The ISO 14000 International Standards: Moving Beyond Environmental Compliance Christina C
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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. Im prove 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., FederalPrivatization Agenda, 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 maintaining5 strong environmental protection laws in the United States. What is evident, however, is an