. 22

has yet to develop a formal policy regarding how information

uncovered during an ISO 14000 audit could be used in the
enforcement context.255 The EPA may consider allowing a grace
period following the initial review within which a company is
required to report and correct any compliance problems uncovered
during the ISO 14000 certification process.256
Despite some reassurances from the EPA and state agencies,
many U.S. companies remain concerned that undergoing a third
party ISO 14001 audit may expose them to legal liability if
information from the audit is made available to. regulatory
agencies."5 Various versions of federal and state legislation have
been proposed to protect the confidentiality of environmental
audits.258 Legislation is pending in Congress that would grant
privilege and immunity protection to environmental self-audits.259
The EPA has recently issued a self-auditing policy allowing
greater confidentiality in reporting results of self-audits if certain
conditions are met.2 6' Because such protections often extend only
to self-audits and not to third party EMS audits, however,
environmental consultants recommend that companies conduct a
comprehensive compliance audit and take the necessary steps to
ensure compliance with applicable regulatory requirements before
the company is audited by a third party for ISO 14001

255 Id. However, the chemical industry and other business interests have urged the
EPA to take a formal policy stance assuring companies that information gained in an
initial audit will not be used against the company in subsequent compliance proceedings.
Marvin, supra note 2, at 19.
256 Fairley & Roberts, supra note 252, at 37.
257 Will Implementing ISO, supra note 138, at 432.
258 Id. at 431-32. Eighteen states have passed some form of statute granting a
confidentiality/privilege to companies that discover environmental violations through
self-auditing if the violations are promptly reported and corrected. Thirteen of these
states specifically extend this confidentiality protection to reports generated as part of
assessing an EMS. Id.
259 H.R. 1047, 104th Cong., 1st Sess. (1995); S. 582, 104th Cong., 1st Sess. (1995).

The Senate and House versions of the bills, however, extend such protections only to
self-audits and not to third party audits of an EMS. Will Implementing ISO, supra note
138, at 432.
260 Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention

of Violations, 60 Fed. Reg. 66,706-07 (1995). Under the new policy, EPA reserves the
right to request self-audit reports related to violations already being investigated by the
agency. Will Implementing ISO, supra note 138, at 432.
1996] ISO 14000 ENVIRONMENTAL STANDARDS

certification.2 61 Progressive companies are: now realizing that they

must get their environmental houses in order and be prepared to
publicly disclose the environmental impacts of their operations.
Some companies are beginning to use public disclosure as a
competitive advantage, even when they are not required to make
such disclosures.262

IV. Should My Company Implement ISO 14000?

Companies that have recognized the market driven incentives
and potential benefits of ISO 14001 certification are already taking
steps towards implementing an ISO 14000 EMS.263 Indeed, some
companies have already received preliminary certification to the
ISO 14001 EMS standard. 264 Despite indications that ISO 14000
will have a faster and more widespread impact than ISO 9000,
many companies have adopted a "wait and see" approach.265

261 Will Implementing ISO, supra note 138, at 433.

262 See Powers, Companies Await ISO 14000, supra note 138, at 46. James H.
Schaarsmith, an attorney and risk consultant for Woodward Clyde Consultants in
Denver, explains how some companies may use such public disclosure as a competitive
advantage. Id. Schaarsmith states, "If your competitor uses [disclosure] as an asset it
will suck you and everyone else into it." Id.
263 Ouellette, supra note 244, at 2. ISO 14000 may already be well on its way to

becoming an industry standard, according to Ron Black, director of safety, health and
environment systems for B.F. Goodrich. Id.
264 The 3M Dental Products Division received recommendation for ISO 14001

certification from the British Standards Institute of Milton Keynes, United Kingdom, in
June 1996. 3M Dental Products Division Receives Recommendation for ISO 14001
Certification,PR Newswire (July 2, 1996), availablein LEXIS, Envim Library, Curnws
File. In December 1995, an SGS-Thompson facility in Sancho Bernardo, California
became the first U.S. site to meet the requirements for formal ISO 14001 certification
under the draft standard. See SGS-Thompson, supra note 214, at 1, 22. Their
certification will be finalized as soon as the current draft standard meets final approval.
Id. Five additional U.S. companies are currently participating in an ISO 14000 pilot
program designed to spur ISO 14001 certification in the United States. Five Firms Join
ISO 14001 Pilot to Help Spur U.S. Certification, 34 AIRIWATER POLLUTION REP. ENV'T
WK., July 26, 1996, availablein LEXIS, Envim Library, Curnws File.
265 Are CompaniesReady ForISO 14000 Certification?,Bus. & ENV'T, Sept. 1995,

at 5 [hereinafter Are Companies Ready?]. Seventy-seven percent of the respondents to a

recent survey of global firms in twenty-one different industries indicated that they would
wait until the standard was finalized before deciding whether to take any action toward
certification. Id. Coopers & Lybrand conducted the survey of companies based in
Northern California to assess levels of awareness of the new ISO 14000 standards. Id.
Based on the survey results, Coopers & Lybrand concluded that many companies have a
substantial amount of work to do in order to shift from. a traditional, compliance-
oriented view of environment to one that integrates environmental management with the
core business strategy. Id.
350 N.C. J. INT'L L. & COM. REG. [Vol. 22
Although most environmental managers say they are concerned
about the new international standards coming down the pipeline,
many simply do not know how their companies should 2 66
approach
the standards and decide whether to seek certification.
Companies may evaluate their current internal management
systems in light of the elements contained in the ISO 14000 draft
documents.267 Careful analysis of a company's existing
environmental and quality management programs is an excellent
way to begin preparing for ISO 14000.268 Companies should start
by obtaining a copy of the draft ISO 14000 standards. 269 Then,
existing environmental programs should be critically evaluated
against the requirements outlined in draft documents to determine
where important gaps exist.27

A. Costs and Benefits of.GainingISO 14001Certification

One of the greatest benefits of ISO 14000 is its potential to
unify and synchronize all of a company's environmental and
management initiatives. 271 Not only does ISO 14000 seek to
develop a uniform system of environmental management that can
be adopted worldwide, but it also represents a fundamental shift in
the corporate approach to the concept of environmental
management itself.272 At the heart of ISO 14000 is an integrative
management philosophy which seeks to improve the efficiency,
productivity and competitiveness of the company by integrating
quality, environmental, health, safety, and other management
functions into the company's overall corporate strategy.273 In this
266 Id.
267 Ouellette, supra note 244, at 2.
268 Id.

269 See Flanagan, supra note 94.

270 Are Companies Ready?, supra note 265, at 5-6. Consulting firms such as

Coopers & Lybrand offer "gap analysis" services which compare a company's current
environmental management program with the ISO Standards. See Fahy, supra note 53.
Andrew Savitz, Director of Environmental Services at Coopers & Lybrand,
acknowledges that many companies can conduct such a gap analysis themselves,
particularly if they have already been through ISO 9000. Id.
271 Anderson, supra note 86.

272 Id.

273 Flanagan, supra note 94. Susan Engleman, vice president of environment,
health and safety affairs at Hoechst Celanese explains, "ISO 14000 is too valuable just to
be another addition to a full plate of corporate verification programs ... it could well
1996] ISO 14000 ENVIRONMENTAL STANDARDS

respect, ISO 14000 encourages the company to shift its focus away
from mere regulatory compliance, toward creating value by
integrating environmental concerns into all levels of operations.274
The fact that companies have failed to fully integrate
environmental concerns as a key component of long term strategic
planning has been a major source of the environmental problems
facing industry today.275 The new ISO 14000 EMS standard
recognizes the important link between environmental performance
and business performance. "6 The ISO 14000 program makes good
business sense because it creates a systematic approach to
environmental management by seeking to control the
environmental impact of every input into every one of the
company's processes.277 ISO 14000 utilizes interconnected open
management systems to ensure that environmental impacts are
minimized at all levels, rather than simply assigning
environmental compliance responsibilities to one discrete unit of
the company."' Many companies are already beginning to
recognize and implement this holistic approach to managing their

serve as the unifier." See Mullin & Sissell, Managers Gear Up, supra note 214, at 9.
274 See Mullin & Sissell, Managers Gear Up, supra note 214, at 9.
275 See Anderson, supra note 86, at 85-86.

Many analysts have remarked that the reason we have gotten ourselves into the
environmental mess we're in is because we neither saw nor recognized the
importance of the ecosystems we are a part of. In short, we were not systems or
horizontal thinkers .... The engineer or designer was responsible for product
specifications and not for the waste problem created or the resources needed to
manufacture it. We tended to work and think and develop standards in silos of
discrete activity, and not in interconnected open systems.
Id. at 85-86.
276 See generally Kirkpatrick, supra note 89, at 186. David Kirkpatrick,
environmental systems manager for Grant Thornton L.L.P. of Minneapolis, states,
"[T]he secret is to meld environmental performance with business performance. At
times, these two areas have seemed at odds, but they form a partnership under the
coming [ISO 14000] international environmental standards." Id.
277 Pollution prevention is an important concept underlying ISO 14000. Id.
"[I]nstead of focusing on the end of the pipeline, ISO 14000 seeks to control the
environmental effect of every input and every link in every process." Kirkpatrick, supra
note 89, at 186.
278 Kirkpatrick, supra note 89, at 186. Cornelious Smith, director of environmental
services for ML Strategies, states, "[T]he key to a successful environmental management
system... is the integration of the program into the way the company actually operates
as opposed to having it be a function of those few who deal in the environmental arena."
See ISO StandardsMay Be Substitute, supranote 224, at 326.
 N.C. J. INT'L L. & COM. REG. [Vol. 22

environmental impacts. 9 ISO 14000 provides a vehicle for

companies to develop an EMS designed to help managers think
horizontally, by considering the environmental aspects of all of the
inputs into their products and processes: ranging from the
sourcing of raw materials, to the distribution, point of sale, and
ultimate disposal of a product."
To reap the real benefits of ISO 14000, management must
view implementing an EMS not merely as a way of gaining
certification, but as a way of truly managing the company's
environmental responsibilities at the highest level in conjunction281
with the company's mission statement, goals and strategic plan.
Companies should not focus so much on registration that they
ignore the inherent benefits of better environmental
management. 282 Company executives, environmental consultants,
and other interested parties involved in implementing EMS
programs using the ISO 14001 draft standards as a guide have
already begun to see the many benefits to be gained from ISO
14000.283 Although such benefits may vary by company and
industry, the following paragraphs outline the general benefits
companies will see upon implementing ISO 14000.284

279 For example, "[d]espite the shifts toward greener standards... 'we are still a

long way from having an environmentally sustainable chemical industry.' It is critically

important... that companies shift to more novel approaches that employ green
technology." Allison Lucas, Industry Urged to Maintain Environmental Momentum,
CHEM. WK., Feb. 1, 1995, at 89. "Companies that believe they are not responsible for a
product after they sell it must look at that practice in the face of environmental
regulations and standards and realize it can no longer be justified." Id.
280 See generally Kirkpatrick, supra note 89, at 186.

281 See Kissel & Watson, supra note 4, at 62-63. A company must demonstrate its

commitment to the EMS process at the highest levels of management. Id.

282 Beglen, supra note 127, at 81. DuPont has already created new policies on
health, safety and environment using the early-stage ISO 14001 standards as a guide. Id.
Ross Stevens, manager of corporate issues at DuPont notes that implementing ISO
14001 has helped the company identify the shortcomings in their current systems for
environmental management. Id. He states, "We found our managing systems were as
out of date as our policy was." Id. Stevens encourages companies to implement ISO
14001. He notes, "[J]ust doing it rather than certifying it is already gaining us
value ....I'd encourage any company to start looking at this." Id.
283 Beglen, supra note 127, at 81.
284 See Bird, supra note 111, at 96-97 & Table 3. Because the benefits will vary

from one industry to another, different industries have showed a varying level of interest
in the new ISO 14000. Id. Industries whose customers show the greatest interest, such
as the chemical and manufacturing sectors, have been the most active participants in
standards development. Id.
.1996] ISO 14000 ENVIRONMENTAL STANDARDS

1. Simplify ComplianceMatters
The ISO 14000 standard offers companies an excellent vehicle
for simplifying their environmental compliance matters by
harmonizing the various national and industry-based standards into
a single international standard.28 The new standard will be of
tremendous benefit to companies doing business multinationally
because it will eliminate the need for multiple registrations,
inspections, certifications and licenses. 286 Some developing
nations even hope to require'the ISO 14000 standards in order to
obviate the need for rigid "command and control" initiatives. 287 It
is expected that ISO 14000 will provide a single 2 88
system for
multinationals to implement wherever they operate.
Another advantage of ISO 14000 is that it offers companies a
system for simultaneously addressing all affected media: air,
water and land. By contrast, piecemeal "command and control"
legislation tends to break down compliance requirements into
complex programs for the separate regulation of each of these
media.289 ISO 14000 requires companies to formulate an
environmental policy which includes a commitment to compliance
with all legal, regulatory and other requirements, including any
industry-based initiatives to which the organization subscribes.290
285 Industry based initiatives such as the Chemical Industry's Responsible Care

program, the American Petroleum Institute's STEP program, and the Global
.Environmental Management Initiative (GEMI), can provide the impetus to recognize
ISO 14001 certification. See Crognale, supra note 206, at 10.
286 See Crognale, supra note 206, at 10..
287 See id., at 11. For example, environmental policymakers in Mexico see the

overemphasis on "command and control" mechanisms as the biggest failing of U.S.

environmental policy. 'EnvironmentalRegulation Revolution' Plannedin Country, INE
Official Says, [1995 Transfer Binder] 1.8 Int'l Env't Rep. (BNA) No. 18, at 678 (Sept. 6,
1995). One Mexican official stated, "'We've realized that command and control is
basic,' but is not enough and is too expensive .... We're trying to go toward a new
generation of standards ... intended to improve environmental quality rather than
emissions reduction." Id.
288 See id., at 10. Howard J. Apsan, faculty member at Columbia University, notes,

"[m]ost business people welcome standardization because it minimizes the confusion,

complexity, and controversy associated with environmental quality." Howard N. Apsan,
ISO 14000: StandardizingEnvironmentalManagement Beyond ASTM, TOTAL QUALITY
ENvTL. MGMT., Summer 1995, at 118. ISO 14000 has "the potential to integrate all the
disparate components [of environmental management] on a worldwide basis... [while
also adding] uniformity and consistency." Id.
289 Powers, CompaniesAwait ISO 14000, supra note 136, at 33.

290 See generally Michael S. Baram, Multinational Corporations,Private Codes,

 N.C. J. INT'L L. & COM. REG. [Vol. 22

In addition, the company must set measurable objectives and

targets under ISO 14001 in order to achieve compliance."'
The ISO 14000 program facilitates compliance not only by
requiring the company to demonstrate a formal commitment to
compliance, but also by fully integrating the environmental
management function into all levels of business operations. 2 By
making managers and employees throughout the organization
aware of the environmental impact of their jobs, the EMS
facilitates active compliance with regulations at all levels.2 93 The
EMS helps companies see exactly how environmental
management furthers the company's strategic plan, and thus
provides an alternative to the threat of "command and control"
regulation as the main impetus for compliance.9

2. Enhance Company Image

ISO 14000 is a private sector initiative utilizing voluntary
standards which are fundamentally market driven. Therefore, one
of the most important benefits of implementing an EMS and
seeking certification under ISO 14001 is the marketing advantage
to be gained. 95 Key market stakeholders such as customers,
suppliers, community members, employees, lenders and investors
are increasingly seeing environmental stewardship as an important
factor in deciding which companies to do business with.2 96
Consumers also show a marked preference for purchasing
environmentally-friendly products and doing business with
environmentally conscious companies. 97 Indeed, some companies

and Technology Transferfor Sustainable Development, 24 Nw. ENVTL. L. J. 33 (1994)

(providing overview of various environmental codes in private industry).
291 See supra notes 107-21 and accompanying text for a discussion of setting
objectives and targets under ISO 14001.
292 See ISO StandardsMay Be Substitute, supra note 224, at 327.
293 See id.
294 See Crognale, supra note 206, at 10. See also, Karl Frankel, New Directions in
CorporateEnvironmentalStrategy: A Survey of Leading Experts, reprintedin BRUCE W.
PIASECKI, CORPORATE ENVIRONMENTAL STRATEGY: AN AVALANCHE OF CHANGE SINCE
BHOPAL (1995).
295 See generally, Frankel, supra note 294.
296 See Kirkpatrick, supra note 89, at 186.
297 See Eric Pryne, Putting a New Spin on 25th Earth Day: Public Cares About
Environment, Isn't as Fond of Environmentalists,SEATTLE TIMES, Apr. 16, 1995, at Al.
For example, Exxon Corporation received 25,000 returned credit cards from customers
1996] ISO 14000 ENVIRONMENTAL STANDARDS

have made environmental consciousness a cornerstone of their

corporate image and communications strategy.298 While it is easy
for companies to make sanctimonious claims of environmental
responsibility, ISO 14001 certification may provide the
substantive evidence of environmental consciousness for which
many companies have been looking. 9 Certification would lend
credibility to a company's claims of environmental stewardship
and would be a source of positive reinforcement for corporate
environmental efforts. 3
"Command and control" regulations have allowed companies
to garner only negative publicity through the imposition of fines,
penalties and even criminal liability.30°' By contrast, ISO 14000
provides an unparalleled opportunity for companies to garner
positive publicity by achieving environmental excellence.3 2
Indeed, because of its required commitment to compliance and
emphasis on integrating environmental management into every
aspect of the company's operations, ISO 14000 actually helps to
prevent the negative publicity associated with environmental
incidents and accidents.3 3 Managers focus on maximizing the
value of environmental assets, rather than on putting out the fires
created by environmental emergencies. 34 Environmental
performance is no longer seen merely as a burden imposed on the
company from regulatory agencies on the outside, but as an
important measure on the company's effectiveness to be
continually improved from the inside."5

indicating they would no longer do business with the company following the Exxon
Valdez oil spill disaster in Alaska. See Jane E. Dutton et al., OrganizationalImages and
Member Identification, ADMIN. Sc. Q., June 1994, at 239; Betsy D. Gelb, More
Boycotts Ahead?, Bus. HORIZONS, Mar. 1995, at 70.
298 Using ISO, supra note 213, at 4-5 (discussing the environmental focus of Aveda

and The Body Shop).

299 Id.
300 See Kirkpatrick, supra note 89, at 186.
301 Id.
302 Id.
303 Id.
304 See Kissel & Watson, supra note 4, at 62. Proactive management of
environmental assets and liabilities can create opportunities for cost savings and
increased profits. Id.
30 See Flanagan, supra note 94. The EMS prescribed under ISO 14001 not only
helps companies achieve compliance, but also promotes continuous improvement in
356 N.C. J. INT'L L. & CoM. REG. [Vol. 22

Finally, ISO 14001 certification can reinforce the positive role

of the company within its community.31 6 Just as ISO 9000
recognized employees for contributions to quality, recognition of
environmental quality improvements under ISO 14000 will lead to
increased satisfaction and pride on the part of employees.3"7 This
type of positive internal communication, when coupled with
external community involvement, helps to secure the company's
status as a good corporate citizen.3°8
3. Gain Competitive Advantage in Global
Markets
In addition to creating marketing and public relations
advantages for a company, ISO 14001 certification can be a source
of competitive advantage in other ways. In order to improve
efficiency and competitiveness, many companies have already
implemented other management initiatives such as the ISO 9000
quality management standards or other reengineering programs."'
Also, companies that have undertaken reengineering can
readily incorporate an ISO 14000 EMS into their reengineered
processes.' ISO 14000 should be relatively easy and less costly to

environmental management. Id.

306 See Kissel & Watson, supra note 4, at 62. One of the benefits to be gained from
the process of implementing an ISO 14001 EMS is the fostering of good public relations
and community and consumer support. Id.
307 See generally Bird, supra note 111, at 94-96 (discussing the importance of

assembling a team of employees and interested stakeholders to ensure successful

implementation of the EMS).
308 See Fahy,. supra note 53 (stating that sound environmental strategies
incorporated into a company's overall business goals will give managers and employees
confidence that their firm is a good corporate citizen).
309 See Jump, supra note 207, at 12-13. For a general discussion of Reengineering,
see MICHAEL HAMMER & JAMES CHAMPY, REENGINEERING THE CORPORATION (1993) and
MICHAEL HAMMER, REENGINEERING REVOLUTION (1995).
310 See Jump, supra note 207, at 12-13. Rodger A. Jump, President of International
Business Consultants notes that there is a positiverelationship between ISO 9000, ISO
14000 and reengineering efforts. Id. at 12. Jump discusses the trend towards employing
reengineering techniques to eliminate any activities deemed nonessential to a firm's
fundamental processes. Id. He argues that there are elements of convergence between
reengineering and the ISO standards, making it easier to implement ISO 9000 and 14000
in firms that have been reengineered because there are fewer fragmented divisions
within the company. Id. Jump acknowledges that the two programs are very different
and explains that the key is to successfully implementing ISO 14000 is to make it
harmonize with existing reengineering efforts. Id. He states that companies must make
"the ISO 14000 process systemic to the reengineered processes of the firm rather than
having ISO 14000 as an appurtenance." Id. at 13.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 357

implement for firms that have already been through the ISO 9000
certification. " There are efforts already underway to integrate the
ISO 14000 certification process with certification under ISO
9000.212

4. Improve Profits
Perhaps the most compelling reason why many companies are
planning to implement ISO 14000 is its potential to improve
profits over the long term.313 The values underlying EMS
implementation are consistent with notions of sustainable
development and pollution prevention, which encourage
companies to move beyond compliance to a longer-term view of
the economic value of environmental management.314
As a practical matter, highlighting the financial benefits of
implementing an EMS is essential to gaining upper management
support for an ISO 14001 certification initiative.315
. Proponents of
ISO 14000 certification should start by identifying the specific
ways that ISO 14000 can'impact profits in their company.""
One way ISO 14001 certification improves profits is by

311 Orenstein, supra note 219, at 1, 3. John Tao, corporate director of

environmental health and safety auditing at Air Products and Chemicals, Inc. in
Pennsylvania, says that companies like his which have ISO 9000 certification should
find adapting to ISO 14000 relatively easy. Id. He states, "Because we're so committed
to ISO 9000 to proceed toward ISO 14000 is a natural extension." Id.; see also Fahy,
supra note 53.
312 Fahy, supra note 53. Andrew Savitz, director of environmental services at
Coopers & Lybrand predicts that the certification processes under ISO 9000 and ISO
14000 will be integrated so that companies can obtain both registrations with a single
audit program. Id.' Savitz states, "Sophisticated companies that have been through ISO
9000 can do this for themselves," Id.
313 See PAUL SHRIVASTAVA, GREENING BUSINESS, PROFITING THE CORPORATION AND
THE ENVIRONMENT 54-56 (1996) (discussing economic advantages of environmentally
sound investments); see also Kirkpatrick, supra note 89, at 186.
314 See Advisory Group to Offer Changes to Draft ISO Management Standard,
[1995 Transfer Binder] 18 Int'l Env't Rep. (BNA) No. 6, at 12-13 (Jan. 11, 1995)
(discussing plans to include a pollution prevention requirement within the ISO 14000
standards, and stating that the EMS helps companies achieve financial goals); see also
Zabarsky, supra note 212, at 30 (discussing how ISO 14000 and other private sector
codes go beyond "end of pipe" measures by facilitating pollution prevention in the
manufacturing process).
315 Jump, supra note 207, at 13.
316 Id.at 10.
 N.C. J. INT'L L. & COM. REG. [Vol. 22
helping to boost the company's market share.3" The company can
highlight its certification status as a mark of environmental
excellence in its marketing materials in order to improve the image
of the company and its products." 8 ISO 14001 certified companies
will gain a particular boost to their market share in developing
countries where ISO 14001 certification is recognized in lieu of
imposing "command and control" regulations." 9 ISO 14001
certification may also help companies and their products stand out
when attempting to penetrate new global markets familiar with the
international certification.2
Investors are now seeking environmentally conscious
companies.32 ' Indeed, major investment firms now provide special
"green" mutual funds to insure customers that they are investing in
the securities of environmentally friendly companies.32 Investors
often are not only interested in the ethics of the company, but have
a self-interest in minimizing their own investment risks.323
Implementing an EMS allows a company to proactively manage
its environmental obligations and facilitates environmental 324
compliance, in an effort to reduce liabilities down the road.
Doing things right the first time is always less costly than being
required to clean up the problems created due to poor
environmental management after they have already occurred.32
Another way that ISO 14001 certification can help increase
profits is by lowering costs. 32 6 Typical objectives of the EMS are

317 See generally RICHARD WELFORD & ANDREW GOULDSON, ENVIRONMENTAL

MANAGEMENT BUSINESS STRATEGY 147-54 (1993).
318 See generally id.
311 See Michael Roberts & Kara Sissell, Setting World Standards: Developing
CountriesMeasure Up, CHEM. WK., Dec. 6, 1995, at 42, 42-43.
320 See Kirkpatrick, supra note 89, at 186.
321 See Ken Berzof, Socially Responsible Investors Influence Growing Comer of
Market, COURIER-JOURNAL, Oct. 22, 1995, at IE.
322 See e.g., Green Funds Offer Way to Invest While Being Socially Responsible,
TAMPA TRIB., Jan. 16, 1996, available in LEXIS, Nexis Library, Curnws File
[hereinafter Green Funds]; Ricardo Sandoval, Just How "Green" are the Green Funds?,
CHI. TRIB., Jan. 22, 1996, at 3C.
323 See Green Funds, supra note 322; Sandoval, supra note 322.
324 See Bird, supra note 111, at 95-97.
325 See id.
326 See id. at 97.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 359

to improve efficiency by reducing waste, increasing energy

efficiency, utilizing recycling, and streamlining raw materials
consumption.327 By shifting focus from the end of the pipeline to
pollution prevention upstream, companies can also gain greater
flexibility in acquiring permits and reduced inspection
frequency.328 Environmental compliance audits can cost a
company between $300,000 to $3 million annually, so reduced
audits translate into bottom line savings.329
There are several other tangible ways that ISO 14000 improves
a company's profitability. Certification may increase the
availability of capital and improve credit terms by gaining the
confidence of lenders.33 Insurance companies will also be more
willing to issue pollution-related coverage at lower rates to a
company with a proven environmental management system in
place. 31 A well-integrated environmental management system can
also reduce management workload and facilitate technology
development and transfer in the environmental arena because of its
emphasis on continual improvement of the environmental
management system. 332

B. Conducting a Cost-Benefit Analysis

Another useful step in determining how quickly a company
should move to implement ISO 14000 is to conduct an initial cost-
benefit analysis. 333 Cost-benefit figures in this arena are often
unscientific because of the inherent difficulty in quantifying the
many intangible benefits of having a strong environmental
management system, and because current cost estimates of ISO
14000 implementation and certification vary widely depending on
the underlying assumptions used in calculations.334 Nevertheless,
cost-benefit analysis can be a useful way to place ISO 14000

327 See id. at 95-97.

328 See id. at 96.
329 See id.
330 See supra notes 226-32 and accompanying text.
331 TIBOR & FELDMAN, supra note 20, at 13.
332 Id.
333 See Flanagan, supra note 94.
314 Jump, supra note 207, at 10-11.
360 N.C. J. INT'L L. & COM. REG. [Vol. '22

implementation decisions in a rational framework.33 It is also

important for proponents of ISO 14000 within the company to
develop cost-benefit figures to promote the idea of certification to
senior management.336
Companies should realize at the outset that obtaining ISO
14000 certification is a significant undertaking. The costs and
resources needed to successfully implement an EMS and meet
certification requirements are significant.337 There are potential
costs involved in addressing environmental conditions uncovered
during the implementation and audit phases, and the certification
process itself can be costly.33 Published cost estimates for large
multinational companies to prepare for and receive ISO 14001
certification range between $100,000 and $1 million per plant,
depending on the level of EMS programs that may already be in
place.339 The costs of implementing ISO 14000 will be much
lower for companies who are already registered under ISO 9000. 4o
It is estimated that ISO 14001 certification costs will be only ten
percent of what most companies paid to obtain their ISO 9000
registration."' Small to medium sized facilities with no prior ISO
9000 experience can expect to incur costs ranging from $10,000 to
$50,000 to complete the certification process, according to
published cost estimates 342 and most medium
4
sized companies can
become certified for less than $50,000.1
1

Quantifying the benefits of completing the ISO 14001

335 Id.
336 Id. The author, president of International Business Consultants, notes that there
will always be proposed activities in a firm that compete for funds. Id. He suggests that
proponents of ISO 14000 registration within the firm need to furnish decision makers
with the ammunition to justify the expense of going forward with the registration
process. Id. at 10.
337 Flanagan, supra note 94.
338 Id.

339 Id.
340 Beglen, supra note 127, at 46.
341 Id. Dorothy Bowers, vice president of environmental and safety policy at Merck
& Company agrees, "we let consultants sell us an expensive ISO 9000 program." ISO
Standards May Be Substitute, supra note 224, at 327. Bowers notes that both small and
large companies are already exploring new and innovative ways to gain cost effective
certification. Id.
342 Byrd, supra note 94.
343 Ouellette, supra note 244, at 2.
1996] ISO 14000 ENVIRONMENTAL STANDARDS

certification process can pose an even greater challenge than

estimating costs.3 " Identifying contracts won, increases in gross
revenues, the value of goodwill generated, and other benefits of
ISO 14000 implementation will often be a matter of opinion and
debate.3"5 Managers can use any of the many forecasting tools
familiar to most large companies in quantifying ISO 14000
benefits.3"6
For example, the Delphi Method of evaluation can be used in
cases where the item to be forecast is "fuzzy.,,141 Under the
Delphi Method, a group of experts is asked to offer predictions
without consulting one another.3 4' The responses are then
averaged to arrive at a nominal result.3 49 Another common
forecasting technique for estimating the future benefits of a
decision or program is to develop best case, nominal and worst
case scenarios. 5 A third method for estimating benefits of ISO
14000 registration is to analyze the cost effectiveness of ISO 9000
certification and draw as many parallels as possible.' Whatever
methods are used, some of the information collected will
necessarily be anecdotal or "fuzzy" data.3"2 However, a large
amount of imprecise data that shows clear trends is certainly better
than no feedback on costs and benefits at all.3 "

C. PotentialPitfalls of the "Wait and See "Approach

As part of the cost-benefit analysis, companies should also
consider the opportunity costs of allowing competitors to get a
head start on the ISO 14001 certification process.354 By adopting a
"wait and see" approach to ISO 14000, companies may be tacitly

344See generally Jump, supra note 207, at 10-11 (discussing how to demonstrate
the cost effectiveness of ISO 14000 implementation).
345 Jump, supra note 207, at 10.
346 Id.
347Id.
348 Id.
349 Id.
350 Id.
351 Id.
352 Id.
353 Id.
354Id.
 N.C. J. INT'L L. & COM. REG. [Vol. 22

offering competitors an advantage, especially in fast-growing

emerging global markets. 5 For example, companies in Pacific
Rim nations such as Japan and South Korea are already taking
steps towards ISO 14001 certification.356 Given the apparent
interest in ISO 14000 shown by companies in overseas markets, it
may be critical for U.S. companies to move towards certification
quickly in order to maintain a competitive advantage in global
markets.357
Although the decision whether to undertake ISO 14000
certification is difficult, companies may have more to lose by
waiting than by pushing ahead with plans to implement an EMS
compatible with the ISO 14000 standards.358 Because incentives
surrounding a company's certification decision are largely
determined by the responses of key stakeholders, firms should
consider forming a task force to provide useful feedback for
addressing the ISO 14000 decision.35 9 Intercompany committees or
focus groups could include representatives from key groups such
as customers, suppliers, lenders, investors, and employees to
evaluate ISO 14000 implementation issues.36 Companies can use
such a forum to gain insight into the perspectives of the people
who will directly impact whether ISO 14000 can be implemented
successfully.361 There are also a wide range of industry-based ISO
14000 conferences available which offer excellent opportunities to

"I See Flanagan, supra note 94.

356 Are Companies Ready?, supra note 265, at 5-6. Japanese companies such as

Matsushita Electric Industrial Company, Omron Corporation, and Toyota have already
announced plans to obtain ISO 14001 certification for all domestic plants in Japan. Id.
at 6. Canon has already been certified under the British BS 7750 standard, and is
expected to follow suit with ISO 14000. Id.
151 See Apsan, supra note 288, at 118. Howard Apsan, director of environmental

management services for Clayton Environmental Consultants, states, "The success and
apparent longevity of ISO 9000 would suggest that it behooves business to jump on the
ISO 14000 bandwagon before it leaves without them." Id. Apsan concludes, "It is
critical that we all prepare for ISO 14000 now because it's definitely on its way." Id.
358 Are CompaniesReady?, supra note 265, at 5-6. Charles McGlashan, director in

environmental services at Coopers & Lybrand, notes that companies overseas are
already taking action to implement ISO 14000, while many U.S. firms have adopted a
"wait and see" attitude. Id. McGlashan is "concerned that U.S. companies are gambling
with market share" by waiting to implement ISO 14000. Id.
359 See Bird, supra note 111, at 95-97.
360 See id.
361 See id.
1996] ISO 14000 ENVIRONMENTAL STANDARDS 363

network with the key stakeholders affecting a particular industry.362

Even if a company is not ready to implement ISO 14000 in the
near future, now is the time to begin investigating options and
learning more about how ISO 3 14000
63
signals important new trends
in environmental management.

IV. Conclusion
During the quality management revolution of the 1980s, the
world witnessed a fundamental shift in corporate ideology.
Companies began to look beyond generating short term
shareholder gains, in favor of a long-term approach to ensuring the
organization's financial health and stability. Through ISO 9000
and other quality management programs, companies grew closer to
their customer base, and gained a better understanding of the how
the needs and expectations of key stakeholders could have an
impact on their businesses. The most successful companies
coming out of the 1980s were those who fully incorporated quality
management principles into a strategic vision for the company.
Companies in the 1990s are already taking a more holistic
approach to environmental management. As world population
grows and the developing world becomes more industrialized,
pressures on the Earth's limited resources and fragile ecosystems
will continue to increase. Thus, the demand for effective
environmental management methods will continue to grow
dramatically. The strict regime of environmental legislation
imposed by government during the 1970s and 1980s provided the
initial impetus needed for companies to take a serious look at their
environmental practices. Without such legislation, it is doubtful
that companies would have undertaken such major environmental
initiatives voluntarily. Now that companies have been forced to
create formalized internal systems for addressing the
environmental aspects of their business operations, many now see
that important business opportunities are created through effective
environmental management. By applying quality management

362 See Calendar: Courses,Seminars, Conferences, INT'L ENvTL. SYS. UPDATE, Oct.
1995, at 32-34 (each issue of Environmental Systems Update provides a complete list of
upcoming conferences, seminars and courses on ISO 14000 throughout the United
States and internationally).
363 See generally Are Companies Ready?, supra note 265, at 5-6.
364 N.C. J. INT'L L. & COM. REG. [Vol. 22

principles to the environmental aspects of their operations,

companies can realize substantial competitive, marketing and
financial advantages.
The ISO 14000 system offers a formal methodology for
moving beyond mere regulatory compliance by integrating
environmental management values into the company's long term
strategic vision. It is still too early to determine whether ISO
14000 will, in fact, become a "global passport" for doing business
in international markets, as industry observers have predicted.
Implementing the concepts and principles embodied in the ISO
14000 system, however, should benefit most companies. ISO
14000 offers a new perspective on how firms can create value
through more effective environmental management. Regardless of
whether a company ultimately plans to seek certification under
ISO 14000, managers should take the time now to reevaluate their
current environmental management systems using ISO 14000
standards as a benchmark.
Firms have little to lose by incorporating ISO 14000 principles
into their approach to environmental management. By starting this
process now, companies can begin to reap the rewards of more
effective environmental management, while becoming better
prepared to undertake certification if ISO 14000 does in fact
become a required "global passport" to international business.

CHRISTINA C. BENSONt

t The author thanks the following persons for their guidance and suggestions
during the writing of this piece: Professor Donald Hornstein of the University of North
Carolina School of Law; Professors Michael Berry and Dennis Rondinelli, both of the
Kenan-Flagler Business School, University of North Carolina at Chapel Hill; and the
Board of Editors of the North CarolinaJournalof InternationalLaw and Commercial
Regulation. Additionally, the author thanks Michael Benson and Drs. James and Judith
Cowan for their unending support and encouragement.