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Environmental Law Article

This article appeared in EM Magazine (November, 1997) published by the Air and Waste Management Association (AWMA).

Environmental Management Systems
Myth and Mystique

by P. Douglas Petrie, Willms & Shier, Toronto, Ontario, Canada

To achieve due diligence, environmental considerations must be thoroughly integrated throughout an organization's management and operations. Implementing an environmental management system (EMS) is one way to achieve this integration. However, having an EMS does not guarantee regulatory compliance or a successful due diligence defense to a prosecution. Moreover, a poorly designed or maintained EMS has significant downside potential. This article describes benefits and limitations of EMS, and debunks some common misconceptions.

These are the views of an environmental lawyer in Ontario who advises a broad range of industrial and public sector organizations on environmental management issues. These comments pertain to most environmental management systems (EMS), and many pertain to the EMS model ISO 14001 adopted by the International Organization for Standardization.

Today's level of environmental awareness (and fear of liability) has persuaded many organizations to systematically address environmental issues. A number of leading corporations have publicly committed to ISO 14001 certification. Ford of Canada, for example, already has achieved certification for one of its plants, as has Ontario Hydro.

In Canada, the courts and regulators already have expressed willingness to consider a company's adoption of an EMS as a sort of regulatory mitigating factor or indicator of environmental dependability. In the Prospec Chemicals case, an Alberta judge ordered the convicted company to achieve ISO 14001 certification within three years of the conviction. The federal government and Ontario provincial regulators have suggested in discussion papers that companies that adhere to ISO 14001 standards may be treated with less regulatory scrutiny in areas such as monitoring and reporting.

Despite the fanfare, an EMS is not an instant environmental management solution -- in some cases it may even increase corporate and executive exposure to prosecution. The fundamental point is simple but profound: an EMS has inherent limitations and benefits, so govern yourself accordingly.

EMS Defined

There is little debate about the definition of the term "environmental management system." The term is defined in ISO 14001 and 14004, but definitions by others do not vary significantly. Stated simply, an EMS deals with the totality of activities an organization undertakes to manage its environmental affairs in a systematic fashion. An EMS is

• a way of organizing language and documentation about environmental issues that conforms with the way others organize their thoughts on these issues (i.e., standardized methodology) and

• a generation, control, and maintenance process for documents (records of activities, policies, strategies, and procedures).

An EMS, in and of itself, is not a set of instructions on how to conduct business in a more environmentally friendly manner or how to ensure legal compliance or due diligence.

Properly Executed EMS

An EMS should provide (if executed appropriately and rigorously)

• a clear message to everyone in the organization, to stakeholders (investors and lenders), and to the outside world (regulatory agencies, customers, competitors, suppliers, and the general public) that the organization is committed to the environment, at least to the extent of the stated policy objectives and targets;

• an encouragement to everyone in the organization to dedicate effort and resources to the stated environmental objectives and targets; and

• a prompt to measure performance, self-assess and re-evaluate goals and priorities, and to train employees for environmental awareness.

Potential Downside

An EMS has significant downside potential -- that should not be underestimated or dismissed as a remote possibility -- to be

• a sham commitment to the environment for immediate and short-term public relations and trade gains. Stakeholders, regulators, and the courts will hold the organization to this commitment, and failure to meet it may sabotage a due diligence defense;

• documentation of environmental shortcomings obliging upper management to confront and correct them, and evidence of failure to exercise reasonable care if ignored; and

• shorthand for the regulators to assume satisfactory environmental controls are in place, waiving the usual scrutiny of mandatory filings or routine inspections that might ordinarily lead to the discovery of a problem.

EMS Benefits

Some minimum benefits to an EMS may prevail no matter how insincere the effort. These include

• gathering together in one place, physically in a new manual called the EMS Manual, or virtually, by creating a brief guidebook to identify the location of all of the elements, the policy, programs, and documentation on environmental issues;

• forcing managers to consider environmental issues, in the formulation of the policy, objectives, and targets with deadlines and measurable indicators, in the assignment of responsibilities and accountability throughout the hierarchy, and in the mandatory "management review" phase; and

• EMS-driven activities such as pollution controls, pollution prevention/waste avoidance and reduction initiatives, and environmental auditing can germinate an environmental awareness that may become ingrained in the corporate culture.

Ten Points to Ponder

In my experience, many organizations have not achieved compliance with environmental laws. Most must still learn how to crawl (get into compliance) before they walk (address the issues preventatively or proactively). The following points will likely strike a chord with many:

1. Sophisticated systems are for those who already have a high degree of confidence that they are in compliance with the law or know their areas of non-compliance and are actively implementing a workable and reasonable plan (in terms of the time frame and the effort involved) to get into compliance.

2. Ontario's Courtaulds Fibres and other Canadian court decisions demonstrate that actively implementing a reasonable compliance plan can constitute due diligence despite non-compliance, long before an EMS process can have any significant effect.

   [ed: see "R. v. Courtaulds Fibres Canada: The Successful Defence of Due Diligence at an Aging Industrial Plant", Canadian Environmental Regulation & Compliance News]

3. When dealing with unknowns (e.g., the extent of non-compliance or the limits of environmental performance), an ambitious environmental policy may prove difficult to honor. One will be judged against that policy.

4. In dealing with unknowns, consider structuring complex self-assessments so that you can assert solicitor/client privilege. However, federal and provincial government policies against routine seizure of self-assessments are merely policies, not guarantees. Moreover, these policies will not protect unprivileged documents from discovery rules in civil lawsuits.

5. By exercising caution in the pre-EMS assessment and design phase and mitigating problems before implementing the EMS, you can avoid embedding potentially damaging documentation in the EMS record.

6. No warranty of good environmental performance comes with an EMS owner's manual. Guard against a false confidence that your EMS will translate into due diligence or reasonable care in a court of law in a particular fact situation.

7. Be discerning when establishing targets and performance indicators. Carelessly chosen criteria can provide regulators with ready-made evidence of environmental offenses. In Ontario, for example, air emission standards relate to concentrations of contaminants at the "point of impingement," typically the property line. Targets based on emissions from the process equipment can provide helpful performance measurement, without supplying records that could be misconstrued by regulators or introduced as evidence of an offense at trial. In some cases it may be helpful to base targets on reduced raw materials associated with contaminants of concern, rather than measuring emissions. Similarly, where approval conditions establish wastewater characteristics at the outfall, alternative targets might be developed based on individual process elements rather than the end-of-the-pipe co-mingled waste stream.

8. What does not go outdoors remains indoors, and what is exhausted from the indoors goes to the natural environment. This is another way of saying that environmental and occupational health management must be coordinated. The solution to a natural environment problem must not create a workplace health problem, and vice versa. This integration is easy to accomplish in a system. Note, however, that the ISO 14001 model does not explicitly accommodate this.

9. ISO 14001 may become standard practice, and so far as that goes, having an ISO 14001-certified EMS will be the public's and the regulator's shorthand for thinking that you are implementing a duly diligent program. It is too soon to predict how much slack that will cut you.

10. Like all ISO standards, the ISO 14001 series is intended to facilitate international trade. In so doing, it raises the bar and imposes economic pressures on smaller organizations competing in local markets. It will be foisted upon the suppliers and service providers of large organizations. ISO 14001 will undoubtedly appeal to companies with the organizational structure and resources needed to implement and support an EMS. Despite ongoing efforts by ISO 14001 advocates to facilitate ISO 14001 implementation in smaller companies, (e.g. standardized implementation manuals and resource-pooling schemes), ISO 14001 will likely continue to be a hard sell to small- and medium-size enterprises.

Conclusion

Like all tools, the EMS must be properly designed and handled -- carelessness or inattention can backfire and damage the very thing the system was designed to fix. It is not rocket science, however. Mostly, it is the practical application of good management practices, coupled with a healthy obsession for documenting one's efforts. Many organizations already have integrated the elements of EMS, although they do not 'package' it as such. It remains to be seen whether trade advantages or regulatory bonuses are sufficient incentive to prompt small- and medium-size companies to formalize their EMS through ISO 14001 certification.

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