ISO 14001 BOOM:
More Companies Acquiring Environmental Certification

December 8, 1997

A little more than a year after the issue of ISO 14001, an international standard for environmental management, the number of Japanese companies moving to acquire certification for compliance shows no signs of diminishing. As well as the obvious increasing interest in the environment, the reason also lies in their recognition that certification has become an essential condition for transactions with foreign companies. The industries and scale of companies acquiring the certification are becoming more diverse, and some local governments are joining the move, too.

Certification Essential for Global Business
Formulated by the Geneva-based International Organization for Standardization (ISO), the ISO 14001 standard was issued in September 1996. This international standard for environmental management systems is aimed at reducing the environmental impact of corporate activity and products. It closely regulates the methods of environmental management and the reduction of waste matter in plants and other facilities and stipulates the methods of environmental assessment and monitoring at each stage, from the manufacture of products to their use and disposal. Facilities that are deemed to fulfill the requirements of the standard are granted certification. According to the Agency of Industrial Science and Technology of the Ministry of International Trade and Industry, 425 certifications had been awarded in Japan as of the end of September 1997.

By industry, the electric machinery industry came top with 56.1% of the cases of acquired certification, followed by general machinery at 13.6%. In other words, export-oriented companies account for the majority of facilities acquiring the certification. European companies, which are very sensitive toward environmental issues, often place importance on the stance of business partners toward environmental management, and whether or not a firm has acquired ISO 14001 certification is the quickest gauge of its efforts in this direction. Hence the fact that Japanese companies in the electric machinery business, which have a high ratio of overseas sales, have taken the lead in moves to acquire certification. All of the leading Japanese electric machinery makers are making efforts to become certified at their domestic and overseas bases. Matsushita Electric Industrial Co. group has acquired the certification at 25 facilities in Japan and 15 facilities abroad and plans to expand acquisition to cover all its facilities (about 210) during fiscal 1998. Auto makers and related parts makers are also getting certified for their main plants.

Good for the Corporate Image
Acquisition of ISO 14001 certification also leads to an improvement of corporate image. It is a good opportunity for companies that already make active efforts toward environmental management--for example, through the control of waste discharge from plants, recycling, the efficient use of energy, and the procurement of products in consideration of the environment--to broaden their appeal among consumers and business partners.

In the oil industry, almost all companies are going ahead with plans to acquire certification for all their oil-refining plants within fiscal 1997 (April 1997 to March 1998). While bearing in mind the benefits to future exports of petroleum products, their aim is also to impress business partners and consumers with the environmental countermeasures of their refineries and to boost the industry's image.

The iron and steel industry, which gobbles up a lot of energy in the production process, still accounts for only 2.1% of plants that have acquired certification. Prompted by calls from the household electric appliance and auto industries, though, it is expected to step up its efforts from now on. Since consumers in Europe and North America tend not to accept products using materials that put a large burden on the environment, steelmakers are moving to acquire ISO certification. Some companies that consider the acquisition of certification as a condition for doing business have also emerged. Matsushita Electric Works, for example, has called on its main cooperative companies and totally owned subsidiaries--17 firms in all--to acquire certification by the year 2000.

Small Companies and Local Governments Join In
Large corporations are not alone in their efforts: Recently the move to acquire certification has spread to small- and medium-sized enterprises, too. One maker of industrial instruments considers the ISO 14001 certification to be a "passport to the international market," and another sensor maker wants to gain wider recognition among foreign companies and societies through certification. There are also some local governments that encourage the acquisition of certification through subsidies as a means of further activating local industry. In one city in the metropolitan Tokyo region that is home to a leading electric machinery maker and many smaller firms, the local government offers subsidies to the tune of up to 3 million yen (23,000 U.S. dollars at 130 yen to the dollar) for firms trying to gain certification.

Furthermore, some local governments are taking the initiative by seeking to acquire certification themselves. One city in the Tohoku region of northeast Japan aims to acquire certification within fiscal 1997, so that, according to a spokesperson, "We will be able to offer consultation when small- and medium-sized firms in the city try to obtain certification." Another town near Tokyo plans to acquire certification in 1998. Both of these municipalities are considering specific efforts including the reduction of office paper, the promotion of the use of recycled products, the saving of electricity consumed by electric equipment, and management of the use of vehicles, including the elimination of unnecessary idling and the purchase of low-pollution vehicles. Both governments hope that the efforts by municipal employees will have the effect of spreading awareness among local residents and companies as well as reducing the burden on the environment.