PREVENTING ENVIRONMENTAL LIABILITY THROUGH ISO 14000 COMPLIANCE

Violations of environmental laws can produce large fines and civil liabilities that impose substantial costs on firms.  Many companies are attempting to reduce risks of this type of liability through careful management of environmental practices to achieve law compliance.  Under this approach, law compliance becomes a key objective of broader environmental management systems aimed at pollution prevention and liability avoidance.

These types of environmental management systems have recently been the focus of important standardization and improvement efforts.  As a product of these efforts, the International Standards Organization (ISO) has issued standards for the operation of environmental management programs.  These standards, known collectively as ISO 14000, are based on the view that companies and other organizations can best conduct their environmental affairs if they systematically identify and manage potential environmental performance problems. Among the steps needed to ensure proper attention to environmental performance, companies adhering to the new standards must adopt law compliance auditing and management review systems.

The drafters of ISO 14000 hope that these standards will assume a role concerning environmental management systems that is comparable to the role played by ISO 9000 in the field of product and service quality.   ISO 9000 establishes a framework within which companies can systematically identify and meet quality criteria valued by consumers of a given product or service.   Conformity to ISO 9000 has become a condition of doing business in diverse contexts, particularly overseas. Many firms have found it to be a commercial necessity -- i.e., their customers demand not only that the firms they deal with meet ISO 9000 standards, but that such firms have their systems audited and approved or "registered" by a third party as complying with ISO 9000.  Worldwide, almost 100,000 ISO 9000 registrations have been issued, with 10,000 in the United States.   It is expected that registration agencies for compliance with ISO 14000 will be operational soon and that compliance with ISO 14000 will, like its ISO 9000 counterpart, be a significant commercial consideration for both suppliers and consumers.

The significance of compliance with the new ISO 14000 standards will vary depending on a particular firm chooses to embrace the standards.  The standards can be used by a firm to:

In comparison with traditional legal regulation of companies' environmental practices, ISO 14000 is aimed at privatizing such regulation.  Because companies that are ISO 14000 compliance will be advantaged in commercial transactions relative to those firms which do not comply with the standards, private incentives should promote conduct in accordance with these new standards.   This conduct should in turn produce heightened levels of law compliance.

Beyond creating these new incentives, the detailed guidance about good law compliance practices that is provided within the ISO 14000 standards should result in some other important benefits.  At the organizational level, these standards will help organizations to construct and operate complete and effective environmental management systems.  At the national level, the standards will positively influence and improve government policy and regulation as ISO 14000 compliance and associated private incentives come to be seen as a valuable complements to traditional regulatory solutions to environmental problems.  Finally, at the international level, the ISO 14000 is a step towards the observance of consistent international standards that will facilitate trade for environmental businesses and for industries in general.

The materials at the following links contain detailed discussions of the provisions of ISO 14000 and the implications for companies and law enforcement of compliance with these standards:

Provisions of ISO 14000

ISO 14000: Implications For Pollution Prevention

ISO 14000: A Corporate Perspective