In Fall 1999, Ford announced that it would be requiring suppliers shipping directly to its facilities to conform to the ISO 14001 standard for environmental management. “This requirement reinforces Ford’s commitment to the environment,” commented Carlos Mazzorin, group vice president of Purchasing and vice president of Ford of Mexico. GM followed suit a day later, with Harold R. Kutner, group vice president of Worldwide Purchasing and North American Production Control & Logistics, bragging that, “Working together with our suppliers, we can accomplish much more to improve the environment than GM can alone.” But when I studied up on ISO 14001, I was dismayed to learn that the standard isn’t really about improving the environment, per se. In fact, further examination of this situation leads me to believe that Ford and GM’s ISO requirements will fail to yield many real results on their own.
First of all, conforming to ISO 14001 does not require any specific environmental action. All it really requires is that a company establish an environmental management system. This is defined as, “That part of the overall management system which includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy.” This environmental policy is somewhat vaguely defined as a “statement by the organization of its intentions and principles in relation to its overall environmental performance.” Therefore, Ford and GM are not requiring their suppliers to meet their respective environmental performance standards (however high those standards may or may not be). They aren’t even setting any sort of metric for environmental evaluation of their suppliers. A supplier is really only required to set and meet its own standards, based on, among other things, environmental legislation and “the business case.” For a supplier that’s not currently breaking the law, I can’t see how the ISO 14001 requirement provides any real incentive to improve environmental behavior. At best, it may create a system in which environmental improvements could propagate, but this is not guaranteed.
Whether or not ISO 14001 is worth the (hopefully recycled) paper it’s printed on is actually beside the point. What I really want to know is how Ford and GM’s requirement could actually achieve any real environmental benefits. I spoke with Lori Kincaid, associate director of the University of Tennessee’s Center for Clean Products and Clean Technologies, and Bill Miller, manager of Environmental Affairs at Saturn Corp. About the same time that the Big Two were making their big environmental announcement, UT was entering into a partnership with Saturn and the U.S. EPA Design for Environment Program to promote cleaner production practices at Saturn and throughout the Saturn supply chain.
The purpose of the partnership is to identify “the most cost-effective methods for reducing the overall environmental footprint associated with making cars,” says Miller. Part of this mandate involves voluntarily sharing environmental best practices among the OEM and suppliers at all levels of the supply chain. One of the main points that Miller makes is that environmental management systems must be careful to avoid shifting environmental burdens down the supply chain. The bottom of the supply chain is actually crucially important because, as Kincaid explains, “the greatest [environmental] benefits can be achieved in the lower tiers.” She continues to explain that in her survey, most of the top Saturn suppliers already have dedicated environmental staff and some sort of environmental policy. Interestingly enough, these findings are in line with a statement by Ford that the motivation for requiring the ISO 14001 certification is that many of its top suppliers are already pursuing the certification or have facilities registered compliant.
While I’m sure that the logic behind requiring suppliers to conform to ISO 14001 is that it will lead to those suppliers requiring their suppliers to conform and so on and so forth, this doesn’t necessarily mean that any of them will actually improve their environmental performance. Especially when you consider that individual facilities get certified on their own, even those within a single company. For Ford and GM to truly expect environmental improvements to result from their ISO 14001 requirement, it’s pretty obvious that there must be an additional requirement, one that ensures not only that tangible experiences are communicated, but that action is taken to bring everyone up to the same environmental performance standards. And not just between Ford and GM and their top suppliers, but among the entire supply chain as a group, as envisioned by the Saturn-UT-EPA partnership.
While the supplier ISO requirement may be a first step toward environmental improvement, it falls far from completely addressing the issue. For the sake of the environment, I hope that more best practice sharing programs like Miller and Kincaid’s are implemented. Perhaps then, ISO 14001 will live up to its billing.