Implementing an environmental management system through iso 14001: A case study at lever Vietnam, Hanoi branch

IMPLEMENTING AN ENVIRONMENTAL MANAGEMENT SYSTEM THROUGH ISO 14001: A CASE STUDY AT LEVER VIETNAM, HANOI BRANCH by Le Thang Long A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration Examination Committee Dr. Fredric W. Swierczek (Chairperson) Dr. Barbara Igel Dr. Arne Deussen Nationality Vietnamese Previous Degree Bachelor of Economics National Economics University Hanoi, Vietnam Scholarship donor Government of Switzerland Asian Institute of Technology School of Management Bangkok, Thailand April 2001 Acknowledgement The author expresses his deep gratitude to his advisor, Dr. Fredric Swierczek, for his visionary advice and comments that help complete this research study. Sincere thanks are extended to Dr. Barbara Igel, who has given critical suggestions for a better structure of the recommendations of the research. The author would like to thank SAV Program, whose funding made his study at AIT possible. Warmest love is dedicated to his father, who has been a guiding light and extended endless encouragement for him to pursue his interest in environmental management. The author extends his special thanks to Dr. Nguyen The Chinh and Mr. Dinh Van Tru for their assistance in collecting information and ideas in establishing the research framework. Mr. Mai Duc Lam also spent his valuable time to provide information for this research study. Abstract Environmental management has recently emerged as a competitive edge in the international market. Vietnamese companies can no longer ignore this phenomenon in the way joining the world business community. However, they are far behind world level practice in environmental management and now pacing to catch up with their rivals in advanced countries. ISO 1400 standards series developed by the International Organization for Standardization is widely acknowledged as a solution for business entities based in developing countries to compete equally in the world market in terms of environmental management. Vietnamese enterprises are now paying more attention to environmental management and, thus, considering the option of implementing ISO 14000. This research aims at discovering the practice of ISO 14000 standards series in a Vietnamese facility: Lever Vietnam, Hanoi Branch. The author wants to analyze the practice of building an Environmental Management System through a standard of the ISO 14000 series, ISO 14001 namely “Environmental Management System specification”. Base on the analysis the research study draws the lessons for implementing ISO 14001 at the facility and suggests recommendations to improve the EMS of the facility. Table of Content ACKNOWLEDGEMENT I ABSTRACT II TABLE OF CONTENT III LIST OF FIGURES V LIST OF TABLES VI CHAPTER 1: INTRODUCTION 1 I Background 1 II Problem statement 2 III Research objectives 2 IV Research methodology 2 1 Primary information: 2 2 Secondary information: 2 V Scope and limitations 3 1 Scope: 3 2 Limitations: 3 VI Plan of the research 3 VII Presentation of the research 3 CHAPTER 2: LITERATURE REVIEW 5 I Environmental Management System and sustainable development 5 II ISO 14000 standards series and the prospects of EMS 7 1 What is ISO 14000 standards series 7 2 General Description of ISO 14001 12 3 ISO 14000 standards series and EMS 14 4 Benefits of implementing ISO 14001 17 CHAPTER 3: IMPLEMENTING ISO 14001 AT LV HANOI 19 I Current Vietnamese Laws And Regulations on Environmental Protection 19 1 The Law on Environmental Protection 19 2 Government Decree 175-CP 20 II Social trends and public perception of environmental perfection 22 III Company profile 22 IV ISO 14001 at the facility 24 1 Corporate environmental policy 24 2 Planning 25 3 Implementation And Operation 30 4 Checking and Corrective Action 40 5 Management Review 41 V Difficulties in implementing ISO 14000 at LV Hanoi 42 1 External difficulties 43 2 Internal difficulties 44 3 Impacts of ISO 14001 implementation 45 4 Provision for future environmental actions of LV Hanoi by EMR 47 CHAPTER 4: CONCLUSIONS AND RECOMMENDATIONS 48 I Conclusions 48 1 The ultimate purpose of ISO 14000 standards series 48 2 Perspectives of implementing ISO 14000 standards series in Vietnam 49 II Recommendations 49 1 For LV Hanoi 49 2 For State authorities 52 3 Recommendation for further studies 53 BIBLIOGRAPHY 54 LIST OF FIGURES Figure  Title  Page   2.1.  Environmental Management System Loops  6   2.2.  ISO 14000 standards series  9   3.1.  Procedure for identifying significant environmental aspects at LV Hanoi  24   3.2.  Environmental Management structure at LV Hanoi  29   3.3.  Environmental communication hierarchy at LV Hanoi  32   3.4.  Procedure for document control at LV Hanoi  34   LIST OF TABLES Table  Title  Page   2.1.  ISO 14000 standards series  10   2.2.  Comparison of EMS standards  14   3.1.  Capital contribution of Lever Vietnam  21   3.2.  Operational control over significant environmental aspects at LV Hanoi  36   Chapter 1 Introduction Background The World Trade Organization (WTO) Committee on Trade and Environment (CTE) has brought environmental and sustainable development issues into the mainstream of WTO work. The Committee's first Report, which was submitted to the WTO Ministerial Conference in Singapore in 1998, notes that the WTO is interested in building a constructive relationship between trade and environmental concerns. On the way joining WTO, Vietnam will soon take environmental protection into serious concern and environmental issues can no longer be ignored from business consideration. Historically, environmental management in corporations and small companies alike has not been included in the “inner circle” of senior management. Many organizations placed environmental management on the back burner until compliance issues arose or contamination was found on the property. When those instances occurred, senior management suddenly gained an intense interest in the subject. Today, many organizations are beginning to think beyond environmental compliance towards environmental performance. Access to vital information about the compliance status of a company, how many pounds are emitted or who is responsible, can easily be accessed over the Internet. This leads to an unprecedented awareness by the public of whether an organization has a positive or negative impact on the environment. Those who are responsible for the bottom line of a company are also beginning to recognize that a well-designed Environmental Management System (EMS) can have a profound impact on a company. This impact not only extends to the short-term bottom line and public image, but also to the long-term financial health of a company. At this time an EMS that has been certified to the internationally recognized International Organization for Standardization’s ISO 14001 Standard is considered the state of the art in environmental management. Businesses are increasingly adopting the global environmental management system, ISO 14001, in order to more effectively and efficiently manage their environmental impacts. This voluntary system, as well as all EMSs, has the potential to provide facilities with a structure to minimize their environmental impact, ensure compliance with environmental laws and regulations, and address wasteful uses of natural resources. For these reasons, EMS may greatly affect the environmental performance of facilities that adopt them and subsequently impact their financial performance, as well. Only recently could organizations have their EMS certified, as the final version of the international EMS standard was published in late 1996. Since then, over 10,000 facilities around the world have had their EMS certified (Gallagher et al., 1999). While businesses are increasingly adopting these systems to better manage their environmental impacts, little is known about the potential these systems have for environmental protection, social welfare, and future public policy. In Vietnam, ISO14001 is still considered among entrepreneurs as a source of expense or obligation, and the adoption of this standard is limited within a small number of companies, mostly foreign-invested enterprises. This leads to a bitter fact that most Vietnamese companies may not be able to comply with international regulations and standards when they go competing globally thus hindering their entrance into world market. Problem statement Companies doing their business in Vietnam are now bearing potential risk of losing their ground due to poor environmental performance. A complete and effective Environmental Management System is now crucially important for every business entity to proactively deal with the new business environment at the time being. There are numerous types of EMSs among which, the ISO 14001 EMS has emerged as the most widely accepted international standard for environmental management and has the potential to harmonize EMS worldwide. When EMS is certified with ISO14001 standard, a company can reach farther than compliance with regulations since they are able to rely on environmental management to differentiate themselves from competitors. The business Lever Vietnam is doing belongs to chemical industry, which has been identified as one of the most potential source threatening the living environment of the society. Furthermore, the company’s market is consumer goods, cosmetics for exact, and this product category requires high standards on industrial sanity and safety. Managing environmental performance becomes a vital task to keep the company alive in this competitive business environment. Therefore, it is worth looking at the practice of implementing ISO 14000 at Lever Vietnam to study why and how a Vietnamese facility uses ISO 14001 as an essential tool to strengthen its EMS. Research objectives To evaluate the current Environmental Management System at the facility; To identify the main benefits of and obstacles to implementing ISO 14001 standards at the facility; To suggest recommendations to the facility about strengthening the current EMS with ISO 14001 standard series. Research methodology Primary information: Interview with management board of the facility to study the current EMS Interview with officials from Office for Standardization, Metrology and Quality Control for overall perception about the current practice of implementing ISO14000 in Vietnam Secondary information: Books, journals, magazines, newspapers Company releases Government regulations, guidance and other documents. Scope and limitations Scope: This piece of research only focuses on EMS at the firm level, it does not intend to assess the possibility and prospects of implementing ISO14001 at the industry or the nation level. The research also implies an in-depth analysis of possibility but not a feasible study for implementing ISO14001 standards at the company. Instead, this case study is an investigation of the practice of implementing ISO 14001 at Lever Vietnam Hanoi Branch (hereinafter is referred to as LV Hanoi), located at Nguyen Trai Road, Thuong Dinh, Thanh Xuan, Hanoi. Limitations: It might be difficult to reveal much primary information from the company. The legal system for environmental control in Vietnam has not been built to such an effective level that can standardize the environmental records for many kinds of company. The company chosen may not have recorded a sufficient database for its EMS and is, thus, unable to give out much detailed information. Plan of the research The time plan of the research can be divided into five stages: Literature review Data collection Data analysis and recommendation Completing research report Presentation of results Presentation of the research Chapter 1: Introduction This part presents the rationale of the research, research methodology, background and statement of the research problem, objectives, scopes and limitation of the study. Chapter2: Literature review This part reviews the definition of an EMS and its importance to sustainable development. The role of EMS in the modern business competition and how ISO14000 standards can be used in building an effective EMS for a facility will be discussed. Basic concepts and viewpoints based on which the research is conducted will be justified in this chapter. Also at the focus are the general principles and benefits when implementing ISO14000 into a firm. Chapter3: Implementing ISO14001 at the facility This part will focus on analyzing environmental practices of LV Hanoi and base on the analysis the current EMS will be evaluated to work out the weaknesses and rooms for improvement in the company’s current EMS. An overview of Vietnam’s legal system on environmental protection will be provided to support the analysis. The study of the current system will be the main arguments used for later recommendations. This section will also discuss prospects and feasibility of implementing ISO14000 standards into the facility. The main benefits and obstacles in the implementation process will be examined in details to assess the reality of applying ISO14000 to strengthen the company’s EMS. Chapter 4: Conclusions and recommendations Chapter 2 Literature review Environmental Management System and sustainable development Environment, health and human development in the future depend heavily on what we are doing at the mean time. Environmental problem has become so serious that if we do not change the way we exploit natural resources, the way we manufacture and even our lifestyle, the Earth will continue to be hurt and the living environment to which our lives belong will continue to be destroyed. Examples of hottest environmental problems include: depletion of Ozone layer, Greenhouse effect, ecological imbalance, air and water pollution, toxic chemical substances, exhausted natural resources, and environmental impacts on living quality. Those problems are getting worse and worse and they are affecting all countries, developed or developing. Environmental problem itself at the same time increases interdependence among the countries and no single solution can be acceptable for all actually. The problem also can never be solved without regarding the social-economic and other specific situations of each country or organization. As such, the second principal of the 1972 Stockholm Conference stated: “All countries are responsible to ensure that all activities within their control and legal regulations will not damage the environment or cause the aspects out of control by other countries”. Individuals and business of all types must accept responsibility for the stewardship of the Earth, not only as a means of pollution control and resource management, but also as a way of balancing human activities with nature’s expertise in renewing itself. Future prosperity, which is essential for a healthy global economy, depends on preserving the Earth’s natural wealth and sustaining a healthy ecological balance. The 1992 Rio Conference introduced the world to the concept of sustainable development, a notion coined by the Brundtland Commission Report, Our Common Future. Briefly stated, sustainable development is an approach to development that utilizes the Earth and its resources in a manner that does not compromise the ability of the future generations to meet their needs. Partially resulting from agreements reached at the Rio Conference, sustainable development emerged as the foundation upon which national (and even some local) governments and many major organizations worldwide elected to build their environmental policies for the 21st century. The significance of the sustainable development concept to the emerging worldwide paradigm shift in environmental management is evidenced by the fact that the international business community voluntarily elected to adopt many codes and charters that promote sustainability in one form or another. One of the most visible examples is the Business Charter for Sustainable Development developed by the International Chamber of Commerce. This charter lays out 16 principles for environmental management that translates sustainability into operation terms. Over 1200 corporations, including more than 25% of the Fortune 500, have endorsed these principles. (Dufresne, 1997) Anticipating this trend, over the past several years many business firms worldwide have adopted formal environmental management systems as procedures for systematically identifying environmental aspects and impacts of their operations, setting explicit goals for compliance, performance, and continuous improvement, and managing for them throughout these operations. An Environmental Management System (EMS) is a management structure in which organizations can assess their environmental impacts. It creates a system to assess, catalogue, and quantify environmental impacts, not simply activity by activity, but throughout an entire organization. The goal of EMS adoption is to help organizations ensure that their operations articulate and achieve specified environmental goals, normally including at least compliance with environmental laws, management of other major environmental risks and liabilities, and potentially positive environmental improvements as well. An EMS supplies the framework to do so by creating a systematic structure to adopt a written environmental policy; to identify all environmental aspects and impacts of their operations; to set priorities, goals and targets for continuous improvement in their environmental performance; to assign clear responsibilities for implementation, training, monitoring, and corrective actions; and to evaluate and refine implementation over time so as to achieve continuous improvement both in implementation of environmental goals and targets and in the EMS itself. (Gallagher et al., 1999). Five principles make up an EMS and the basic elements of an EMS are set up respectively to these five principles, namely policy and commitment, planning, implementation, measurement and evaluation, and review and improvement. Implementation of EMS starts with an initial review, which is not defined as a principle, and then follows the five principles. (Figure 2.1) Figure 2.1 Environmental Management System Loops Source: Sturm and Igel (1996) Evaluation of an EMS should, therefore, follow each basic element of the system to assess the specific procedures as well as efforts exerted into those procedures. Management’s vision and commitment, and employees’ competence are the keys to assess an EMS. Management’s vision and commitment determine the missions and structure of an EMS, what is it built for and how should it operate. Employees are the persons who implement and participate in daily operation and, therefore, their knowledge in environmental management is essential to the smooth operation and future development of the EMS. The reasons for the business community to build up an EMS do not come solely from the public interest about sustainable development. In fact, an effective EMS can make the road less traveled for those organizations, which strive for perfect environmental performance. An organization can choose to be a leader or a follower within their field. By identifying the environmental costs of its operations broadly and by initiating prevention-based measures in all aspects of product manufacture, distribution, use, and disposal, organizations can handle their responsibilities proactively instead of reactively. Organizations can use integration of environmental controls throughout a business and implementatio