14001: context is everything

26th February 2015


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John Hooper

Understanding an organisation and its context is required by the revised 14001 standard. Greg Roberts discovers how.

The clause in 14001: 2015 to understand the organisation and its context will require high-level understanding of the important internal and external issues that can affect an organisation's environmental management system (EMS). A workshop approach to increase cross-functional understanding and input from across the organisation would be one way to ensure this requirement helps improve the effectiveness of the EMS.

But an EMS tends to be the exclusive domain of only one or two people, disconnecting it from the rest of the business and, with the exception of environmental issues, what is happening in the outside world. As a result, the system often lacks exposure to "big picture issues", which have the potential to seriously affect, negatively or positively, the ongoing success of the EMS and the business itself. Examples of such issues include a possible change in government, a changing workforce or future restrictions on accessing critical substances. Such issues could be a threat or an opportunity or both, and apply to the environment and the organisation. If the revised standard helps an organisation to identify, assess and manage risk, it, as well as the EMS, will prove its extra resilience.

Focusing on these kinds of "macro" issues is not familiar EMS territory, though arguably it should be, given that they could limit the success of a system. 14001: 2015 will require organisations to think beyond risk in the sense of environmental aspects but also consider the risk to the success of the EMS itself.

Intended outcomes

The revised standard will require organisations to determine external and internal issues that are relevant to its purpose and that affect its ability to achieve the intended outcomes of its EMS. The term "intended outcome" refers to what the organisation is required to and wants to achieve by implementing the EMS. The minimum intended outcomes under the revised standard are likely to include enhancing environmental performance, complying with statutory obligations and fulfilling environmental objectives. However, ISO 14004 - the guidance document on establishing, implementing, maintaining or improving an EMS, which is also being revised - encourages organisations to set additional intended outcomes. These could include going beyond the EMS or legislative requirements by, for example, adopting social and environmental sustainability principles.

A further element of the requirement to understand the organisation and its context is that practitioners will also have to consider environmental conditions affecting the organisation as well as those conditions the business affects. This flips the existing demand, "what is our impact on the environment?", to one that also considers the effect of a changing environment on the organisation. Obvious examples are climate change, resource scarcity and decline in natural capital. This widens the interaction with other processes, such as business continuity and corporate risk, and raises the value of 14001 across the organisation.

Determining context

Although the revised 14001 standard does not specify how to determine context, 14004 suggests organisations undertake a context review. This could include interviews, questionnaires, surveys and research. However, what is fundamental is that the process receives input from all departments, including finance, training, human resources and commercial and design, to gather a breadth of expertise. Not only will this ensure an appreciation of the context but also wider engagement, particularly with those functions not previously involved with the EMS. This support will be critical for every other requirement of 14001: 2015.

A valuable way of undertaking the context review is to hold a workshop to share ideas. A PESTLE analysis can be used to structure the conversation and help to achieve buy-in to what is often seen as a peripheral or niche area. This type of analysis can be used to develop an understanding of the external context in which an organisation operates as well as the internal context. It has six themes:

  • Political - Who is or could be in government? What are their policies? What about internal politics, organisational structure and style?
  • Economic - Is there growth or recession? How about inflation levels? Are interest and exchange rates rising, falling or stable? What capital is available?
  • Social - What are the changing demographics and trends? What are the main concerns of society?
  • Technological - What new technology or materials are emerging? What is the cost of renewables? What are the levels of internal R&D expenditure?
  • Legal - What are the changes in international, European, national and local policy? What is the internal structure to manage legal compliance?
  • Environment - How is the environment changing due to, say, the impact of climate change, local air quality and the availability of space?

In practice

Manufacturers' organisation EEF has used such an analysis to support a number of companies. Ervin Amasteel, a steel abrasive manufacturer in Tipton, West Midlands, and NOV Downhole Eurasia, which designs and manufactures drill bits for the oil and gas industry and is based in Stonehouse, Gloucestershire, are two examples. Ervin Amasteel is implementing 14001 for the first time this year, while NOV Downhole Eurasia is changing its existing EMS to the revised standard.

Before undertaking the PESTLE analysis workshop, the cross-function senior management teams from both companies benefited from participating in IEMA's course on leading with environmental sustainability. The half-day sessions were facilitated by EEF. The course allowed participants to identify for themselves the particular relevance of environmental sustainability to their organisation, allowing them to discuss the changes that would be required by their companies and what their business would look like in 2030.

This vision was achieved by answering simple questions, such as: Where will we get our energy from? Where will our waste go? What will our product look like and how will our business model have changed?

The one-page vision document the group developed brought to life the intended outcomes of the EMS, since it is these that the system will be required to achieve in the long term. It made identifying the issues a relatively straightforward process, as managers could more easily visualise those issues that would help or hinder the achievement of this long-term vision.

Richard Jordan, general manager at NOV Downhole Eurasia, said: "The vision we produced was more than just an environmental exercise. It made us question where we were going, gave the management team a real sense of purpose, and supported our commitment to delivering sustainable and efficient manufacturing.

To ensure the involvement of every participant, smaller groups worked through a prepared template, which was split into the six PESTLE themes and provided several areas to consider. Participants were asked to identify the issue but also the threat or opportunity it posed. Feedback was collated and a summary of the results from the two workshops is provided in the panel below.

The revised standard requires an organisation to take action on the issues that present the greatest threat or opportunity to the success of the EMS. The response may centre on environmental objectives or operational control, although it is just as likely that the identified threats and opportunities will have to be addressed through other processes, such as business continuity, business strategy or financial planning. Ervin Amasteel and NOV Downhole Eurasia undertook a simple risk assessment using a 5 X 5 matrix - consequence x likelihood of occurrence - and are using the results to develop a response.

The workshops highlight the robustness that the requirement in 14001: 2015 to understand the organisation and its context will bring to an EMS and how the PESTLE analysis approach can help participants grasp the complexity of risks, threats and opportunities. It is something Phil Ripley, commercial director at Ervin Amasteel, is keen to highlight: "We had tended to focus on the environment as the preserve, and the problem, of manufacturing. The workshop has led us to review the wider implications for our industry, with additional focus and guidance to suppliers and customers in terms of sourcing and disposal. This may in turn also lead to an additional revenue stream.

Understanding the organisation and its context will be the first requirement of 14001: 2015. Implemented correctly, it can be used to engage senior managers not normally involved in the EMS to consider environment as a strategic issue. This will increase the resilience of the EMS and contribute further to organisational success.

Tips on conducting a PESTLE workshop

  • Before the workshop, find out who has experience of using PESTLE. They can assist or act as a supporter during the discussion.
  • Obtain results from earlier analysis - this will be relevant even if not captured for environmental reasons.
  • Do not get too bogged down in collecting vast amounts of detailed information - the workshop should not be seen as a project in itself. Understanding will improve over time.
  • Encourage participants to ask: "So what?" Only those issues that can affect the intended outcomes of the EMS deserve a lengthy discussion.
  • Do not worry too much about placing the issues under the right PESTLE theme because some will cross over two or more - just ensure the issue is captured.

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