2.1 EMS: Definition and Concepts 

For the last ten years various stakeholders defining standards of good environmental management practice have influenced corporate strategies for environmental management and environmental information. The growing importance of environmental management is reflected by number of important regulations and standards in force or being prepared, all with the aim of harmonizing environmental management practices and procedures. Standardization and its application to company systems are the most important aspects of effective environmental management Standards can be technical, related to performance, or can be process-based and they provide the foundation for continual improvement in relation to established benchmarks. Among the most significant standards in recent time are BS 7750 (BSI 1992), the EU directive on EMS and standard ISO and 14004 (or ISO 14004 for companies not seeking certification of ISO (1994a, 1999a). ISO 14001, which is now being adopted widely, is a process standard ISO currently developing a family of environmental management’ standards that address management systems and environmental aspects of products in the areas of life-cycle assessment, (LCA) (ISO 14040), labeling, (ISO 14020), and environmental performance evaluation.

Standard-setting organization such as the BSI, ISO as other national standard-Isetan organization have formulated standards against which corporate management systems can be audited. These standardization organizations are private institutions financed by industry. Their markets (i.e. sales) depend on the price of auditing and certification services as well as on the reputation of organization for ensuring that the material audited is of a high quality. The quality of these auditing services is, in turn, checked by regulators, who verify corporate environmental audit.

BS 7750, released as a draft standard in 1992 (and released as an actual standard in 1994) was the first standard for corporate environmental management systems. It has substantially influenced ISO 14001, which was published as a draft version in 1994 and as final document in 1996 (Hillary 1995: 294 Sheldon 1996; Tibor and Feldman 1997). Although ISO 14001 encompasses the general element of 7750, it allows greater flexibility in application.

A major motivation for companies to establish environmental management systems comes from the European Commission’s (COM) introduction of the voluntary EMS for production sites and companies. The term “ audit “ could be misleading, because EMS covers much more than a traditional legal compliance audit. EMS enables companies to have their audited according to criteria for good environmental management practices and, if they fulfill the requirements of the directive, to use (restrictively) a label that confirms that a specific site has an environmental management  system in place and that it has successfully completed an external environmental audit. The label can only be used on a letterhead or on environmental and financial reports and is not attached to products.

As shown in the following in Figure 2.1, an important part of EMS focuses on the process of ensuring that an environmental management system is in place and functioning

To comply with the provisions of EMS, a company must have implemented an environmental management system that helps to:

§         Formulate an environmental policy and goals for corporate environmental protection.

§         Secure efficient environmental accounting (or information management)

§         Evaluate environmental performance (and support decision-making)

§         Plan and steer company activities.

Figure 2.1: Important parts of EMS

·        Implement the respective plans

·        Build up an effective and efficient organization

·        Communicate with internal and external stakeholders  (Environmental Reporting)

In addition, the existence and functioning of the corporate Environmental management system has to be verified by external auditors.

Companies that comply with these requirements are free to display logo on their letterhead; something that it is hoped would become a mark of environmental excellence. It was expected that market pressure, especially in inter-corporate business relationships, would encourage companies to participate EMS. However, as an economic analysis of the incentives provided by EMS and early experience show, this reason for participation may be overestimated in the past In addition, competition continues between EMS and ISO 14001 as alternative Environmental management standards. Frequent reports on the relative take-up of these of these rival schemes continue Emphasis on membership and cost is critical; for example, ISO reversals More than 80% of 500 companies surveyed on their experiences with implementation of [ISO] Environmental management systems (EMS) found them to be cost-effective, with over 60% quoting payback periods on their investment of less than 12 months. 

The Idea behind ISO 14001 can be shown in Figure 2.2. The main requirements for the ISO Environmental management system are similar to those of EMS. The company must establish:

§         An Environmental policy.

§         An Environmental accounting or monitoring system.

§         Implementation plans. 

§         Plans for correction.

§         An effective and efficient organization.

Figure 2.2: Core components of the EU Eco-management and audit scheme

As with EMS’s 1998 changes that extended the scheme to non-industrial companies, external revision of the ISO corporate Environmental management system is necessary for companies to adopt external ecological reporting. 

Also, EMS until 1998) and ISO were both site-oriented However 14001 does not exclude the application of its standard to products.  Just as with quality standard ISO 9000, strong pressure was expected to be exerted on companies which have their production sites certified. First tendencies show that in some business-to-business relationships the fulfillment of an environmental management standard is becoming a requirement for suppliers. Differences between the standards are small- apart from the fact that ISO 14001 does not require a public disclosure of environmental impacts.

BS 7755, EMS and ISO 14001 define requirements for corporate environmental management systems. However, none of these standards specifies how the requirements should be fulfilled, nor do they provide an indication of what goals corporate environmental management should strive to achieves for the importance of parallel changes to corporate culture,  

All standards emphasize the need for Environmental management control as well as the need for Environmental, and particularly, accounting as an important part of corporate environmental management. Nonetheless, the standards do not provide any methods for the management or implementation of decision-making processes (i.e. through incentive systems).

2.2 Methods of Corporate Environmental Management  

This is not place to discuss specific environmental management tools in depth but rather to show the link between the main tools of corporate environmental management with environmental accounting and environmental management system which indicates that contemporary methods of corporate environmental management are not particularly new and that they rely on well-known traditional management tools, see Figure 2.3.    

Environmental accounting auditing and reporting, eco-control total quality environmental management ( TQEM ) are all based on traditional accounting notions of auditing, reporting, control and total quality management ( TQM ) (Dobyns and Crawford-Masson 1991; Greenberg and Unger 1991; Petrauskas 1992 life-cycle assessment) LCA and costing is a special case of ecological accounting and simply corresponds to calculation (costing).  It represents a single-time ecological calculation and simply corresponds to calculation (ecological costing) with its scope extended to cover the entire life-cycle of a product.  

Whichever standard of environmental management is adopted –BS 7750 EMS, the EU regulation for a product eco-label or ISO 14001- all address some of following key functions of good environmental management .

·         Information management.

·        Support for decision-making, organization or planning environmental management programs.

·        Steering, implementation and control.

·        Communication

·         Internal and external auditing and/or review.

Figure 2.3: Methods of environmental management derived from methods of environmental economic management

2.3 Life-Cycle Assessment (LCA)  

 The main focus of LCA is on data management (single calculations) and assessment LCA also addresses some aspects of goal-setting (strategy and planning) and decision support. However, other functions of corporate environmental management, such as steering and communication, are not supported or are only partially supported by LCA.

2.4 Environmental Accounting and Reporting

Traditionally, accounting is the main corporate information management tool. Al management activities rely on or are at least influenced by accounting information. Environmental accounting is the application of an established of accounting (i.e. tools of information management, analysis and communication) to environmental management. However, environmental accounting is a management tool and must be comprehensively incorporated into the environmental management process. Only can environmental information be integrated into goal-setting, implementation and communication.  

TQEM is application of the principles of TQM to environmental management. In this connection the term “quality" is expanded to include environmental quality. TQEM is based on statistical tool to achieve quality control, namely various charts for data analysis, steering and internal communication.  In addition, TQEM is based on a statistical and engineering philosophy and supports goal-setting with an emphasis on the continuous improvement of quality In its original from TQEM, does not integrate measures of economic performance with measures of quality or, rather, environmental quality apart from an emphasis on statistical quality control and on continuous improvement (a notion central  to environmental management standards), TQEM, is holistic, that is it looks at each part of environmental management as an integrated whole-a system in which all elements have to work together (including the environmental element ) if goals are to be achieved.

2.5 Management Eco-control  

2.5.1 Perspectives on Eco-control   

Management eco-control is the application of financial and strategic control methods to environmental management. The concept of eco-control has also been applied to the state, to public administration and public policy (see Schaltegger et al., 1996). It provides a decision to support system for management (Schneidewind et al. 1997; Vedso 1993). Econ-control is among the most popular corporate environmental management approaches in continental Europe but is largely unknown in English-speaking West. Several concepts of eco-control have been developed in the German – speaking parts of Europe (Austria, Germany and Switzerland) and successfully applied by an increasing number of multinational medium-sized and small companies.  

Originally, eco-control was designed for the manufacturing industry. Recently, it has also been applied to service industries and to the management of fauna and flora.

As financial and strategic control is defined in a number of different ways, it is no surprise that a number of versions of eco-control have been published. Three main approaches to eco-control can be distinguished (Schaltegger and Kempk, 1996):

§        Financially oriented eco-control methods attempt to compute, analyze, steer and communicate environmental induced financial impacts.

§         Ecologically oriented eco-control methods are based on satellite systems of ecological accounting that are an extension of accounting and control system. Their purpose is to steer corporate impacts on the natural environment.

§         Economical-ecologically integrated concepts of eco-control integrate the two approaches mentioned above They take into account the evaluation and steering of financial and ecological impacts of corporate activities Measurement is two-dimensional: in terms of monetary units per unit of environmental impact added.

All three eco-control perspectives can be used for strategic as for operation management.

2.6 The Process and Concept of Integrated Eco-control

Integrated eco-control is a permanent, institutionalized, internal management process based on environmental accounting and reporting. The concept of eco-control corresponding to financial and strategic control is concerned with the environmental and financial impacts of a company. Eco-control can be divided into five procedures, as it is shown in the following:

       1.           Goal and policy formulation.

       2.           Information management (environmental accounting and reporting).

       3.           Decision support.

       4.           Steering and implementation.

       5.           Internal and external communication.  

All environmental management systems, including EMS and ISO 14001, require an environmental policy as well as clear and measurable annual environmental protection goals. With a focus on the aim of improving corporate eco-efficiency, economic and ecological aspects of operational goals should both be considered.

Information management is the only core of any environmental management system.  In practice, it is often the case that only what is measured is very important. The establishment of an environmental accounting system is one way of increasing the efficiency of information management.

Managers frequently suffer from excessively detailed information that hampers efficient selection and use of relevant data. Any information concerning environmental intervention has therefore to be assessed according to relevance. Furthermore, integration of economic and environmental aspects is necessary. Effective environmental management requires incentive systems to steer (or pilot) and implement corporate plans in the most efficient manner. Internal communications play a central role in efficient implementation. However, communication with external stakeholders also supported internal processes and this increases the gains from sound internal environmental management. 

Although it is important to establish a clear structure and plan for procedures, steps do not necessarily have to be completed in sequence. Nevertheless, the five procedures are present in logical order in the next five sections.

Specific guiding instrument are needed in order to implement the eco-control process. The process provides management with a detailed analysis the place, cause, extent and timing of environmental impacts. In addition, the total corporate environmental impact caused should be kept in mind when dealing with individual problems to avoid inefficient development (e.g. spending more and more on scrubbers to reduce smaller and smaller amounts of sulphur dioxide [SO₂] instead of reducing far worse environmental impacts from nitrogen oxides [NOx].  

The importance of each eco-control procedure depends on the environmental issues faced by the company and on their effect on commercial success. However, companies should consider carefully whether they have given enough to every procedure.  Too often, environmental management tools are introduced without any clear understanding of the corporate environmental strategy being followed.