Joint EMS and Group CertificationA Cost-Effective Route for SMEs to Achieve ISO 14001

by Jonas Ammenberg, Berit Borjesson, Olof Hjelm

At Hackefors Industrial District in Sweden, 30 small and medium-sized enterprises (SMEs) formed a network to establish a joint environmental management system (EMS) as a cost-effective way to receive ISO 14001 certification. Since receiving certification in early 1999, they have observed many environmental and commercial improvements. Many of the companies receive positive responses from their customers and believe the EMS improves their ability to obtain contracts for the sale of products and services.

The European Commission defines SMEs as companies employing fewer than 250 employees, with a turnover of less than EU40 million. Small enterprises are further defined as companies with fewer than 50 employees and a turnover smaller than EU7 million. Official statistics from Statistic Sweden show that 99.5% of Swedish companies meet the definition of an SME. They represent 42% of total annual sales for Swedish companies. SMEs in Sweden, and probably elsewhere, are not subject to environmental regulation to the same extent as are larger companies, and, therefore, their environmental impacts may be poorly controlled.

EMS implementation requires substantial resources, both financially and in terms of staff. In a study of SMEs in the UK, all the companies studied found the initial stages, such as the environmental review, register of significant environmental aspects and policy requirements, difficult (Hillary, 1996). It is essential to find a cost-effective solution that facilitates the implementation and maintenance of EMSs in SMEs. It is also important that such as solution is not regarded as a ‘light’ version of ISO 14001 or EMAS, but involves a complete EMS.

Formation of the Network
Hackefors Industrial District in Linkoping, Sweden, consists of about 90 SMEs with 1500 employees. Of these, the largest has 70 employees and 50% have fewer than eight employees. They represent a wide range of businesses, including manufacturing, waste recycling, transportation, construction and graphic industries.

A common trend in Sweden in the late 1980s was to form business associations, and this is what happened at Hackefors. The objectives of these associations varied considerably. The main objective at Hackefors was to stop the closure of the local post office. Over the following years the business association worked on various issues, including environmental matters.

The starting point for common environmental work was in 1996 when they conducted an inventory of waste generated at all 90 companies. The following year they created a central unit for collection, separation and utilisation of waste. This work raised awareness of environmental issues in many of the companies and some of them decided to go one step further. They wanted to establish an environmental profile for the district and find a means of publicising their environmental achievements and credentials. During discussions with environmental organisations, the possibilities of EMSs and ISO 14001 were considered. Over 30 companies formed the Hackefors Environmental Group and started to develop a joint EMS according to ISO 14001. Of these enterprises, 17 have five or fewer employees, four have between six to ten employees, two have between 11-20 employees, five between 21-30 employees and four have more than 30 employees.

An additional group at Hackefors consisting of 20 companies is following their example. At present, several industrial districts in the Linkoping region, as well as other parts of Sweden, have started to implement joint EMSs.

The Joint EMS
The EMS model is called the Hackefors model. Each enterprise in the group has an EMS of its own that fulfills the requirements of ISO 14001 and thus holds its own certificate.

Organization
The joint EMS is organised in a way that is very similar to the organisation of systems for larger companies. The EMS group consists of an environmental coordinator from each company. From this group a steering committee is chosen, consisting of seven of the coordinators, which in turn selects a central coordinator. A few individuals (ie., the support group) support the central coordinator and the steering committee and assist the coordinators with their duties. Decisions are prepared in the steering committee and implemented by the EMS group. The steering committee, together with the central coordinator, and the support group, can be compared to a core environmental department in an industrial concern.

The central coordinator can be selected from the companies in the network or from outside. At Hackefors, the coordinator is employed by a consulting firm which is a member of the group. Personnel from the firm have supported the coordinator and steering committee, and assisted in accomplishing environmental reviews, documentation, training, etc. The central coordinator has many important functions, such as preparing documents, identifying and communicating common legal requirements, raising interest and commitment, calling meetings, handling minutes and dispatches and planning environmental training.

The central coordinator leads the steering committee. Important functions for the committee are to develop the EMS and to plan environmental auditing. It also inspects and discusses new or revised documents, especially the central document – the EMS manual – that is identical for all enterprises. It examines training needs, what the training should include, etc. During the implementation process, the committee met twice a month. Since certification, it holds meeting as necessary, but at least once a quarter.

Environmental coordinators are responsible for their enterprise’s environmental matters. They meet on a regular basis within the EMS group. The purpose of these meetings is to make decisions, train and educate the coordinators, and provide information about and discuss new or revised procedures or documents. The EMS group met once a month during the implementation phase, but now meets every other month. To promote efficiency, a maximum time is set on the length of the meetings, and agendas are distributed well in advance.

Interpretation of Requirements and Documentation
It is our experience that many environmental managers find it difficult to interpret the ISO 14001 requirements, especially those that are not accustomed to reading standard or legal documents. They find it difficult to prepare, control and update documents needed. Smaller enterprises often lack competence and resources, both financial and human.

To address this problem the central coordinator and the steering committee prepare many of the documents needed. The EMS documentation consists of two main binders, the EMS manual and documents specific to each enterprise. The central coordinator and steering committee prepare templates for most of the company- specific documents. Centralised handling saves the SMEs much of the administrative work. This, however, requires good communication, so that each enterprise understands the function of the documents and why they are needed. There are also binders for each enterprise’s records.

Environmental Review & Assessment of Environmental Impacts
The central coordinator and steering committee prepare guidelines for environmental reviews that facilitate the identification of environmental aspects. A joint assessment method is used by the enterprises. Each company carries out its own assessment according to this method, but the coordinator and support group assist and supervise the process.

One of ISO 14001’s main requirements is compliance to legal requirements. The companies together subscribe to the latest issue of environmental legislation on CD-ROM and every c
ompany has a register of environmentally relevant legal paragraphs that affect its activities.

Environmental Targets
Each enterprise has individual objectives and targets. There are also collective objectives for the group, which are not quantified. It is not mandatory for individual companies to have targets that support the collective objectives. These objectives are viewed as guidelines.

Training
The Hackefors model puts great emphasis and substantial resources into environmental training. Knowledge of environmental matters and EMSs is necessary to motivate staff and to help them understand how to cope with environmentally related tasks. Each employee receives at least 30 hours training, made possible partially through government subsidies. The training includes basic environmental information, education on EMSs and ISO 14001, waste management, environmental impact of industries in general, and legal and other requirements.

Internal Auditing
All the environmental coordinators were offered a course in internal auditing, which the auditing authority arranged. 15 participated and 10 completed the training and were certified as internal auditors. They conduct all internal audits for the group at a set price per hour (EU58), which they decide together. At small or micro enterprises it might be difficult to use personnel as internal auditors since auditors should be independent and objective. At Hackefors, auditors do not audit their own companies.

Certification & External Audits
As noted previously, each enterprise has an individual certificate. The term ‘group certification’ refers to the fact that all of the companies were certified at the same time and much of the work was coordinated within the group. Each enterprise was audited at the time of certification. This will not be the case for follow-up audits. Since the documentation and procedures conform for enterprises within the same line of business, the external auditing authority agreed to audit only one enterprise within each line of business at a time. Each company, however, must be externally audited within a period of three years.

Costs
For the implementation of the EMS, the participating enterprises pay a stipulated amount per employee to finance the work of the central coordinator and the support group. This amount does not include training, certification or internal audits. At Hackefors, this amount was roughly EU195. Regarding the later projects, the figure was set at EU345 per employee for enterprises with no more than 50 employees and considerably lower (EU25-155) for larger enterprises. 50% of the group’s training costs was covered by government subsidies. The remaining cost was EU58 per employee. At another similar project in Sweden where there were no subsidies, they reduced the number of training hours by half (16 hours).

Cost Savings & Commercial Effects
The price for group certification is estimated to be at least 50% lower than for individual certification. Many of the cost savings came as a result of sharing expenses among 30 companies. The group had a negotiating advantage with external auditing agencies because of the many companies involved and the fact that the joint EMS was such a novel approach. The use of internal auditors was also cost-effective compared to having one internal auditor at every company or using external consultants.

In a recent study, 12 of the environmental coordinators were interviewed to see if the cooperation and joint EMS have led to any changes regarding environmental performance or commercial matters (Ammenburg and Hjelm, 1999). This study indicates that a majority of respondents believe the EMS has made it easier to win contracts for products and services, and that ISO 14001-based EMSs led to commercial and environmental improvements in general.

Environmental Effects
The study revealed that the main improvements were in waste management, on which the companies cooperated before the EMSs were implemented. Therefore, these improvements must be seen as a consequence of networking, rather than from the EMS per se. Previously, there were only two waste categories, one for incineration and one for non-combustible waste. Today, there are about 20 waste categories, separated at a central unit, some of which are re-used by other companies.

Other areas where improvements have been found, or environmental targets promise positive effects, are emissions, energy, goods and transportation. Examples of improvements are: reduced emissions of solvents; reduced emissions to air and water; more effective use of energy; substitution of more environmentally sound goods; and coordinated transportation. Many of these are a direct result of the EMS.

The companies cooperate in many areas as a consequence of the network. They purchase electricity jointly and the companies have managed to get district heating to Hackefors. There is a common pool of workers, collective caretakers and security guards, and sharing of some office equipment (ie., photocopiers).

Conclusions
Networking and group certification have led to a rational and cost effective solution for small enterprises at Hackefors. The role of the central coordinator is of great importance. The presence of a dedicated person is crucial for success, especially in this pilot program with no comparable experiences to learn from. This could be the model’s weak point, with so much depending on one person. The central coordinator must be a good communicator who is able to convince the leaders of the SMEs that environmental issues are important, both from an environmental and commercial point of view. Experiences from Hackefors also show that this person must have a good understanding of the entire district.

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FROM Greener Management International. Special Issue on ISO 14001.
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Greener Management International is a SustainableBusiness.com Content Partner.

References:

Ammenberg, J. and O. Hjelm (1999) ‘Joint Environmental Management System at an Industrial District: Environmental Improvements and Commercial Advantages’,
presented at the Industrial Ecology and Sustainability Conference, Troyes, France, 22-25 September 1999.

Hillary, R.(1996) ‘Environmental Management Standards: What do SMEs think?’, in C. Sheldon (ed.), ISO 14001 and Beyond: Environmental Management Systems in the Real World (Sheffield, UK: Greenleaf Publishing): 333-55.