Companies are required to be transparent about hundreds of ESG indicators – by rating agencies, investors and other stakeholders. The situation is further complicated by the fact that the focus is on different indicators depending on the industry. To avoid losing sight of the big picture, we shed some light on what’s behind each ESG indicator. Today: Environmental management systems.
Environmental management systems are particularly relevant for manufacturing companies, as they are primarily used to certify production facilities. Those who have integrated an environmental management system into their processes confirm that the company is concerned about environmental issues and is actively making improvements. The usage goal for environmental management systems should be to improve one’s environmental performance, comply with standards and achieve environmental goals. Among the most popular environmental management system certifications are ISO 14001 and EMAS.
Environmental management system according to ISO 14001
The international ISO 14001 standard specifies how environmental goals are planned, implemented using predefined procedures, and subsequently monitored. For this purpose, there are so-called “environmental guidelines”, which in turn suggest and demand adjustments again and again. The ISO 14001 standard can be applied regardless of the industry and size of a company or organization. It is important to note that the standard only certifies the management system, i.e., the procedures and processes – specific environmental indicators are not specified.
The road to the certificate
Companies initially introduce an environmental management system themselves at one or more sites. In order to comply with the ISO 14001 standard, the first step is to draw up a written environmental policy that must be communicated to all employees. This must contain certain commitments, improvements, and targets for environmental protection. In addition, the context of the respective company must be considered – both during the formulation of the environmental policy and during the development of goals and measures. This means that the company is examined in the overall context, for example regarding the production site, type of product or service, supplier, or investor. Further requirements for certification with ISO 14001 are performance measurements with key figures, consideration of opportunities and risks of environmental aspects as well as upstream and downstream environmental impacts.
If all criteria of the ISO standard are met without exception, this can be certified by an independent inspection body, such as TÜV-Süd or DEKRA – then the fulfillment of the environmental management system indicator is complete and can be communicated accordingly in the ESG reporting.
ISO 14001 certification can take up to twelve months to complete. This is mainly due to the fact that many different actors are involved, and the necessary steps build on each other. After all, the implementation of the environmental management system must first be decided and defined, then the relevant information must be obtained and integrated into the environmental policy, and goals and measures must be decided based on this information. Accordingly, the implementation of an environmental management system is time-consuming – and resource-intensive.
An example company for the presentation of ISO 14001 certification is SGL Carbon: on the company’s website, environmental management certificates for several sites are listed transparently.
Environmental management system according to EMAS (Eco-Management and Audit Scheme)
In addition to ISO 14001, there is also the voluntary European environmental management system “Eco-Management and Audit Scheme” (EMAS for short). The system developed by the EU includes the requirements of ISO 14001 and expands them by some aspects, such as a stronger involvement of employees in the improvement of processes and active communication about the environmental ambitions and performance of the company.
The road to the certificate
The requirements for EMAS certification are similar to those of the ISO 14001 standard but go even further. Anyone wishing to obtain this certificate must be able to demonstrate measurable improvements in the environmental area and be committed to going beyond minimum legal requirements. The most important criterion: the involvement of employees in the process of continuous improvement in environmental matters.
For initial certification with EMAS, the entire company must undergo an environmental audit, which must then be repeated at regular intervals – at least annually. Based on this, the goals and necessary steps are formulated and translated into an environmental statement, i.e., an environmental policy as in ISO 14001. This environmental statement must be published. In the case of EMAS, external environmental auditors must also assess and confirm the company’s efforts and the environmental statement. The Deutsche Akkreditierungs- und Zulassungsgesellschaft für Umwelt-gutachter mbH (DAU) provides an overview of approved experts for the respective industries. During such an audit, among other things, the environmental declaration is checked and confirmed for reasonableness and objectives in comparison with internal documents. In addition, audits are carried out by internal, trained employees. Once the internal and external audits have been passed, the company can have itself or the EMAS-audited sites entered in an EMAS register. This entry then also entitles the company to use the EMAS logo.
Similar to ISO 14001, EMAS certification also involves costs and effort. In particular, personnel resources, investments in other, more environmentally friendly technologies, the audit by environmental auditors and the final entry in the EMAS register must be included in the cost calculation for certification. Depending on the number of sites and the level of knowledge of the staff, EMAS certification can take several months.
ISO 14001 vs. EMAS – which benefits my company more?
One advantage of EMAS is that anyone who receives this certificate automatically fulfills the requirements for ISO 14001 and thus complies with the most internationally recognized standard. EMAS also goes one step further in another respect: voluntary environmental management requires greater involvement of all employees in the company, continuous improvements in environmental performance, and internal environmental management officers who carry out regular checks. The ISO 14001 standard, on the other hand, does not require these steps, as it explicitly evaluates and certifies only the management system. The advantage of EMAS is therefore the extended commitment, which is sure to win points with investors and customers. At the same time, certification according to the ISO standard is likely to be associated with lower costs than EMAS certification.
In addition to the positive ESG rating impact that an environmental management system brings with it, other factors also play an important role – such as a better overview of one’s own environmental risks in production or an additional argument vis-à-vis (B2B) customers.
So, is the introduction of an environmental management system worthwhile? In principle, many of the requirements already play a major role in companies. However, they are still too rarely specified in concrete and centralized terms. However, it is urgently recommended that this should be anchored in an environmental management system in a structured manner, because this is the only way that rating agencies and investors can use this information and base their decisions and assessments on it. And, not to be forgotten, anyone who uses an environmental management system should definitely talk about it and present it transparently on the company website.
You want to introduce an environmental management system to improve your ESG ratings? Feel free to contact us – we will efficiently support you with the next steps!