Raising the ISO bar Some of Maine’s largest companies are finding efficiency – and a greater chance of survival – in a new breed of environmental management

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Early in 1999, the bloom was still on the New Economy, the dot-com bubble had yet to burst, and Ruth Lane was in search of a durable concept. As the human resources director for auto parts maker Z.F. Lemforder in Brewer, Lane was advancing a set of environmental initiatives to reduce waste and health hazards, increase efficiency and – it is hoped – save the company some money.

“We were looking for ways to go beyond [regulatory] compliance,” said Lane, who is now in her 20th year with Lemforder. “We had a lot of programs and procedures in place, so the ISO 14001 certification seemed like a natural way to take that to the next level.”

The ISO who?

It may be an eye-glazing label, but ISO 14001 is an international certification gradually being accepted by some of the largest companies in Maine. Introduced in 1996 by the Geneva, Switzerland-based International Organization for Standardization, the program is a system aimed at increasing efficiency by cutting back a company’s pollution, waste and demand for natural resources.

In the European Union, the certification quickly became a key piece of the regulatory scheme. In the United States, the designation has been slower to catch on. This year, however, a total of 1,625 new certificates since January boosted the U.S. total to 5,323 ISO 14001 companies.

Maine is home to 23 of those. That might sound slim compared to the 936 certified operations in Michigan or the 453 in Ohio. But measured as a percentage of total employer businesses, Maine ranks above California and on a par with New Hampshire and Massachusetts.

Granted, the numbers are minuscule – fractions of a percent of each state’s total businesses. But they suggest Maine is off to a decent start in what many see as an increasingly important designation on international markets. Whether or not there is value in such a start depends on whom you ask.

Jack Kanholm is a Danish engineer who helped introduce ISO 9001, an earlier set of standards, in Europe and the United States during the 1980s. He has also played a key role in the uptake of the new environmental program.

After auditing thousands of companies, the engineer says operations that adopt ISO 14001 invariably become more efficient, more accountable and more aware of how their processes influence the environment. A higher percentage of ISO registered companies in a particular state or region, he said, is a positive mark on the management mind-set.

“It is certainly an indicator of a more forward-looking and modern industry,” he said. “There is absolutely no doubt in my mind.”

Wherefore ISO?

Businesses tend to invest in ISO standards more on the basis of survival, however, than idealism. The 9000 series standards, which are designed to verify and improve quality, are a basic requirement for any company in order to sell products in European Union markets. The trend then spread to the automobile industry during its death struggle with Japanese automakers in the 1980s.

“Automakers decided it was a shortcut to improving quality, so they adopted ISO 9000 themselves, then required it of their vendors,” said Norris Dale, a Portland-based engineering consultant who performs ISO audits for Maine companies.

Today, there are almost 43,000 ISO 9000 registered companies in the United States, with 109 of them in Maine. Most are small to medium-sized manufacturers – tool-and-die makers, apparel or furniture manufacturers. But the group also includes larger operations – paper mills, defense contractors and electrical firms – needing to maintain micrometer-fine tolerances across millions of widgets.

Lemforder, which makes ball joints, stabilizer links and other auto suspension components, is ISO 9000 certified. It was also an early adopter of the new environmental standard. The company earned its 14001 certification midway through 1999, and the timing was propitious. By the end of that year, Ford Motor Co., one of Lemforder’s major clients, announced it would require all its vendors to be ISO 14001 certified by July 2003. General Motors and DaimlerChrysler followed suit.

The first steps for Lemforder were to recognize the operation’s various waste streams: steel turnings, cardboard, plastic, paper and scrap steel. Lane said that since 2002 the company has reduced its solid waste output by 23 percent per part produced. The process also halted any further purchase of what had been a significant source of hazardous waste as well as toxic compounds in the plant’s atmosphere: aerosol cans of solvents and lubricants. Lane said the current issue on Lemforder’s chopping block is consumption of energy and fuel.

To maintain certification, ISO 14001 companies must undergo thorough review every six months by an independent auditor. Lane shopped for an audit firm geared to help the company push the envelope – one willing to foster continuous improvement rather than simply audit for basic non-conformities.

“Some audit companies are more stringent than others,” she said, “and the point of this was not to get a rubber stamp.”

At the nearby Osram Sylvania plant, orders from the company’s central command in Danvers, Mass., directed its environmental and tooling manager, Edward Doiron, to implement the ISO 14001 system in 2000. Doiron brought the program online over a period of six months, and said it was an educational process.

“It forces you to identify everything,” he said. “You write everything down, from the time it comes through your shipping door, all the way through your facility. Wherever you consume resources, you have to write programs to reduce or improve those processes and to help eliminate the impact on the environment.”

Doiron inventoried Osram’s use of chemicals, cutting back on the use of several compounds the company had to dispose of as hazardous waste. The plant tightened up its energy consumption, and began to create supply loops, leading to the reuse of things like plastic packaging customers had previously tossed into the trash.

The improvements weren’t enough, however, to save the plant or its 66 jobs – now in the final stages of shipping out to an offshore Osram facility in Monterrey, the capital of Nuevo Leon, Mexico. Nuevo Leon, a state with about twice the population of Maine, is home to 32 ISO 14000 certified companies. Next door in Coahuila, a state with 2.3 million residents, there are 58 such operations.

Forests for the trees

Offshore facilities built to feed U.S. markets were the springboard to Mexico’s ISO participation. The catalysts in Maine were more varied. One of the biggest prods grew out of the Green Party referendums in the late 1990s attempting to ban clear-cutting of timberlands.

Voters nixed those referendums, but the vicious political battles spurred a Washington-based industry group, the American Forest & Paper Association, to draft the Sustainable Forestry Initiative. The SFI, and comparable efforts by the Forest Stewardship Council and the American Tree Farm System, set out specific guidelines for management of erosion control, water quality, wildlife habitat, threatened and endangered species, and silviculture practices.

In Maine, International Paper, Domtar Industries Inc. and Fraser Papers Inc. adopted ISO 14001 as a tool to help to launch SFI, and to verify and document the results.

“You could do the best job in the world on the ground in terms of taking care of the forest and the animals and the water, but if you don’t have good documentation and processes set up, it won’t stand the test of audit and certification,” said Joel Swanton, who manages the SFI program on International Paper forestland from Maine to Minnesota. “ISO is the tool we use to do that.”

An agent of change

Criticism of ISO 14001 comes from all sides. Some companies complain the exhaustive documentation can bog down, rather than improve, operating efficiency. Environmental advocates say the certification is too often pasted on as a public relations ploy, masking irresponsible behavior. Corporate lawyers commonly resist the move to ISO 14001, saying it will measure and document what they see as potential liabilities regarding the environment and health, and could be used against the company in certain situations.

Jason Denner is a commercial industrial engineer at the Rocky Mountain Institute, a Snowmass, Colo.-based consulting agency that weds business practice to innovative environmental thinking. Denner explains that, from an environmental perspective, ISO certification is more a steppingstone than a symbol of having arrived.

“A lot of this is about corporate change – you are changing the consciousness of the people making management decisions,” he said. “ISO 14001 is a good thing in the sense that it is an agent of change for a lot of corporations.”

Like any measurement and verification method, the system has shortcomings. In spite of third-party audits, ISO 14001 rules do potentially allow companies to maintain certification while simply quantifying inefficient and irresponsible performance.

But Denner contends that engaged, competitive businesses tend to go after the untapped value typically revealed through the process of ISO reporting. There are also some managers who ignore that potential and stick to business as usual.

“What you do with that information and how you use it to improve your business, that is where progress on environmental issues is really made,” Denner said.

It is also true that an ISO system demands time and money to implement and maintain. The potential return on that investment isn’t always obvious beforehand, when the decision to adopt or forgo the system is being made, according to Henry Whittemore, director of the governor’s forest certification initiative launched in July 2003.

Years of managing certified timberland for Hancock Timber Resource Group, a subsidiary of John Hancock Financial Services Inc., taught Whittemore that markets continue to offer little, if any, direct financial payback for the cost of certifying woodlands. That may change as the state and industry attempt to foster a high-end market, where certified wood products would earn a price premium. In the meantime, Whittemore said, the ISO programs do play a role in fostering an attitude of efficiency and continual improvement. And Denner’s observation on the nature of change has held true among Maine’s larger timber operations.

“At first the foresters came sort of kicking and screaming, but eventually they realized this was a good thing,” Whittemore said. “And it ultimately empowered them to practice the good forestry that they got into the business to do in the first place.”