September 2004

Research Into Growing Implementation Of Environmental Management Systems (EMS) In Small Business

Recent research amongst SMEs indicates the numbers aware of the benefits of environmental management is growing. However, many find it hard to progress beyond the "compliant" level to achieve the further business benefits that are available from integrating environmental management into their everyday business practises.

Involvement in Environmental Management Systems (EMS) is relatively recent in many companies. A recent survey of manufacturing SMEs in the West Midlands shows that the majority had become aware of systems for environmental management only in the last 1 to 2 years. Where not already established, many are now seeking ISO 14001 registration.

Those companies that are pursuing an EMS can be considered as leaders in their sector. A UK wide survey of small business in 28 industries in 2003 showed only 14% of businesses with 50-250 employees had an accredited EMS.

Most companies interviewed in the West Midlands survey who are implementing an EMS, were considered to be at a "compliant" level. Approximately 15% had progressed to an "informed" level, and a further 13% had risen to a "market driven" level, using the following definitions.

Compliant:

A minimum level of environmental management an organisation can adopt for being in compliance with environmental regulations.

Informed:

Spending time and resources collecting information, to go beyond compliance. Typically participating in internal operational improvement and external activities, for example through benchmarks and networks.

Market-Driven:

Responding beyond regulatory requirements to meet existing customers’ environmental expectations - providing enhanced products/services and operational performance.

Competitive Advantage:

Understanding environmental market opportunities and proactively pursuing a leadership market position, making use of wide current knowledge.

Very few smaller businesses, independent of a larger group, have reached a level of competitive advantage. Appreciating some of the drivers and barriers for SMEs may help explain why.

Drivers and Barriers for Environmental Management

Three quarters of the West Midlands manufacturing SMEs sampled experienced or anticipated a demand for environmental management. Half cited benefits in cost savings, in performance management and in customer satisfaction. Some identified the requirement to have a recognised and accredited EMS to join a supply chain, in both home and export markets.

Similarly in the wider "SME-environment 2003" survey, 65% of small businesses agreed that environmental good practice benefited customer relations and 53% agreed that it could help reduce operating costs. Only 26% did not feel there was a link between environmental good practice and winning orders. Approximately half were driven by general concern and half by legislation, where customer pressure was less significant.

In general the smaller the business, the less likely it is to recognise the business benefits of good environmental practice and to act upon them. However SMEs are generally more flexible than larger companies in responding to opportunities.

Barriers to implementation include understanding environmental management, getting senior management commitment and limitations on time and resources.

There is often an adoption of energy efficiency, waste minimization and recycling within a general drive for quality improvement, without having an independent initiative to gain such environmental benefits.

Indeed, enhancing the integration of environmental performance within the existing management systems was the purpose of the research in the West Midlands. Complying with environmental regulations is clearly a necessary step, but realising ambitions for achieving ISO 14001 and raising the level of environmental management towards the level of competitive advantage often require assistance. Nevertheless, there are many examples of cost-benefits to internal and external stakeholders for managers who are prepared to lead in becoming informed and market-driven.

For a review of your environmental performance and advice on environmental management, particularly for integrating management systems and training at all levels, contact Aneeta Patel or Steve Stones via email or telephone 024 7627 9000.

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