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A New Standard

Finished sweating through your ISO 9000 certification? Time to think about ISO 14001.

In 1998, SWD Inc. was one of the first U.S. companies to boast certification under the ISO 14001 environmental standard. With its automotive customers asking the 105-person Addison, Illinois, metal-finishing company to follow ISO 9000 quality standards, the then-new environmental certificate looked like the natural next step. "Because of the industry we're in, we have to deal with environmental laws on a continuing basis anyway," says vice president Tim Delawder, 35, whose father started SWD in 1980.

Today, more than 1,500 U.S. firms are under the ISO 14001 banner. While they make up a tiny fraction of American businesses, the number was up 23 percent during 2001. That doesn't rival Europe and Asia, however. The roster of 14001-certified Japanese companies was up 50 percent in 2001 to nearly 8,000.

Why the interest? ISO 14001 is the environmental cousin of the ISO 9000 quality certificates carried by close to a half-million companies worldwide. The Geneva-based International Organization for Standardization, author of both, wrote ISO 14001 to specify how companies should set up, maintain and continually improve an environmental management system (EMS). The EMS helps companies monitor and measure the impact on air, water and soil of vehicle and smokestack emissions, noise, vibration, radiation and other fallout of business products and activities.

ISO 14001 doesn't define companies' environmental impact. Rather, it requires them to analyze environmental aspects of their products and services and then, based on local regulations and other considerations, set goals for controlling and improving that impact. For example, a company that determines its high water use has a negative environmental impact may change processes to conserve water.

Suppliers Demand
Interest in ISO 14001 picked up in 1997, a year after the standard was released, when General Motors and Ford said their suppliers would have to follow it, says Susan Gilbert-Miller, director of environmental services for the Chicago Manufacturing Center, a government-funded consulting organization. Many now believe the certification will be essential for entering new markets, especially automotive, European and Asian ones. But that's not why Delawder likes it. "Don't expect to get business out of it," he says. "At this point, it's more of a tool to make your organization stronger. If I produce more product with less water, energy and chemistry, I've just saved money."

Savings aren't free, however. You'll see auditing and registration fees of about $9,000, says Gilbert-Miller. Every six months auditors must visit again, an ongoing cost of about $6,000 each time.

Also, SWD's certification was preceded by more than a year of weekly four-hour meetings involving 10 managers and employees. "It was a pretty big undertaking," says Delawder. The lowest total estimates for a company to implement the ISO 14001 standard, including labor and management time, are about $35,000, Gilbert-Miller says.

The first step in seeking ISO certification is hiring a consultant. Find consultants with expertise in ISO 14001 through state or local environmental protection agencies, small business development centers or the ISO's Web site at www.iso.ch. Next assess the company's environmental impact, devise goals for improvement and come up with ways to control and measure that improvement. Then come the regular environmental audits.

Overall, ISO 14001-related savings are about equal to the costs, says Delawder. But he says the investment is worth it because it improves environmental awareness among employees, reduces risks of violating regulations and improves the company's image among customers and members of the community.

From being an industrial enterprise that was viewed with suspicion by some local residents, SWD has become something of a showplace for environmental awareness. Delawder has brought in school groups and allowed other business people to study SWD's operation. And not long ago he did something that, for a metal finisher, is unheard of. "I let an environmental group tour us," he says. "Ten years ago, I would have said, 'Where's your search warrant?'"

Next Step
Download a free guide to implementing an ISO 14001-based environmental management system from NSF International, a nonprofit education and consulting organization based in Ann Arbor, Michigan.

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This article was originally published in the October 2002 print edition of Entrepreneur with the headline: A New Standard.

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