BS7750 - the selling of a standard

Implementation of the EC Regulation on eco-management and audit (EMA) is now only one year off, but many of the most contentious issues remain unresolved. The UK's environmental management standard, BS7750, is still ensnared in debates over accreditation and certification arrangements, while arguments continue over the mutual compatibility of BS7750, EMA and the ISO9001 international standard. These uncertainties may discourage companies from entering the schemes - especially when combined with concerns that the potential benefits of certification are being oversold by some interested parties.

The British Standards Institution (BSI) published a revamped version of BS7750 in February (ENDS Report 229, pp 21-23 ). The amendments reflected the lessons of a 12-month pilot study, and also sought to make the standard compatible with the final form of the EMA Regulation - which itself was heavily influenced by the BSI model (ENDS Report 216, pp 39-40 ). The most significant difference between the two is the EC requirement for regular publication of independently verified environmental statements. Many firms see BS7750 as a convenient stepping-stone towards this tougher requirement.

Both schemes have been in the pipeline for several years, but general understanding of their aims and benefits is as muddled as ever. Certification to either is not intended to indicate sound environmental performance - the requirements are to comply with relevant legislation and corporate objectives. The standards are purely concerned with the effective operation of a company's environmental management system.

A bad case of overselling?
In a report for the European Commission last year on the progress of an EMA pilot study, PA Consulting found a "common misconception" about the scope of the standard. Many firms also found it hard to understand the Regulation's aim of harnessing market forces to encourage industry to improve their performance beyond legal requirements. And fears of excessive bureaucracy were common.

Since then, the final versions of BS7750 and the Regulation have attempted to clarify the muddle. However, at a BICS conference held in London in April, it became clear that views on the purpose of certification remain highly dependent on the speaker and his or her audience.

One view was put by Tony Strong, Du Pont UK's Director of Product Safety, Quality and Environmental Affairs and the leader of a Chemical Industries Association (CIA) working group on environmental management systems. "Certification," he told the conference, "is an answer to public pressure for independent evidence on a company's environmental performance. It will also provide an easier answer to customer questions on environmental liability, and a demonstrable improvement in environmental performance will give industry a stronger position to oppose further legislation."

Mr Strong's comments were echoed by other speakers - many from the auditing profession - who seemed content to stoke the belief that certification will secure firms against environmental liabilities, fend off attacks by environmentalists and ensure an easy ride with regulators. But Geoff Smith of the Department of Trade and Industry's Environment Unit told the conference that "given the general ignorance in industry about BS7750, it's the worst case of overselling I've ever seen".

Stakeholders' perceptions
Chris Sheldon, who heads the BSI initiative, warns that "communication of the objective is vital or people will go for BS7750 for the wrong reasons, and treat it as just a green badge". However, he did little to bring expectations for the standard down to a more realistic level by commenting that BS7750 would "establish a credible framework for self-regulation" and "meet the aspirations of stakeholders".

These arguments assume that a certified management system alone will inevitably yield significant, credible improvements in a company's environmental performance. There are grounds for believing that such systems will lead to reduced impacts - but this cannot be taken as read.

The latest version of BS7750 specifically bars certifiers from considering if a firm has correctly assessed its "significant" environmental impacts. And while it requires "year-on-year enhancement of overall environmental performance, not necessarily in all areas of activity", it has little to say on what rate of improvement will be deemed acceptable. A useful analogy for the standard is a fitness programme. Either an Olympic athlete or a lounge lizard can adopt a programme - and can decide how fast and how far they want to improve.

While many "stakeholders" regard BS7750 as an important step in the right direction, certification alone may fail to address their concerns. Richard Tapper, Head of Industry Policy at the World Wide Fund for Nature, says: "I'm looking for evidence of a reduction in environmental impacts...The existence of an environmental management system alone is of little comfort where levels remain high or catastrophic leaks occur."

For most companies, however, the two most important stakeholders are the financial community and the regulators. Peter Blackman of the British Bankers Association stressed that "the ability of bankers to influence business is often overstated". Environmental risks are just one element in a lending decision, he says, "and while management standards are helpful, there's more than one way to skin a cat".

Role of the regulators
Some regulators have recently made more positive noises about the benefits of BS7750 and EMA. In March, HM Inspectorate of Pollution (HMIP) suggested that certification is likely to give "some confidence that we can reduce the level of inspection activity" - and offered the prospect of an associated reduction in the level of its charges under integrated pollution control (IPC). However, Martin Bigg of HMIP's pollution policy division told the conference that inspectors would need to be convinced of the validity of a company's targets under its environmental management system. To a large extent, he suggested, certification may be irrelevant.

The relationship of BS7750 to IPC and other regulations presents several interesting possibilities. From one perspective, HMIP's latest statements could be seen as the first step towards privatising regulation and oversight of processes under IPC. But paradoxically, inspectors may be forced to judge the environmental reviews and inputs to a firm's environmental management policy in order to assess its value - a role the independent assessors have declined to accept.

Another important question is to what extent, if at all, BS7750 will lead to environmental improvements over and above those required by legislation. In particular, the continual improvement sought by the standard is based on the reduction of "adverse environmental effects to levels not exceeding those corresponding to economically viable application of best available technology" - or, in yet another acronym, EVABAT.

So far, the only attempts to define the thorny questions of EVABAT and "significant" environmental effects under BS7750 are the sector application guides (SAGs). There are several doubts over the success of this exercise. SAGs were generally expected to be prepared by trade associations in a hangover from the BSI's pilot BS7750 exercise (ENDS Report 218, pp 19-20 ). However, trade associations are notorious for seeking the lowest common denominator for their members, and there has been little or no consultation between industry sectors to ensure consistency of approach.

The DTI's Geoff Smith warned that "a number of trade associations are not rising to the challenge", and told the conference that there may be a role for Government to bring together examples of best practice. He also believes that "there could be a lot of blood spilt" in making EVABAT under BS7750 consistent with the European interpretation.

The power generation industry is the only sector to have sent out a SAG for public consumption - but is somewhat reluctant to go beyond legislative requirements in addressing its key environmental effects (see box ). The CIA is attempting to produce a SAG by revising its interpretive guidance for ISO standards for safety, health and environmental management systems. However, Du Pont's Tony Strong believes that EVABAT may be less stringent than the "best available techniques not entailing excessive cost" required under IPC.

Doubts over certification
All of these concerns tend to raise the question - why go for certification? The question is particularly relevant for sitescovered by IPC, especially regarding the value of BS7750. The added requirement of the EMA Regulation for verified public statements and published emissions data gives rather more legitimacy to the use of a certificate to enhance credibility - provided the environmental objectives which underpin it can withstand close examination.

While many firms are now convinced of the importance of an effective environmental management system in managing their impacts and risks, there are doubts in some quarters about the need for certification. PowerGen is one example - even though its Kingsnorth station was one of the 17 sites in the EMA Regulation pilot exercise. Environmental Advisor George Barrett says: "we've got quite a well-developed system in place...If there is significant pressure from customers - namely our shareholders - we'll go down the certification route, but I don't see it emerging too strongly. However, if HMIP carries out less frequent visits and reduces its fees for IPC, then we'll probably be first in the queue." He describes most of the benefits from certification as "PR".

In strong contrast, National Power is committed to certifying all of its major sites to BS7750. Nigel Burdett, Manager of the firm's Corporate Environment Unit, describes BS7750 as "a ready-made framework" to allow the company to "pull together all the strands of environmental management into a more organised system, one built on a foundation of staff motivation, understanding and communication". He is also enthusiastic about the EC requirement for verification of environmental statements - "there is little point in spending effort in preparing data and information if their accuracy can be questioned".

However, the driving force for certification is coming at present from sections of the chemical industry, where environmental management systems are at their most advanced. Tony Strong says that the CIA supports BS7750, the EMA Regulation and any ISO initiative equally as logical tie-ins with the industry's "Responsible Care" programme - though "some companies have concerns about the public statement requirements of EMA". The CIA is still pushing for a single certification process for health, safety and environmental management in order to minimise the number of audits required (ENDS Report 210, p 3 ). However, its priority is now simply to get a system up and running, and Mr Strong says that "the industry is getting frustrated at the delay".

On certification, Mr Strong's advice is: "if you don't believe real cost-effective improved performance will result, don't do it". However, he says that certification will prevent senior management backing off from a commitment as a result of "short-term pressures of the market". "You'll do a lot to avoid the horrible embarrassment of losing a certificate," he comments - although many firms may prefer to avoid red faces by not applying for one in the first place.

The most likely mechanism for the standards to spread to other sectors is via supply chain pressure from certified companies, in a similar fashion to the quality standard BS5750. The waste industry may be first in line, as chemical companies grow increasingly concerned about potential liabilities arising from their waste disposal contractors. However, Jan Vernon of KPMG Peat Marwick's Environment Unit warns that large firms sometimes use certification requirements "as shorthand to avoid having to look at issues in detail, where it's not always appropriate". The DTI's Geoff Smith also hopes that "large companies are sensitive to the needs of SMEs [small and medium sized enterprises], who are often struggling for survival and don't have the management resource."

However, the main reason why most firms are now blowing cool on certification is uncertainty about the future requirements. The first area of doubt concerns the process via which certifiers for BS7750 (or verifiers for the EMA Regulation) are assessed and accredited for the task. The Government has given the job to the National Accreditation Council for Certification Bodies (NACCB) (ENDS Report 226, pp 36-37 ), which will publish its draft criteria in early May.

The NACCB has two main concerns - the independence and competence of the auditing body. On the first point, spokesman Roger Brockway sees the auditor's involvement in consultancy work as a "litmus test". However, drawing a line between consultancy and independent auditing is by no means straightforward. Existing consultancies will be able to put themselves forward for accreditation provided they establish "Chinese walls" within their organisations.

The competence issue has stirred greater debate, especially over the environmental expertise that the NACCB will require in an auditing team. The Environmental Auditors Registration Association has been pushing its registration scheme for individual auditors (ENDS Report 228, p 10 ), while schemes proposed by the Royal Society of Chemistry and the Institution of Chemical Engineers are at a more embryonic stage.

However, the NACCB has backed away from making registration under such a scheme a formal requirement. Mr Brockway says that "there is no cast-iron guarantee of a competent auditor at present", and comments that "it's not a disaster if no paper qualification is required". The requirements for an auditing team are, he says, technical knowledge of the industry sector, expertise in management systems, an understanding of the standard, and an understanding of environmental effects. The NACCB's main criteria will be the management system of the certification body itself. The BSI's Chris Sheldon also plays down the level of environmental expertise required: "It's a lot less than people think. The assessment is very different from letting an environmental auditor loose on the site."

Such moves are likely to reinforce fears that BS7750 is becoming increasingly remote from environmental factors, and may turn into a bureaucratic, desk-based exercise.

The NACCB is launching a six-month initial accreditation phase at the end of May, based on its draft criteria. It hopes to involve up to ten certification bodies which will be encouraged to start working with up to four companies each. Mr Brockway says that when the final criteria are agreed by the DTI at the end of the year, all participants in the dry run will become accredited automatically, and the companies which they have certified will be awarded BS7750 immediately.

A shaky stepping-stone
Many companies see BS7750 as a convenient stepping-stone towards EMA certification, but are worried about the compatibility of the accreditation processes. The NACCB says that it will hold two separate registers, but expects that most certifiers will appear on both lists and that companies should be able to avoid problems by sticking with the same auditor.

A more fundamental worry is that the European Commission has not yet formally recognised BS7750 as consistent with EMA. The British standard has influenced national standards in France, Ireland and Spain, and is used in Denmark and the Netherlands as a de facto standard. However, Geoff Smith warns that "it is by no means clear that all Member States will wish to see BS7750 recognition". Germany is believed to be particularly concerned about the absence of performance criteria from the standard.A decision is expected by late summer.

A committee chaired by the Commission is due to meet in May to discuss guidelines for audit frequency. One of the main areas for debate is expected to be over verification requirements. Under the Commission's current thinking, verifiers would test the relevance of internal controls and audits and avoid judging a firm's assessment of environmentally significant effects and the adequacy of its commitments. But verifiers face something of a conundrum, as it appears that they are still expected somehow to take account of these factors when assessing the adequacy of the public statement. No independent verification of the numerical release data contained in a statement will be required.

Other issues over the implementation of the Regulation remain to be ironed out. A major concern in many companies is that, unlike financial audits, no rules for protection of confidentiality are in place. And some verification bodies question what will happen if they uncover non-conformance that requires corrective action. At present, there is nothing to stop a company from simply employing another verifier who may not notice the problem.

Liability looms large
But perhaps the biggest unresolved issue for both verifier and verified is that of liability. Auditors are concerned to do sufficient work to cover their professional indemnity insurance. Equally, the possibility that verification may expose a company to greater financial risk remains a murky area in the European arena. The issue is a hot potato in the USA, and is a major threat to efforts to secure an internationally recognised environmental management standard.

The momentum for an international standard has been building steadily for some years - with groups such as the CIA seeing an opportunity to combine environmental management with health and safety systems. Last summer, the International Standards Organization (ISO) established a technical group to develop an international standard, ISO 9001, which is due out by the end of 1995. However, Geoff Smith of the DTI describes this timetable as "heroic by ISO standards", and there are grave doubts that it will be met.

Foremost among the problems is the reluctance of the USA and Canada to adopt a specification standard which could imply an enhanced duty of care. There is a strong possibility that to meet these concerns, ISO may eventually opt for a guideline rather than a specification - and therefore fail to satisfy the legal requirements of the EMA Regulation.

The ISO technical committee meets in Australia in May to agree a draft document for publication in the summer. According to Mr Smith, at a preparatory meeting in Toronto the USA, "after initial hesitancy, accepted the 1994 version of BS7750 as a working text". However, he says, "the US is challenging every clause".

The European Commission needs agreement on a suitable standard fairly rapidly in order to implement the EMA Regulation in all Member States. If ISO fails to make sufficient progress by the autumn, it may have to fall back on the European standards organisation CEN to prepare an EC-wide standard at short notice.

In view of the uncertainties hanging over the arrangements for achieving certification and the compatibility of the various standards, firms can be forgiven for treading warily. Caution is even more understandable in light of the unresolved debate over the basic function and value of the standards. So far, this has been dominated not by potential end-users and environmental stakeholders - but by the standard-setters and others who stand to gain from the certification process.

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