Archive for the ‘Certification’ Category

Legal Compliance – A Trivial Pursuit

Oomph Seminar – Environmental Management Systems – The Dark Arts

In the week that Defra announced the timetable over the next four years for the removal and simplification of environmental regulation, the latest Oomph Seminar focussed on the evaluation of legal compliance. This long awaited reform seeks to reduce the administrative burden of compliance. The past twenty years has seen a steady and seemingly inexorable increase in the breadth and depth of regulation and government has now called a halt. For organisations with an environmental management system the challenge of how to demonstrate compliance with this baffling mountain of statutes, simplification and reduction must be welcome.

This theme emerged again at today’s Oomph Seminar at Highcross in Leicester. Many thanks to Nicola Duffy for the fabulous room and her insightful introduction to the theme, Environmental Management Systems – The Dark Arts. It was generally agreed that for many environmental professionals the focus of their EMS is on achieving a certificate. But once the certificate is shining on the General Manager’s wall what then? Is it more box ticking or can more be achieved? Is the organisation or business then fully legally compliant?

It is often the perception of senior management that achieving the certificate ensures legal compliance in environmental legislation. Company reports may even state this. Compliance is however a very dynamic and complex state which connects the application of detailed regulations with procedures and behaviours. A change in one of these and therefore a disconnection between these three elements may lead to becoming non-compliant. Is it actually unrealistic to describe, with any degree of confidence, whether an organisation is ever actually in full and 100% compliance? If not, then what is point of legal compliance?

Much store is given to having an accurate and up-to-date legal register, however without this being integrated as a part of overall risk assessment, we will lose sight of what is really important. As a consequence we could be ignoring the truly important for the sake of achieving the unachievable.

Surely the most important part of the job of an environmental manager is to provide the expert analysis of the law and as a result give assurances to senior management. It is almost tantamount to heresy for an environmentalist to admit to being in a non-compliant state. However the reality is that what they should be doing is to analyse the business risk and consequence and to target effort, especially in these times of limited resources.

If one accepts that legal compliance is a risk based exercise, then what can result is better targeting of both resources and business benefit. What tends to cause problems is getting buried in and obsessive about trivia. The challenge is how to decide what is trivial. The discussion around this concluded that the best way is through active and effective engagement across the organisation.

What tends to happen is the environmental expert is isolated and comes up with worthy but often impractical advice and guidance. This results in a lack of credibility and a huge uphill battle from then on. One image of environmental mangers that stuck was of often feeling like a dementor (soul-sucking creatures from Harry Potter). If we focus on the trivial we lose the argument and make enemies of those that we need to involve in the process.

If it is a risk process then it is likely that some legislation will be missed because it is considered trivial even though it might relevant. Will this cause a problem with the third-party auditor? It shouldn’t if it is presented in the context of the business. Surely the outcome must be that the environment is protected and the organisation can demonstrate continual improvement. Linking environmental aspects and impacts with legislation and internal control processes through an integrated risk register might be the method that we need to adopt.

So, perhaps the best way to deal with legal compliance is to throw away the legal register and start building systems that intrinsically recognise the legal framework which we need to operate within. Slavish attempts to prove that every part of every piece of legislation is being complied with is counter-productive. We should know what will really hurt the organisation, whether in terms of fines and penalities or in risk to reputation and apply the system accordingly.

Fourth Oomph Seminar – ISO14001 – beyond the badge

  1. Leadership and Management Review
  2. Systems integration
  3. External auditor involvement and personal confidence
  4. Accreditation, certification and supplier selection
  5. EMS value and strategic priorities.
If there is one overarching conclusion then it is this: if we are to make significant and meaningful progress, we must stop being obsessed with achieving the badge.
After a very brief introduction to the revision process for ISO14001 and the likely new High Level Structure based on ISO Guide 83, we dived straight into gathering first hand experiences of both the use and application of the standard and the process of certification.

1. Leadership and Management Review
The best barometer of an EMS is the efficacy of the Management Review process. The right people need to be in the room, involved actively in the review and direction of the system. This resulted in some uncomfortable shuffling amongst participants. In order for ISO14001 EMS to gain credibility and to increase it’s worth to the organisation, the top people need to attend and participate in the decision-making process.

2. Systems integration 
Are Environmental performance and management in danger of being sidelined?  While some said that integration of environment, safety and quality had resulted in better overall performance, this was not universal. At the root of this seems to be that all too often ISO14001 is seen as an end in itself, rather than the priority given to process of culture and behaviour change that is now becoming more commonplace in safety systems. One key phrase that struck a chord was that the EMS must “reflect the world as it is, not as you’d like it to be” – change takes time, vision and not just a certificate.

3. External auditor involvement and personal confidence
While its easy to blame weak or inconsistent auditing by certification bodies for poor performance in EMS, in reality all parties in this process bear some responsibility. Only one participant had discussed what value the organisation wanted from the process of certification. It was generally agreed that significant improvement can occur if the auditor understands what the organisation wants and indeed the organisation knows what it wants. It is therefore implicit on the system owner to recognise the broader benefits of external scrutiny and what the system can deliver. All too often the system owner feels extremely pressurised during external audits, in part because they have taken on too much ownership and have not delegated up and down the organisation. They feel they are being audited not the system. Ultimately this is both stressful to the individual and it can become a reason why the system doesn’t evolve or operate as effectively as it could.

4. Accreditation, certification and supplier selection
The common confusion over accreditation and certification is perhaps symptomatic of a deeper issue around implied quality and credibility. Organisations can create problems for themselves by insisting on ISO14001 as part of the supplier selection criteria. The feeling that some suppliers are badge collecting and the desire of procurement teams for a ready-made solution provided by certification are causes for concern. In practice, organisations need to look behind the badge carried by suppliers. The problem with a one-size doesn’t fit all approach is it is time consuming and expensive, however when done well can provide real value through developing truly beneficial partnerships.

5. EMS value and strategic priorities
It sometimes feels that environmental improvement happens in spite of the ISO14001 EMS, rather than because of it. All too often the EMS will be left to handle the on site and day to day operational matters, while the meaty strategic (i.e. big ticket) issues get sliced off to be managed by others. An example might be energy and carbon – a topic so obviously relevant – but increasingly not really an integrated part of many EMS. Decisions taken to install alternative energy generating sources will rarely be a part of the system and as such it will lose credibility and perceived value. This in turn perpetuates a view that it is a bolt on system run by ’tree-hugger’s, rather than one that is core to the business.
The common conclusion that we must move beyond looking at environmental management as a badge collecting exercise must happen if ISO14001 is to become a powerful strategic tool as some of those involved in the ISO revision process would like. To move beyond a simple compliance tool, we as professionals must start to incorporate the language and processes of the organisation and stop using the ISO14001 standard as the template for the EMS.

Carbon Reduction Commitment – letting out the frustration

As with many new things, it takes time to see their strengths and weaknesses.  Part of the problem with the Carbon Reduction Commitment (CRC) is that it has changed significantly since its inception, so that now we are dealing with a very different thing from the original concept.

For those that have been out of the country or not paying much attention, the original idea was to create a scheme which rewarded performance, was fiscally neutral and created economic incentives to encourage organisations to increase their energy efficiency and so reduce their carbon emissions. Companies could gain high ranking through ‘early action metrics’ by gaining the Carbon Trust Standard and introducing automatic metering (AMR). By coming high in the rankings organisations could be rewarded, while poor performance would be penalised. Since the 2010 general election this has been amended to become, basically a carbon tax. The rankings still exist but without any rewards. Organisations simply pay out in proportion to their carbon footprint.

Among many environmental professionals there was a sense of inevitability about the shift in policy and a resignation that all the past three years’ planning and preparation had been largely undone. While it remains true that reducing carbon emissions through becoming more energy efficient has its own financial rewards, there are other considerations.

An environmental professional seeks to work to identify and minimise the risks to their organisation or client. When policy shifts so dramatically with a change of government, the environmental professional loses credibility but more importantly the organisation starts to review its position on environmental issues. If Government and its regulations are perceived as not taking an issue seriously then organisations are likely to reflect this.

It is perfectly acceptable to modify legislation after a period of time to test its effectiveness or if it was proving costly to regulate, but a change based entirely on political doctrine leaves a very nasty taste. As we have subsequently discovered the u-turn over CRC was a precursor for many others.

This policy shift, is however only the tip of the iceberg in relation to the problems that CRC has created.

The scheme has always been complex, both to understand and then to use. While the scheme provided incentives and penalties, there was a value to the complexity. With the 2010 change of policy, this complexity has remained and serves virtually no value. Indeed it could be said that leaving the complexity in place was a deliberate ploy to discredit a scheme now viewed as politically unnecessary. On the one hand one could argue that leaving things as they were in terms of process provides the opportunity to return to the original fiscally neutral scheme where good performance was to be rewarded.  On the other hand, and if one was being cynical, keeping the system complicated would support the argument that legislation is bureaucratic and thus support calls for deregulation.

The complexity of CRC creates a huge drain on time and a requirement for new expertise. There will be instances when organisations will inaccurately report – either disadvantaging themselves or under reporting. An example of this is that one can obtain an end of year statement from energy suppliers, however some companies have found discrepancies between internally derived consumption figures and those from their suppliers. Without the internal capacity to check and verify, reliance on energy company data could lead to errors and potential financial implications for CRC participants.

In the early days before the 2010 changes, the Carbon Trust Standard (CTS) offered forward-thinking organisations an opportunity to gain credits for the early action metrics and thus improve their initial ranking position with associated cost benefits as outlined above. Initially CTS did not have any competition, but following successful lobbying other equivalent schemes (e.g. CEMARS by Achillies, Kitemark for Energy by BSi and Carbon & Energy Management Scheme by LRQA) have become established. All of these schemes, however, are not directly comparable with CTS because they require certification to or verification against an additional ISO standard – ISO 14064 or ISO 16001. This additional element is not required by CRC and leads to additional complexity and internal resource to service and maintain the data and monitoring for apparently little additional benefit – at a time for many organisations when resources are stretched to near breaking. Since 2010 it would appear that the Carbon Trust still dominates the UK market however the demand for the CTS has fallen off since the u-turn on CRC.

Automatic Meter Reading or AMR is the other CRC early action metric.  In large organisations with many, diverse and sometimes remote sites, the practicalities of installing AMR have been over-looked and regarded over-simplistically by government and regulator. To gain 100% on AMR the difference in effort and cost in getting there is huge if comparing an organisation which needs two AMR against one that needs 6,000. One could argue that this is organisations having a bit of whinge – “it’s not fair that we’re a big company” (said in the tone of a slightly sulky teenager). There are practical issues for companies with remote sites with limited mobile signal – as AMR work using mobile phone networks – a small quarry in deepest Devon or remote water pumping station in rural Northumberland might simply not be able to communicate. There are a surprising number of these types of sites and for some organisations to achieve 100% on this early action metric would be impossible.

With such a complex scheme, guidance needs to be effective and accessible. In practice this is not universally so. Guidance is often vague and has to be discussed with the help-line, and when guidance is compared it has sometimes been found to be inconsistent. This all adds to the time needed to comply with the regulations. An example of inconsistent guidance is the interpretation on how to treat and exclude EU Emission Trading Scheme (EUETS) operations within CRC. This is especially so when considering the treatment of renewable energy supplies in small-scale power generation. Due to the multiple layers of emission trading (and purchase of credits), environmental permitting, and renewable obligation certificates (ROCs) there will inevitably be examples of double accounting or disincentives for the use of renewable fuels.

And so to sum it all up – it would appear from talking to many people over the past year that are closely involved with the CRC – it’s a bit of a mess and the over-riding sentiment is frustration. Frustration with the changes, frustration with the complexity and time-consuming nature of the data gathering and frustration in the lack of consideration of the effect of all this on organisational strategy. Many now feel that if CRC is in effect a Carbon Tax then remove the complexity and simply levy a fixed sum per MW of energy and charge it through the energy bill. But this will not have the desired outcome as many companies will pass it on to the customer, while others such as local authorities and water utilities will not be allowed to do the same. It’s a muddle which needs to get sorted out.

This blog is my views based on many conversations with professionals and reading on this subject – I have not attributed comments and have decided to make some of the comments generic rather than specific to a particular company or sector.

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    • Testimonials

    It is fantastic to leave a seminar feeling inspired and full of practical ideas. Thursday’s oomph seminar did exactly that, Ben and Dan are naturals at putting an audience at ease which meant real participation from the group. As environmental professionals often form a one person team, it is fantastic to share a room with like minded individuals from local businesses who have faced and tackled similar challenges and can offer insight and advice. Eagerly anticipating the next installment of Oomph!

    Nicola Duffy, Environmental Co-ordinator at Highcross, Leicester

    Thank you both for inviting us to today’s Oomph seminar. From our point of view, we found the stimulus material and subsequent debate insightful from a sustainability perspective, but also in a wider context applicable to the successful deployment of general business initiatives.

    Participant at Oomph Seminar 30 June 2011

    Really enjoyed this morning. I have attended very few seminars over the past two years simple because they are all too similar, often the the same speakers and follow the same theme. Today was most importantly enjoyable, interesting and got the brain cells working. I like small groups with variety of people and backgrounds.

    Participant at first Oomph Seminar 30 June 2011