By Susan Burns and Dorie Kranz

The ISO 14001 Environmental Management System Standard (ISO EMS or ISO 14001) was published by the International Organization for Standardization (ISO) in the fall of 1996. It is part of the ISO 14000 series of environmental standards. The technical committee that drafted ISO 14001 (TC 207) comprised representatives from most of the industrialized countries in the world. The ISO EMS is primarily a vehicle--a management system--designed to help a company achieve and demonstrate improved environmental performance. Although it provides little guidance or inspiration in terms of vision, once a vision is established, it can be a powerful system for managing change and moving a company toward a shared goal. ISO 14001 also requires that a company’s policy "provides a framework for setting and reviewing environmental objectives and targets." The Natural Step fulfills this framework requirement elegantly.

The Natural Step is an international organization whose purpose is "to develop and share a common framework composed of easily understood, scientifically based principles that can serve as a compass to guide society toward a just and sustainable future." The Natural Step model articulates the minimum conditions necessary to achieve a sustainable society and has been used by more than one hundred corporations worldwide as a guiding framework for strategic planning.

Why are businesses interested in this framework? Because The Natural Step applies a systems approach to explaining the linkages between ecology and the economy. As nature’s capacity to provide resources continues to diminish and society’s need for these resources continues to accelerate, our economy is increasingly being shaped by ecological pressures. Companies are often bewildered by the complexity of environmental issues. Future boycotts, bans, price increases, and regulations are hard to predict and can be costly if they are not anticipated. For a business wanting to make skillful investments, a crucial strategy is to direct its investments toward activities that are in alignment with nature’s laws. Such a business often gains significant competitive advantage.

The Natural Step was started in 1989 by Swedish cancer physician Dr. Karl Henrik Robèrt. In the course of his review of literature pertaining to health-related effects of environmental contamination, Dr. Robèrt became aware that effective action on environmental problems was being held back by endless disagreement over details. This insight convinced him that what was needed was a way to address environmental issues as an entire system rather than as a series of disparate symptoms. As a cellular biologist, Robèrt knew that certain fundamental requirements must be met if a cell is to survive; similarly, he hoped that the scientific community in Sweden could reach consensus on the fundamental conditions for a sustainable relationship between human society and the rest of nature. Toward that end, Robèrt facilitated a consensus process that resulted in many of Sweden’s leading scientists agreeing on the essential scientific principles that define the basic requisites for life on this planet. Out of these scientific principles derived four statements of eminent common sense that together form a unique and easily understood compass toward a sustainable future.

With The Natural Step providing a compass to steer a company in the direction of sustainability, a company’s ISO 14001 management system can move from a focus on compliance and incremental improvement to a focus on creating a better bottom line and a sustainable, or even restorative, economy.

When a company is considering whether to implement ISO 14001 or The Natural Step, the best strategy is to do both. Together, they form an excellent pair of planning and implementation tools for business.

In addition to being a nice fit of vision, compass, and vehicle, there are other reasons that ISO 14001 and The Natural Step are a powerful combination. The most controversial aspect of ISO 14001, that it is not prescriptive in terms of environmental results, is mitigated by The Natural Step core conditions of sustainability. Both ISO 14001 and The Natural Step expand the sphere of attention to include the environment, a long-neglected aspect of business that often yields economic benefits when improved. Synergistically, they assist a company in behaving like a learning organization.

Below, we discuss in greater detail both ISO 14001 and The Natural Step, and why they make a powerful combination.

ISO EMS--A vehicle

The strength of an ISO EMS is in moving a company systematically toward a goal. It is a system that manages information, processes feedback, and helps a company design, implement, and continually improve programs that lead toward progress on specific goals.

The intent of an ISO EMS, as stated in the introduction of the standard, is "to provide organizations with the elements of an effective environmental management system…to assist organizations to achieve environmental and economic goals." The focus of the standard is in achieving goals, not in setting them. The importance of attending simultaneously to environmental and economic goals is clearly acknowledged. An ISO EMS encourages a company to manage its economic and environmental health simultaneously.

The management system outlined in ISO 14001 is cyclic. The cycle begins with setting an environmental policy. Next, a company plans how it will carry out that policy, and the plans are then implemented. Progress toward goals is continually checked and, when necessary, corrective action is taken. Periodically, the organization’s top management reviews the efficacy of the programs and the continued relevancy of the original policy and plan. At the end of each cycle, a new cycle begins with a revised policy and programs in light of the review, and so on.

• Environmental policy. Each iteration of an ISO 14001 cycle begins with top management setting or amending the environmental policy. The standard does not prescribe a guiding vision for the policy. A company need not have a vision beyond commitment to compliance with environmental legislation and some form of continual improvement and prevention of pollution.

• Planning. To facilitate ongoing evaluation of progress, a company must have procedures to identify environmental aspects and legal requirements, and to determine which aspects have significant environmental impacts associated with them. Focusing on activities with significant environmental impacts, a company then sets objectives and measurable targets for improvement and designs programs to achieve those objectives and targets. The word "measurable" is important. In order to gauge progress on goals and targets, they must be measurable.

• Implementation and operation. Once programs are designed, a company outlines a management structure and assigns roles and responsibilities to carry out the programs. Training needs are identified and employees are trained to ensure that they have the necessary awareness and competence to carry out their responsibilities. Procedures are established and maintained for communication regarding significant environmental impacts to relevant employees and to community members and interested stakeholders. The major components of the EMS must be documented and procedures must be established for controlling documents to ensure that they are up to date and can be located. Operational controls must be established and carried out for all activities that are associated with significant environmental impacts. In addition, the organization must establish and maintain procedures to mitigate environmental impacts associated with accidents and emergency situations.

• Checking and corrective action. The organization must have documented procedures to monitor and measure activities that can have significant effects on the environment. They must also have procedures for handling and investigating nonconformance with those procedures, taking action to mitigate effects caused and for taking corrective and preventive action. Procedures must also be established and maintained to keep environmental records to demonstrate conformance with the requirements of the standard. Periodic audits are conducted to determine if the EMS conforms to the standard and has been properly implemented and maintained. The results of the audits must be provided to management.

• Management review. At the end of each cycle, top management must evaluate the effectiveness and suitability of the EMS. Changes are made to improve the management system for the next round, and they start again through the cycle.

By creating measurable goals and procedures for feedback loops, an ISO EMS increases a company’s ability to create the future it desires. This cyclic process of establishing and following procedures creates a new pattern of attention that includes environmental impacts. This pattern of attention focuses at a minimum on regulatory compliance, continual improvement, and prevention of pollution. If the right long-term vision, such as sustainability as defined through The Natural Step, is embraced as a framework for setting and reviewing environmental objectives and targets, an ISO EMS can help a company make important changes toward strategic advantage through sustainability.

A Controversial Aspect of ISO 14001

ISO 14001 certification does not require companies to achieve any particular environmental results, only to demonstrate their commitment to compliance with the environmental laws where they operate and to demonstrate continual improvement and the prevention of pollution. A company implementing ISO 14001 can choose what aspects it wants to improve to what degree each year. Two companies in the same industry operating in different countries under different environmental laws can have very different impacts on the environment and both still be certified to ISO 14001.

Some people fear that this lack of prescriptiveness makes ISO 14001 ineffective. A company desiring to be certified for the sole purpose of demonstrating its environmental friendliness for market advantage could get certified without making drastic changes. A company operating a heavily polluting business in a country with lax environmental laws could be causing significant damage to the environment and still be certified to ISO 14001.

The up-side of this flexibility is that it allows companies who would otherwise not pay attention to environmental performance to begin giving management time and attention to this important area. By reducing waste and using resources more wisely and efficiently, companies usually find that they begin saving money very soon through better environmental management. This can change the attitude of even the most skeptical manager. Sound environmental management becomes more than a buzz-word attained for its market value: It becomes a new pattern of attention valued for its contribution to the health of the business.

A more serious downside to the traditional ISO 14001 management system certification is the potential for companies to squander valuable time and money setting up a high-powered management system that will be used only to make small changes. If a company focuses mainly on complying with existing environmental laws, ISO 14001 perpetuates the focus on short-term, end-of-pipe solutions that may become obsolete with the next wave of environmental legislation, supplier demand, or natural limits in either resource availability or waste assimilative capacity. This is like building a yacht capable of sailing to a distant continent and using it only to sail along familiar coastlines. The vehicle is not being used to its full potential. Another, smaller, less expensive vehicle could serve the same purpose. Thus, a company considering implementing an ISO 14001 EMS should be sure to choose a framework for decision-making that supports a big enough strategic vision to make the investment pay off.

Unfortunately, although our environmental problems are due to systemic errors in our relationship with nature, our regulatory process is a system that reacts to downstream effects of these errors rather than addressing root causes. This keeps industry reacting to constantly changing environmental regulations. Consider the case of a typical coal-fired power plant. Up until July 1997, such a company was required to remove particulates below the size of 10 microns in diameter (about one-third the thickness of a human hair) from its emissions. Such a company would have invested in equipment such as an electrostatic precipitator to achieve this emission standard. But as the health effects of smaller particles have become apparent, the EPA has passed new regulations to specifically remove particulates less than 2.5 microns in diameter. Because electrostatic precipitators are often unable to do the job, the company may have to invest in an entirely different technology (such as a bag house) to meet this new requirement. Thus, constantly reacting to regulations is not only frustrating, it’s expensive.

We as a society often create piecemeal environmental policies without the benefit of a systems perspective. The recent controversy over the gasoline additive MTBE illustrates our often short-sighted approach. MTBE (methyl tertiary butyl ether) is a methanol-based gasoline additive designed to increase gasoline’s oxygen content and make it burn cleaner, thus reducing air pollution. An unintended side effect of MTBE is groundwater contamination. When gasoline leaks out of underground fuel storage tanks, MTBE is now released with it. This suspected carcinogen has been found to move through ground water farther and faster than other gasoline components and to degrade very slowly. The oil industry has spent more than 4 billion dollars in California alone to retool its refineries to accommodate the MTBE additive. The additive’s purpose is to improve air quality. Are we any further along the path of improving environmental health if the additive creates an expensive groundwater contamination problem?

Any company seeking ISO 14001 certification will need some type of framework to analyze its environmental impacts and prioritize options for continual improvement. There are many possible guidelines for moving beyond compliance. A few that are well known in North America include Agenda 21 from the U.N. Conference on Environment and Development, the CERES Principles, and the International Chamber of Commerce’s Business Charter for Sustainable Development. These all lay out important and valid objectives that would lead to a more sustainable society. However, they are lengthy: Agenda 21 consists of forty chapters, the other two have ten and sixteen paragraphs, respectively. They also mix together process principles such as employee education, environmental measurement, and public reporting with content principles like reducing energy and resource use. This can make them awkward to use in conjunction with a process-oriented tool like ISO 14001. The Natural Step, because it focuses on content (not process), is based on a systems perspective, and focuses on root causes of environmental problems, fits particularly well with ISO 14001.

We should note that the TNS framework does not contradict anything in the above-mentioned frameworks; in fact, it can enhance and even justify, from a systems perspective, the guidelines in these frameworks.

The Natural Step--A Compass

Going back to our metaphor of the yacht, if you were setting out away from the shoreline into the deep ocean, you would surely know what land mass you were aiming for on the other side and have good navigational equipment to point you in that direction. If the desired destination is a successful business in a sustainable society, the best framework and compass we have seen is provided by The Natural Step.

The Natural Step offers a framework of four System Conditions for sustainability--four statements of eminent common sense underpinned by basic scientific principles about which there is virtually no disagreement. The scientific principles and four System Conditions define what is required of us to move from a linear (take, make, waste) economy to a cyclic (waste equals food) economy allowing us to create thriving businesses and a sustainable relationship with nature. The System Conditions are first-order principles that are neither overlapping nor prescriptive. The creativity of the individuals using the framework drives specific changes, not the prescriptions of the framework.

By focusing on scientific principles, The Natural Step transcends the debate over details of specific isolated environmental problems and focuses on the fundamentals of how natural systems work and the forces that undermine or support life on earth. The scientific principles are:

• Matter and energy cannot be created or destroyed. The conservation laws, one of which is also the first law of thermodynamics, remind us of the fact that our waste products do not disappear and that waste disposal is a myth. When we incinerate garbage, for example, it does not disappear, it is merely transformed into molecules of gaseous waste. Because the earth is a closed system to matter, there is no "away."
• Matter and energy tend to disperse. The entropy law, the second law of thermodynamics, says that matter and energy in a closed system are always tending toward a state of greater and greater disorder. Only by the input of outside energy (the sun in the case of the earth) can a system maintain constant or improving levels of order. This means that all matter introduced into society, either from the earth’s crust or from human activity, will eventually be released into natural systems.
• What society consumes is the quality, purity, or structure of matter, not its molecules. Material quality is characterized by the concentration and structure of matter. We cannot consume energy or matter--but we can and do consume material quality. If we as a society turn natural resources into dispersed waste faster than nature can reconstitute the waste into resources, then we are becoming collectively poorer.
• Increases in order or net material quality on earth are produced almost entirely through sun-driven processes. There is only one large-scale source of net increase in material quality on Earth, and that is photosynthesis. Green plant cells, with light from the sun, provide the primary mechanism to reconstitute disorder back into net order.

While these scientific principles are not new, the framework that they form is a breakthrough in making complex scientific principles easily understood. This framework illuminates our systemic interconnection with the environment and is composed of four common-sense "System Conditions" that derive directly from the core scientific principles. These four System Conditions describe the necessary minimum prerequisites for a sustainable society:

1. Substances from the Earth’s crust must not systematically increase in concentration in the ecosphere. This means fossil fuels, metals, and other minerals must not be extracted at a faster pace than their slow redeposit and reintegration into the Earth’s crust. This requires a reduced dependence on mined materials and fossil fuels.
2. Substances produced by society must not systematically increase in concentration in the ecosphere. This means that substances must not be produced at a faster rate than they can be broken down in nature. This requires a greatly decreased production of naturally occurring substances that are systematically accumulating beyond natural levels, and a phase-out of persistent human-made substances not found in nature.
3. The physical basis for the productivity and diversity of nature must not be systematically deteriorated. This means that the productive surfaces of nature must not be systematically diminished in quality or quantity and we must not harvest more from nature than can be recreated. Our health and prosperity depend on the capacity of nature to reconcentrate and restructure wastes into resources. This requires sweeping changes in agriculture, forestry, fishing, and planning of societies.
4. There must be a fair and efficient use of resources with respect to meeting basic human needs. Basic human needs must be met with the most resource-efficient methods possible. A just resource distribution is necessary to ensure the social stability and cooperation needed for making the changes in due time. Efficiency is not only necessary to meet the needs of ten billion people, it is also a largely untapped source of cost savings for companies.

The System Conditions are obviously a tall order, and cannot be met easily in the current economic system. However, they are not meant to be used as prescriptive rules; rather, they are to be used as a tool to help a company describe a future toward which to orient their investments. In this way, they act as a compass, helping a company avoid decisions that will have negative environmental and business consequences.

The power and originality of the TNS framework is that it distills complex scientific principles into four common-sense statements that make it easy for most audiences and age groups to understand sustainability. This shared understanding allows a person, whether a CEO, a line worker, or a supplier, to work with others in his or her own way, toward a common goal. It allows them to think strategically together about the best steps they can take now to invest in a sustainable future.

A company that chooses to manage proactively within the laws of nature will not have to worry about sudden changes in society’s environmental laws forcing them to reinvest.

In contrast to a company trying to keep up with the ever-changing environmental regulations (as in the coal-fired power plant example above), a company using The Natural Step model typically finds that it can avoid many regulations altogether. An example is Electrolux, the largest appliance manufacturer in the world. The company uses sustainability as a driver for new product design. As a result, they make the most efficient appliances in the world. It is not concerned about, nor do they resist, energy efficiency standards because they know they will meet or exceed any standards set for their industry. In fact, energy efficiency standards work to their advantage because they are better positioned to meet these standards than their competitors are.

Looking back at our MTBE example, we know that MTBE is a human-made substance that does not break down in nature and disperses quickly (System Condition 2). The Natural Step model reminds us that persistent chemicals do not disappear, but will increase in the biosphere as long as we continue to produce them, no matter how carefully they are handled. It also reminds us that natural systems--the air, water, and land--are connected. By thinking systemically, perhaps we can make policy decisions that will protect human health and business investments in the long run.

The core concepts of The Natural Step, because they are scientifically based and derived through consensus, offer common ground where people of disparate beliefs and values can discuss environmental and economic concerns without drowning in disputes. It is easier to discuss problems and concerns without criticism, blame, or attack because everyone agrees on the basics.

When people within a company have a shared understanding they can direct their efforts effectively and creatively within that framework. This shared understanding allows individuals from different disciplines to make decisions together that are aimed toward the corporation’s overall policies, goals, and strategy. Using this compass to guide each decision, a company can be sure that choices made today about specific materials and processes are a platform for the next move toward sustainability. It can be confident that the result of each step will be an increasingly sustainable company.

Dialogue and consensus are an important part of the process of applying The Natural Step. When a company decides to take on The Natural Step as a framework, the first step is to educate everyone in the four System Conditions and the underlying scientific principles. The next step is to explore the company’s current situation in light of the model. The work done in an ISO Environmental Management System to document current environmental impacts is valuable in informing this conversation.

Questions are raised about how current material choices and practices violate any of the System Conditions. As that picture becomes clear, the conversation moves not to "How can we incrementally reduce our violations while providing the same product?" but to "What service do we provide, and how can we provide this service while coming into alignment with the System Conditions?" Within a typical ISO EMS, a company might ask questions only about incremental reduction of negative impacts and keep focusing on the end of the pipe. Using the TNS framework, the conversation moves to creating a vision of a sustainable future for the company and the service it provides.

Once a future vision is created, the company charts a path toward that future. Charting a path in this way, known as "backcasting," ensures that each step serves as a firm foundation for the rest. Each step is aligned with the compass.

Achieving the Goal with the ISO EMS

While The Natural Step offers a framework for thinking about the future of a company and deciding which steps to take, it does not offer a system for implementation—and that is where ISO 14001 comes in. ISO’s systematic process of deciding what will be done, educating the people who will do it, measuring the effects, and comparing what happened with what was intended ensures that the company actually moves toward where its compass is pointing.

Together, ISO 14001 and The Natural Step help a business succeed in an economy increasingly shaped by ecological pressures.

Traditionally, corporate attention has been focused on financial flows. This has led to internal financial management systems, third-party financial auditing, and published annual financial statements--all of which we now take for granted as necessary parts of a viable business. The quality revolution expanded the focus of management attention from the flow of capital to the flow of quality. By giving attention to the quality of goods, services, and relationships, through such systems as total quality management and ISO 9000 quality management systems, companies have found that their financial bottom line improves along with improvements in quality. Most leading-edge companies now have third-party audited quality management systems.

We are at the beginning of the expansion, yet again, of management’s sphere of attention to include our relationship with the natural world. Environmental management asks us to consider our consumption of resources and creation of wastes. The pioneering companies that have chosen to proactively manage toward environmental excellence have found that this too contributes to the financial bottom line. It is intuitively sensible that a wiser use of resources and the creation of less waste leads to savings. ISO 14001 and TNS focus companies’ attention on the environment, which helps them manage toward a healthier business and a healthier environment in which to do business.

For example, evidence has existed for quite a while on the dual benefits of environmental excellence and economic success from front-end product and process redesign through programs like Pollution Prevention. In an article in Harvard Business Review, Michael Porter and Claas van der Linde demonstrate with real-life examples their assertion that "ultimately, companies must learn to frame environmental improvements in terms of resource productivity… pollution often reveals flaws in the product design or the production process." [1] Of twenty-nine chemical companies cited in the article that had made product or process innovations to prevent waste generation, 99 percent had a net cost decrease, two-thirds had a payback time of six months or less, 97 percent had increases in product yield, and there was an average return of $3.49 for every $1.00 spent on source reduction.

In addition to the study of these twenty-nine chemical companies, the article also explains how Dow Chemical is saving an estimated $2.4 million per year on a process change that cost only $250,000. 3M, by engineering solvents out of a process at a cost of virtually zero, reduced hazardous waste by 110 tons a year, which saves them an estimated $200,000 per year. Ciba Geigy, also in an effort to reduce hazardous waste, increased yield by 40 percent and is saving about $740,000 per year.

These quantified examples demonstrate that the prevailing sense in business that environmental excellence hurts the bottom line is a myth. Reducing waste, especially through better product and process design, yields long-term financial benefits. The combination of TNS and ISO 14001, which bring management’s attention to the environment, helps a company improve its bottom line.

Peter Senge, in his groundbreaking book The Fifth Discipline, says that "a learning organization increases a group’s ability to create the future it desires."[2] The iterative feedback process—setting policy, planning, doing, checking, reviewing--of an ISO-style EMS uses some of the principles of the learning organization. The Natural Step, because it helps to build a shared vision through a systemic view of the world and through its dialogue and consensus process, uses learning organization principles as well.

When combining The Natural Step and ISO, a company will practice four of the five disciplines of the learning organization:

1. Systems thinking, seeing how events distant in time and space are connected. The Natural Step catalyzes a shift of mind toward our interconnectedness with the ecosystem. The essence of The Natural Step is understanding the natural systems in which we live and seeing our interrelationships and processes of change within that system. Both TNS, through backcasting, and ISO 14001, through creating a systematic management process that focuses on circular loops of attention and feedback, help individuals within a company see how their actions create--and can solve--the problems they experience.
1. Mental models, scrutinizing our internal pictures of the world. The ISO EMS process of learning and working together in a systematic way, observing the results of behavior over time, and adjusting that behavior based on the results, helps a group to unearth and scrutinize its collective internal pictures of the world. Through the collection of information and continual feedback throughout the system about what is and is not working, beliefs are challenged about what is possible, such as discovering that environmental and economic improvements go hand in hand.
1. Building shared vision. With The Natural Step, a company can create a shared vision of a sustainable future that fosters genuine commitment and enrollment.
1. Team learning, the process of dialogue, thinking together in an atmosphere of suspended assumptions. This process is fundamental to how The Natural Step came about and how it moves forward.

Incorporating the fifth discipline--personal mastery--would greatly enhance the effectiveness of the combined TNS-EMS strategic management tool in any organization.

If you want your company to be a learning organization working toward a sustainable future for the company and for the environment, you will be well served by using the combined power of ISO 14001 and The Natural Step. The shared framework and compass of The Natural Step help a company to "do the right thing." Systematic management through an ISO 14001 Environmental Management System helps a company to "do the thing right."

1. Michael Porter and Claas van der Linde, "Green and Competitive." Harvard Business Review, September/October 1995, pp. 120-134.

2. Peter Senge, The Fifth Discipline: The Art and Practice of the Learning Organization.

New York: Doubleday/Currency, 1990.

Susan Burns and Dorie Kranz can be reached by phone at 510-839-8879, or by e-mail at doriekranz@earthlink.net or Susanburns@aol.com.