SMEs adopt EMS in USA

American experts were asked to look at the problems facing a wider adoption of EMS by small and medium-sized companies in the USA. Pennsylvanian academics Christopher J Lynch and Thomas Gibson told edie their findings.

When recently asked about small business acceptance and use of Environmental Management Systems (EMSs) in the United States, the lack of readily available information on the subject provided an immediate clue as to the answer.

On the whole, small business owners, even those committed to environmental compliance and good stewardship, have not been overwhelmingly convinced that the time and financial resources involved in developing an EMS will result in a management tool that justifies the investment.

In the late 1990’s, the US-based automobile manufacturer, Saturn Corporation, surveyed many of its parts suppliers, most of whom were small to medium sized manufacturers, to gauge the interest in ISO14000.

Most suppliers indicated they would consider integrating ISO14000 into their existing ISO/QS 9000 system only if their primary customer, Saturn Corporation, required it. In general, these automotive parts suppliers displayed concerns about the burdensome nature of the paperwork required in developing an EMS, the direct and indirect costs of certification, and the costs and “potential liability” of maintaining certification.

For even smaller businesses, the lack of positive drivers and concerns about time and cost remain as prevalent today as they were in the late 1990’s.

Ultimately, unless facing the loss of a major customer demanding certification, most small and medium-sized businesses are unlikely to adopt a formal EMS, particularly an ISO 14000 certifiable EMS.

Unless additional financial or regulatory incentives (such as fast-track permitted or the reduced frequency of inspections) are provided, for the average small business, the time and financial resource requirements are simply too great compared to the perceived benefits.

Few rewards, public or private, have developed in the United States to encourage small business EMS development. One example where a state environmental agency has developed incentives exists in Minnesota.

With its Flexible EMS Permit, the Minnesota Pollution Control Agency has implemented a program under which small and medium-sized businesses with qualifying ISO 14000 EMSs can obtain limited procedural relief in obtaining a permit and additional operational flexibility once the air permit is issued.

A few private firms have also taken steps to establish benefits and incentives for companies with EMSs. For example, in March 2006, Unigard, a California-based commercial insurance company, began offering a ten percent discount on insurance premiums for companies with an EMS in place.

Unigard offers this discount as a way of recognizing that externally auditable EMSs are likely to help reduce a business’ environmental risks. On a limited basis, other insurance firms, both in the US and abroad, have offered similar premium discounts to their customers.

With all of this in mind, however, let’s examine the story of an environmentally-concerned dry cleaner who sought assistance developing an EMS by contacting the Environmental Management Assistance Program of the Pennsylvania Small Business Development Centers, an economic development group based at The Wharton School of the University of Pennsylvania. Perchloroethylene dry cleaners have received a significant share of attention from environmental enforcement agencies over the past 15 years and are currently some of the most inspected small businesses in the United States.

While some garment cleaners have moved to perchloroethylene alternatives, the majority of the industry still utilizes this cleaning solvent. If any small business is likely to have an interest in an environmental management tool, especially to help ensure compliance, this is a likely candidate.

Based in Pennsylvania and employing 22 individuals, the owner of this dry cleaning establishment excitedly embarked on the process of developing an EMS out of a strong desire to be an industry leader; to operate in an environmentally responsible manner; and, to satisfy qualifying criteria for participation in the US Environmental Protection Agency’s Performance Track – a recognition program for top performing environmental performance.

After a couple of meetings and numerous attempts to get the process started, the business owner felt compelled to abandon the effort.

For him, constraints on his own time and concerns about the ultimate costs associated with developing an EMS, especially one that could be independently assessed by a third party, were the reasons cited.

Recognition by a federal environmental agency was not enough of a driver alone. His customers were demanding clean clothes with good service at reasonable prices; they were not demanding an EMS.

A small business owner is understandably going to devote the bulk of his or her time focusing on business viability and the day-to-day operations of delivering a quality product or service.

What is also important to note, however, is that the lack of a formalized and well-documented EMS has not precluded solid environmental compliance by this dry cleaning business – as demonstrated by the documentation of zero violations during recent inspection visits.

Nor has the lack of a formalized EMS prevented this small business from pursuing environmental improvements, in this case the business owner has already had a facility energy audit and he is pursuing strategies to use energy more efficiently in the business.

The notions of regularly evaluating one’s own environmental impacts, and the concept of the plan-do-check-act cycle, as embodied in an EMS, are very worthwhile exercises for any size business.

Perhaps what the small business community needs is a guide for the process of regular self-evaluation, rather than guides for developing and documenting an EMS. The more detailed and extensive the process of developing an EMS itself, the less likely a small business will adopt such a tool due to concerns about time and costs.

On the other hand, could fill-in-the-blank templates and less rigorous EMSs be the answer? Not if improved environmental performance is the ultimate goal. Most experience has shown that if little thought goes into developing an EMS, then the document is more likely to gather dust on a shelf than it is to become a business management tool.

Without additional public or private incentives, unless a small business faces the risk of losing an important customer, it seems unlikely there will be widespread adoption of EMSs by small businesses – no matter how well-intentioned and environmentally-committed.

By Christopher J Lynch and Thomas Gibson

Mr Lynch is Director of the, Environmental Management Assistance Program (EMAP) for the Pennsylvania Small Business Development Centers at The Wharton School of the University of Pennsylvania. He also serves on the Advisory Board for the Center for Small Business and the Environment in Washington, DC. Mr Gibson is a student at the University of Pennsylvania and an environmental management intern with EMAP.

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