Trends in Japan

Certification System Introduced in Japan

NOVEMBER 19, 1996

Companies Asked to Preserve the Environment
September saw the enactment of the first of a new series of international standards delineating management techniques to be adopted by companies in order to protect the environment, as well as the introduction of a certification system in Japan based on the new standards. The standards call on companies to recognize the effects of their activities on the environment and to independently and constructively work toward the protection of the environment. Adherence to these standards is expected to become indispensable not just for international business dealings, but for favorable opinion on the part of consumers. With this in mind, Japanese companies are directing their efforts toward obtaining certification under the new standards.

Individual Factories and Workplaces to Be Certified
The new standards are to be released by the International Standards Organization, the Geneva-based organ that sets standards for various industrial sectors. The ISO is nongovernmental, and unlike international treaties, its standards are not legally binding; but they do carry weight. The ISO has thus far defined over 10,000 international standards for such things as quality assurance, and industries throughout the world, Japan included, have gained certification as adhering to these standards.

The newest environment-related standard is officially known as "ISO 14001." The first in the "14000 series," it is aimed at businesses and serves as a globally standardized manual of environmental policy. It stipulates that: (1) The top management of a company will determine a basic policy on the environment and make it known both within and outside the company; (2) the company will set concrete goals for reduction of pollutants and industrial waste, resource conservation, and recycling; (3) the company will place someone in charge of environmental management and keep environmental-management records; and (4) the company will undergo checks by an external auditor.

Domestically, companies must apply to a private monitoring agency recognized by an industry-established sanctioning organ for certification for each factory and workplace, to be received if the conditions of the standards are met. For companies active overseas, similar procedures must be carried out in each location.

Companies Actively Applying for Certification
According to Keidanren (the Federation of Economic Organizations), Japan's largest economic association, in a survey carried out in July among its member businesses, the number planning to be certified according to the ISO standards had reached 49.4%, or 179 out of the 362 manufacturers and energy companies responding. This is a considerable percentage, considering that the standards had yet to be announced at the time of the survey.

Now that the certification system has been introduced, one domestic monitoring agency reports nearly 160 factories and workplaces that have already applied to it for inspection and registration. There were also several manufacturing companies that obtained provisional certification prior to the enactment of the new standards, and now have only to wait for full certification.

Soon after the standards took effect, a seminar directed by the monitoring agencies attracted a wave of applications for the 200 available seats from managers in environment-related posts in various industries. The sponsors of the seminar reported that "representatives of each industry expressed very strong interest, and most of the questions asked dealt with practical topics such as details of the evaluation needed for certification."

Evaluation and registration under the new standards is quite costly. A 1,000-worker factory can expect to pay 3 million yen (27,000 dollars at the rate of 110 yen to the dollar), and even a 100-worker factory is faced with a minimum 1 million yen (9000 dollars) outlay. Costs are further increased by the mandatory annual external audits and examination for recertification carried out every three years. But companies are actively seeking certification under the standards because of their heightened recognition that the importance has shifted from merely adhering to globally required environmental standards to building trust between themselves and citizens through the establishment of clearly defined management positions and the regular and open provision of information on their doings. The industrial world increasingly feels that an age is upon them where not only price and quality, but also environmental measures will prove important in competition between manufacturers.

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