ISO 14001 and EPA Region I's StarTrack Program:
Assessing their Potential as Tools in Environmental Protection
Jennifer Nash
John Ehrenfeld
Jeffrey MacDonagh-Dumler
Pascal Thorens
Technology, Business, and Environment Program
Massachusetts Institute of Technology
Prepared for the
National Academy of Public Administration
June 2000
Learning from Innovations in Environmental Management:
The Research Papers
This report is one in a series of independent evaluations of innovations in environmental
management commissioned by the National Academy of Public Administration's Center for
the Economy and the Environment. The entire series is available at the Academy's website,
www.napawash.org, and will be available in print in late 2000.
The U.S. Congress initiated this study in FY 1998 when it asked the Academy to undertake
an independent evaluation of some of the most promising innovations in environmental
management. A panel of Academy Fellows and other experts is guiding the project. The
panel selected the research topics and researchers, and encouraged the researchers to offer
their own findings and recommendations. The reports in this series are the work products of
the research teams; neither the Academy nor the project panel endorses their findings and
recommendations. The panel will use the research reports as a foundation for its own report
and recommendations to Congress and the U.S. Environmental Protection Agency later this
year.
The overall project is under the direction of DeWitt John and Richard A. Minard, Jr. The
U.S. Environmental Protection Agency has funded the project through contract number 68W-98-211.
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1
EXECUTIVE SUMMARY ..................................................................................................................................4
CHAPTER 1. INTEREST IN ENVIRONMENTAL MANGEMENT SYSTEMS.......................................10
THE PURPOSE AND REQUIREMENTS OF ISO 14001 ...........................................................................................10
ISO 14001'S POTENTIAL BENEFITS TO REGULATORS ........................................................................................12
ISO 14001'S POTENTIAL BENEFITS TO FIRMS ...................................................................................................13
PATTERNS OF ADOPTION........................................................................................................................16
CHAPTER 2. PRACTICAL EXPERIENCE WITH ISO 14001 ...................................................................19
FACILITY A .......................................................................................................................................................20
FACILITY B .......................................................................................................................................................20
FACILITY C .......................................................................................................................................................21
FACILITY D .......................................................................................................................................................21
FACILITY E .......................................................................................................................................................21
FACILITY F........................................................................................................................................................22
FACTORS THAT ENABLED ISO 14001 REGISTRATION .......................................................................................23
MOTIVATIONS FOR BECOMING REGISTERED TO ISO 14001 ..............................................................................24
BEHAVIORAL CHANGES BROUGHT ABOUT THROUGH ISO 14001 ....................................................................26
Formalization and Reinforcement of Existing Environmental Practice .....................................................26
Integration of Environmental Objectives into Operating Routines.............................................................28
ISO 14001 and Compliance ........................................................................................................................28
Beyond-Compliance and Pollution Prevention...........................................................................................29
Economic Considerations ...........................................................................................................................33
Corporate Influence ....................................................................................................................................33
Responsible Care ........................................................................................................................................34
IMPACT ON EXTERNAL RELATIONSHIPS ............................................................................................................35
Corporate Recognition................................................................................................................................ 35
Supplier Relationships ................................................................................................................................ 35
Inclusion of External Stakeholders in Decisions ........................................................................................35
External Communication ............................................................................................................................35
Community Outreach ..................................................................................................................................36
Regulators ...................................................................................................................................................36
SUMMARY OF ISO 14001 ANALYSIS.................................................................................................................36
CHAPTER 3. STARTRACK: A PILOT REINVENTION PROGRAM ......................................................38
THE BEGINNINGS ..............................................................................................................................................38
THE GOALS.......................................................................................................................................................38
To Change Agency Behavior ......................................................................................................................39
To Change Firm Behavior ..........................................................................................................................39
To Inform Agency Reinvention Programs ...................................................................................................40
STARTRACK REQUIREMENTS............................................................................................................................41
Gaining Admission ......................................................................................................................................41
Periodic Program Requirements ................................................................................................................41
BENEFITS TO FACILITY MANAGERS ..................................................................................................................45
CHAPTER 4. CASE STUDIES OF REGION 1 STARTRACK FACILITIES .............................................46
FACILITY I ........................................................................................................................................................46
2
Changes in Management Practices.............................................................................................................46
FACILITY II .......................................................................................................................................................49
Changes in Management Practices.............................................................................................................49
ISO 14001 Impacts......................................................................................................................................50
FACILITY III ......................................................................................................................................................51
ISO 14001 Impacts......................................................................................................................................53
FACILITY IV......................................................................................................................................................55
Changes in Management Practices.............................................................................................................56
ISO 14001 Impacts......................................................................................................................................57
CHAPTER 5. OTHER RESPONSES TO STARTRACK ...............................................................................58
CONCERNS FROM OECA AND STATES ..............................................................................................................58
PERSPECTIVES OF STARTRACK STAFF ..............................................................................................................59
Partnerships with Agencies .........................................................................................................................59
Penalty Mitigation ......................................................................................................................................60
Inspection Relief .........................................................................................................................................60
Rapid Response to Permit Applications ......................................................................................................60
Public Recognition ......................................................................................................................................61
PERSPECTIVES OF ENVIRONMENTAL GROUPS ...................................................................................................62
CHAPTER 6. STUDY FINDINGS ...................................................................................................................63
WHY MANAGERS HAVE CHOSEN ISO 14001 ...................................................................................................63
THE RELATIONSHIP BETWEEN AN EMS AND ENVIRONMENTAL PERFORMANCE ...............................................63
THE VALUE OF THIRD-PARTY CERTIFICATION TO MANAGERS .........................................................................64
HOW ISO 14001 AND STARTRACK CONTRIBUTE TO PUBLIC UNDERSTANDING OF FACILITY OPERATIONS .......65
IS STARTRACK ACHIEVING ITS GOALS? ............................................................................................................65
CHAPTER 7. RECOMMENDATIONS ..........................................................................................................68
APPENDIX. STATISTICAL ANALYSIS: DATA, METHODS, AND RESULTS......................................71
BIBLIOGRAPHY...............................................................................................................................................81
ENDNOTES ........................................................................................................................................................84
3
EXECUTIVE SUMMARY
This report is part of an evaluation of environmental innovation undertaken by the
National Academy of Public Administration. The goal of the Academy’s evaluation is to
“help Congress, the general public, state governments, and EPA understand which
[innovations] are working well, which are not, and how to improve the initiatives and
environmental management more generally.”1 The environmental innovations of interest to
the Academy are defined broadly as regulatory "reinvention."
The central idea of reinvention is today widely accepted—that EPA can and should find
more effective and efficient ways of protecting the environment by working cooperatively
with its stakeholders.2 The goals of the EPA Office of Reinvention are the following:




use incentives and promote environmental management systems (EMSs)
provide timely and accessible compliance-assistance
create flexible and streamlined permitting
help communities make sound environmental decisions3
EPA reinvention activities comprise some 30 programs. This research explores two recent
initiatives related to those goals: ISO 14001 and the EPA Region I's StarTrack program. We
studied ISO 14001 through two approaches—a statistical analysis of the characteristics of
early adopters, and case studies at six chemical facilities, five of which had adopted the
standard. To study StarTrack, we interviewed managers at four of the six facilities that have
participated in the program since its inception, as well as EPA staff members at the regional
and national levels, state environmental officials, and representatives of environmental
advocacy groups.
THE ROLE OF ISO 14001 IN ENVIRONMENTAL PROTECTION
ISO 14001 is a private effort to standardize and promote the implementation of
environmental management systems. This research seeks to understand the extent to which a
facility’s adoption of ISO 14001 may serve as a proxy for environmental excellence, that is,
environmental performance above a normal baseline. This understanding could help to
inform EPA decisions about the role of ISO 14001 in regulatory reinvention. We attempt to
answer two questions about ISO 14001: Why do managers choose to adopt that standard, and
what changes does it bring about in the organization, management, and ultimately
environmental performance of facilities?
4
Facilities that adopted ISO 14001 between 1996,when the standard was published, and
mid-1999, when we completed gathering data for this research, we call "early adopters." We
analyzed their characteristics—in terms of size, ownership, management practices, and
environmental performance—with a database we developed for that purpose. Our analysis
shows that early adopters tend to be large, foreign-owned facilities, that had already adopted
ISO 9000, the international quality-management standard. They also tend to emit more toxic
pollutants than their peers.
Managers of large facilities who have experience with ISO 9000 are more capable of
adopting ISO 14001 than managers of smaller, less-sophisticated plants, due both to
managerial experience and plant size. That does not, however, fully explain why some
managers have chosen early adoption. The relatively high level of toxic emissions of early
adopters suggests a possible motivation: a desire to improve environmental performance,
particularly compliance. Managers in the five ISO 14001 facilities we studied cited that
desire as a reason for becoming registered. Those managers had determined, for a variety of
reasons, that strong environmental management is in their interest. By adopting ISO 14001
early they hoped to assume the designation of "leaders."
How does ISO 14001 change environmental management in early adopters? We
found that, in the case-study facilities, ISO 14001 led to some common practices: greater
attention to regulatory compliance, increased formalization of environmental practices, and
stronger integration of environmental objectives into operating routines. It had little impact
on managers' relationships with regulators and other external constituencies.
Managers told us that ISO 14001’s greatest contribution was in strengthening
regulatory compliance programs. Managers included regulatory compliance in the targets
they set in their ISO 14001-structured EMSs. They said that ISO 14001 helped to
“indoctrinate” employees so that the goal of compliance became unquestioned. But ISO
14001 did not guarantee compliance, as demonstrated by a major accident that occurred in
one of the adopting facilities more than one year after registration. Less significant incidents
had occurred at each of the other ISO 14001 plants, as well, but managers we spoke with felt
strongly that ISO 14001 will help to reduce such incidents over time.
Within those common trends we found substantial variation. Each of the five ISO
14001 facilities we studied is using the standard in its own way, to achieve its own
objectives. Many facilities are using ISO 14001 to improve their performance beyond what is
required by regulation. The extent to which that happens depends entirely on the decision of
managers to include "beyond-compliance" goals in their ISO-structured EMSs. In most of
5
the facilities we studied, beyond-compliance goals were pursued only if they resulted in cost
savings. In one facility, environmental objectives were pursued for their own sake.
Those findings raise a question for EPA as it considers using ISO 14001 as a tool in
environmental policy. Our research shows that early adopters are both capable (due to their
large size and experience with ISO 9000) and motivated (as shown by their expressed desire
to become environmental leaders) to use ISO 14001 to improve environmental performance.
Evidence suggests, therefore, that the improvements in environmental management we
observed in our case studies may be attributable to characteristics already established in those
organizations: their resources, capabilities, and commitments. What will happen as firms that
lack those characteristics adopt ISO 14001?
During the study period, in September 1999, Ford Motor Company and General
Motors Corporation announced they will require their suppliers to adopt ISO 14001. Other
manufacturers may soon follow suit, imposing ISO 14001 as a requirement for business. We
anticipate that firms that adopt ISO 14001 because it is required will experience different
outcomes than those that adopt at their own initiative. Later adopters will not necessarily
possess the resources, capabilities, and commitments to achieve the results we observed in
the early adopters. We have seen that the standard allows managers to implement the
standard in their own ways, and that even among early adopters, environmental objectives
vary substantially. As the characteristics of adopting firms become more diverse, we expect
that the impacts of adoption will also be more varied.
THE ROLE OF STARTRACK IN ENVIRONMENTAL PROTECTION
EPA's Region I office initiated StarTrack in 1996 as a pilot project. The goals of StarTrack
are to improve:



efficiency of public and private resource allocation
protection of the environment
public understanding of a company's environmental performance
The program’s initial goal was test the use of third parties to verify compliance. The
original name of the program was the “Third Party Certification Project,” and most of the
activities of the program appear to support that goal. The program provides benefits to
facilities that establish the goal of continuous improvement in environmental performance,
audit their compliance and environmental management systems, have results verified by
qualified third parties, correct any violations discovered through that process within 60 days,
and disclose environmental performance to EPA and the public. Currently 15 facilities
participate.
6
Is StarTrack achieving its goals? StarTrack’s success is most apparent with respect to the
third goal, improving public understanding of a company’s environmental performance.
StarTrack overcomes a major deficiency in ISO 14001, which contributes little to public
understanding of facility operations. Firms that participate in StarTrack disclose information
about their emissions, product performance, and use of resources. At StarTrack facilities,
compliance and EMS audits are public events, in which agencies and environmental groups
are invited to participate. Results from the audits are publicly available.
Success with respect to the first and second goals is more ambiguous. At this point,
StarTrack appears not to be improving the efficiency of public and private resource
allocation. StarTrack is a pilot project, just finishing its second operational year4. With
StarTrack, EPA is testing a system whereby third parties verify the sufficiency, and the
substantive results, of both compliance and EMS audits. Staff members from the regional
office and state environmental agencies routinely participate in the third party audits as
observers. Observation is necessary, agencies say, in order to verify that participating firms
are honoring their commitments and that third parties are identifying all significant issues.
Preparing for audits, participating in them, and assessing results require substantial amounts
of agency time.
StarTrack will result in improved efficiency as EPA and states find, through careful
testing of the program, that it is a reliable substitute for direct agency oversight. StarTrack
includes the necessary elements to serve that function. EPA’s confusion with respect to the
second goal, the role of StarTrack in improving environmental protection, weakens the
program, however.
Members of the EPA StarTrack team assert that, in addition to privatizing compliance
assurance for firms with strong environmental histories, StarTrack strengthens the
environmental performance of firms that participate, as well as firms that may aspire to
participate in the future. Our case studies suggest that environmental performance is
improving in StarTrack facilities, but not as a result of the program. To be admitted, a
facility must have a history of pollution prevention and an EMS that includes environmental
performance improvement as a goal. Firms that meet those criteria are managed by people
who have already invested in environmental performance improvement, and are committed to
continuing to do so. Our cases suggest that, at this point, the factors that push StarTrack
managers to develop beyond-compliance programs have little to do with agencies.
StarTrack is impeded by a lack of specific program benefits. The benefits EPA promises are
partnerships, penalty mitigation, inspection relief, rapid processing of permits, and
recognition. StarTrack team staff members admit that participants are not receiving all of
those benefits. Some StarTrack firms are still inspected by agencies; their permit
applications are not handled any differently from the way they were before joining. The only
benefit that is consistently delivered is public recognition. Currently, StarTrack facilities
7
receive plaques and notice at a year-end conference. The EPA Region 1 website mentions
participating companies by name.
Research presented in this report suggests that recognition from agencies will not,
however, on its own, move facilities in the direction of excellence. Larger forces shape the
environmental practices of firms.
Like the early adopters of ISO 14001, the facilities currently joining StarTrack are
both capable and motivated to strive toward excellence. Those characteristics, established in
the facilities prior to joining, are what move firms forward. When adequately tested,
StarTrack may prove to be an effective program for privatizing agency oversight in those
firms. It is a weak tool, however, for changing firm behavior. EPA should therefore limit
participation to firms with established records of strong environmental performance.
RECOMMENDATIONS FOR STARTRACK
We recommend that EPA improve the specificity of StarTrack goals and the
enforceability of StarTrack agreements. One step toward achieving those improvements
would be to divide StarTrack into two programs. The first program, which should retain the
StarTrack name, would have as its goal improving the efficiency of agency compliance
assurance programs. It should focus on changing agency behavior. StarTrack should work to
reduce the level of direct agency oversight of facilities with strong compliance performance,
freeing inspectors to focus on average and poor performers. Candidates for StarTrack should
be limited to facilities with strong compliance histories and established commitments to
pollution prevention and environmental performance improvement. Only firms with little to
hide should be invited to join a program that relies on facility managers to publicly disclose
their environmental problems.
Many in the agency believe their roles as environmental stewards extend beyond
compliance assurance. They say that EPA's role should include helping firms do more than
what regulations require. Promoting beyond-compliance performance could be the focus of a
second EPA program. The goal of such a program would be to change the behavior of
companies. If EPA wants to promote beyond-compliance performance, it need not focus on
StarTrack facilities. StarTrack facilities have shown that they are already both capable and
motivated to achieve that level of environmental performance.
In designing its beyond-compliance program, EPA should decide which inhibiting
factor it will address: lack of capability, or lack of motivation. An appropriate focus might be
to attempt to engage firms managed by people who are motivated to improve but do not have
the necessary skills, knowledge, or resources. EPA could help to move such firms in the
direction of environmental excellence by offering technical assistance. It need not provide
such assistance directly; many states have developed exemplary programs in that area.
8
Alternatively, EPA could attempt to engage firms managed by people who are not yet
motivated to strive beyond what is required by law. If it chooses that population of firms, it
should focus on developing incentives. Incentives that EPA has been using in StarTrack may
not be sufficient or appropriate. Regulatory flexibility could potentially be a strong motivator
because it can affect a firm’s costs and competitiveness. Flexible approaches, however, are
often time-consuming to negotiate, and must be developed on a case-by-case basis.
In summary, we recommend that efforts to change the behavior of agencies—which is
the appropriate focus for StarTrack—be separated from campaigns to change the behavior of
firms to embrace beyond-compliance goals.5 Combining those two objectives, as EPA has
done in its current design of StarTrack, has made it difficult to evaluate the program, to plan
for its expansion, and, ultimately, to achieve either goal.
9
CHAPTER 1. INTEREST IN ENVIRONMENTAL MANGEMENT SYSTEMS
Environmental management systems are formal structures of rules and resources that
managers adopt in order to routinize behavior that helps satisfy corporate environmental
goals. They are a subset of management systems in general.6
Firms have used EMSs since at least the mid-1980s when the potential liabilities and
strategic implications of environmental performance became a business concern. In the
United States, a variety of institutions have promulgated different types of EMSs. Several
trade associations, most notably the Chemical Manufacturers Association, have developed
codes of environmental management practice for their members. Those trade association
codes fit our definition of an EMS: they require managers to establish environmental
objectives, assign responsibility, allocate resources, and regularly measure and report
progress. Many individual firms have developed their own environmental management
systems tailored to the specific needs of their organizations. Of particular interest to
regulators are formalized EMSs that include systems to verify the consistency of a firm's
stated goals and its management practices. A leading example of such a system is ISO
14001.
The Purpose and Requirements of ISO 14001
The International Organization for Standardization published ISO 14001 in September
1996 to help firms achieve three objectives:7



to manage the environmental aspects of business operation reliably and
consistently
to integrate environmental consideration into all activities of the enterprise
to create a means for objective validation of corporate commitment to effective
environmental management
It provides organizations of all kinds with a common framework for establishing an
independently verifiable environmental management system, or EMS. That framework is
based on the concept of quality management, a term coined by W. Edwards Deming in the
1950s. Quality management requires a comprehensive, or "systems" approach, in which
managers work to continuously improve not only their products, but the processes through
which products are developed, made, serviced, and disposed. The goal of quality
management systems is total satisfaction of customer need. While thatgoal can never be fully
attained, quality management offers a system whereby managers move closer and closer to
thatgoal. Joseph Cascio, chairman of the United States Technical Advisory Group to the
international committee that developed ISO 14001, has compared the process of continual
10
improvement to ascending a spiral staircase. “As you complete each upward spiral, you find
yourself one level closer to your destination,” he explains.8
ISO 14001 is structured as a continuous "Plan-Do-Check-Act" cycle of:

environmental policy-making

environmental planning

environmental program implementation

auditing

management review
The ISO 14001 standard requires each adopting organization to establish an environmental
policy that includes, as a minimum, a commitment to regulatory compliance. While the
standard also requires that policies include a commitment to prevention of pollution, the term
is defined so broadly that its meaning is virtually lost.9 ISO 14001 requires that managers
assess their environmental “aspects”—the environmental impacts associated with their
activities, products, and services—and develop targets for reducing them. Managers must
designate responsibility for meeting those targets and the dates by which milestones will be
achieved. They must establish a training program to make workers aware of environmental
policy and their roles in implementing it. All those steps must be carefully documented so
that independent auditors will be able to understand the planned system, and verify that it is
in place. Those activities constitute the “planning” and “doing” steps of the cycle.
Managers must commit to continually improving their EMSs. ISO 14001 defines
continual improvement as the “process of enhancing the environmental management system
to achieve improvements in overall environmental performance in line with the
organization’s environmental policy.”10 Thus an organization must revise its EMS
periodically to improve its ability to achieve its policy goals. In revising an EMS, managers
may re-examine the environmental aspects they have identified, or reconsider the targets they
have selected, or assess their progress toward achieving them, or review their record-keeping
procedures. The ISO 14001 definition of continual improvement includes the note that “the
process [of continual improvement] need not take place in all areas of activity
simultaneously.”11 One year managers might focus on improving their aspects identification;
another year they might focus on record-keeping. ISO 14001 offers no guidance as to the
expected rate of improvement.
ISO 14001 requires that managers assess their progress on a regular basis through
auditing. Section 4.4.4 stipulates that managers “establish and maintain programs and
procedures for EMS audits.” The purpose of ISO 14001 audits is to determine that a firm’s
11
EMS conforms to the standard. Managers must report audit results to senior managers and
correct any deficiencies. Those activities are the “checking” and “acting” part of the cycle.
Firms that adopt ISO 14001 may either self-declare conformance with the standard
based on their own audits, or use accredited third parties to make that determination. Only
facilities that choose third-party verification are registered to the standard. Independent
registration audits ensure to outsiders that an organization has established a systematic
structure for managing its environmental impacts and is following through on internal
environmental commitments. Before giving their approval of the management system,
registrars audit to ensure that each element is in place, is linked to the achievement of the
organization's goals, and conforms to the standard.
ISO 14001's Potential Benefits to Regulators
ISO 14001 is of interest to regulators because it has the potential to improve
regulatory compliance and environmental performance in several arenas.
Regulatory compliance
The importance of regulatory compliance is made clear in the first several sections of
the standard where the requirements for a firm’s environmental policy and planning are
spelled out. Section 4.1 of the standard stipulates that an organization’s environmental policy
must include a “commitment to comply with relevant environmental legislation and
regulations, and with other requirements to which the organization subscribes.” Section
4.2.2 states that a firm must “establish and maintain a procedure to identify and have access
to” its legal requirements. Section 4.2.3 requires that, when managers develop their
objectives and targets, they must consider their legal obligations.
Because ISO 14001 requires that managers identify their legal and other obligations
and implement a system for achieving them, EMS audits must include an evaluation of the
facility’s regulatory compliance program. The EMS audit determines whether the system for
managing compliance is functional—that it is resulting in continual improvement toward the
goal of total compliance. ISO 14001 does not, by itself, ensure compliance but does ensure
that a firm continuously improves its compliance programs. ISO 14001 offers regulators the
assurance that facility managers are aware of their compliance obligations and are moving
toward achieving them.12
Environmental performance improvement
Section 4.3.1 states that managers must establish a procedure to identify the
environmental aspects of their activities, products, or services in order to determine “which
have or can have significant impacts on the environment.” Managers must take those
significant impacts into account when they establish their environmental targets. A facility’s
12
environmental aspects are not limited to their regulated releases. Managers may include toxic
run-off from their parking lots, diesel fumes emitted as their products are transported, or any
other environmental impact they deem “significant.”
The annex to the standard explains that managers should take the following activities
into account as they identify their environmental aspects: “emissions to air; releases to water;
waste management; contamination of land; impact on communities; use of raw materials and
natural resources; other local environmental issues.” That list goes beyond the scope of
environmental regulation. Managers are also to consider financial and technological
constraints as they set their environmental targets. The extent to which they choose
ambitious goals is up to them.
ISO 14001 has the potential to move facilities beyond regulatory compliance if
managers view their environmental aspects broadly, establish ambitious targets, and develop
practices to meet them.
Third-Party Registration
Third party registration provides its own set of benefits to regulators. The objective
review assures regulators that a facility's management systems is designed and implemented
in accordance with the standard and that EMS performance is improving. Undertaking a
third-party audit itself may improve environmental performance by bringing deficiencies in
the EMS to management attention.
Critiques of the Standard
The standard is criticized13 for its failure to adequately involve and respond to the
interests of environmental advocates and developing countries, and for disadvantaging smallto-medium size enterprises because of the high relative cost of implementation. It is further
criticized14 for not setting performance requirements (the standard requires only continual
improvement of the system itself): a company may be registered to ISO 14001 without being
in regulatory compliance. In addition, the standard does not require the disclosure of specific
environmental performance information to the public. As a result, critics point out that there
is no guarantee of a link between adoption of the standard and improved environmental
performance, and many believe that organizations may use adoption of the standard to falsely
represent their environmental commitment.
ISO 14001's Potential Benefits to Firms
The fact that environmental management systems in general are consistent with good
business practice, improving both environmental and overall business performances, seems
13
accepted today.15 EMSs may increase expected revenues (if customers value strong
environmental management) or lower expected costs (through pollution prevention and
resource conservation). Adopting ISO 14001 offers firms opportunities to strengthen
internally and externally focused activities.
Internal benefits include opportunities to:

increase compliance assurance, thereby decreasing the likelihood of legal upset and
the costs of regulatory non-compliance

improve efficiency and cost savings. Companies that have registered to ISO 14001
have identified cost savings "as one of their first and most noted improvements after
implementation of an EMS16."

improve environmental performance
Those benefits could yield additional advantages as they:

raise the value of the firm to shareholders, by reducing the risks and the costs of
liabilities and increase its expected value

increase employees' morale and pride
Managers often adopt an EMS to signal environmental performance to:

customers. The environmental management system can become a marketing tool,
providing a means of differentiation and a competitive advantage, often enhancing
relationships with customers (when not a supply-chain requirement).

the public. The EMS provides some basis for a reputation of good corporate
citizenship.

regulators. Adoption can reduce friction and improve relationships with regulatory
agencies, providing the demonstration of steps taken toward compliance, as shown in
recent settlement agreements.

insurance companies and lenders. The EMS lowers business risks, reducing the
probability of adverse events and violations, and lowering the cost of externally raised
capital.
Intervention of an independent qualified third-party to review and verify the
organizations' EMS and its implementation provides additional benefits to firms:

review of the EMS. The objective review assures an organization that its
management systems is correctly designed and implemented. In addition, a large firm
14
seeking company-wide certification may register one facility to assess the amount of
work it must do to become fully ISO 14001 compliant.

enhanced effectiveness. Undertaking a third-party audit is one step beyond merely
designing and implementing the EMS, and generally increases employees'
commitment.

additional credibility of an independent audit

recognition as international standard. The actual registration provides competitive
advantage when engaging in foreign trade by increasing business opportunities, and
reducing the threat of non-tariff trade barriers.
While it is important to distinguish the benefits associated with ISO 14001 adoption from
those associated with registration, in practice both sets of benefits are intricately linked, and it
is the combination of both that drives organizations to register to the standard. For example, a
recent adopter declared that "by carrying ISO 14001, we hope to waste fewer resources,
reduce liability, improve our public image, and increase profits." Figure 1 depicts the many
potential benefits to firms that adopt the standard.
15
Figure 1. Summary of Firms' ISO 14001 Expectations
PATTERNS OF ADOPTION
Since its inception in late 1996, ISO 14001 has been widely adopted in Europe and
Asia. On those continents, some manufacturers are requiring that their suppliers are
registered to the standard. Capital investors in Europe are starting to systematically demand
ISO 14001 certification, and there are some signs that participation yields informal regulatory
flexibility.17
By contrast, in mid-1999the time of our researchmany U.S. firms were taking a
wait-and-see attitude18. While many firms have adopted environmental management
systems, few facilities perceive the need to actually register to ISO 1400. Registration is
generally viewed as a poor use of resources.19 Many companies appear to be using the
standard without actually registering. For example, anecdotal evidence suggests that many
facilities have used the standard as a guide in developing EMSs, and many have performed
16
gap analyses to assess the effort that would be needed to register in the future.20 At the end of
1998, fewer than 250 facilities in the United States had registered. That number almost
doubled in the first half of 1999, however, suggesting that managers believe the value of the
standard is growing.
It is too soon to draw conclusions about the future development of the standard in the
world, as well as in the United States, but it is possible to analyze the characteristics of the
organizations that have already chosen to adopt ISO 14001. In this chapter we compare the
characteristics of United States facilities that have become registered to ISO 14001 with those
that have not.21 A description of the data and methodology we used in this analysis, and
statistical results, can be found in the appendix of this report. We compare ISO 14001 with
non-ISO 14001 facilities on the basis of the following characteristics:

a firm's nature (size, ownership, profitable or not, exposure, market position)

industry sector (level of pollution, regulatory context, structure of competition)

past environmental performance (based on toxic releases and regulatory
compliance history)

participation in other "beyond-compliance" initiatives

ISO 9000 registration.
Our analysis shows that larger facilities, that presumably already have well-structured
management systems, are more likely to adopt ISO 14001 than smaller ones. Based on 1996
performance data of facilities that must report their toxic releases to the toxic release
inventory (TRI), we concluded that facilities with larger numbers of employees obtained
registration to ISO 14001 disproportionately often. The data indicate as well that the size of
the parent company is a factor. We also found that facilities that have already registered to
ISO 9000, five standards published in the early 1990s that describe elements of quality
management systems, are more likely to register to ISO 14001 than those that have no
experience with ISO 9000.
Why would large facilities with management systems that are already well established
be more likely to register to ISO 14001? Large firms or facilities are more vulnerable to risks
of poor environmental performance and need advanced EMSs such as ISO 14001 to manage
the greater complexity of those environmental operations. Those companies and facilities
have readily available the necessary resources, and can afford the significant costs of both
implementation and registration. Such large firms may want to test the compliance of their
EMSs with the international standard in order to be ready if and when it becomes a business
requirement. (At this early stage, very few organizations have achieved company-wide
registration.22)
17
ISO 9000 prepares managers for ISO 14001. Many of the requirements for
documentation and auditing are similar. Firms already compliant with ISO 9000 have less
work to do to become ISO 14001-registered, compared to firms without ISO 9000
experience.23
Regardless of those potential benefits, organizations that have actually registered to
the standard are the ones for which the costs of development and implementation of an
environmental management system are relatively low. Hence, larger facilities, which possess
the necessary resources and are in general better organized, and the facilities that are already
registered to the ISO 9000 quality standard and whose structures fit the new EMS, have a
comparative advantage and are more likely to adopt ISO 14001 early.
Below-average environmental performance also increases the likelihood of
registration. Facilities that emit more pollution than peers in their industry tend to adopt ISO
14001. One possible explanation may be that those facilities have lacked effective EMSs in
the past and are now adopting ISO 14001 in order to improve their management practices.
Once again, the formal registration to ISO 14001 (which is tested here) should not be
confused with the implementation of an EMS. Another explanation for that finding could be
that reputational benefits spur adoption among the most emission-intensive facilities. Indeed,
it may very well be that large facilities with greater-than-average emissions levels are subject
to more intense public scrutiny and would gain greater benefits from formal registration.
There is no significant relationship between a facility's compliance history and its
decision to become registered. Neither a history of compliance nor non-compliance appears
to contribute to the registration decision. Facilities with strong compliance performance are
just as likely to obtain registration as those with compliance problems. Furthermore,
belonging to one or another EPA region does not influence the adoption of the standard. In
addition, our data suggest that facilities operating in industry sectors with higher average
levels of effluent per employee or with heavier regulation are not more likely to obtain ISO
14001 registration.
Neither does there seem to be a significant relationship between a facility’s industry
and its decision to become registered. Even though the data suggest companies in some
sectors are less likely to register, it is difficult to draw any conclusion, given the structure of
that data and the sizes of the sample at this stage of the standard development.24 Foreign
ownership, however, is a key determinant of ISO 14001 registration. That confirms the
broadly held sentiment that US firms are waiting to see whether the standard will become a
competitive requirement or yield substantial economic benefits.25
18
Chapter 2. PRACTICAL EXPERIENCE WITH ISO 14001
The annex to the ISO 14001 standard states that “improvements in [an organization's]
environmental management system are intended to result in . . . improvements in
environmental performance.”26 That is the uncertain promise offered by ISO 14001. Do
firms that adopt the standard achieve superior environmental performance compared with
those that do not? To answer that question we conducted case studies of six facilities
belonging to or close to the chemical industry. We detail our findings, analyzing the
influence and impact of adoption on practices and behavior.
Only 42 chemical facilities (SIC code 28) had registered to ISO 14001 at the time that
data were collected for this study (July 1, 1999). Like ISO 14001 facilities generally, those
facilities tend to be large, with greater-than-average emissions, and have parent corporations
based outside the United States. The only difference lies in the influence of the Responsible
Care membership, which replaces ISO 9000 as an explanatory variable. Facilities that already
have elements of an EMS in place find adopting ISO 14001 relatively cost-effective. (For an
explanation of the data and methods we used to derive those conclusions, please refer to the
appendix of this report.)
We limited our case studies to facilities within the same industry. By keeping the industry as
a constant we hoped to discern the impact of ISO 14001 more clearly. We chose to focus our
study in the chemical industry because of its relatively high number of registrations. Also,
we had previously studied implementation of Responsible Care in the chemical industry and
had contacts in the industry as well as background information that could contribute to this
study.
Our initial plan was to focus our case studies in three chemical firms. Our research
design called for matching each of the ISO 14001 case-study facilities to a similar non-ISO
facility, allowing us to compare management practices in ISO and non-ISO plants. Hoping to
control as many parameters as possible, we tried to study facility pairs within the same firm.
However, we soon discovered that most firms had either no experience with the standard at
all, or were working toward registration at all of their facilities. Rather than continue our
search for matched pairs, we chose to study five chemical facilities that had become
registered to the standard. as well as one that had not. All the facilities have different parent
companies. (See Table 1 for comparative information on the facilities.)
We asked questions in five areas: normative change, management consciousness,
employee consciousness, environmental performance, and external communication.27 Most
of the questions solicited information about integration of environmental considerations into
19
facility operations. An additional section included questions about the motivations that led to
adoption of the standard. The questions were aimed at representatives of general
management, environmental management, design or process engineering, and productions.
Facility A
Facility A, which is owned by a large European multinational operation, makes
detergent alkylates used in household and industrial cleaners. It is small, employing only 120
people, and is located in an in urban area. Few people live near the facility, and it, along with
its industrial neighbors, is attempting to relocate those who do. In 1998, it had a major fire in
which no one was injured, but which did shut down operations for three months.
Facility managers initiated ISO 14001 registration on their own; corporate managers
were unsure about the value of registration. All of the managers we spoke with had been in
their jobs for many yearsthe minimum tenure was 15 years.
Most of the facility’s pollution-prevention and waste-minimization efforts were
established after the adoption of ISO 14001 in 1997. A program for life-cycle assessment
and other environmental management practices was in place prior to ISO 14001 adoption, but
the EMS existed only in fragments.
The facility has no established program for community participation. Managers report
few citizen-inquiries about environmental performance, and that their relations with the
community and the regulators are excellent. Notably, Facility A was the only facility in the
study that provided us with a list of its environmental aspects, as well as its objectives and
targets for reducing them. Other facilities considered that information confidential.
Facility B
Facility B, a large industrial site employing more than 1,000 people, manufactures
chemical products used in cosmetic applications. It has a strong commitment to
environmental stewardship. Indeed, its U.S.-based parent company is a signatory of the
International Chamber of Commerce Business Charter on Sustainability, which managers use
as a guide to business decisions. In 1993, those managers developed an environmental policy
that stressed beyond-compliance environmental performance. They implemented a corporate
EMS in 1995, as well as programs in total quality management, pollution prevention, waste
minimization, life cycle analysis, and product stewardship. The company was one of the first
in the United States to publicly state a company-wide commitment to the ISO 14001
standard, and has created a corporate “ISO Center of Excellence” to advise facilities on ISO
14001 implementation.
Corporate and facility policies emphasize sustainability, which managers say requires
“integration of EHS into the business fabric.” The EHS manager has stated that product
redesign represents the most cost effective way to move toward environmental excellence.
20
The facility has had no major compliance issues in recent memory. It is attempting to
integrate full cost accounting in its practices and participates in agency beyond-compliance
programs, including StarTrack.28
Facility C
Like Facility B, Facility C produces chemicals used in the cosmetics industry. It is
smaller, however, employing just 175 people at a plant located in a commercial center in a
small town. It is owned by a large multinational firm based in Europe.
Several years ago corporate managers required that all facilities develop EMSs
compatible with ISO 14001. Facility C’s managers decided to take the additional step of
registering to the standard. The major emphasis of environmental programs, in addition to
regulatory compliance, has been packaging recycling and waste reduction, which programs
were in place prior to ISO 14001 adoption. Programs in the areas of product stewardship,
life-cycle analysis, and total quality management are nascent. Managers have established no
program for local external communication, yet claim that local relationships are positive.
The facility has a good compliance history with no major issues in the past several years. In
addition, managers participate in several agency beyond-compliance programs, including the
StarTrack program.29
Facility D
Facility D is a large manufacturing site that produces catalysts used in the
manufacture of plastics. It is located in a heavily industrialized area adjacent to 80 acres of
undeveloped land. The original plant was built in the early 1920s. Ownership has changed
five times since then; it is now owned by a large company based in Europe.
Managers consider the facility a “flagship” in the area of environmental management
for the company’s North American sites. The facility participates in several voluntary
programs, including OSHA’s Voluntary Protection Program for facilities with strong health
and safety programs. The decision to embrace ISO 14001 was a corporate one; officers
wanted to assess the costs and benefits of registration through experience at the location.
According to the facility’s environmental performance report, corporate managers
subsequently decided to use the facility’s EMS at all sites on this continent.
Facility E
Facility E is large, employing 1,500 people in a heavily industrialized location. It is
one of several United States sites of a company based in Asia. Environmental management
practices at the plant were strongly influenced by community opposition to a major facility
expansion in 1993. Under pressure from residents and EPA, managers agreed to implement
programs that led to significant reductions in toxic and wastewater releases. The agreement
21
also established a technical-review committee that strengthened environmental auditing and
compliance. Managers now plan to double facility capacity in the next several years.
The facility practiced pollution-prevention planning and waste-minimization planning
prior to ISO 14001 adoption. It also published an environmental performance report. It
conducted compliance audits and risk assessments and had an active product stewardship
program.
Facility F
Facility F, our non-ISO 14001 control, was nationally recognized for its commitment
to toxic-use reduction and environmental-performance reporting in the late 1980s and early
1990s. At that time, managers instituted programs for total-quality environmental
management, pollution prevention and waste-minimization planning, environmental
accounting, life-cycle analysis, and product stewardship. Environmental goals were achieved
on or ahead of schedule during the first years of those programs. Progress has slowed
recently, however.
The facility’s managers contend that further reductions in chemical use and waste are
constrained by their products They have been unsuccessful in attempts to substitute less-toxic
materials. Furthermore, declining profits have required managers to focus more intensely on
achieving business objectives. New environmental management practices include a productdelivery program that integrates environmental concerns with product development.
Regulatory compliance is the major emphasis for corporate environmental managers: since
1995, the company has been assessed substantial penalties from state and federal agencies.
Facility F has strong ties with environmental advocacy groups, and annually publishes a
comprehensive report on its environmental performance.
22
Table 1: Summary Characteristics of Case-Study Facilities
FACILITIES
A
B
C
D
E
F
Size (number of employees)
< 200
> 1000
< 200
< 200
> 1000
<500
Age (years since facility creation)
> 50
>50
> 50
> 50
< 10
>15
European
US
European
European
Asian
US
ISO 9000
Yes
No
No
Yes
Yes
Yes
Responsible Care
Yes
No
Yes
Yes
No
Yes
7/1997
1/1997
7/1999
10/1996
9/1996
*
International ownership
Date of ISO 14001 Registration
(*) Non-ISO Facility
Factors that Enabled ISO 14001 Registration
Information gathered in interviews confirmed the finding from our statistical analysis
that relatively low implementation costs favored early registration. All five ISO facilities
already had elements of an environmental management system in place prior to the adoption
of the standard. (Three of the facilities are members of the Chemical Manufacturers
Association and are implementing Responsible Care.) In the case of Facility B, a complete
EMS had been implemented globally throughout the company in 1994,30 and was considered
mature at the time of the certification. The other four facilities also had environmental
procedures or pollution-prevention programs but were lacking formalization, planning, and
documentation. For example, an independent audit undertaken in Facility C prior to the
implementation of the ISO 14001 system concluded that the "facility's EMS appear[ed] to be
functioning effectively to maintain compliance and meet their specified goals; however, the
facility's EMS program [was] largely informal, mostly undocumented and [had] few written
programs or procedures."
The interviews confirmed as well the importance that an existing ISO 9000 system
can have in the design and implementation of a standardized EMS. The synergy between the
two standards, in functions such as document and data control, training, and internal
auditing,31 was appreciated by managers of the facilities registered to both. Approximately
two-thirds of Facility’s A’s EMS came directly from its quality-management system,
according to the plant's EHS manager, who believes it would have been "a mistake not to
combine the two systems." Facility D acknowledges the "high integration" of the two
systems, and Facility E recognizes that its ISO 14001 program was developed as "an
additional layer" to the ISO 9000 basis.
23
Because both smaller and larger plants were represented in our cases, it is impossible
to draw any conclusion from our sample about the influence of a facility's size on the decision
to register. It is interesting to notice however that all five ISO 14001 facilities belong to large
international organizations (one based in the United States, one Asian, and three European).
Motivations for Becoming Registered to ISO 14001
Questions asked during the interviews probed the motivations of the facility managers
to seek registration. Managers at all six facilities emphasized the absence of customer or
supply-chain requirement for ISO 14001 in the United States. Early adopters are choosing to
adopt the standard for reasons other than market requirements.
The primary motivation for adoption cited by all managers in those ISO-registered
facilities was to improve compliance and environmental performance. The plants are using
ISO 14001 to enhance existing procedures or management systems in order to achieve their
number-one objective: compliance. It was "job one" for Facility E’s manager and "difficult
but necessary" for Facility C. Compliance needed to become "institutionalized" for Facility
D and ISO's framework was expected to provide the required formalization. Reacting to an
unacceptable number of incidents, Facility A’s "first concern was [compliance] results,"
although the opportunity for cost savings was a factor too. Environmental performance was
systematically cited together with compliance as a motivation.
Compliance and environmental performance were also a factor in Facility B’s
decision to augment its existing EMS, but the prospect of worldwide recognition and the
opportunity to use certification as a public relations and marketing tool were significant as
well. Thatobservation is consistent with the findings of a recent survey of early adopters32.
According to that study, based on telephone interviews with people in 22 organizations
worldwide, "the most common reasons for pursuing ISO 14001 certification among the
companies surveyed were to ensure an ability to compete in all markets and to promote a
leading environmental image.”33
Both Facility C and D admit an intention to use the standard as a public relations tool
that will demonstrate themselves as responsible members of the chemical industry. Similarly,
Facility E, whose major expansion in the early 1990's encountered significant community
resistance, has used, with success, ISO 14001 as a signal of its good environmental intentions
to regulatory agencies and the neighboring community. All six facilities describe themselves
as environmental leaders with a good reputation among regulatory agencies and, often,
communities.
24
Once again, it is difficult to draw a line between reputational benefits provided by the
EMS and those related to the official registration. A "potential competitive advantage in
acquiring customers" is one of the most important motivators for certification,34 and Facility
D’s manager indeed considers ISO 14001 a "valuable marketing tool" in that respect.
Another important benefit of certification is to "demonstrate EHS [environment, health, and
safety] due diligence,”35 as recognized by Facility B, which, in spite of the prior existence of
a mature EMS, said that "nothing is as credible as a third-party certification." Facility A’s
EHS manager views third-party certification and the independent audits as primarily a means
to "make the EMS real." Explained Facility E’s plant manager, "certification does have the
added value of an independent set of eyes to challenge the process."
The role of corporate management in the decision to register differed widely from one
plant to another. Facility A, for example, made the decision entirely on its own under the
leadership of its environmental manager,36 and was the first to be certified in the United
States. Facility B acted in the context of a global corporate self-declaration, and voluntarily
chose to seek third-party certification. The decision was shared by facility and corporate
managers in the case of Facility E. In contrast, a corporate decision led to the registration of
Facility D, which agreed to take the role of a "pilot" plant in the efforts leading to the design
of the ISO 14001 EMS. Facilities B and E also mentioned the role of pilot. Apparently, IO
14001 adoption is a way facilities can distinguish themselves within corporate boundaries.:
Facility C highlighted corporate recognition (in contrast with regulatory agencies') whereas
Facility A recognized its drive for leadership among the firm's seven U.S. plants.
25
Table 2: Summary of Enabling Factors at Case-Study Facilities
FACILITIES
A
B
C
D
E
Customer or supply-chain requirement
no
no
no
no
no
Elements of an Environmental Management System





Member of Responsible Care

no


no
Implemented ISO 9000

no
no


< 200
> 1000
< 200
< 200
> 1000
Large parent company





Foreign owned

no



Corporate (C) or Facility (F) decision
F
F
F
C
F/C
Facility size
Behavioral Changes Brought About Through ISO 14001
We found that adoption of ISO 14001 led to two types of changes in the case-study
facilities. First, adoption has formalized and reinforced existing environmental practices.
Second, ISO 14001 has led to increased integration of environmental objectives into
operating routines. By that we mean that regulatory compliance has been institutionalized as
a priority for business managers and, in several facilities, pollution-prevention activities have
been incorporated into responsibilities of many workers.
Formalization and Reinforcement of Existing Environmental Practice
The ISO 14001 helped case-study facilities formalize and reinforce their
environmental management systems. That formalization and reinforcement occurred in
several steps. First, in setting up an EMS, managers reviewed their environmental policies.
Managers of Facility B rewrote their environmental policy to make it more suitable for an
ISO 14001 system. Second, managers reviewed their EMS procedures and wrote down
systems that used to be in people's heads. That methodical review helped them "to focus on
areas that had been overlooked." In addition, when problems did occur, ISO 14001 helped
managers identify the cause and institute systems to prevent recurrence.
Policy. The ISO 14001 EMS requires an organization to establish an environmental
policy that articulates its commitment to manage its environmental aspects. All of the
facilities we studied had developed environmental policies prior to ISO 14001 adoption, with
26
the exception of Facility D. Adoption required its managers to set down in writing their
commitments to compliance, pollution prevention, and community involvement.
ISO 14001 adoption triggered changes in Facility B’s environmental policy. The previous
policy committed the company to the broad goal of “environmentally responsible
management” of facilities, materials, production processes, products and packaging,
transportation and distribution, waste, energy, and general business operations.
“Environmentally responsible management” was not defined. The old policy was written not
as a framework against which the company’s progress could be assessed, but as a source of
guidance and inspiration. The new policy closely follows the specific requirements of the ISO
standard, committing the company to compliance with “all applicable governmental
requirements”, “prevention of pollution”, and “continual improvement of [the] EHS
management system.” The new policy is specific enough so that managers and ISO 14001
registrars can evaluate the degree to which it is being implemented. The definitions included
in the ISO 14001 standard have added precision to Facility B’s environmental policy.
However, the policy is arguably now more narrow in its scope.
Awareness of policy One of the most obvious impacts of the ISO 14001 registration,
according to the managers, was an increase in employees' awareness of their facility's
environmental policy. Managers at all of the ISO facilities had implemented training
programs geared specifically to policy content. At Facility A large banners summarizing the
policy hung in all common spaces. Those approaches have "indoctrinated" employees,
according to the environmental manager. Facility D’s EHS manager declared that he had
"drilled [the new policy] into employees' heads" with three catch-words: compliance,
continual improvement, and communication. In contrast, the environmental manager at
Facility F, our non-ISO plant, admits poor employee awareness of its environmental policy.
Written procedures. A major impact of ISO 14001, according to the people with
whom we spoke, is documentation. The ISO EMS standard requires that every procedure and
operation that is part of the EMS be described in writing. We mentioned earlier that Facility
C’s lack of documentation had been identified as a deficiency in an independent audit prior to
the implementation of the ISO system. That same lack of documentation was identified by
managers of Facility F, the non-ISO 14001 control facility in our study, when they performed
a gap analysis at the time of the standard's publication. Environmental practices at this plant
consist of a semi-formal EMS that relies heavily on the EHS director to manage personally
all information flows.
In most cases, the procedures that were in the new ISO 14001 manual were already in
place and implicitly followed by employees prior to adoption. Yet managers considered
documentation valuable. Facility D’s environmental manager explained that "writing [the
27
procedures] down made it easier to ensure that employees understood the 'why' of their
actions, and where they could find answers.” For example, adoption of the standard helped
better define and detail each worker's role in handling waste at all phases of production.
Facility E organized and enhanced its procedures by building its ISO 14001 manual around
existing health, safety, and quality reference materials. The EMS was seen as a
"strengthening of programs already in place since those existing programs were considered
"solid." Several facilities had developed databases to collect audit results and corrective
actions.
Corrective Action. ISO 14001 enabled Facility A to "consolidate the bits and pieces"
of environmental practices. "The systems approach helps to reduce chaos in the operations,"
and helps managers "focus on getting to causes of problems," said the plant manager. The
facility suffered a major incident in 1998 when workers attempted to remove a residue that
had formed in one of the reactor vessels. Unfortunately, there was no established procedure
for doing so, and the method they tried resulted in a massive explosion. As a result, the plant
was closed for three months. Managers then amended their EMS, adding the appropriate
procedure for cleaning the by-product, as well as a new "procedure compliance policy" to
prevent similar events from happening. According to the environmental manager and process
engineers, using the EMS structure they were able to rapidly take corrective actions and
rebuild the process. The incident was closely scrutinized during the following ISO 14001
audit, which found that the new system was an appropriate corrective action.
Facility Four controlrecognized that its environmental programs were slipping
due to budget constraints. Its managers noted that such slippage was less likely to occur in
ISO 14001-registered plants. Aspects of formalization emphasized by managers are
discussed briefly below.
Integration of Environmental Objectives into Operating Routines
Analysis of the six case studies indicates that ISO 14001 adoption provides the
opportunity to integrate environmental objectives (whether strictly compliance related or
extending beyond compliance) into day-to-day plant activities. ISO 14001 appears to foster
the involvement of a broader sector of plant workers in at least some aspects of
environmental management.
Environmental concerns, particularly concerns about
compliance, are integrated into operating routines through that approach.
ISO 14001 and Compliance
Improvement of compliance was one of the first motivations cited to explain adoption of an
EMS, and of ISO 14001 in particular. The interviews showed that, indeed, implementation of
28
the standard EMS has helped manage compliance activities. Compliance problems still occur:
releases may exceed permitted levels, hazardous-waste containers are sometimes improperly
labeled, monitoring and waste manifests are not always complete. While ISO does not ensure
that compliance is always achieved, it helps to focus the attention of workers on that goal.
The first objective of Facility A’s EMS is to "reduce incidents." For Facility C, "compliance
is difficult but necessary." The benefits gained from an increased respect for regulations and
a "sharper focus on the law" are well worth the effort of registration, according to the
managers we spoke with.
The interviews in Facility E demonstrated the significance of compliance activities.
Compliance "is job one" for the plant manager and "the whole purpose" for production
engineers; one operations manager even considers that his very job "is to maintain
compliance." Notably, those are managers whose jobs address core business functions.
Compliance is a priority in the facility's EMS objectives, and a majority of the goals are
compliance-related. In order to "assure" the highest possible degree of compliance, Facility
E’s has purchased an information system from a competitor consisting of detailed procedures
aimed at every aspect of regulation; that system is integrated into the EMS.
Facility D’s process manager considers that "regulated aspects are not goals, [but] must-do's."
The plant manager expected that ISO 14001 would "institutionalize" compliance. He gave as
evidence that this has occurred the fact that conversations about compliance are now rare.
There is little reason to discuss a subject about which workers have reached agreement.
Of course, managers can improve compliance performance without ISO 14001. Managers at
Facility F have chosen not to register to the standard, but are firmly committed to distancing
themselves from the problems of several years ago that resulted in substantial fines. Faced
with declining profits and very tight budgets for environmental concerns, they consider ISO
14001 an expenditure they cannot afford. The requirement for documentation is time
consuming and in many instances does not contribute to performance, according to the people
we spoke with. Managers at Facility F have decided to focus the resources they have
available on self-auditing compliance and correcting compliance problems.
Beyond-Compliance and Pollution Prevention
Compliance is only one aspect of environmental activity, and, as we discussed earlier, many
firms develop and implement an EMS to improve environmental performance beyond
regulated levels. Regardless of the ultimate motivation, an advanced management system
29
such as ISO 14001 appears to enable greater integration of environmental improvement goals
into every day operations.
Facility A’s environmental steering team identified three objectives from the ISO 14001
aspects identification: to reduce incidents, with a focus on procedures and human resources;
to reduce waste, with a focus on equipment and maintenance; and to reduce energy, with a
focus on process. Establishing goals that address unregulated aspects, such as the last two,
has shifted the facility's focus to beyond-compliance. The environmental manager spends
only half of his time on compliance issues; the rest he devotes to planning, community
involvement, and EMS implementation. Prior to adoption, attention to energy efficiency had
been sporadic: it is now a major focus for process and design departments. According to
process engineers, managers' decision to include beyond-compliance goals in the EMS has
introduced incentives other than cost savings. Those incentives have "generated projects that
would have not been completed in the past." An example of one such project is a secondary
vent collection system, implemented as a result of an incidents analysis.
Interviewees in other facilities also reported increased attention to beyond-compliance
activities. Facility B’s business goals include environmental as well as economic targets.37
The EMS, which was mostly in place before adoption of ISO 14001, aims at making "EHS a
part of the strategic plan."
That integration of environmental objectives into activities was also noticed in both Facility
C and Facility D. In Facility D, ISO 14001's strongest impact was reported to be on
manufacturing, where "production was [previously] a higher priority than environmental
issues." According to the process manager, changes to the manufacturing process must now
be reviewed in terms of their impact on achieving environmental targets.
The same is true of Facility E, where the requirement for continual improvement "helps keep
environment as part of the plant's activity," and where the EMS and its procedures have
identified particular individuals as responsible. An emphasis on "prevention at the source"
has accentuated and formalized the decentralization of the environmental function to the
production units. Production engineers are "becoming environmental experts," taking care of
stack testing and permits management, for example. As a consequence, production has
become the key decision-maker concerning environmental improvements of the processes.
Managers of the different product lines have full responsibility for integrating EMS goals,
and identifying, initiating, designing, and implementing projects. The purchase of a new
technology to eliminate most of the facility's hazardous waste by turning it into a marketable
product is a good example. The purchase was consistent with the facility's EMS targets.
30
Table 3 summarizes what managers considered the most important pollution prevention
projects implemented in their facilities since 1996. The role of plant management in
developing pollution-prevention projects appears to be weaker in Facility F, our non-ISO
14001 facility.
31
Table 3: Pollution-Prevention Activities Cited by Interviewees (with
identification of the driving entity)
FACILITY
DESCRIPTION OF ACTIVITY
DRIVING ENTITY
Reduce "Incidents"
A
Reduce "Waste"
Corporate and Facility EHS
management
Reduce "Energy"
B
C
D
E
Implementation of secondary vent collection system header Cope with periodic failures of the system
Implementation of an integrated response plan - Spill
management team and computerized scenarios
Reformulation of products to reduce or eliminate TRIchemicals
Development of natural products - Construction of a new
plant with optimized production
Reduction of VOCs by changing formula of product - Less
alcohol is used
Elimination of chemical use in a cooling tower by installing a
sand filter and ozone feed system
Facility EHS management, result of
incidents analysis
Automated compounding tank cleaning system
Engineering and manufacturing
Reuse of spent solvent (with customer agreement) - Led to
reduction of waste by half
Process Engineering and
production
Facility EHS, maintenance and
process engineering
Recovery and recirculation of air-steam condensate
Facility EHS and chemical lab
Product standard set by California
law
Facility EHS and manufacturing
Implementation of waste management plan
Facility EHS
Purchase of technology to treat waste material and turn it
into product - Elimination of 90% of hazardous waste
Implementation of early-release system - Preventive
shutdown
Facility production and general
management
Wastewater recycling
Product stewardship
F
Facility EHS and all operational
units
Facility EHS and chemical lab
EHS, production and maintenance
Facility production and wastewater
department
Corporate EHS and process
engineering
Co-generation
Corporate EHS
Upgrading of after-burner
Facility EHS and engineering
32
Economic Considerations
The five ISO 4001-registered facilities we studied behave differently in their approaches to
economic factors. On one end, managers at Facility A say they disregard the economic
dimension and set environmental objectives independently from economic considerations.
As already described, managers based EMS objectives on their understanding of their
facility's environmental impacts. At Facility A, once an environmental need is established, it
is considered as a "must-do" and eventually is addressed.
On the other end, Facilities C, D, E, and F all declare that the ultimate driver for
environmental projects is cost savings. For Facility D’s plant manager, "good business"
implies that "there are always economic reasons for a project," including pollution-prevention
projects. While the EHS department often identifies and implements environment related
projects, the final approval usually comes from corporate management, which acts as the
source of funding. The same is true in Facility E, where decentralization of environmental
functions to the production lines can explain why "motivation number one is cost savings." A
project "has to be lucrative" and "economically beneficial”38 to be implemented. The
objective of this facility's EMS is resource conservation, which is supposed to provide both
environmental benefits and cost savings. For example, the treatment of a chloroform leak
problem in cooling towers through use of a new technology will conserve use of that
chemical and also reduce risk. In Facility C, business decisions are also motivated by cost
savings.
Performance goals set within the ISO 14001 framework are chosen realistically, and take
economic opportunities into consideration.
Corporate Influence
Corporate directives have a significant influence in shaping the unregulated portion of
facilities' environmental goals. That is clearly the case for Facility B, whose strategy derives
from a strong corporate commitment to environmental stewardship and sustainability, as well
as the will to maintain environmental leadership in the industry. Corporate directives are also
a significant factor in Facility D’s decisions. A "strong feeling about meeting regulation and
beyond compliance issues" led to the design of an ambitious corporate program in 1995 that
included both profitability and environmental goals. Corporate goals are important at
Facility E as well, where corporate management based in the United States has identified
sustainability as a concern. The official corporate objective is zero emissions by 2005, with a
25 percent reduction every year. Each department must set its own goals and objectives in
33
line with that directive. Although Facility A operates with relative independence from
corporate oversight, its objectives, described earlier, are also in line with company objectives.
Facility objectives focus on subsets of the corporate goals.
Table 4 summarizes the main factors that have influenced facility goal setting, as gathered
from the six case studies.
Table 4: Relative Importance of Factors Influencing EMS Goals in
Case-Study Facilities
FACILITIES
A
B
C
D
E
F
Significance of compliance
+
+
+
+
+
+
Significance of unregulated
aspects
+
+
~
~
~
~
Significance of economic
factors
0
~
+
+
+
+
Significance of corporate
influence
~
+
~
+
+
+
+ indicates factors that strongly influence facility goals; ~ indicates factors that are somewhat significant; 0
indicates insignificant factors.
Responsible Care
The relationship between ISO 14001 and Responsible Care varies among facilities, and
depends on managers' perceptions of the goals of the two approaches. At Facility D,
ISO 14001 is viewed as "a tool that helps in meeting some of the codes of Responsible Care,"
especially pollution prevention. The managers give more credit to ISO 14001 than to
Responsible Care in environmental progress.
Facility A’s environmental manager believes that Responsible Care is "more subjective" than
ISO 14001, and that ISO 14001 "defines quantitative criteria" for action. As a result,
Responsible Care is seen as a set of requirements to be managed within the ISO 14001 EMS
by implementing procedures to comply with the different codes. At Facility A, Responsible
Care requirements are seen as "already decided aspects" that the EMS must address.
ISO 14001 is the framework that managers use to ensure that the organization is continuously
improving toward Responsible Care objectives. Facility E’s managers told us that
Responsible Care and ISO 14001 rely on the "same principles—both programs achieve the
same goals and objectives." ISO 14001 adds third-party certification.39
34
Impact on External Relationships
The impacts of ISO 14001 on internal operations can be easily identified and described (as
above). There is much less evidence of ISO 14001's impacts on managers' behavior towards
outside parties. Facility A’s environmental manager, for example, reports that his
involvement in the community and with the regulators was already important, yielding a good
image, and that his facility's external relations have not been modified with the
implementation of ISO 14001.
Corporate Recognition
As mentioned earlier in the discussion of motivations for adoption, managers at all five
registered facilities acknowledged their desire to be recognized by corporate officers, either
through serving as an ISO 14001 "pilot plant" (as was the case for Facility D and to a lesser
extent Facility B and Facility E), or as an innovator. Corporate recognition is an important
component of ISO 14001 implementation at this stage.
Supplier Relationships
Adopting ISO 14001 has not changed facilities' policies towards their suppliers, and has not
induced any change in what is required of them in terms of environmental practices.
Suppliers to Facility A and Facility F had been qualified through checklists that included
environmental performance criteria; however those checklists were developed and managed
at the corporate level, in the context of purchasing policy. Facility D is developing an
environmental questionnaire for its suppliers in order to meet Responsible Care
commitments, but no action is taken in the context of ISO.
While ISO 14001 is not, at least not yet, a business requirement in the United States, Facility
B’s corporate management officially encourages its suppliers to implement an ISO 14001compliant EMS and to register.
Inclusion of External Stakeholders in Decisions
Although most of the facility managers we interviewed cited examples of changes they had
made to their manufacturing processes in response to community concern, they all reported
that the implementation of ISO 14001 has had no impact on the participation of outside
interested parties in decisionmaking. ISO 14001 has not brought about increased community
involvement.
External Communication
35
Similarly, a standardized EMS has not led to any major change in external communication
patterns. Facility A, for instance, did notand still does notrelease any formal document
regarding its environmental practices (although the information is available on demand). In
contrast, Facility F, which is not registered, has been publishing an extensive environmental
report since 1988.
Community Outreach
The interviewed facilities all have community-outreach programs. Facility A organizes an
annual community reception and holds an open house. Considered as "one of the best
operators in the area,"40 it has recently launched a relocation program to clear the industrial
peninsula of the few remaining residents. Facility D’s community-outreach programs are
shaped by the Responsible Care principles and include a community advisory panel (CAP).
The plant manager recognizes the public's strong negative perception of the chemical industry
and believes the public is made "less anxious by the information it receives” through the
CAP. Facility E, in addition to similar programs, believes that its employees, who generally
live in the local community, share their knowledge of facility environmental programs with
their neighbors. All those programs existed prior to the adoption of ISO 14001, and ISO has
not augmented or re-directed community outreach activities.
Regulators
The managers we spoke to told us that their facilities' reputations with regulators are strong.
The EHS manager at Facility A told us that prior to registration regulators viewed his plant
“as the best around.” Managers at Facility D, who also said they have a good image with
regulators,41 nonetheless admit that their ISO certification "has made a great impression," and
that since adoption managers have been invited to participate in a beyond-compliance
program. The ISO 14001 system has also helped Facility E’s relationship with agencies,
although a "cooperative working relationship existed already." Our control facility, Facility
F, has also maintained a favorable reputation as a "reasonable company." While ISO 14001
has been used in some cases as an effective public relations tool, there is no clear link
between registration and the quality of a facility's relationship with regulators.
Summary of ISO 14001 Analysis
ISO 14001 offers potential benefits to regulators by increasing the effectiveness of a facility’s
environmental program. The standard is both stringent and lax. It is stringent in its
requirement for consistency between what an organization says it will do—in its
environmental policy and plan—and its practice. Managers who have implemented the
standard emphasize that one of its most significant requirements is documentation. Under
36
ISO 14001, environmental responsibilities and procedures must be clearly documented so
that an independent person could verify that what managers do is consistent with what they
have said, and that what they do and say are consistent with the standard.
In one of our cases, managers revised their environmental policy as part of the ISO 14001
adoption process. The previous policy was more sweeping, but managers felt it was not
suitable for ISO 14001. Auditors would not be able to assess whether stated goals were
consistent with practice. That example suggests what we mean by ISO 14001’s laxness. It
does not require excellence, that is, performance above a normal baseline. It does not require
that managers set ambitious environmental targets. It does not specify the content of the
organization’s policy or plan, with one important exception: managers must include in their
environmental policy a commitment to regulatory compliance.
In the case-study facilities, managers adopted ISO 14001 in order to improve compliance
performance. Managers included regulatory compliance in their EMS targets. In several
instances, production engineers and operations managers had taken responsibility for
compliance programs. Compliance had been integrated into routine business practice in a
more consistent and comprehensive manner than before ISO 14001 adoption. The fact that
ISO 14001 EMS does not guarantee compliance is demonstrated by the major accident at
Facility A, which occurred more than one year after registration. Less-significant incidents
had occurred at each of the case study facilities since adoption. Will ISO 14001 help to
reduce the number and severity of incidents over time? Managers we spoke with felt strongly
that the answer to that question is “yes.” Total compliance exists only in theory, at the top of
the spiral staircase Joseph Cascio has written about, ever-present as a goal, but never reached.
ISO 14001 helps to move a facility up the staircase, a little higher every year.
The extent to which managers establish ambitious environmental targets that go beyond what
is required by regulation is up to them. Facility A had included waste reduction and energy
use reduction in its ISO 14001 targets, which resulted in new projects that would not have
been completed in the past. At Facility C, in contrast, targets were chosen “realistically,” so
as not to stretch resources. Managers at each of the ISO 14001 facilities are actively pursuing
pollution prevention. Pollution prevention was practiced in Facility F, but projects appeared
to be driven by corporate, rather than plant, management.
Of course can pursue compliance and beyond compliance without adopting ISO 14001.
Managers at Facility F have chosen not to pursue ISO 14001 registration for financial
reasons. They feel they have instituted systems that will improve compliance performance
without the administrative costs associated with ISO 14001.
37
CHAPTER 3. STARTRACK: A PILOT REINVENTION PROGRAM
We now turn to a discussion of the StarTrack program. After briefly outlining the
requirements of the program we consider the benefits it offers to regulators, facility
managers, and environmental and community advocates. We then consider the perspectives
of facilities that participate in the program. Ultimately the success of StarTrack will depend
on leaders at agencies and firms deciding that the program is worth the effort. Currently 15
facilities participate in the program.
The Beginnings
StarTrack, a pilot program of EPA Region I which in 1999 completed its second operational
year, grew out of the National Environmental Leadership Program announced by the EPA in
June 1994. The Environmental Leadership Program (ELP) was EPA's second experiment
with reinvention, implemented after the Common Sense Initiative. According to EPA
publications, ELP was designed to recognize facilities that “demonstrate[d] accountability for
compliance with existing laws.” To be admitted into ELP, facilities were expected to exhibit
qualities of leadership: a strong compliance history, “state-of-the-art” compliance
management and environmental management systems, independent audits, public
involvement, pollution prevention programs, and mentoring. EPA asked companies to submit
proposals describing innovative approaches in any of those “leadership” areas. EPA and
participating states promised to forego routine inspections of ELP sites and offered an
amnesty period in which managers could corrected violations voluntarily disclosed. EPA
also publicly recognized ELP sites as excellent environmental performers.42
The Gillette Company submitted an ELP proposal and was accepted into the program in
1995. The Gillette ELP project developed a system for using third parties to verify
compliance and EMS audits. The Gillette project was the starting point for StarTrack. John
DeVillars, regional administrator for Region 1, launched StarTrack in 1996 to test the Gillette
experience on a wider scale.
The Goals
As stated in StarTrack descriptive materials, the goals of the program are to improve:



protection of the environment
public understanding of a company’s environmental performance
efficiency of public and private resource allocation
Those broad goals motivate many agency activities, not just StarTrack. To develop a clearer
understanding of the purpose of the program, we interviewed members of the StarTrack team
at EPA Region 1, as well as their supervisors.
38
Initially the goal of the program was to test the use of third parties to verify compliance. The
original name of the program was the “Third Party Certification Project.” Most of the
activities of the program appear to support this goal. However, staff members emphasized
that the program is also intended to improve the environmental performance of firms. In
addition, it is intended to provide the agency with information about what constitutes
environmental excellence and what motivates managers to pursue it. We describe these goals
in the following paragraphs.
To Change Agency Behavior
The primary goal of the program has been to change agency behavior: to gather information
that will allow agency managers to allocate inspection resources more efficiently. In
organizing the program, DeVillars hoped to show that—for firms already committed to
regulatory compliance and willing to disclose their performance—compliance assurance
could be privatized through a system of audits similar to those of the Securities and
Exchange Commission. Federal and state inspection coverage rates are low, and likely will
not increase due to resource constraints. For example, over a recent two-year period, fewer
than one percent of facilities with federal permits were inspected in all three media.43 The
overarching goal of StarTrack is to target the agency’s scarce resources to poor performers.
To Change Firm Behavior
Members of the EPA StarTrack team assert that, in addition to providing a mechanism to
allow the agency to focus more intently on firms with significant compliance problems,
StarTrack is about improving environmental performance beyond compliance, both of
StarTrack and non-StarTrack firms. According to the program’s staff members, moving
StarTrack and non-StarTrack facilities beyond compliance is of equal importance to the
compliance assurance objective discussed. StarTrack has focused intensively on compliance
assurance during its first two years in order to build a base of support for the program within
agencies.
Figure 2, below, depicts the vision of agency StarTrack managers. The bell-shaped curve
represents the distribution of firms based on their environmental performance. StarTrack
firms, on the right side of the curve, are above-average performers. Members of the EPA
StarTrack team assert that the requirements for performance beyond compliance included in
StarTrack (discussed below) will move these firms toward greater environmental excellence.
They further assert that programs such as StarTrack, if implemented on a broader scale, have
the potential to shift the entire performance curve to the right. That will occur, they assert, as
firms that do not meet StarTrack requirements observe the benefits accrued to members, and
decide to change their behavior so they may be included in the program.
39
Figure 2: StarTrack's Role in Improving the Environmental Performance of Firms
To Inform Agency Reinvention Programs
According to Ira Leighton, director of Region 1’s Office of Environmental Stewardship,
which oversees StarTrack, at this point the program’s primary purpose is to help answer two
questions. The first is what constitutes excellent or even good environmental performance?
“We know how to define bad, but don't know what a good performer looks like. If we asked
around the agency, we'd get 10 different views,” he explained.
The second question StarTrack is intended to answer is “what works and what doesn't work
to improve environmental performance?” Do EMSs, and ISO 14001 EMSs in particular,
improve performance? Can a program like StarTrack help provide leverage to managers of
firms so they can push harder to move their companies beyond compliance? “We encourage
our inspectors to [observe facility audits] because that's how we learn whether a program that
puts good companies under a microscope works,” Leighton explains. He stressed that
StarTrack facilities are not necessarily superlative performers, a view shared by other EPA
staff members familiar with the program. They do not necessarily have exemplary design for
environment programs, for example, or life cycle assessment programs, according to the
40
people to whom we spoke. “What does it take to make a good performer become excellent,
and how do we get a firm on that path?” is a question he would like to answer with
StarTrack.
StarTrack Requirements
Gaining Admission
In order to join StarTrack, a company must show EPA that it has:





an established compliance audit program
an acceptable compliance history
a cooperative relationship with regulators
top management commitment to EMS implementation and continuous environmental
improvement
significant pollution-prevention efforts with quantified results44
EPA uses significant discretion in picking companies since there are no quantifiable
measurements that guide StarTrack admission. Moreover, since selection factors cover a
wide range of environmental management activities, companies can have quite different
characteristics. For example, some companies show most excellence in auditing, others in
pollution prevention.
The vagueness of the requirement that facilities demonstrate an "acceptable compliance
history" is deliberate. Once the program has been fully tested, StarTrack staff members say
they may admit firms that have experienced some compliance problems.45
New England state agencies participate in StarTrack as EPA partners. They review facility
applications and must sign off on facility agreements. After Region 1 and the relevant state
environmental agency review an application, all parties sign a letter of commitment. Usually
the Region 1 office, the state agency, the facility managers, and, possibly, municipal officials
are signatories. The company promises to complete four primary requirements after being
accepted to StarTrack.
Periodic Program Requirements
Companies participating in StarTrack agree to conduct annual compliance and EMSs audits
and submit audit results to EPA, state, and local regulatory agencies. During their first year in
the program, and every three years thereafter, participating facilities must have audit results
reviewed by a qualified third party. In addition, participating facilities must annually publish
a comprehensive environmental performance report.
41
StarTrack has four fundamental requirements, outlined in Figure 3. These are specified in the
formal agreement signed by all parties, and further elaborated in the guidance documents.
Several points require clarification.
Annual compliance audits required by StarTrack may be conducted by corporate or
divisional staff, facility personnel whose jobs are not directly related to the functions being
audited, or by third parties.46 Compliance auditing is quite common in large companies, and
StarTrack attempts to build upon that compliance-assurance measure by adding guidelines to
audit protocols. Guidance documents specify the minimal requirements for document review,
facility background review, inspection, and sampling/testing of many different environmental
aspects. The results of compliance audits conducted under StarTrack are public documents.
Facility managers must release them to the EPA Region I office. In practice, EPA and state
agency staff members generally participate in annual compliance audits as observers. Issues
identified in the compliance audits must be corrected within 60 days; after that time the
facility is subject to standard agency enforcement-action.
The annual EMS audit may also be conducted by corporate staff, but is usually done by an
outside consultantan ISO 14001 registrar, for example. While guidance documents list
ISO 14001 as an effective EMS, there is no specific requirement that binds a facility to that
management system.47 Four facilities that participate in StarTrack have become registered to
ISO 14001. Others are at different stages of EMS development. Many have established
partial or informal EMSs. While EPA does not require ISO 14001 as a condition of
participation in StarTrack, facilities that have not adopted that EMS standard present a
problem for auditors. How are auditors to assess a facility's environmental management
system in the absence of a formal statement of what its environmental management system is
supposed to be? EMS auditors must have some standard against which to assess
management practices, and ISO 14001 is the standard they generally use. The EMS audit
undertaken as part of StarTrack assesses the gap between a facility's existing EMS and ISO
14001. Results must be disclosed to EPA and state agencies, and deficiencies must be
corrected.
EPA included an EMS requirement in StarTrack because the agency recognizes that
formalized systems of environmental management can increase facilities’ self-monitoring
capacities. As long as a facility has developed a good system to monitor the right aspects of
its environmental management, then an EMS can be effective in compliance assurance and
overall environmental performance improvement.
The environmental performance report is a summary of the major audit-findings and
needed corrections, as well as facility background, facility environmental goals and
objectives, and aspects of its environmental performance. The format has recently been
harmonized with the Global Reporting Initiative guidelines in an attempt to solicit more
consistent data and clarify procedures for environmental managers.48 Managers must disclose
information about a facility's activities, management, and organization; its relationships with
42
community groups; its compliance status, including results from the StarTrack audit; as well
as its use of resources, its emissions, and its product performance.
Every third year a third party, hired and paid for by the participating facility, checks the above
three activities. That third party must meet the following criteria set by EPA guidance
documents:49

be independent from the facility; i.e., not own stock in the company, and have no
historical or anticipated contractual arrangements

have undergone training in each of the major federal environmental regulatory programs,
and have knowledge of state and local requirements

have previously conducted compliance and multimedia audits for a total of 20 equivalent
work days of auditing in at least four different situations

possess technical background necessary to assess pollution control equipment and
pollution prevention

have expertise in EMSs, with training that meets or exceeds requirements of independent
professional organizations, such as the American National Standards Institute (ANSI)
While third-party review certification is technically required on a triennial basis, the reviews
have been conducted during each facility's first year in the program because StarTrack is in
its pilot phase.
The intent of StarTrack is to use third-party certification as a review of audit sufficiency in
addition to commenting on the substantive results of audits. In other words, third parties
check deficiencies in both the format of facility audits and findings of those audits. As part
of the review, third parties must submit to the facility and the Region 1 office a Certification
Review Report and Statement, outlining the results of their evaluations. These requirements
are outlined more specifically in the guidance documents.
43
Figure 3: Summary of StarTrack Requirements
44
Benefits to Facility Managers
StarTrack agreements signed by facility managers and federal and state agencies stipulate that
EPA and states will not initiate any enforcement action for violations discovered at StarTrack
facilities if they are corrected within 60 days.50 According to members of the StarTrack team,
the promise of penalty mitigation provides facility managers with predictability—they can be
assured that operations will not be disrupted through legal upset, and that their reputations
with corporate offices and the public will not be sullied through an enforcement action.
Region 1's policy with respect to StarTrack facilities is consistent with EPA's Audit Policy.51
EPA recognizes StarTrack facilities as environmental leaders. It lists the names of StarTrack
firms on it website, and recognizes their achievements at annual meetings. Such recognition
could raise the value of the firm to shareholders, deter criticism from environmental and
community advocates, and strengthen employee morale.52
EPA also offers what it calls “partnerships” to firms participating in StarTrack. By that, the
agency means “constructive feedback to help improve auditing programs, environmental
management systems, and measures for improving overall environmental performance.”
StarTrack promotional materials list additional benefits to managers of firms. These
additional benefits—which are not listed in the formal agreements signed by the parties—
include modified inspection priority and “express lane service for permits and other
regulatory actions.”
Later we describe EPA's delivery of those benefits, which differs from what it has promised.
45
CHAPTER 4. CASE STUDIES OF REGION 1 STARTRACK FACILITIES
Currently 15 facilities participate in StarTrack. They represent a wide variety of industries
including building materials, bulk gas-supply, defense, electronics, paper, and plastic
manufacturers. A facility of the U.S. Postal Service and a facility of the U.S. Coast Guard
also participate. Six of the commercial facilities have participated in the program since its
initiation in 1996. In order to understand the impact of StarTrack over time, we contacted
these six facilities and asked to meet with managers to discuss their impressions of how the
program was working. Two facilities declined to participate. We conducted interviews at the
remaining four sites.
Facility I
Facility I is a large industrial facility owned by a multinational corporation. Approximately
1,200 employees work at the site. The extensive grounds include wastewater-treatment
ponds, a landfill, a materials-holding area, and highly mechanized industrial processes. The
facility is located in a small town, and is within one mile of residential areas.
The facility’s competitors are mostly other large multinational companies. Product imported
from Asia, after shipping costs, can be purchased at substantially lower cost than comparable
product manufactured in the United States. Product differentiation is a key factor in its
business, and StarTrack has helped distinguish the facility's operation as environmentally
superior. Although customers have not explicitly demanded superior environmental
performance, the facility’s managers believe that two major customers recently signed
contracts with the facility based in part on its environmental reputation.
Facility I experienced compliance problems in the 1980s. It was subject to a multimillion
dollar criminal violation, as well as smaller actions by state and local officials. In the 1990s
facility managers reconsidered their stance on environmental management. They invested
millions of dollars to improve environmental controls, and hired as the plant environmental
manager a former director of a state environmental department. That decision signaled a shift
in corporate culture. Now environmental management would mean “complying with the
spirit and intent of the law.”
That new attitude was in part driven by increased regulation from local municipal officials.
Town ordinances were specific to the facility, and directly addressed “good neighbor” issues.
As a result, the facility worked more collaboratively with local officials to demonstrate
respect for community concerns.
Changes in Management Practices
The facility chose an unusual strategy to fulfill its StarTrack obligation for its annual internal
compliance audit. In its second year participating in the program, it requested that the state
46
environmental agencynot corporate auditorsconduct a compliance audit. The facility was
not due for a corporate audit for another year, having recently completed a corporate review
prior to its StarTrack participation. The state agency complied with the facility's request and
hired an environmental consultant to develop a compliance auditing protocol. The facility’s
environmental manager preferred the state agency audit over corporate review, noting that
corporate auditors are very difficult to please and look at many aspects of performance, not
just compliance and EMS programs. That environmental manager has strong personal
relationships with regulators, having previously worked for a government agency. Corporate
managers agreed that if state inspectors are satisfied with compliance performance, they are
satisfied as well.
Facility I has not implemented a facility-wide EMS. The consultant that helped develop the
state's compliance auditing protocol also audited the facility's EMS, comparing it to ISO
14001. The consultant found that a considerable effort—the equivalent of one person
working full time for a year—would be required to bring the EMS up to the ISO 14001 level.
That same consultant, serving in the role of third party, recently certified that the plant was
addressing some of the deficiencies she had identified, and was taking steps to improve its
EMS.
47
Table 5: Summary of Changes at Facility I Attributed to StarTrack
Participation
Management Practice
Compliance audits
Prior to StarTrack
Monthly self-audits,
periodic internal audits
EMS audits
No facility-wide EMS,
no EMS auditing
Third-party verification
of compliance audit
competency
None
Third-party verification
of EMS audit
competency
None
Environmental
performance report
Informal disclosures to
community advisory
board
During StarTrack
Monthly facility selfaudits.
Audit by state agency in
which federal inspectors
participated as observers
Consultant compares
facility’s informal EMS
to ISO 14001
requirements (gap
analysis)
As part of state agency
compliance-audit, third
party confirmed audit
competency
EMS consultant, serving
as third party, verifies
that gaps identified in
the EMS are being
addressed
More information is
disclosed, in
standardized format
Table 5 lists concrete changes as a result of StarTrack. The facility environmental manager
worked closely with EPA, the state agency, and consultants to implement these changes.
While other employees we talked with were vaguely aware that the facility participated in
StarTrack, they could not identify its specific purpose or effect.
The facility environmental manager attributes significant intangible benefits to StarTrack.
StarTrack helped to strengthen already cooperative relationships between facility
management and regulators. The audit by state officials created a problem-solving
atmosphere. The facility was looking for ways to improve, and highly valued input from
regulators, while regulators valued the opportunity to learn more about the facility.
During the course of the interviews we were able to witness the cooperative relationship at
work. The state agency contact for StarTrack was present during our site visit. At one point
during a discussion about pollution-prevention projects the environmental manager
mentioned a new idea he had to reduce waste. By combining several waste streams, he hoped
to create an inert material that could be used on-site for landscaping. The state agency person
immediately responded by giving his candid opinion of the regulatory concerns such a project
might raise. That open sharing of ideas quickly resolved several issues. Without such
interaction the environmental manager might have been reluctant to share his plans at such a
48
preliminary stage. At best, the dialogue would have occurred over a longer time scale, and
would have consumed more agency and facility resources.
Facility I managers repeatedly mentioned continual compliance-improvement as an
important goal, even though they were not concerned about breaking the law. They
consistently run their operations at 10 percent to 20 percent of permitted levels, but still strive
to reduce the number of temporary exceedances. Government recognition through programs
such as StarTrack helps legitimize a facility’s extra work, providing an additional incentive to
continue beyond-compliance activity.
FACILITY II
Facility II was founded as a private company in the early 1950s and currently employs over
4,000 employees. It is a low-volume/high-margin production facility that uses a variety of
toxic materials as inputs. It operates several oil and gas-fired boilers on site. Hazardous
waste is shipped off site for treatment and disposal.
In 1997, a much larger corporation acquired Facility II and placed new requirements on
environmental management departments. The facility’s environmental manager departed,
and the department was left without a leader for several months. Environmental affairs lost
stature. Since the hiring of a new director the role of the environmental department has
begun to assume its former influence. The new director has shifted the focus of activity away
from beyond-compliance programs to a more intense focus on compliance with regulatory
and corporate requirements.
The facility is located near other commercial businesses as well as residential areas. There is
historical groundwater-contamination on-site. Remediation efforts are ongoing, and the
groundwater does not pose a major environmental risk according to facility managers.
Facility II is the largest employer in the area. The environmental manager said that local
residents and elected officials perceive the facility as a good environmental neighbor. There
are no noticeable emissions, either odiferous or visible.
Changes in Management Practices
Participating in StarTrack was an initiative of a former environmental manager. Originally,
StarTrack participation was intended to aid Facility II in ISO 14001 certification. Corporate
environmental management required that all facilities in the facility’s division become
registered to the standard. Facility II’s environmental manager saw StarTrack as a way of
easing implementation through advice of regulators and third party consultants. C
summarizes changes in management practices brought about by StarTrack.
Table 6: Summary of Changes at Facility II Attributed to StarTrack
Participation
Management Practice
Prior to StarTrack
During StarTrack
49
Compliance audits
Corporate-led audit team
EMS audits
Only to determine what
would be required for
ISO 14001 registration
Third-party verification
of compliance audit
competency
None
Third-party verification
of EMS audit
competency
Environmental
performance report
None
Information disclosed to
corporate management
Corporate-led audit
team, joined by federal
and state observers
Corporate-led audit team
as required by ISO
14001, joined by federal
and state observers
EPA-approved third
party certifies
compliance audit
competency. Federal
and state inspectors
participate as observers
Third-party EMS audit
as required for ISO
14001 registration
Similar information is
now disclosed publicly,
formatted to StarTrack
requirements
The facility’s managers support EPA's goal of reinvention and view participating in
StarTrack as a way to further that goal. The environmental manager “hopes that by
participating in the StarTrack program, other businesses will become involved in more
partnership initiatives, thereby encouraging less command-and-control approaches to
regulatory issues.”
As at Facility I, StarTrack helped to establish a cooperative relationship among facility
environmental managers and regulators. The audit process, in which agency personnel
participated as observers, offered opportunities for managers to learn more about the key
concerns of regulators, and how compliance issues were being handled at similar plants.
A focus on compliance, both with regulatory requirements and corporate environmental
goals, was well established at Facility II prior to StarTrack. Employees we spoke with were
greatly concerned about how they were perceived by corporate managers, and took corporate
directives very seriously. Facility managers felt that corporate auditors were generally more
stringent than agency inspectors. They cited as an example the fact that Facility II received a
“C” rating from corporate auditors on environmental management, while at the same time
receiving numerous awards from environmental groups.
Compliance assurance repeatedly came up as “job #1” of the environmental management
department. The environmental manager likened compliance to a house’s foundation—the
foundation comes first, and the house will fall if it is not reliable.
ISO 14001 Impacts
50
The facility’s environmental manager explained that initially his group included targets that
were outside the scope of regulatory requirements in its ISO 14001-structured EMS. The
EMS included the goal of reducing emissions from the facility's boilers, for example.
However, managers soon discovered that continuous reductions in boiler emissions would be
costlyand could potentially place them at a competitive disadvantage. The "Plan-DoCheck-Act" cycle established by ISO 14001 required managers to probe periodically and
document why continuous reductions were not being achieved. The resulting paperwork—
which the facility environmental manager called "administrivia"—was overwhelming.
Managers decided to change the EMS objectives to focus more narrowly on compliance.
At Facility II, ISO 14001 served as a system for organizing and formalizing activities, not
necessarily a source of new procedures and routines. While all employees suggested
increased awareness as a result of ISO 14001, three out of four said there was no direct
change in their job routines.
Pollution prevention
Facility II boasts impressive bar charts from the late 1980s through the mid-1990s that show
significant declines in emissions and hazardous waste generation. But pollution prevention is
much more difficult now, and the facility’s pollution-prevention performance has plateaued.
Because of the high cost of many of the products the facility produces, managers are
conservative about the degree to which they will undertake changes in production process
that might reduce environmental impacts. They consider current levels of chemical use and
waste generation extremely low. They would rather waste small quantities of chemicals than
experiment with new processes that might yield lower quality.
An additional barrier to pollution prevention relates to facility behavior. At one point, the
facility was considering lab consolidation, which would reduce holding costs and waste of
chemicals. At any one time, however, the facility has more than 200 contracts, and each
contract employs a specific group of people who tend to interact only sporadically. Group
leaders have opposed lab consolidation because they have seen it as interfering with the
established organizational structure.
One major innovation in chemical management would be to contract the handling of
chemical procurement and disposal. Currently, the facility must buy chemicals in bulk sizes
but rarely uses all of the chemicals before their expiration dates. By outsourcing, managers
could order chemicals in batch sizes and minimize disposal costs. The option is currently
being explored.
Facility III
Facility III is one of several sites of a large multinational corporation. The facility's major
environmental impacts include emissions of VOCs such as acetone and methanol, as well as
51
TCE (trichloroethylene) and anhydrous ammonia. There is a wastewater-treatment facility in
the building, managed by the environmental specialist.
Facility III is located in a small industrial park close to residential areas and downtown.
Although the facility has made the local newspaper’s “Top Ten Polluters” list (based on TRI
reporting), the employees interviewed all felt that community perception was generally
positive. The facility’s general manager seemed very committed to being a good neighbor and
saw facility policies as a reflection of that principle.
Approximately 250 employees work at the facility, considerably less than in the late 1980s.
Production at the facility has been consolidated from four floors to one. Business seems
somewhat stable now. As management described, competitors are large corporations that
also supply and purchase from the facility. The facility has found a strong niche market for
its specialized products.
Five years ago, the facility was assessed a $25,000 penalty for on-going environmental
violations. The facility then implemented a European management system standard and soon
thereafter registered to ISO 14001. Facility III was one of the first U.S. facilities to become
ISO 14001-registered. A corporate manager compared the approach embodied in ISO 14001
to a zero-defects quality-management program. ISO 14001 is a zero “notice of violations”
program; i.e., it enhances compliance assurance, he said.
Neither corporate nor facility environmental management cited ISO 14001 as a requirement
by customers, which explains why most other facilities in this company are not certified by a
third-party registrar. Instead, managers use it as a product-differentiating characteristic,
saying, “our product was made with zero compliance issues.”
Facility III became involved with StarTrack through the Environmental Leadership Program,
and the facility was ISO 14001-registered by the time an agreement was signed with the EPA.
As indicated in Table 7, most StarTrack requirements were already in place prior to
participation.
52
Table 7: Summary of Changes at Facility III Attributed to StarTrack
Participation
Management Practice
Compliance audits
Prior to StarTrack
Annual corporate
compliance-audits
EMS audits
Internal EMS audits as
required by European
EMS and ISO 14001
Third-party verification
of compliance-audit
competency
None
Third-party verification
of EMS audit
competency
Third-party registrar
certifies that facility
EMS is appropriate
given facility's impacts
and is consistent with
ISO 14001
European EMS requires
public disclosure of
major environmental
impacts
Environmental
performance report
During StarTrack
Annual corporate
compliance-audits.
Federal and state
inspectors participate as
observers
Corporate EMS audits
as required by European
EMS and ISO 14001.
Federal and state
inspectors participate as
observers
EPA-approved third
party certifies
compliance-audit
competency. Federal
and state inspectors
participate as observers
EMS certification as per
ISO 14001 registration
requirements. Federal
and state inspectors
participate as observers
Similar information is
disclosed, formatted to
StarTrack requirements
ISO 14001 Impacts
When asked for the three most-significant events that shaped environmental management in
their facility, all four Facility III interviewees listed ISO 14001. From the perspective of the
environmental manager, ISO 14001 is the tool to identify environmental aspects, set
environmental performance goals, signal to customers that the facility is an environmental
leader, and design products with fewer environmental impacts.
A major benefit cited by several interviewees was the changes in auditing brought about by
ISO 14001. Internal auditors are employees, often from outside the environmental
management department, who periodically check to see that management practices conform
with the standard. Anyone, from the custodian to senior engineer, may serve as an internal
auditor. Facility III had eight active internal auditors and another two to four people capable
of assuming the role. Internal auditors receive three days of training, and must have
participated in three audits before becoming fully qualified.
53
Aside from involving more workers in environmental management, the internal audit process
serves as an important information resource to workers who may feel separated from the
management culture. For example, a painter may feel uncomfortable asking an environmental
manager how to deal with a paint spill, but may not hesitate to ask a co-worker/internal
auditor.
ISO 14001 appears to be the primary driving force for environmental management change in
Facility III. Not only has that EMS changed routines for many employees, but also the
fundamental attitudes and identity of the facility appear to have shifted to seek out
environmental opportunities. The next section lists some of the projects that have been
implemented as a result.
Pollution prevention
Three projects were identified during the interviews. Table 8 summarizes these projects and
their resulting changes.
Table 8: Pollution-Prevention Projects Undertaken by Facility III
Project Description
Drivers for
Implementation
Part of facility-wide
consolidation
Costs
Benefits
Initially, production
capability decreased
Chemical dispenser change:
chemicals are now stored in
squeeze bottles which
reduce evaporation
Goal to reduce VOCs
Very little
Energy-reduction projects :
changed lighting fixtures,
added sensors, changed
ventilation
Electrician in the
facilities management
department
Up-front capital
costs, defrayed by
utility demand-side
management
incentives
Lower production and
pollution control costs,
environmental
management more
uniform across labs
Better production
capability (it's easier to
use squirt bottle),
lower production and
pollution-control costs
Lower production and
pollution-control costs
(cut utility bill by
50%); important
morale booster for
employees
Chemical lab consolidation
– combining several labs
across facility into one
central location
All three projects had direct benefits that exceeded costs of implementation. The chemical
lab consolidation occurred during a general period of consolidation for Facility III.
Thathelped cut down on costs to modify workspace areas since other parts of the facility were
54
also being changed. In addition, capital financing was easier to obtain because chemical lab
consolidation was budgeted as part of general consolidation.
Squeeze bottles are no more costly than the beakers previously used to dispense chemicals.
Squeeze bottles reduce VOC emissions as well as the volume of chemicals procured for
production. The process change integrated well into existing production protocols—no one
had to substantially change his or her routine to continue producing the same good. The
energy-conservation project was implemented due to its easily quantified cost-savings.
Two pollution-prevention projects advocated by environmental managers were not get
implemented. An effort to recycle alcohol used in production was abandoned because of its
impact on product quality. A program to discontinue nickel plating of some products was
also halted due to customer demand. (The plating served only a cosmetic function.)
Facility IV
Facility IV is very visible, located on the main street of a small town, and a large employer in
the area. Its major environmental impacts include 15,000 gallons of wastewater a day, solid
waste from packaging, product disposal, VOC emissions, and emissions from a large boiler.
Approximately 200 employees work in the 375,000 square-foot facility, operating three shifts
five days a week. The facility is heavily automated. In addition to compounding and mixing
solutions, the facility also manufacturers plastic containers for its products. It is a highvolume operation with low profit margins per-unit of output. .
The industry structure for Facility IV is highly competitive. Product differentiation is a
crucial aspect for success, both through new products and advertising. In addition,
production costs play a major role in profit margins. The need to minimize production costs
is directly related to environmental management. The quality of wastewater discharge is
related to how much waste product must be processed. The product waste-stream has high
biochemical oxygen demand (BOD) loading, which needs to be reduced before discharging
into the environment. By reducing product waste, the facility saves money and improves the
wastewater quality.
The facility is owned by a European-based parent corporation, which also drives
environmental management. Several years ago, corporate management encouraged all
facilities to adopt environmental management systems. Corporate offices also conduct audits
which employees claim are very thorough and rigorous.
Facility IV has a good compliance record with no major issues in many years. Of the issues
documented, many seem to be a result of a somewhat strained relationship with state
regulators. For example, Facility IV was cited for pH level exceedances, but managers claim
the state’s testing method was flawed.
55
Facility IV became involved with StarTrack through the Environmental Leadership Program.
It already had a well-developed audit system, consisting of both corporate and internal audits.
The facility was also cited for its extensive vendor-certification program, which requires
suppliers to meet high standards.
Table 9 compares pre and post-StarTrack activities. The next section describes the drivers
and effects of those changes.
Table 9: Summary of Changes at Facility IV Attributed to StarTrack
Participation
Management Practice
Compliance audits
Prior to StarTrack
Corporate-led
compliance audits
EMS audits
No facility-wide EMS,
no EMS auditing
Third-party verification
of compliance-audit
competency
None
Third-arty verification
of EMS audit
competency
None
Environmental
performance report
None
During StarTrack
Corporate-led
compliance audits,
joined by federal and
state observers
Corporate EMS audits
as required by ISO
14001. Federal and state
inspectors participate as
observers
EPA-approved third
party certifies
compliance-audit
competency. Federal
and state inspectors
participate as observers
Third-party EMS audit
as required for ISO
14001 registration.
Federal and state
participate as observers
Information disclosed in
accordance with
StarTrack requirements
Changes in Management Practices
Becoming ISO 14001-registered was helped along by StarTrack. Facility IV was already
feeling pressure from its parent corporation to adopt a structured EMS. Corporate
management boasts in its 1998 environmental performance report: “our systems are
compatible with the internationally recognized standard ISO 14001 and 13 of our plants won
certification by the end of 1997.” The facility was required to be ISO 14001-compatible, and
third-party certification was required for StarTrack. The cost of becoming certified to the ISO
14001 was only a small additional cost.
56
While other facilities in the StarTrack program noted a more open relationship with
regulators, Facility IV voiced a more ambivalent response. The corporate environmental
manager described EPA’s Regional Office as “understanding, reasonable, and cooperative.”
On the other hand, the facility environmental manager seemed frustrated by a lack of benefits
from participation. When he needed to change the facility's wastewater permit, he did not
receive any faster consideration. His perception was that facilities that participate in
StarTrack are exempt from agency inspections. Yet the state agency has continued to inspect
his plant. Although designed to build trust, in this case StarTrack may be exacerbating
tensions due to its failure to deliver promised benefits.
ISO 14001 Impacts
As mentioned earlier, Facility IV was on its way toward adopting a robust EMS before
StarTrack. 53 Participation in the program lowered costs to adopting ISO 14001 because
StarTrack required significant investments in a facility EMS. Facility IV has a long history of
waste-minimization projects. It views waste minimization as critical to keeping production
costs down. An added benefit, from the perspective of managers, is that those projects also
improve the environment.
57
CHAPTER 5. OTHER RESPONSES TO STARTRACK
In addition to evaluating how StarTrack worked at the facility level, we also studied how the
EPA staff responsible for StarTrack interacted with companies and other government offices
involved with the project. We interviewed the five members of the StarTrack Team, and on
several occasions shared with them our observations about the program. The team is part of
the Region 1 Office of Assistance and Pollution Prevention, which is in charge of
administering many programs, including Project XL and the Center for Environmental
Industry and Technology. We also spoke with representatives from the Office of Enforcement
and Compliance Assurance (OECA) in Washington, D.C., and from each of the state
agencies that participates in StarTrack.
Concerns from OECA and States
StarTrack staff have worked hard to bring EPA and state enforcement employees on board
with the general goals and methodologies of the program. They have organized EMS training
sessions as well as quarterly meetings to brief enforcement staff on how StarTrack works.
They have also encouraged people from enforcement offices to observe StarTrack
compliance and EMS audits. “The best way to build support is to expose enforcement people
to the audit process first hand,” explained one StarTrack team member.
A chief concern for OECA at the outset was that participating companies might reduce
attention to compliance once admitted into the program. That has not happened, according to
the OECA and state enforcement personnel with whom we spoke. There is no evidence to
suggest that environmental performance at StarTrack companies is declining, or that
companies are taking advantage of the penalty-mitigation provisions offered by the program.
“In most cases, companies follow through on their commitments in a serious way,” explained
one manager at OECA familiar with StarTrack.
Yet OECA has not accepted the idea that companies admitted into StarTrack do not need to
be inspected by EPA. John Fogarty, acting director of the Office of Planning and Policy
Analysis at OECA, believes that Region 1 has yet to prove that the program provides
compliance assurance. “The fact that these companies are less likely to violate environmental
laws has not yet been established,” he said. More experience is needed to test the reliability
of the audits and the third-party system. Others at OECA also urged giving the program more
time. “The only way to build legitimacy in the program is to observe the audits,” explained
an OECA staff person. “If no substantial problems are discovered over the course of 50 or so
audits, headquarters will have to see the program as legitimate.”
Representatives of both OECA and state environmental agencies expressed concern about the
costs of StarTrack. Often, between five and 10 people from agencies observe compliance and
EMS audits. Inspectors from air, water, and waste departments take part. Preparing for
58
audits, participating in them, and assessing their results require substantial amounts of time.
Bob Minicucci of New Hampshire’s Department of Environmental Services explained that
participating in StarTrack requires one full-time-equivalent for his agency. Four New
Hampshire companies belong to StarTrack.
Perspectives of StarTrack Staff
We asked StarTrack staff to identify what they considered the most effective aspects of the
program. They told us that the program has been most successful in improving relationships
been EPA and participating companies. StarTrack provides opportunities for agencies and
facility managers relate to each other in a problem-solving setting. Under the old system,
there was basically no communication until agencies had a legal obligation to inspect and
fine.
Through observation of compliance and EMS audits and interaction at the annual StarTrack
meetings, EPA staff better understand the technical and financial constraints of facility
environmental managers; likewise, facility staff have opportunities to use regulators as
problem-solvers. Mutual respect has replaced the fear and suspicion which used to
characterize those relationships.
Through StarTrack, agency staff serve as “liaisons” or consultants to facilities.
Environmental managers can get quick feedback on new regulations, information about legal
hurdles to pollution prevention projects, technical advice, and news about trends in
environmental policy. The relationship is helping to create trust, which is allowing agencies
to communicate their concerns to environmental managers more effectively.
We also asked the StarTrack team to describe what they considered the major weaknesses in
the program. They told us that the difficulty in defining and delivering benefits was their
chief concern. Because EPA has not been able to develop meaningful incentives, it has
limited leverage with firms. StarTrack companies do not always file performance reports on
time. The agency has not always been satisfied with the consultants facilities have picked to
serve as third-party verifiers. Yet StarTrack staff members feel they are in no position to
complain about those issues.
Below we consider how the benefits promised by the program—partnerships with agencies,
penalty mitigation, inspection relief, rapid processing of permits, and recognition—work in
practice.
Partnerships with Agencies
StarTrack staff members offered an example of regulatory flexibility provided by the
program. One participating company, Texas Instruments, requested that EPA delay
59
processing its operating permit until it could work out changes in one aspect of its
manufacturing process. EPA agreed to that request.
Penalty Mitigation
StarTrack program materials list as one of the benefits of the program “limited penalty
mitigation.” Facility managers must disclose to agencies all violations of local, state, and
federal environmental laws; EPA and state agencies agree not to initiate any enforcement
action if the disclosed violations are not egregious, and are corrected within 60 days. No
StarTrack facility has been subject to enforcement action. However, under EPA's audit
policy, equivalent penalty-mitigation is available to managers at any facility who voluntarily
disclose and correct violations.
One facility was not readmitted into StarTrack due to a major compliance issue. The facility
is now under an administrative order issued by its state environmental agency. Neither EPA
nor the state took action against the facility based on information gathered through the
StarTrack process, however.
Inspection Relief
The EPA Region 1 website lists “modified inspection priority” as a benefit of StarTrack.
Facility managers interpret that to mean “inspection relief.” The agreements signed by EPA,
the state agency, and facility managers stipulate that agencies "will not, during the [StarTrack
project], conduct any routine regulatory inspections.”54 Mandated inspections, according to
the agreements, "will be used to aid in the development and implementation of the [StarTrack
program] rather than for enforcement purposes.”55 However, StarTrack staff members told
us that agencies may inspect StarTrack facilities if they so choose. Region 1 has
recommended "spot checks of participants' performance and adherence to program
requirements.56 Two of the facilities we studied reported that they had not been inspected
since joining the program, the other two had been subject to inspections.
Rapid Response to Permit Applications
The Region 1 website lists “express-lane permitting” as a benefit of StarTrack. Facility
managers we spoke with mentioned that the benefit, if delivered, would be significant to
them. Their facilities often change product lines and production levels, which can alter the
amount or kind of pollution emitted from their processes. If managers know such plans far
enough in advance, the permit application process can sometimes happen quickly, with a
smooth transition. But environmental managers with whom we spoke noted that permitting
new operations often does not proceed smoothly. Sometimes provisional permits can be
negotiated, but often new processes must be put on hold until permits can be arranged. Thus
the permitting procedure often leaves environmental managers frustrated.
60
One example, in a non-StarTrack facility, brought out the idiosyncrasies of permitting. The
facility planned to consolidate two operations which happened to be in different states. While
combined emissions in the consolidated facility were below the permitted level for the
original facility, the environmental manager was concerned that a sudden increase in
production could result in an exceedance. The time necessary to obtain the new permit for
the consolidated operation meant that the facility would continually be at risk, despite the fact
that the combined operations were expected to be cleaner than the two previous sites due to
returns-to-scale on combined pollution-control and pollution-prevention technologies. The
example shows how, in a worst-case scenario, slow turnaround-times for permitting could
result in a facility being fined for having cleaner operations. We conducted interviews at this
facility because it fit the profile of a potential StarTrack plant. It had a strong record of
regulatory compliance and emphasized safety and environmental performance in some
marketing materials. We wanted to understand the factors that might motivate such facilities
to join the StarTrack. Fast-track permitting could clearly provide significant benefits,
possibly enough to offset administrative costs.
Unfortunately, none of the managers we spoke with at StarTrack facilities felt that their
permits were processed any faster than before joining the program. Permit applications went
through regular administrative channels, resulting in usual processing times. The same
people, in the same offices, process their permit applications.57
Public Recognition
Currently, StarTrack facilities receive plaques and notice at a year-end conference, and the
Region 1 website mentions participating companies by name. StarTrack staff mentioned
internal disagreements about StarTrack granting wider official recognition. Some people
within EPA feel that StarTrack facilities are not necessarily excellent, especially since a few
have had compliance actions taken against them within the last 10 years. They feel that three
years of good behavior does not constitute excellence.
According to one StarTrack staff member, a philosophical schism exists between those in the
agency who advocate rewarding improving companies, and those who believe in rewarding
firms only after a long history of excellence. Some staff members are concerned that official
recognition by EPA might be used against the agency later. For example, if a facility
backslid and was found culpable for illegal activity, EPA might then be seen recognizing a
company that did not have a true environmental commitment.
StarTrack facilities see the need to legitimize their environmental management, which can be
done more effectively by EPA endorsement than glossy corporate reports.
The
environmental advocates we interviewed for this study supported further public recognition
for StarTrack facilities. A coordinated endorsement by environmental groups and EPA could
also help insulate the agency from public scrutiny in the case that a facility does backslide.
61
Perspectives of Environmental Groups
A premise of StarTrack is that public disclosure of environmental performance will help to
ensure that participating facilities continue their commitment to regulatory compliance.
StarTrack staff members have invited community and environmental groups to participate as
members of audit teams, review environmental performance reports, and attend the annual
StarTrack conference.
We interviewed representatives of the two environmental organizations that had observed
StarTrack audits prior to October 1999.58 Both representatives had participated in facility
self-audits and third-party verifications. They both found facility managers “very responsive"
to their involvement. They environmental group representatives perceived their role to be
legitimization of the StarTrack program and the facility's standing as an environmental
leader. They did not feel qualified to address the adequacy of compliance or EMS audits
because these areas are outside their expertise. Environmental organizations expressed
support for the program. Explained one environmental advocate, "StarTrack provides a space
for non-confrontational relationships to develop, which eventually can lead to incorporation
of environmental concerns into business decision-making."
We also spoke with a representative of local government that had observed audits of the
StarTrack facility in his town. He described the audits by saying, “they were tough on
themselves.” Observing the audits marked a turning point in his view of the facility. He
decided that the town could gain more by not enforcing in certain instances. A more
cooperative relationship could yield greater environmental improvement than "nit-picky
enforcement."
62
CHAPTER 6. STUDY FINDINGS
Why Managers Have Chosen ISO 14001
Our statistical analysis shows that, at this point, ISO 14001 facilities tend to be owned by
large companies with highly developed management systems. They have the capabilities—
the resources and existing knowledge—to make adoption relatively inexpensive. ISO 14001
represents a next step in an already established trajectory toward structured and formalized
management.
What motivates managers to adopt ISO 14001? Our case studies suggest that early adopters
may be driven by a desire to distinguish their environmental programs. Managers told us
that, for a variety of reasons, strong environmental management is in their interest. ISO
14001 helps them to formalize and extend their commitment to regulatory compliance and
continual improvement, and to demonstrate their commitment to internal and external
constituencies.
Evidence suggests, therefore, that the improvements in environmental management we
observed in our case studies may be attributable to characteristics already established in these
organizations: their resources, capabilities, and commitments.
An important question for policy makers is what will happen as firms that lack these
characteristics adopt ISO 14001. During the study period, in September 1999, Ford Motor
Co. and General Motors Corp. announced that they will require their suppliers to adopt ISO
14001. We anticipate that firms that adopt ISO 14001 because it is required will experience
different outcomes than those that adopt at their own initiative. Later adopters will not
necessarily possess the resources, capabilities, and commitments to achieve the results we
observed in the early adopters.
The Relationship Between an EMS and Environmental Performance
We stated at the outset that environmental management systems are formal structures of rules
and resources that managers adopt in order to routinize behavior that helps satisfy corporate
environmental goals. Goals drive the system. A firm may choose goals that are trivial or
ambitious; the choice is up to facility managers.
ISO 14001 is a particular kind of EMS that offers several features of interest to regulators.
ISO 14001 says very little about the actual content of EMS goals. It does require, however,
that an organization include a commitment to regulatory compliance in its environmental
policy, that managers are aware of their regulatory obligations, and that a system is
established to identify and correct regulatory lapses. It requires continuous improvement in
environmental-management performance. Furthermore, the strong emphasis of ISO 14001 is
63
consistency between the standard and the EMS that managers put into practice. ISO 14001
ensures consistency by requiring that both managers and third parties periodically audit the
system and correct deficiencies.
ISO 14001 adoption does not constitute environmental excellence, that is, performance above
the norm. Through a statistical analysis of the characteristics of facilities that have registered
to ISO 14001, we found that relatively poor environmental performance increases the
likelihood of registration. We can draw two interpretations from that finding. Facilities could
be adopting the standard in order to disguise their poor performance. The reputational
benefits associated with third party registration might provide a smoke screen allowing poor
performance to continue undetected.
The other interpretation is that facilities adopt ISO 14001 in order to improve their
performance. Managers are aware that they could be doing better, and choose ISO 14001 as a
tool toward doing so. That explanation was supported by our case studies of chemicalfacility managers who cited improvements in compliance and environmental performance as
the primary motivation for adoption.
Managers at all the facilities we studied shared a commitment to regulatory compliance and
were using their EMSs to achieve that goal. ISO 14001 helped to institutionalize
compliance-driven activities. It helped ensure that, in the face of other corporate objectives,
compliance would not slip, all operations would be included, and everyone would be
involved in the process through what one person called "indoctrination."
We found, in the facilities we studied, substantial variation in managers' commitments to
pollution prevention. While each facility could cite examples of projects that prevented
waste, several had chosen not to include pollution prevention goals in their ISO 14001
structured EMSs. At one end of the spectrum was Facility A, pursuing waste reduction and
energy conservation for their own sake, even if they cost the facility money. At the other end
was the StarTrack Facility II, whose managers' negative experience in attempting to achieve
beyond-compliance goals had led them to narrow their focus to compliance alone.
The Value of Third-Party Certification to Managers
We found that third-party certification achieves two purposes for managers of the five
chemical facilities that had adopted ISO 14001. It first demonstrates environmental "due
diligence" to both employees and external stakeholders. It also offers managers an objective
assessment of the strengths and weaknesses of an EMS. In other words, third-party
certification offers both reputational benefits and opportunities for learning.
Managers of the four StarTrack facilities we studied appeared to have somewhat different
perceptions about the value of third-party certification. Those managers said that third-party
review of compliance systems occasionally uncovered minor issues but generally confirmed
that internal audits were conducted properly. They learned little through third-party review.
64
On the other hand, StarTrack managers highly valued the participation of agencies as audit
observers. They were anxious to hear what agency personnel had to say about the strengths
and weaknesses of their compliance programs. The managers at Facility I were particularly
pleased when the state environmental agency agreed to conduct compliance audits itself
instead of relying on corporate representatives. They believed that if state inspectors looked
carefully they would find a sound operation dedicated to compliance and beyond. All of the
facility managers we talked with sought agency recognition. What better way to achieve it
than through direct agency observation, without the threat of penalties? Reputational benefits
were important to managers of both the ISO 14001 facilities we studied from the chemicals
sectors and the StarTrack facilities. StarTrack managers believed their reputations would be
enhanced more effectively through agency, rather than third-party, review.
StarTrack facilities are also subject to third-party review of their EMSs. Three of the four
facilities we studied had decided to become registered to ISO 14001 prior to joining
StarTrack. Since ISO 14001 registration requires third-party certification, the StarTrack
requirement resulted in no additional burden for these facilities. But most StarTrack facilities
are not registered to ISO 14001; for them, the cost of both an EMS audit and third-party
certification of the EMS audit is substantial. To address that concern, StarTrack guidelines
allow the EMS consultant that performs the EMS audit to also perform the third-party
certification. The question arises, then, as to what constitutes a third party
.
How ISO 14001 and StarTrack Contribute to Public Understanding of Facility
Operations
Our case studies show that ISO 14001 is helping firms improve environmental performance
and achieve cost savings. It contributes little, however, to public understanding of facility
operations. It did not foster public involvement in managers' decisions about their products
or operations.
StarTrack overcomes a key limitation of ISO 14001 by requiring public reporting. While
environmental and community groups are generally supportive of StarTrack, participation is a
relatively low priority. Given resource constraints, those groups focus their time on major
polluters, not above-average facilities. While the groups endorse the goal of public
disclosure of information, the documents produced by StarTrack are not particularly
interesting to them. As a result, performance reports are rarely requested or used by external
stakeholders.
Is StarTrack Achieving its Goals?
We explained earlier that StarTrack has numerous goals. The first goal is to change agency
behavior by generating information that would allow inspection resources to be administered
more efficiently. Clearly, at this stage, the goal is not being achieved. All parties consider
the program expensive. StarTrack focuses the agency's scarce resources on above-average
65
facilities, which is a negative result for a program geared toward improving efficiency. But
the program should not be judged on the basis of its current performance. The appropriate
question is whether StarTrack is designed so that it could achieve that goal over time.
To be admitted into the program a facility must have an acceptable compliance history and a
commitment to pollution prevention and continual improvement in environmental
performance. Managers audit their performance, and third parties verify that audits have
conformed to established protocols, and have uncovered all compliance problems. Is such a
program likely to yield reliable results— results that could at some future point take the place
of routine agency inspections?
We believe that the answer to that question is yes, but only if StarTrack limits participation to
firms with established commitments to compliance-performance. Firms with a history of
compliance problems should not be candidates for StarTrack. Firms that participate in
StarTrack are expected to disclose, and correct within 60 days, every instance of noncompliance. A history of compliance problems indicates that a firm lacks the capability to
identify and correct such problems. Furthermore, increasing the potential candidates for
StarTrack to include firms with compliance problems will undermine the legitimacy the
program has worked so hard to build.
Is StarTrack improving the performance of firms that participate in the program? The
answer, based on our case studies of participating facilities, appears to be no. While
environmental performance at StarTrack firms is improving, improvements should not be
attributed to the program. To be admitted, a facility must have a history of pollution
prevention and an EMS that includes environmental performance improvement as a goal.
Firms that meet those criteria are managed by people who have already invested in
environmental performance improvement, and are committed to continuing to do so.
Neither is StarTrack likely to improve the performance of facilities that might aspire to
participate in StarTrack. The reason is important. Our cases show that the factors that push
managers to develop beyond-compliance programs have little to do with agencies. Our
research suggests that managers adopt ambitious environmental programs because they are
both capable and motivated. In our statistical analysis we saw that facilities that have already
instituted advanced management systems such as ISO 9000, and that are owned by large
organizations, are the ones that adopt ISO 14001. Those facilities have the capability—in
terms of knowledge and resources—to embrace the EMS standard. In the case-study
facilities, managers were motivated to invest in environmental performance improvement by
the need to improve efficiency and reduce costs, and, in some cases, to gain stature with
corporate management. Managers told us that they also wanted to improve their reputations
with agencies. But that desire, on its own, was not a sufficient incentive.
Our cases suggest, therefore, that even if EPA could deliver the benefits it has promised in
StarTrack, those benefits alone would not be adequate to shift the curve of environmental
performance in the direction of excellence. Larger forces shape the environmental practices
66
of firms. Fortunately, those forces have in recent years driven many companies in the
direction of compliance and beyond compliance. Agencies have stood at the sidelines.
Is StarTrack generating information that could help to inform agency reinvention efforts?
We believe the answer to that question is yes. Through StarTrack, the agency is gathering
information that is essential to establishing the legitimacy of the program within EPA’s
enforcement offices. OECA cannot accept on faith that audits with third-party verification
are a reliable supplement to agency inspections. It must have evidence that StarTrack
facilities maintain strong compliance records over time. Yet facility managers are justifiably
confused when they sign up for a program that offers "modified inspection priority," only to
find that they are scrutinized more closely than in the past.
67
CHAPTER 7. RECOMMENDATIONS
Based on our evaluation and case studies, we make the following recommendations.
1. Strengthen the specificity and enforceability of StarTrack agreements.
Agency reinvention programs such as StarTrack are based in negotiated agreements between
facility managers and agencies. They have the potential to break down over each party's
difficulty in determining if the other has kept its promise. Knowing how well another has
kept a promise is rooted in two characteristics. The first is how well the conditions of
satisfaction can be specified (specificity). The second is how well those conditions can be
observed (observability). A third problem is how to handle breaches or failures to keep the
promises (enforceability).
The same problems of specificity, observability, and
enforceability arise in standard contract theory in both the legal and economic contexts. They
pose particular problems in negotiated agreements involving environmental performance.
By requiring facility managers to publicly disclose audit results, StarTrack offers a model for
the observability of facility environmental performance. Not only are internal and thirdparty audit reports available for review by anyone who asks; agency staff members usually
participate as observers during audits, and in two cases environmental advocates have taken
part as well.
The lack of specificity about program goals undermines the program. Is StarTrack about
changing agency behavior? It is about changing the behavior of firms that participate, or the
larger universe of firms that do not? Is it about gathering data to inform reinvention
programs? Lack of specificity leads to confusion about the kind of firms that should
participate—excellent, above-average, or those below the norm? It leads to fuzziness about
program requirements. Is continual improvement required because it ensures that managers
will maintain their commitments to compliance, or because performance improvement of
above-average facilities is an agency priority? It leads to frustration on the part of facility
managers, who believe they are not receiving the benefits they have been promised.
Facility managers have been unable to enforce their understanding of StarTrack benefits.
While EPA has established elaborate systems to ensure that facilities maintain their
commitments to compliance, little attention has focused on ensuring that agencies uphold
their side of the bargain. Facility managers have little in the way of leverage with EPA, other
than to drop out of the program. Once in, dropping out is difficult, because it suggests a
facility is no longer an environmental leader.
2. Divide StarTrack into compliance-assurance and beyond-compliance programs.
68
We recommend that StarTrack be divided into two programs. The first program, which
should retain the StarTrack name, would have as its goal improving the efficiency of agency
compliance assurance programs. It should focus on changing agency behavior. StarTrack
should work to reduce the level of direct agency oversight of facilities with strong
compliance performance, freeing inspectors to focus on poor performers. Candidates for
StarTrack should be limited to facilities with strong compliance histories and established
commitments to pollution prevention and environmental performance improvement.
Many in the agency believe their roles as environmental stewards extend beyond compliance
assurance. They say that EPA should also help firms do more than regulations require. We
have argued, based on the findings contained in this report, that firms move beyond
compliance because they have the capability and motivation to do so. Many in the agency
believe their roles as environmental stewards extend beyond compliance assurance. They say
that EPA's role should include helping firms do more than what regulations require.
Promoting beyond-compliance performance could be the focus of a second EPA program.
The goal of such a program would be to change the behavior of companies. If EPA wants to
promote beyond-compliance performance, it need not focus on StarTrack facilities.
StarTrack facilities have shown that they are already both capable and motivated to achieve
that level of environmental performance.
In designing its beyond-compliance program, EPA should decide which inhibiting factor it
will address: lack of capability, or lack of motivation. An appropriate focus might be to
attempt to engage firms managed by people who are motivated to improve, but which do not
have the necessary skills, knowledge, or resources. EPA could help to move such firms in
the direction of environmental excellence by offering technical assistance. It need not
provide such assistance directly; many states have developed exemplary programs in that
area.
Alternatively, EPA could attempt to engage firms managed by people who are not yet
motivated to strive beyond what is required by law. If it chooses that population of firms, it
should focus on developing incentives. Incentives that EPA has been using in StarTrack—
recognition and penalty mitigation—may not be sufficient or appropriate. Regulatory
flexibility could potentially be a strong motivator because it can affect a firm’s costs and
competitiveness. However, flexible approaches are mean time-consuming negotiations, and
must be developed on a case-by-case basis.
3. Give StarTrack time.
StarTrack is a pilot program. By that, we mean that agencies are testing the degree to which
corporate and third-party audits are appropriate tools to supplement agency inspections.
Several years of data are needed to determine the reliability of that approach.
69
OECA's managers do not believe the program is fully reliable at this point. They say they do
not yet have evidence that StarTrack provides compliance assurance. They have told us that
observing the audits and third-party process is the best way to assess the program's potential.
We recommend that StarTrack continue to engage OECA and states in the process.
Region 1 StarTrack staff members are just beginning to develop criteria to determine when
the program will be ready to move from pilot to functional implementation. By functional
implementation, we mean operating as a true system of third-party certification in which EPA
and states no longer routinely observe the audits. We suggest that criteria should focus on the
results of corporate and EMS audits and should address the following questions:



do StarTrack companies maintain strong compliance performance over time?
do corporate compliance audits identify all compliance problems?
do third parties catch issues overlooked by corporate auditors?
Once the agency has determined that the opinions of compliance and beyond-compliance
represented in the audit reports are believable, it should move toward functional
implementation of the program.
70
APPENDIX. STATISTICAL ANALYSIS: DATA, METHODS, AND RESULTS
We base our statistical analysis on an environmental performance database developed by
MIT’s Technology, Business, and Environment Program and New York University’s Stern
School of Business. The database is uniquely complete and accurate. It links EPA's Toxic
Release Inventory (TRI), CERCLA Information System (CERCLIS), Site Enforcement
Tracking System (SETS), RCRA Information System (RCRIS), Water Permit Compliance
System (PCS) and legal action data (DOCKET), with McGraw-Hill's ISO 9000 certification
database, and the Dun & Bradstreet $1M Database (DUNS)59.
The Toxic Release Inventory is one of the few longitudinal data sets of facility environmental
performance. The DUNS database includes data concerning the number of employees at each
facility. Since TRI does not include information about the production volume of facilities, we
have used the DUNS data to control for size differences. The database gathers information
for facilities in the United States, belonging to 20,231 firms. It includes manufacturing firms
only.
Of those 38,586 facilities, we identified 335 as ISO 14001-registered as of July 1, 1999. The
identified facilities are those that we could match, with a fair degree of confidence, with the
publicly available data on ISO 14001 collected from various sources and databases: U.S.
registrars, the Global Environmental Technology Foundation's website60, and the Globus
Registry.61
The environmental performance database covers a ten-year period (1987-1996). The time
frame provides insight into firms' performance prior to ISO 14001, but does not provide the
opportunity to view improvement since the standard was published in 1996.
Our analysis uses data from 1996. We believe that 1996 is likely to provide the most relevant
information with respect to early-adopters' decisions to register. Because we are attempting to
discern motivations, we are interested in a facility's characteristics at the point when
managers decided to pursue registration. For most of the 335 ISO 14001 facilities we
identified in our database, we do not know precisely when that decision occurred, but we
know it was well before the date of registration. A firm does not receive its registration until
its ISO 14001 EMS is in place. The process of becoming registered requires substantial time,
six months to two years. We know that some facilities were pursuing registration as early as
1995. We maintain, therefore, that 1996 represents a reasonable time to assess the
characteristics of early adopters.
71
The small number of registered facilities in the United States (a few more than 450 at the
time of the study) may challenge the significance of the results of the analysis.
Table A-1: Data Summary
Total number of facilities in database:
38,586
TRI-reporting facilities (in 1996):
16,672
ISO-registered facilities (recorded observations):
335
TRI-reporting ISO facilities (in 1996):
181
Table A-2: Descriptive Statistics (for Year 1996)
# Obs.
Mean
Standard Deviation
Minimum
Maximum
38,586
.0086819
.0927726
0
1
16,672
-.0004409
1.002719
-5.070008
12.68858
38,586
.0769968
.2665899
0
1
ISO 9000
38,586
.0740683
.2618854
0
1
Facility size
25,397
4.772003
1.375051
.6931472
10.16589
Firm size
Sector emissions
38,586
5.778446
3.275799
0
12.76008
21,381
5.013514
38.11471
0
907.5129
21,626
.4211135
.5410296
0
3
38,586
.115897
1.056959
0
69
38,586
.0454051
.2081936
0
1
ISO 14001
Relative Emissions
Responsible Care
Regulatory burden
Non-compliance
Foreign ownership
72
Table A-3: Correlation Table for Year 1996 - 16,672 observations
ISO 14001
Relative
Emissions
Responsible
Care
ISO 9000
Facility size
Firm size
Sector
emissions
Regulatory
burden
Noncompliance
ISO 14001
1.0000
Relative
Emissions
0.0218
1.0000
Responsible
Care
0.0226
0.0435
1.0000
ISO 9000
0.0361
0.0018
0.0641
1.0000
Facility size
0.0970
-0.0030
0.0484
0.1161
1.0000
Firm size
0.0929
0.0141
0.2724
0.0989
0.6249
1.0000
Sector
emissions
-0.0042
0.0001
0.1158
0.0154
-0.0216
0.0134
1.0000
Regulatory
burden
0.0232
0.0712
0.1383
0.0470
0.2376
0.2511
0.0613
1.0000
Noncompliance
0.0207
0.0629
0.1745
0.0487
0.0895
0.0823
0.0490
0.1112
1.0000
Foreign
ownership
0.0572
0.0155
0.1205
0.0440
0.0617
0.1103
0.0297
0.0619
0.0369
Foreign
ownership
1.0000
73
Explanation of Variables
In order to test the level of pollution generated by a facility relative to the rest of its industry,
we must define both the meaning of "pollution" and "the rest of its industry." The U.S. EPA's
Toxic Release Inventory (TRI) is a database that contains information, reported by facility
managers, on releases of chemicals into the environment. Managers of facilities that employ
ten or more full-time people must complete TRI reports if they manufacture or process
25,000 pounds, or use more than 10,000 pounds, of any of 246 listed chemicals62.
The chemicals that must be reported to TRI vary widely in terms of their relative toxicity. To
correct for differences in relative toxicity, we weighted each chemical using the "reportable
quantities" (rq) scale established in the CERCLA statute. We constructed aggregate releases
for a given facility in a given year by summing the weighted releases of the 246 chemicals.
TRI does not include information about the production volume of facilities, making facilitylevel analysis difficult. We addressed that problem by matching TRI facility data with data
about facility size contained in the Duns database. (TRI includes Dun & Bradstreet numbers
for each facility, allowing us to correlate the two databases.) Unfortunately, the Duns
database includes information about the number of employees at each facility, not production
volumes. We use number of employees as a surrogate for production volume.
We then estimated a production function, yielding a facility's weighted emissions as a
function of size (number of employees) and of industry sector (identified by its four-digit SIC
code). We designated the environmental performance of a facility by the residual, or
deviation, between observed and predicted emissions, given the facility's size and industry.
Thus, if a facility emits more than we predicted, given its size and SIC code, it will have a
positive residual (Facility emissions). This variable is a measure of a facility's effluent per
worker, relative to the average of other facilities in the same SIC code sector.
Responsible care participation
Responsible Care (Responsible Care) is coded as a binary dummy variable for each facility.
ISO 9000 registration and foreign ownership
ISO 9000 registration (ISO 9000) and foreign ownership (Foreign ownership) are also
coded as binary dummy variables for each facility, based on the ISO 9000 and DUNS
databases, respectively.
Facility and company size
The facility size was measured using the log of total of employees at each facility (Facility
size), as given by the Duns database. Firm sizes are measured with the cumulative number of
employees in their facilities (Firm size).
Pollution levels of industry sectors
Using the emissions-production function mentioned above, based on employees and industry
sector, it was possible to determine emissions per employee in each sector, and then rank the
sector in terms of emission intensity (Sector emissions).
Heavily regulated industry sectors
Permitting requirements under both RCRA and the NPDES are taken as proxies for
substantial regulatory oversight. The more permits a facility holds, the greater its regulatory
burden (Regulatory burden).
History of regulatory non-compliance
Reported spills, RCRA violations, EPA Docket fines, water-permit compliance, and
completed lawsuits were all taken into account in one variable used as proxy for noncompliance history (Non-compliance)
Industry Sector and EPA region
Facilities were classified according to the first two digits of their SIC codes (SIC code) and
to the region they belong to (EPA region). The model then tested whether belonging to one
given sector or one given region, could explain a facility's decision to register ISO 14001.
The Probit Model
To test our hypotheses concerning the ISO 14001 registration we use a probit model, which
specifies the likelihood that a given facility registers. The dependent variable—whether a
firm is registered or not—is qualitative in nature, and is represented by a 0-1 dummy
variable. The independent or explanatory variables include measures of environmental
performance, facility size, and participation in ISO 9000.
The probit model is computed by regression using available data. We have interpreted the
value of the dependent variable predicted by the model as the conditional probability that the
facility will adopt ISO 14001, given the facility's characteristics (the values of the explanatory
variables). Our statistical analysis of the data has determined the significance of each of the
variables we considered in explaining facility-level registration to ISO 14001.
75
Probit models are sensitive to misspecifications, and in particular to the omission of an
explanatory variable. That potential flaw should be kept in mind when interpreting our
results.
Table A-4: Probit Model - Estimates of Decision to Register
ISO 14001
Coefficient.
z
P>|z|
Facility emissions
.0720757
2.624
0.009
Number of obs = 16,672
Responsible Care
.0609978
0.656
0.512
LR chi2(9) = 231.08
ISO 9000
.2396503
3.064
0.002
Prob > chi2 = 0.0000
Facility size
.1637394
5.732
0.000
Pseudo R2 = 0.1157
Firm size
.1023594
5.470
0.000
Sector emissions
-.0011116
-0.555
0.579
Regulatory burden
-.0657942
-1.155
0.248
Non-compliance
.0072307
0.534
0.593
Foreign ownership
.4659024
5.771
0.000
Constant
-4.038697
-26.568
0.000
Note: The significance is given by the P>|z| score: the independent variables with the lowest
score are the ones that are the most significant (in bold italics)
76
Table A-5 ISO 14001 Facilities by EPA Region (as identified in the
database)
EPA Region 1
Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island, Vermont
35
EPA Region 2
New Jersey, New York, and the territories of Puerto Rico and
the Virgin Islands
30
EPA Region 3
Delaware, Maryland, Pennsylvania, Virginia, West Virginia,
and the District of Columbia
22
EPA Region 4
Alabama, Florida, Georgia, Kentucky, Mississippi, North
Carolina, South Carolina, Tennessee
51
EPA Region 5
Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin
96
EPA Region 6
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
31
EPA Region 7
Iowa, Kansas, Missouri, Nebraska
9
EPA Region 8
Colorado, Montana, North Dakota, South Dakota, Utah,
Wyoming
5
EPA Region 9
Arizona, California, Hawaii, Nevada, and the territories of
Guam and American Samoa
46
EPA Region 10 Alaska, Idaho, Oregon, Washington
10
TOTAL
335
77
Table A-6: ISO 14001 Facilities by SIC Code (as identified in the
database)
SIC
Cod
e
Industry
# of
facilities
20.
Food and kindred products
9
21.
Tobacco products
0
22.
Textile mill products
2
23.
Apparel and other finished products made from fabrics and similar materials
0
24.
Lumber and wood products, except furniture
4
25.
Furniture and fixtures
0
26.
Paper and allied products
13
27.
Printing, publishing, and allied industries
0
28.
Chemicals and allied products
42
29.
Petroleum refining and related industries
2
30.
Rubber and miscellaneous plastics products
10
31.
Leather and leather products
0
32.
Stone, clay, glass and concrete products
3
33.
Primary metal industries
15
34.
Fabricated metal products, except machinery and computer equipment
26
35.
Industrial and commercial machinery and computer equipment
34
36.
Electronic and other electrical equipment and components, except computer
equipment
80
37.
Transportation equipment
73
38.
Measuring, analyzing, and controlling instruments; photographic, medical
and optical goods; watches and clocks
17
39.
Miscellaneous manufacturing industries
4
Other
1
-
TOTAL
335
78
Table A-7: Data Summary - Chemical Sector
Total
Chemical Sector
Total number of facilities in database:
38,586
6,323
TRI-reporting facilities (in 1996):
16,672
3,058
ISO-registered facilities (recorded observations):
335
42
TRI-reporting ISO facilities (in 1996):
181
25
Table A-8: Correlation Table (for 1996 - 3,058 observations)
ISO
14001
Relative
Emissions
Responsible
Care
ISO 9000
Facility
size
Firm size
Chemical sector only
Sector
emissions
Regulatory
burden
Noncompliance
ISO 14001
1.0000
Relative
Emissions
0.0457
1.0000
Responsible
Care
0.0562
0.1091
1.0000
ISO 9000
0.0243
0.0172
0.1574
1.0000
Facility size
0.0480
-0.0014
0.2920
0.1470
1.0000
Firm size
0.0280
0.0681
0.5504
0.1396
0.5600
1.0000
Sector emissions
0.0168
-0.0018
0.1614
0.0551
0.0399
0.0806
1.0000
Regulatory
burden
0.0450
0.1228
0.2485
0.0971
0.3034
0.2925
0.1528
1.0000
Non-compliance
0.0312
0.1315
0.1390
0.0872
0.2336
0.1589
0.0824
0.1554
1.0000
Foreign
ownership
0.0644
0.0188
0.2070
0.0249
0.1101
0.2328
0.0363
0.0585
0.0199
Foreign
ownership
1.0000
Table A-9: Probit Model - Estimates of Decision to Register
(chemical sector only)
ISO 14001
Coefficient.
z
P>|z|
Facility
emissions
Responsible
Care
ISO 9000
.1401339
1.941
0.052
Number of obs = 3,058
.3850615
1.957
0.050
LR chi2(9) = 27.07
.1445807
0.705
0.481
Prob > chi2 = 0.0014
Facility size
.1510516
1.864
0.062
Pseudo R2 = 0.0933
Firm size
-.0986986
-1.738
0.082
Sector emissions
-.0001628
-0.056
0.955
Regulatory
burden
Non-compliance
.1759839
1.172
0.241
.005897
0.324
0.746
Foreign
ownership
Constant
.5001938
2.745
0.006
-2.873905
-9.164
0.000
Note: The significance is given by the P>|z| score: the independent variables with the lowest
score are the ones that are the most significant (in bold italics)
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edited by P.A. Marcus and J. T. Willig. New York: John Wiley & Sons, Inc., 1997.
Hale, Rhea. "The National Expansion of StarTrack: Issue Regarding Delegation of
Environmental Compliance Oversight," U.S. EPA Region 1. Boston, MA: August 10, 1998.
International Organization for Standardization. Environmental Management Systems—
Specification with Guidance for Use. ISO/TOC 207/SC1 Geneva: 1996.
Johannson, Lynn. "ISO 14000: What's In It for You?." In Moving Ahead with ISO 14000,
edited by P.A. Marcus and J. T. Willig. New York: John Wiley & Sons, Inc., 1997.
King, Andrew and Michael Lenox. "Prospects for Self-Regulation Without Sanctions: A
Study of Responsible Care in the Chemical Industry," The Academy of Management Journal,
forthcoming.
Krut, Riva and Harris Gleckman. ISO 14001: A Missed Opportunity for Sustainable Global
Industrial Development. London: Earthscan Publications Ltd., 1998.
Nash, Jennifer and John Ehrenfeld. "Environmental Management Systems and their Roles in
Environmental Policy," Multi-State Working Group Research Summit on Environmental
Management Systems. Washington, D.C.: November 2-3, 1999.
Nash, Jennifer and John Ehrenfeld. "Codes of Environmental Management Practice:
Assessing Their Potential as a Tool for Change." Annual Review of Energy and the
Environment 22 (1997): 487-535.
National Academy of Public Administration, "Project Plan: Learning from Environmental
Initiatives," Washington, D.C.: May 27, 1998.
82
Orts, Eric. "Reflexive Environmental Law,"
(1995): 1227-1340.
Northwestern University Law Review 89
Rees, Joseph. "Development of Communitarian Regulation in the Chemical Industry," Law
& Policy 19 (1997): 477-528.
Roht-Arriaza, Naomi. "Shifting the Point of Regulation: The International Organization for
Standardization and Global Lawmaking on Trade and the Environment." Ecology Law
Quarterly 22 (1995) 479-539.
Ross, M. "The Value of Registration: ISO 9000 compared to ISO 14001," ASTM
Standardization News. September 1997.
Scott, Alex. "Europe Weighs its Standards Options," Chemical Week (April 2, 1998): 33-35.
Sissel, Kara."ISO 14000 Looking for Business Value," Chemical Week (April 2, 1997): 2930.
Sissel, Kara. "Behind the Scenes, U.S. Companies Prepare for Certification," Chemical Week
(April 8, 1998): 43-47.
Steinzor, Rena I. "Reinventing Environmental Regulation: The Dangerous Journey From
Command to Self-Control, The Harvard Environmental Law Review 22 (1998): 103-202.
Switzer, Jason. "ISO 14001: Regulatory Reform and Environmental Management Systems."
master’s thesis, Massachusetts Institute of Technology, 1999.
Tener, Beth. ISO 14001: Lessons from Early Adopters. Arlington, MA: Business and the
Environment, 1999.
Thayer, A. "Chemical Companies Take Wait-and-See Stance toward ISO 14000 Standards,"
Chemical and Engineering News, April 1996.
Websites consulted
Chemical Week (http://chemweek.com).
Global Environment Technology Foundation (http://www.getf.org).
Globus Registry (http://www.globusregistry.com).
83
ENDNOTES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
National Academy of Public Administration, "Project Plan: Learning from Environmental Initiatives,"
(Washington, D.C.: May 27, 1998).
EPA's initial experiments with reinvention were criticized for lacking clear objectives and failing to offer
tangible and significant incentives. See, for example, Terry Davies and Jan Mazurek, "Industry Incentives
for Environmental Improvement: Evaluation of U.S. Federal Initiatives," (Global Environmental
Management Initiative. Washington, D.C.: 1996).
EPA, "Aiming for Excellence: Actions to Encourage Stewardship and Accelerate Environmental Progress,"
Report of the Environmental Innovations Task Force. (Washington, D.C.: 1999).
The program was put on hold after its first year in order to evaluate progress and recruit more participants.
StarTrack’s first operational year was 1996-97; it was not active in 1997-98. 1998-99 was its second
operational year.
By increasing the number of facilities that move beyond compliance, EPA will increase the potential
applicant pool for StarTrack.
Jennifer Nash and John Ehrenfeld, "Environmental Management Systems and their Roles in Environmental
Policy," Multi-State Working Group Research Summit on Environmental Management Systems.
(Washington, D.C.: November 2-3, 1999).
Joseph Cascio, The ISO 14000 Handbook, (CEEM Information Systems Baltimore, MD1996).
Ibid., 26.
International Organization for Standardization. Environmental Management Systems—Specification with
Guidance for Use. (ISO/TOC 207/SC1 Geneva: 1996), Section 3.1.The relevant section of the text reads as
follows: “3.13 prevention of pollution: use of processes, practices, materials or products that avoid, reduce
or control pollution, which may include recycling, treatment, process changes, control mechanisms, efficient
use of resources and material substitution.”
Ibid.
Ibid.
In written comments in response to this report, EPA's Office of Enforcement and Compliance Assurance
argues that ISO 14001 fails to provide regulators with such assurance. We agree that a firm's adoption of
the standard does not guarantee continuous improvement toward compliance. Managers may adopt the
standard but fail to devote the resources necessary for implementation; registrars may overlook managers'
failure to address compliance issues. Those examples are not what drafters intended, however. Continual
improvement toward regulatory compliance is the clear intention of ISO 14001. For example, the
introduction to ISO 14001 states that "this standard does not establish absolute requirements for
environmental performance beyond commitment, in the policy, to compliance with applicable legislation
and regulations and to continual improvement." ISO 14001 drafters view compliance as a performance
requirement, not an empty commitment.
Riva Krut and Harris Gleckman, ISO 14001: A Missed Opportunity for Sustainable Global Industrial
Development (London: Earthscan Publications Ltd., 1998).
Jason Switzer, "ISO 14001: Regulatory Reform and Environmental Management Systems" (master’s thesis,
Massachusetts Institute of Technology, 1999).
Lynn Johannson, "ISO 14000: What's In It for You?," in Moving Ahead with ISO 14000, edited by P.A.
Marcus and J. T. Willig (New York: John Wiley & Sons, Inc., 1997).
M. Ross, "The Value of Registration: ISO 9000 compared to ISO 14001," ASTM Standardization News
(September 1997) : 10.
Alex Scott, "Europe Weighs its Standards Options," Chemical Week (April 2, 1998): 33.
A. Thayer, "Chemical Companies Take Wait-and-See Stance toward ISO 14000 Standards," Chemical and
Engineering News, (April 1996).
Kara Sissel, "ISO 14000 Looking for Business Value," Chemical Week (April 2, 1997): 29.
Kara Sissel, "Behind the Scenes, U.S. Companies Prepare for Certification," Chemical Week (April 8,
1998): 43.
84
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
The methodology and general approach used for this analysis are taken from Andrew King and Michael
Lenox, "Prospects for Self-Regulation Without Sanctions: A Study of Responsible Care in the Chemical
Industry," The Academy of Management Journal, forthcoming.
An alternative explanation for this observation is that facilities choose to register to ISO 14001 to
distinguish themselves from other facilities owned by the same firm.
An additional explanation was offered by a reviewer of this report. Firms that register to ISO 9000
establish a relationship with an ISO registrar. The registrar may use this relationship to sell its ISO 14001
registration services.
Given the small number of registered companies in the US, the absence of ISO 14001 facilities in some
sectors cannot be explained today by anything other than chance.
During the study period, both Ford and General Motors announced that they will require suppliers to install
an ISO-compliant EMS.
International Organization for Standardization. Environmental Management Systems—Specification with
Guidance for Use (ISO/TOC 207/SC1 Geneva: 1996): A.1.
This classification was not communicated to the interviewees.
While researchers asked questions and gathered data about the facility's StarTrack participation, the main
focus of our interviews at Facility B was ISO 14001 implementation. The facility is not one of the four
StarTrack sites discussed in this report.
Two researchers visited this site, one studying StarTrack adoption and another studying ISO 14001. The
facility is the same one identified as Facility IV in this report.
The company was one of the first to self-declare conformance of its EMS with ISO 14001.
Judith Cichowicz, "New Opportunities for Expanding P2," in Moving Ahead with ISO 14000, edited by
P.A. Marcus and J. T. Willig (New York: John Wiley & Sons, Inc., 1997).
Beth Tener, ISO 14001: Lessons from Early Adopters (Arlington, MA: Business and the Environment,
1999).
Ibid., 16.
Scott Foster, "Registrars, Accreditation, and ISO 14001," in Moving Ahead with ISO 14000, edited by P.A.
Marcus and J. T. Willig (New York: John Wiley & Sons, Inc., 1997).
Ibid., 4.
Corporate management in the U.S. did not actively support registration, considering it "a leap of faith."
The sustainability vision of the firm consists of economic, social, and environmental targets.
A project aiming at avoiding the emission of salt water into the nearby bay was rejected because the
"economics were too bad compared with the benefits." There are, however, examples of decisions based
only on environmental considerations, such as the implementation of an early-release preventive shutdown
system initiated by EHS.
Facility E does not participate in the Responsible Care program.
A community survey conducted by plant management following the accident found that residents were
“surprised” that the facility would experience a major problem.
Regulatory inspections have identified few issues, according to managers, and the plant recently obtained
the OSHA VPP status.
Rena I. Steinzor, "Reinventing Environmental Regulation: The Dangerous Journey From Command to SelfControl, The Harvard Environmental Law Review, 22 (1998): 103-202.
Federal air, water, and RCRA large-quantity permits. Rhea Hale, "The National Expansion of StarTrack:
Issue Regarding Delegation of Environmental Compliance Oversight," U.S. EPA Region 1 (Boston, MA:
August 10, 1998).
EPA Region 1, "StarTrack Program - Program Guidance Document 1998." (Boston, MA: August 26,
1998).
In written comments to a draft version of this report, Region 1 explained its position with respect to
admitting firms with compliance problems as follows: "We do anticipate that participation in the Program
may be broadened beyond firms with unblemished compliance records, but we do not contemplate allowing
firms who have not shown a commitment to compliance into the Program."
85
46
47
48
49
50
51
52
52
53
54
55
56
57
58
59
60
61
62
EPA Region 1, "Guidance for Compliance Audit, Compliance Audit Report and Facility Corrective Action
Plan." (Boston, MA: March 9, 1998).
EPA Region 1, “Guidance for Environmental Management Systems Audit, Environmental Management
Systems Audit Report and EMS Implementation Plan." (Boston, MA: March 9, 1998).
EPA Region 1, "StarTrack Environmental Performance Reporting Guidelines - Instructions for Users."
(Boston, MA: May 1999).
EPA Region 1, "Certification and Facility EMS Improvement Plan Guidance." (Boston, MA: July 17,
1997).
Enforcement action will still be taken in the case of criminal violations, violations which result in serious
environmental harm, or violations that result in significant economic benefit to the facility.
EPA audit policy states that "where violations are found through voluntary environmental audits or efforts
that reflect a regulated entity's due diligence, and are promptly disclosed and expeditiously corrected, EPA
will not seek gravity-based (i.e., non-economic benefit) penalties and will generally not recommend
criminal prosecution against the regulated entity." EPA Office of Enforcement and Compliance Assurance,
"Audit Policy: Incentives for Self-Policing." (Washington, DC: December 22, 1995).
The environmental performance reports required by StarTrack include information that could potentially
damage the reputations of facilities. For example, managers must include findings from compliance and
EMS audits, as well as information about releases. While that information is available to the public, EPA
has received few, if any requests for StarTrack environmental performance reports from citizens. The act of
disclosing information may strengthen a firm’s reputation; the content of information becomes almost
irrelevant if reports are not widely read.
See, for example, EPA Region 1, "Leadership Agreement between Massachusetts Department of
Environmental Protection, EG&G-Salem, and Environmental Protection Agency - New England,
Attachment 2: Program Benefit Guidelines." (Boston, MA: April 11, 1996).
Facility IV is the same as Facility C.
See, for example EPA Region 1, "Third Party Certification Project Leadership Agreement between
International Paper Company - Jay, Maine Facility, Maine Department of Environmental Protection, Town
of Jay, Maine and United States Environmental Protection Agency - New England." (Boston, MA: June 26,
1996).
Ibid.
EPA Region 1, "StarTrack Year One Final Report," (Boston, MA: August 5, 1998): ii.
For example, when a facility environmental manager learned he would need two separate permits for
manufacturing operations in separate buildings (historically regulated jointly under a single permit) he
expected his permit application would go to the "top of the pile" at his state environmental agency. Instead
he received the same treatment as before joining StarTrack.
A third environmental group observed StarTrack audits at a Massachusetts facility in October 1999, after
we had finished collecting data.
We were not able to include air-compliance data in our environmental performance database because EPA
AIRS data are not longitudinal. It appears that EPA deletes historic air-compliance information from AIRS
when new measurements are made at a facility. Each data point appears to represent the last time EPA
monitored the facility. That practice, combined with the problem of matching facilities from one dataset to
another (which we encountered as we integrated each of the different data sources) made it very difficult to
include AIRS. If EPA can provide a longitudinal record of air-compliance information, we will gladly
include it in future analyses. Such information would be extremely valuable.
www.getf.org
www.globusregistry.com
In the United States, public concern about environmental degradation has focused to a large degree on
industry releases of toxic chemicals during manufacturing. TRI, which includes information on releases of
tens of thousands of facilities, is a good proxy for that measure of environmental performance. It is
important to note, however, some of the deficiencies of TRI. First, data are reported by facility managers
and are not externally verified. Second, in most cases the data are not based on monitoring but are
estimates. Third, many chemicals of concern are not included. (More than 72,000 chemicals are in
86
commerce in the United States today—TRI includes information about releases of only 246.) Fourth, TRI
tells us nothing about other dimensions of environmental performance, such as product design and
stewardship, community involvement, and worker health and safety.
87