Companies' EMS costs show wide variation

Evidence of the business benefits of certified environmental management systems (EMSs) is continuing to accumulate, with a leading electronics producer reporting first-year savings of £400,000. But new information on the costs of EMSs shows a three-fold variation between companies in expenditures per employee in both introducing and operating EMSs - pointing to possible overdesign problems.

About 300 certificates have now been issued to UK companies under the international environmental management standard ISO14001 and its British predecessor BS7750, while some 30 sites are registered under the EC's eco-management and auditing scheme (EMAS) (ENDS Report 267, pp 6-7 ). New information on the costs of achieving and maintaining certification has now emerged from two sources.

One was a survey by the BS7750/EMAS Users' Group. The results, based on returns from 30 certified companies, are reported in the June edition of EA, published by the Institute of Environmental Assessment. Key findings were:

  • Sixteen companies used environmental consultancies to help them develop EMSs. Day rates charged ranged between £207 and £500. Total consultancy costs ranged between £400 and £29,000, with an average of £6,800.

  • Day rates charged by BS7750 certification bodies varied between £400 and £1,240. Total certification costs ranged from £1,100 to £8,757, with an average of £3,745.

  • Firms also incurred internal costs in developing EMSs to BS7750 standard. The working days needed to do this ranged from 40 in a company which already had an informal EMS to 1,500, with an average of 306 days.

  • Maintaining compliance with BS7750 has required a lower level of internal effort, with staff resources expended on running the EMS averaging 154 working days per year.

  • Companies also paid for two surveillance visits per year by their certification bodies. Costs ranged from £775 to £1,550 per visit, with an average of £950. Day rates charged varied between £387 and £775.

    Overall, therefore, the average external cost of securing BS7750 certification for these companies was about £10,000 where consultancies were used, while average external costs for maintaining EMSs are about £2,000 per year.

    A more integrated picture of the costs of preparing for and maintaining certified status has come from consultancy EAG-Environ. Its figures include internal as well as external costs incurred by six companies certified to ISO14001.

    The figures are presented in an article on effective use of consultants by Niall Smiddy of EAG-Environ in the fifth edition of ENDS' Environmental Consultants Directory, to be published within the next few weeks. They are particularly helpful because they have been normalised to cater for multi-site operations and variations in employee numbers.

    The cost data are summarised in the figure . They include external consultancy costs, diverted internal resources, EMS-specific capital expenditure, and certification expenses.

    The figures show an almost three-fold variation in the cost of EMS implementation, ranging from less than £100 to more than £250 per employee. Even between the two power generators with similar businesses the cost varied by a factor of two. The average across the six companies was £185 per employee.

    The cost of maintaining an EMS shows only a slightly smaller variation, ranging from just under £25 to more than £50 per employee per year. The average figure was £37.

    Consultancies were used by all six firms in developing EMSs, and the costs involved were somewhat higher than in the EA survey, at £15,000 to £80,000 per site.

    Variation in EMS costs is only to be expected due to differences in the nature and complexity of companies' activities. However, Niall Smiddy believes that some firms are incurring unnecessary expense by overdesigning their EMSs and misdirecting their internal effort.

    Meanwhile, information on the financial benefits of certification remains fairly sparse. Documented examples include:

  • National Power turned a £200,000 annual cost at one of its sites into a £20,000 profit by improving management of contractors and sending more wastes for reuse and recycling.

  • Woodcote Industries has reported energy and waste savings of £320,000 after achieving EMAS registration.

  • Loudwater Litho is saving £20,000 per year in waste disposal costs.

  • Layezee Beds is saving £250,000 per year on energy and raw material costs.

  • Metal pigment producer Wolstenhome International spent £29,400 in achieving BS7750 certification, and invested another £41,900 in some 20 improvement projects identified in the EMS process. Immediate savings amounted to £35,000, while savings on energy, raw material and waste disposal costs are running at £103,600 per year - giving a handsome payback (ENDS Report 263, pp 6-7 ).

    Another case study was presented by Adrian Belcham of Sony UK at an IBC conference on ISO14001 in June. The company's works in Bridgend, which produces cathode ray tubes and other television components, was certified to ISO14001 last December.

    Although the site had already put effort into improving energy efficiency and recycling, savings of £400,000 were achieved in the first full year of EMS activity, Mr Belcham told the conference. Most stemmed from a 50% reduction in packaging waste - achieved by the widespread introduction of returnable packaging - and a 10% reduction in disposal of waste to landfill through improved waste segregation.

    Sony believes that there is "still great scope for improvement", according to Mr Belcham. Its targets for 1997 include a further 5% reduction in waste to landfill, saving a potential £13,000 in disposal costs alone, and a 3% reduction in energy consumption, saving around £100,000.

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