Integration of management systems – Towards more sustainable management systems

The development of the standards for management systems such as ISO 9001, ISO 14001 and OHSAS 18001 are moving towards a higher degree of compatibility. At the same time, organisations with more than one management system increasingly consider to or integrate these management systems. The paper discusses this development and presents different levels of integration. The aim is to suggest the next steps in order to improve integration that promotes more sustainable management systems. Expansion to stronger product-oriented management and stakeholder focus in the standards for management systems are suggested and the need for a common integrated ISO standard is discussed. Finally, the need for changes in lifestyle and needs is presented as the next step towards more sustainable management systems. 1. Increasing compatibility of standards In recent years, the revision of ISO 9001, ISO 14001, EMAS and OHSAS 18001 has resulted in an increasing number of similarities between the different standards and has made them more compatible. This development is shortly presented below. In 1987 and 1994, the first two editions of ISO 9001 were published. With the latest revision of ISO 9001 in year 2000, among other things, the focus on customers and continuous improvements was strengthened. It made the system more orientated towards the product chain in which it operates. Another important revision was the greater alignment with ISO 14001:1996 in order to enhance their compatibility (ISO, 2000). ISO 14001 was first published in 1996 and was then revised in 2004. The content of the revision was relatively minor, though the compatibility with ISO 9001:2000 and the connection with EMAS II were improved (Dansk Standard, 2004). A common standard for auditing, ISO 19011:2002 for quality and/or environmental management system, was also developed and it shows an example of an integrated standard because of the major similarities in the two systems. An ISO standard for occupational health and safety has not yet been developed. Currently, there is no plan in ISO for such a standard, because it has been voted for twice and then turned down at both times. In stead, international certifying bodies developed OHSAS 18001 with the basis in BS 8800 due to a demand in industry. OHSAS 18001 was published in 1999 and can be viewed as a de facto standard which is used internationally. The standard was developed to be compatible with ISO 9001:2000 and ISO 14001:1996 in order to facilitate integration with other management systems (BSI, 1999). In 2004, ISO decided to develop an international standard providing guidelines for social responsibility and this is expected to be published in 2008. The developments of the standards for management systems toward compatible standards enhance the integration of the standards in practise. 2. Three levels of integration The increasing compatibility between the standards promotes the integration of the systems at company level with the potential of reducing administrative burdens due to internal coordination, competitive advantages and progress towards a more sustainable management system. A distinction between three different levels can be made: Correspondence, Generic and Integration as presented below (Jørgensen, Remmen and Mellado, 2006): Correspondence Cross references and internal coordination in order to reduce add-on problems of different parallel management systems, reduce duplication of paperwork and confusion between demands of different standards. From an administrative point of view the following benefits could be obtained: • Minimisation of documentation and records; • Less bureaucracy and reduction of paperwork; • Cost savings by optimisation of time and resources assigned to the system; • Simplification of internal and external audits. However, correspondence can be viewed only at the first step towards an integrated management system. The generic level goes one stop further. Generic A prerequisite for integration is an understanding of generic processes and tasks in the management cycle – the plan-do-check-act, and the potential benefits of such integration are: • More focus on interrelations – synergies as well as trade-offs – between quality, environment, occupational health & safety, and social accountability; • Objectives and targets are set up, coordinated and balanced; • Organisation and responsibilities are defined in one place. Integration An even more ambitious level of integration is concerned with creating a culture of learning, stakeholder participation and continuous improvement of performance in order to realize external benefits and to contribute to sustainable development. To realize this ambition, focus of the management system has to be on the synergy between customer-based quality, productoriented environmental management as well as corporate social responsibility. The third and highest level, namely integration is necessary to reach, in order to move towards a more sustainable management system. The current question is, how can the standards and the compatibility be further developed in order to promote more sustainable management systems in industry? 3. Towards more sustainable management systems Industry and sustainability have growing attention. The concept of sustainability is becoming more operational at company level, whereas earlier the concept was primarily discussed at international and national level. The unsustainable production processes and products can be found in all parts of the product chain, whether it regards quality, environment or health and safety. In order to find solutions to reduce these impacts and become more sustainable, it is necessary to have a more holistic view on production processes and products and to be aware of the interdependence of various stakeholders in order to reduce these impacts. Product development, new technologies and closer stakeholder collaboration are some of the elements necessary in order to find more sustainable solutions. There is an increasing pressure from regulation and markets for development of more sustainable products. For instance Integrated Product Policy and Extended Producer Responsibility (for packaging, cars and electronics) are increasing the legal, market and financial pressures on manufacturing industries to develop sustainable products (Maxwell and van der Vorst, 2003). Another example is the increasing focus on the social conditions of workers at suppliers in third world countries. Customers and consumers become less willing to accept violations of human rights, health and safety, freedom of association and discrimination etc. The concept of sustainable management systems could be the value basis, building on a balance between economy, environment and social responsibility. For industry to become more sustainable, the responsibility of their activities should be expanded from the production site to the whole product chain. With a product-oriented approach the focus shifts from within the companies to the entire product chain (figure 1). Figure 1. Communication and cooperation in the product chain (Remmen and Münster, 2003). In the following, it is discussed to what extent the standards for management systems today support the requirements for industry to develop more sustainable products. In relation with the quality management systems ISO 9001:2000, industry is already experienced in dealing with the product chain in relation with the focus on customer needs and demands to suppliers. With the demand for increased customer focus, the ISO 9001 standard places increased focus on value and money flow in the product chain (Dansk Standard, 2000b). By this, ISO 9001 place higher demands on the product chain than EMAS and ISO 14001 do today. With the revision in 2000 of ISO 9001 for quality management systems (QMS), the focus on customers and continuous improvements became stronger. The circles and arrows in ISO 9001:2000 symbolise a dynamic and continuous process (see Figure 2). With focus on the customers, their demands and their satisfaction, the organisation has to be more oriented towards the product chain in which it operates. Figure 2. Model of process-based quality management system (Dansk Standard, 2000b). ISO 9001:2000 also provides some requirements for the purchasing process that include you as the customer. These requirements address the following topics (ISO, 2006): • requirements regarding the purchasing information that should be provided so that suppliers clearly understand their customers' needs • the ways in which supplied products can be verified as meeting the requirements of the customer Though ISO 9001:2000 focus on customer needs and satisfaction and suppliers, the main focus is on the organisation and how the organisation are able to comply with customer needs. In order to move towards a more global perspective, the organisation could focus more on TQM. The illustration of the EMS in ISO 14001:2004 illustrates the system elements (plan-docheck-act) and continuous improvements but it does not relate to the stakeholders and the product chain (figure 3). With point of departure in QMS (figure 2), the model for EMS could be developed with the purpose of stating the importance of the organizations’ relations with relevant stakeholders and the product chain. A closer relation between ISO 14001 and the relevant stakeholders could also promote environmental improvements in the product chain because the certified company will have to be more conscious about stakeholder interests and react on it. In ISO 14031:1999 about environmental performance evaluation, the relation between the organisation and environmental conditions and interested parties are illustrated (figure 2). But as long as it is not included more clearly in ISO 14001, only few organisations will probably include this on their own initiative. Figure 3. Environmental management system (left) (Dansk Standard, 2004). Interrelationships of an organization ́s management and operations with the condition of the environment (right) (Dansk Standard, 2000b). In ISO 14001 the demand for life cycle considerations is vaguely formulated. In EMAS II the demands for indirect impacts have been strengthened: “An organisation ought to consider both direct and indirect environmental aspects of its activities, products and services” (European Parliament, 2000, Annex VI, 6.1). In Annex VI, both the direct and indirect environmental aspects as well as the organisation are described. The environmental statement today must, among other things, include: “A description of all significant direct and indirect environmental aspects which result in significant environmental impacts of the organisation and an explanation of the nature of the impact as related to these aspects” (European Parliament, 2000, annex III, 3.2.b). EMAS II could increase the attention of the registered companies to its impacts in all parts of the product chain; though, without placing direct demands on the individual company to reduce their indirect impacts. These demands can be viewed as the first step to companies’ implementation of POEM in a future perspective. In principle, ISO 14001 holds demands for product oriented environmental management in certified companies as among other things, the scope for the standard states that: “It applies to those environmental aspects that the organization identifies as those which it can control and those which it can influence.” (Dansk Standard, 2004). Most companies, however, do not consider themselves to have an influence on environmental performances other than from their own production processes. For instance, companies producing energy consuming products to households must be considered to have an influence on the energy consumption of the products. Therefore, the use of these products must be an environmental aspect to be included in the company’s EMS. The standard for occupational health and safety management systems, OHSAS 18001 is illustrated with the same type of figure as ISO 14001:2000 (figure 3). OHSAS 18001 also has main focus on the production processes and the specific site of the organisation and it does not include considerations of the product chain. On the contrary, the concept of corporate social responsibility, CSR, has a strong focus on suppliers and other stakeholders. Industry is becoming increasingly interested in CSR, with focus on human rights, child labour, forced labour, work hours, health and safety etc, and often focuses especially on suppliers in order to meet the customers’ demand for satisfactory working conditions before buying a product. The present development of a guideline for Social Responsibility (SR) in ISO currently discusses the focus of the standard. One question is whether to include occupational health and safety in the organisation (the site) together with the product chain. If the organisation itself is to be included, the forthcoming SR-guideline will be the first to include both the organisation (the site) and the product chain in the same standard. As ISO does not have a standard for occupational health and safety, it would be a good idea to include it in a standard for SR. Good health and safety conditions in an organisation are important to improve the social element in the concept of sustainable management. But the forthcoming standard for SR will only be a guideline and not a standard as basis for certification. The importance of stakeholder cooperation and communication in relation to activities of environment, health and safety and CSR is often emphasised, but today this is not reflected in the standards. For both ISO 14001 and OHSAS 18001, a strengthened focus on the environmental and health and safety impacts in the product chain and a clearer focus on stakeholders would make these standards more compatible with ISO 9001. This would also move the certified companies towards a more sustainable management system with a more holistic approach to their activities by realising that the production is part of a big production system from cradle to grave and that the companies have a responsible for improvements and reduction of impacts in the product chain. Demands for product oriented management in quality, environment and social responsibility should be strengthened in the standards, because only few organisations work seriously with this on their own initiative. Standards are developed to secure high standards, and to secure high standards, the demands must be continuously strengthened in order to meet the demands of current knowledge and current expectations in society. 4. Need for an integrated ISO standard for IMS? Instead of standardising each standard for management system, the development of the standards could converge towards one basic structure building on continuous improvements. This creates an opportunity for developing a unified system based on a common standard, extended with for instance quality, environment, health and safety and social responsibility. The common standard could be the basis for the different kinds of areas within which a company would like to comply. On top of the common standard, individual standards of e.g. quality, environment and occupational health and safety should still exist, but these standards should only cover demands for one area. It should not be possible to become certified only according to the common standard as there would be no substance in the system. A certification only makes sense in connection with one or more subject areas. (Jørgensen and Simonsen, 2002). The development of the standards moves towards greater compatibility as presented earlier in this paper. The question is whether the creation of a common standard, would promote more sustainable management systems, as basis for an integrated management system with supplements for each of the four areas: quality, environment, occupational health and safety and social accountability. The described model for an integrated standard for management systems would probably motivate more organisations to integrate their management systems, because it would be easier to find out what to add in order to implement a new subject area and to use the same common standard for both areas. Integration of management systems does not in itself promote more sustainable management systems. This depends on the level of integration. The first two levels of correspondence and generic (presented in part 2) may increase the consciousness in the organisation of the interrelations between quality, environment and occupational health and safety. At level three, integration concerns the creating of a culture of learning, stakeholders and focuses on continuous improvements and synergies between the subject areas and creates a good basis for working towards a more sustainable management system. Figure 4 illustrates the different standards and the transverse connections between them. The actual management systems can be viewed as a transverse connection between the different standards, where the standards have a number of similarities and common activities (for instance policy, aims, documentation, and evaluation). The second transverse connection is the life cycle perspective of the products and the need to co-operate with stakeholders and other networks in relation to the product chain (figure 4). Companies’ internal focuses on processes are rather insufficient. It is necessary also to include the companies’ external relations and the entire product chain. Though, the internal approach to EMS forms a good basis for extending this focus. The company needs to intercept changes in surroundings through co-operation, openness and dialogue, and to react on this by changes in strategies and the management systems, in order to adapt new demands and conditions in the surroundings. The third transverse connection is the learning organisation, the dynamic and innovative dimensions, internally by building up relevant competencies in the companies. Handling an integrated management system can be complex, and it will require continuously rebuilding, updating and innovative development within the different areas of the management system. The Danish pharmaceutical company Novo Nordisk views the road towards sustainable development as a learning process: “Moving up the learning curve, there is no magic formula for sustainable development. That is why we need to create the appropriate learning processes. By putting our thinking into practice, we also build up our competencies. In this learning process, we identify best practices which we can apply in new areas of sustainable development” (Novo A/S, 2000). Figure 4. Integration of standards and types of organisational change (Inspired by Jørgensen, 2001). ISO 9001/ TQM OHSAS 18001/CSR ISO 14001/ LCA, ecolabels etc Learning Organisation Management Systems Product focus and interaction with stakeholdes For companies with an integrated management system, it would be natural also to integrate reporting of the different areas of the management system. The reporting could enter into a sustainable perspective, where the company relates its activities to sustainability as a method of working towards a more sustainable production. Figure 5 illustrates the connection between management of knowledge, integrated management systems and sustainability reporting. Figure 5. Knowledge management and a basic standard as the basis for integrated management and sustainability reporting (Jørgensen, 2001). Global Reporting Initiative has published a guide for reporting in regards to sustainable development: “Sustainability reporting guidelines on Economic, environmental, and social Performance”. The aim of the guidelines is to assist organisations in reporting information on the three elements: economy, environment and social issues. These elements are handled separately in the report guidelines, but over time, the reporting framework will move towards a more integrated reporting structure. (GRI, 2002). The companies’ reports regarding sustainable development do not imply that the companies are becoming sustainable. Sustainability reporting can support the companies’ activities towards a more sustainable production and it can help create company values regarding a sustainable production. 5. IMS in the Danfoss Group In this part, experiences with integration of management systems for quality, environment and health and safety Danfoss in Denmark is presented. The Danfoss Group employs more than 18,000 employees with net sales of about 2.2 billion EUR. They develop and produce mechanical and electronic products and controls e.g. Refrigeration & Air Conditioning, Heating & Water and Motion Controls. On the home page, the Danfoss Group states: “We aim to meet the expectations of our stakeholders by being a highly respected company, improving quality of life by mastering advanced technologies in customer applications, while focusing on environmental and social responsibility.” (The Danfoss Group, 2006). Danfoss has chosen to integrate the three different management systems, because the systems have a number of common elements. They would like to manage these common elements centrally in the organisation, and not on the specific site. These elements include (The Danfoss Group, 2005): • Management responsibility • Resources and infrastructure • Aim, control and measurement • Employees, development and education