Time for a change

There’s no doubt that small and medium sized enterprises are vitally important for a healthy dynamic market economy. The SME sector is vast – in the UK alone 99.8% of all businesses are classified as SMEs.

It’s hard to judge the total environmental impact of the sector, but an unsubstantiated figure of 70% is generally held to be the SME sector’s contribution to pollution levels.

Worryingly, smaller companies are largely ignorant of their environmental impacts and the legislation that governs them. SMEs seem to ignore sustainability and are cynical about the benefits of self-regulation and of management tools that could assist them improve environmental performance.

Ignorance of impacts

A recent survey by the Environment Agency found that only 28% of food and drink sector businesses questioned had introduced practical measures to reduce harm to the environment, such as carrying out an assessment of their operations or appointing an responsible officer. Only 29% had an dedicated environmental policy in place.

The research also showed that only 24% of food and drink SMEs could name any environmental legislation affecting them. However, 45% said they would welcome more help and guidance with regard to their responsibilities.

Barriers to implementation

The problems that SMEs face are well-documented – insufficient resources, too little specific expertise, and a lack of information and awareness for starters.

A October 1999 study for the DTI, Evaluation of Study Reports on the Barriers, Opportunities and Drivers for Small and Medium Sized Enterprises in the Adoption of Environmental Management Systems, concludes that internal barriers – lack of human resources; frequent interruptions in EMS implementation; and a lack of information about the benefits they offer – are more important than external ones, such as high implementation costs; uncertainty about market benefits; or sector-specific guidance.

Although the evidence suggests that smaller firms do not recognise the benefits of implementing environmental management systems, SMEs complain that the structures of EMS make it difficult for them to get involved.

On paper, ISO 14001 and EMAS appear to be equally applicable to large or small firms, but it is becoming clear that in practical terms this is not the case.

A step-by-step approach

A number of initiatives aimed at tackling this engagement problem have had success by modifying the approach and structure of implementation. In Sweden, the Hackefors Model uses a networked approach to facilitate the implementation of EMS in geographically close clusters of SMEs, allowing staff to remain focused on the environmental issues important to each company.

This approach has proved surprising successful. Since it began in 1997, 37 groups have generated 520 SMEs certified to ISO 14001 – of which 300 (58%) certificates are held by micro-enterprises, including 77 to firms with only one employee.

The Acorn Project was set up a few years ago to deal with the same problem. It offered a step-by-step approach to EMS implementation with a strong emphasis on environmental performance evaluation, based on ISO 14031. It gives SMEs recognition at different phases through audits of their achievements, in line with ISO 14001 and EMAS.

However, participating firms do not have to complete all of Acorn’s six phases and achieve certification to ISO 14001 (at Phase 5) and EMAS (at Phase 6). If they wish, they can stop at any of the intermediate phases and gain recognition.

This is very beneficial for smaller firms seeking to demonstrate their efforts to drive improvements in

environmental performance without the costs of attaining a full ISO 14001 certification.

The recently developed British Standard BS 8555:2003 – EMS: Guide to the Phased Implementation of an EMS Including the Use of Environmental Performance Evaluation is based on the Acorn model and allows any firm to use a staged approach to EMS.

Of the 42 fast-track SMEs that have taken part and have developed a full EMS at Phase 5, 35 have achieved ISO 14001 certification, while 15 non-fast track companies have got to Phase 3.

Missing the opportunity

These two approaches offer smaller firms a practical way to implement EMS by breaking them into bite-sized chunks and their success suggests that changes need to be made to ISO 14001 and EMAS to make them more SME-friendly.

Efforts to make ISO 14001 clearer have been incorporated into the standard’s current review. This describes the practical steps organisations need to take to implement an effective EMS, and in doing so it makes them more applicable to SMEs.

However, this in itself doesn’t go far enough. A staged approach to implementation must also be considered, not only for ISO 14001 but also for EMAS, which will be reviewed in early 2004.

At the moment, in the case of ISO 14001 at least, it doesn’t look as this will happen. The review is currently restricted to the clarification of various components, rather than looking to change its approach or any of its core requirements. The opportunity to make it more more attractive and feasible for SMEs to become involved seems to have been lost.

The nature of the EMAS revision is as yet undecided but

consideration may be given to including a staged approach in the scheme to assist smaller business participation.

Help must be given

The proliferation of adapted EMS such as the Acorn model – and there are many others across Europe – reflects a real need among SMEs for more accessible and achievable EMS structures.

The development of BS 8555 provides a recognised approach to EMS in line with ISO 14001, but whether or not the market accepts it will depend on both SME uptake and pressure for its adoption from their customers further up the supply chain.

It is undoubtedly a mistake to neglect the SME sector and its needs. Even if SMEs were not such an important source of pollution, it is vital that they become engaged and active in managing their environmental impacts. If they do,

environmental and economic benefits will flow.