Japan's Trend for Local and SME Versions of Environmental Management Systems

JFS Newsletter No.69 (May 2008)

ISO 14001 is an international standard for environmental certification issued by the International Organization for Standardization (headquartered in Geneva). It functions as a systematic approach for organizations that want to build up an environmental management system, and includes plan-do-check-act (PDCA) procedures, structures and documentation. The basic concept is to reduce environmental impacts by steadily improving environmental management. Since 1996, when ISO 14001 was issued, more than 20,000 businesses have obtained certification (registered after examination) in Japan, more than in any other nation in the world.

In 1996, Japan's Ministry of the Environment laid down an "Environmental Activity Evaluation Program (Eco-Action 21)," aimed at encouraging environmental activities by small and medium-sized enterprises (SMEs). In 2004, this program was fully revised to make it a system for certifying that an organization's environmental management conforms to the "Eco Action 21 Guideline (FY 2004 Version)." This program concretely stipulates required actions, including environmental impacts that should be monitored and actions that should be taken, remarkable features for this kind of system. Japan's Institute for Global Environmental Strategies is responsible for the certification and registration of companies for Eco Action 21.

'Eco Action 21' Certification for Small/Medium Organizations
http://www.japanfs.org/db/875-e

Recently, unique environmental management systems that cost less money and are easier to implement have arisen throughout Japan. They mainly target SMEs, which are the backbone of the Japanese economy. More and more government institutions, municipalities and companies have been considering these environmental management systems to be equivalent to the ISO 14001 systems, and some financial institutions have already started to give preferential treatment to companies that have obtained certification for these systems. Let's take a look at the background and trends where these simple, local and SME versions of environmental management systems were born.

Environmental Management Systems for All
http://www.japanfs.org/en/mailmagazine/newsletter/pages/027747.html

Establishment of the Kyoto Environmental Management System(KES) Standards

In December 1997, the Kyoto Protocol, which established that obligations to reduce six greenhouse gases such as carbon dioxide (CO2) were to be mandatory, was adopted at the Third Session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP3).

In COP3's host city of Kyoto, the Kyoto City government set up a local promotion plan for combating global warming a year before the COP, and movements to create a Local Agenda 21 were gaining momentum to help public and private sectors jointly carry out the plan. Against this backdrop, the Miyako Agenda 21 Forum was eventually established jointly by the Kyoto City government, companies, citizen groups, academic experts and others.

Local Environmental Management Standards Spreading among SMEs
http://www.japanfs.org/db/959-e

This forum now has eight working groups (WGs), and one of them, a WG for corporate activities, figured out a set of standards that is simpler and less costly to implement than ISO 14001. Companies have to bear a considerable burden of expenditure and effort to obtain ISO 14001 certification, and this is difficult for many companies in Kyoto, which are mainly small and medium-sized enterprises.

The core members of this WG were people retired from companies belonging to the Kyoto Industrial Association. Based on their experience in obtaining the ISO 14001 certification while working for their companies, these members established the Kyoto Environmental Management System (KES) standard. This standard certification is easier and more reasonable to obtain; companies bear only one tenth of the cost required to obtain ISO 14001 certification.
http://www.keskyoto.org/kesinfo.html (in Japanese)

The KES is divided into Step 1 and Step 2, so that companies can work on their environmental management in stages. Step 1 is for companies that have just started environmental activities; such companies prepare an environmental declaration and make a plan to achieve the goals set out in the declaration. Step 2 is for companies that intend to obtain ISO 14001 certification in the future. These companies make a systematic plan for each environmental issue that they need to address. Step 2 includes all items required for ISO 14001 certification.

The KES certification program officially started in April 2001 after a two-year pilot period. In 2002, the program was renamed the KES Environmental Management System Standard. While the program was initially organized by the KES Certification Department, a part of the Miyako Agenda 21 Forum, the program is now organized by the KES Environmental Organization, a non-governmental organization established in April 2007.

Spread of KES-Affiliated Organizations

At first, the KES standard was established mainly for companies in Kyoto City, as indicated by its name. However, green procurement standards set by KES-certified companies have involved suppliers outside Kyoto City, and demand for environmental management system (EMS) certification for SMEs has grown nationwide. To enable organizations other than KES to assess companies and grant KES certification, KES began to provide know-how to municipalities and companies outside Kyoto, starting in May 2003.

Currently, 11 organizations from the Tohoku region in northeast Honshu to the Kyushu region, have been registered as KES certification bodies, and have engaged in registration activities beyond regional boundaries.

Assessments and consultation for obtaining KES certification are provided by representatives who meet the KES registration requirements for judges and have attended at least one third or more of the training course, which is usually held six times a year. KES-affiliated organizations in various regions regularly gather at the annual KES Promotion Council to maintain assessment standard quality. KES has strived to promote its environmental management program without seeking profit, and this attitude has helped its activities spread.

Background to the Expansion of Environmental Management Systems among SMEs

The increase in the number of registrations of regional EMS certificates and registrations of SMEs is closely associated with environment-related laws and regulations enacted by the national government or local municipalities and with the expansion of green purchasing or procurement among businesses. Meanwhile, international directives, such as the European Union's "End of Life Vehicles Directive" and "Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment," have led many export manufacturers in Japan to strengthen their supply chain management systems. As a condition of business partnerships, these manufacturers have required small and medium-sized parts makers and wholesalers to obtain ISO 14001 or other environment-related certificates.

At the same time, the number of businesses that obtained Eco Action 21 or KES certification also multiplied. The number of registered Eco Action 21 certifications increased from 155 in fiscal 2004 to 728 the following year, and reached 2,087 in January 2008. Likewise, the number of KES certifications multiplied every year--from 100 in the first year of its launch to more than 2,000 in fiscal 2007.

Satoshi Hiratsuka, executive officer of the KES Environmental Organization, explains the factors leading to the increase in KES registrations: "Before KES was established, many manufacturers required suppliers to obtain ISO 14001 certification or otherwise directly provided them with guidance. The appearance of KES lightened the loads on manufacturers, and this served as a driving force."

Meanwhile, it is thought that the expansion of Eco Action 21 was accelerated by the assistance of the Ministry of the Environment, which bears the costs of holding seminars and so on held to promote the Local Government Initiative Program and the Greening Program for Relevant Businesses.

According to the ministry's "Survey on Eco-Friendly Corporate Activities," an annual survey targeting major companies (listed on the stock exchange or with 500 or more employees) first conducted in 1991, the percentage of respondents saying that they set certain criteria regarding suppliers' environmental consciousness was 23.8 percent in fiscal 2006, an increase from 9.3 percent in fiscal 2002. The respondents also cited the ISO 14001 certification as the only criterion in fiscal 2002, but regional EMS certifications were added to the list the following year. Since fiscal 2004, an increasing number of companies have required suppliers to obtain KES, Eco Action 21, or other EMS certifications; that is, they are not necessarily requiring acquisition of ISO certification.

Corporate Eco Activities Expanding in Japan: Survey
http://www.japanfs.org/db/937-e Survey Shows Steady Progress in Corporate Eco-Friendly Activities
http://www.japanfs.org/db/1665-e

In addition to KES and Eco Action 21, other environmental management systems that have been established for SMEs include the Green Management Certification System and the Eco Stage, both purveyed by the Ministry of Land, Infrastructure and Transport, as well as some local EMS certification systems. Meanwhile, the International Organization for Standardization is said to be drawing up ISO 14005, an environmental standard for SMEs.

The birth of these types of local or SME systems have brought benefits both to SMEs and the regions where they are located. Continued revisions through PDCA cycles lead to reduced CO2 emissions and wastes, which result in lower costs for energy sources and waste disposal.

These reductions contribute to anti-global warming measures and the creation of a recycling-oriented society. For these reasons, many local governments designate the acquisition of Eco Action 21 or KES certification, along with the ISO 14001 certification, as a condition for green procurement suppliers.

Given the fact that SMEs account for about 99 percent of Japanese companies, the behavior of both major companies and SMEs with respect to environmental issues is having significant effects on their own management. Generally, resources for management, such as personnel and capital, are limited in smaller companies. We hope that such companies will also be able to use these standards as a tool for achieving their own operational success. With this hope, we will continue to focus on the evolvement of EMS.

(Written by Kazumi Yagi)