Eco-auditing (corporate environmental auditing or environmental management systems auditing) may be defined as a systematic multidisciplinary methodology used periodically and objectively to assess the environmental performance of a company, public authority or, in some instances, a region. Eco-audits can be done in-house, by a government team, or by an independent, accredited specialist or team.
So far, it has been mainly a voluntary process (in relation to finance and company matters, ‘auditing’ implies involuntary) that seeks to increase public awareness and aid the quest for sustainable development. Sometimes eco-audits are not voluntary:
there have been cases where shareholders have demanded eco-audits at public meetings (The Times, 11 April 1997:25), and aid agencies increasingly demand them before granting funding.
Impact assessment deals with potential effects of proposed developments; eco-auditing focuses on actual effects of established activities. Both impact assessment and eco-audit can be valuable tools for environmental management provided that management is committed to adequate action on the findings.
Eco-audit evolved as a management tool in the USA in the 1980s as companies were held more responsible for the damage they caused and realized the need for a green image (EPA, 1988; Shillito, 1994; Buckley, 1995; Gilpin, 1995). It has been promoted in Europe by the International Chamber of Commerce and by some multinational corporations as a means of getting effective environmental management (International Chamber of Commerce, 1989; 1991). A significant step forward has been the development of eco-audit standards/environmental management and audit systems, the world’s first being offered by the British Standards Institution (BS 7750) in 1992. This moved beyond assessment of environmental effects to ensure that bodies made commitments to continual environmental improvement.
Eco-audit handbooks and guidebooks began to appear in the mid-1980s (Harrison, 1984; Blakeslee and Grabowski, 1985; Grayson, 1992; Local Government Management Board, 1991; 1992; Thompson and Therivel, 1991; Spedding et al., 1993; McKenna & Co., 1993; Richards and Biddick, 1994). In 1986 the US Environmental Protection Agency issued an Environmental Auditing Policy Statement, designed to encourage the use of eco-audits by US companies, and laid down guidelines.
Eco-audit is increasingly practised in the USA, Europe, Australia and other developed countries, further impetus being given by the publication of Agenda 21, and by the European Commission’s Fifth Environmental Action Programme (1992).
The latter seeks to promote ‘shared responsibility’ (by people, commerce and government) for the environment, popular green awareness, and a move towards sustainable development, and it supports eco-audit (see Figure 4.1). In 1992 18 of the UK’s top companies undertook eco-audits; by 1996 roughly half the country’s firms had eco-audited—a rapid, voluntary spread. Eco-auditing is part of a growing shift from mere compliance with regulations to developing forward-looking environmental management strategies (Willig, 1994; Sunderland, 1996), so it supports the principle of prudence. There has been less progress in developing countries,
although India has modified its Companies Act to include a requirement for eco-audits, and Indonesia has required companies to conduct eco-audits since 1995.
Eco-audits offer some or all of the following benefits:
♦ they generate valuable data for regional or national state-of-the-environment reports;
♦ they are a means for ensuring the continual improvement of environmental management;
♦ they may be a valuable way of monitoring;
♦ they can help establish an effective environmental protection scheme, which may reduce insurance premiums (Finsinger and Marx, 1996);
♦ they can assist efforts for sustainable development;
♦ they can inform the public about the body’s environmental performance, which is good PR;
♦ they can help involve the public in environmental management;
♦ they help identify cost recovery through recycling, opportunities for sale of by-products, etc;
♦ they reduce risks of being accused of negligence and losing court cases;
♦ they may reduce the need for government inspections;
♦ they can ensure that often complex regulations are known about and followed and licences are obtained;
♦ they offer management more peace of mind.
There may also be risks associated with eco-audits:
♦ they may spot a problem that is costly to cure, which might otherwise have been overlooked without too much harm;
FIGURE 4.1 European Union Eco-Management and Audit Scheme (EMAS) eco-audit award logo
Note: This can be used on a company’s brochures, letterhead, reports and advertisements, but must make no reference to specific products or services, and may not be used on product pacakages.
♦ they can be expensive;
♦ a body may fear trade secrets will be exposed to competitors;
♦ smaller companies cannot do eco-auditing in-house and must use specialists from outside (costly, with a risk of loss of trade secrets).
There are two broad categories of eco-audit: (a) industrial—private sector corporate eco-audits, (b) local authority or higher-level government eco-audits (sometimes called ‘green charters’) —these are more standardized than industrial (private sector) corporate eco-audits, and are commissioned by local authorities to show local environmental quality (Levett, 1993; Barrett, 1995; Leu et al., 1995) (Box 4.1). Some local authorities produce state-of-the-environment reports which are not the same as audits carried out as part of an environmental management system approach (see later in this chapter).
BOX 4.1 Types of eco-audit
♦ Site or facility audit a company or body audits to see how it conforms to safety and other regulations and care for the environment.
♦ Compliance audit to assess whether regulations are being heeded and/or policy is being followed.
♦ Issues audit assessment of the impact of a company’s or other body’s activities on a specific environmental or social issue, e.g. rainforest loss (Grayson, 1992: 40).
♦ Minimization audit to see if it is possible to reduce: waste; inputs; emission of pollutants (including noise); energy consumption, etc.
♦ Property transfer audits (pre-acquisition audit, merger audit, disvestiture audit, transactional audit, liability audit) —a company or body audits prior to disvestiture, takeover, joint venture, alliance, altering a lease, sale of assets, etc., to show if there are any problems such as contaminated land.
♦ Waste audits to see if regulations are met, whether costs can be reduced by sale of by-products, etc. (Ledgerwood et al., 1992; Thompson and Wilson, 1994). The motivation to audit may be to comply with legislation or come from a desire to prevent problems.
♦ Life-cycle assessment/analysis evaluation that can extend beyond the time horizon of a single owner, company or government (it is cradle-to-grave), e.g. impacts of something from manufacture, through use to disposal (Fava, 1994; British Standards Institution, 1994c).
Note: Even within a single company eco-audit must check for variation from unit to unit and allow for change that takes place as plant ages. Eco-audit may extend to checking environmental impacts of suppliers, subsidiaries, use and disposal of products and packaging.
In the UK the first eco-audit by a local authority took place in 1989 (Kirklees District Council, assisted by Friends of the Earth). Roughly 87 per cent of UK local government authorities had used eco-audit or planned to by 1991, encouraged by the UK 1990 Environmental Protection Act (Grayson, 1992:50). Unfortunately, some of the eco-audits produced little more than publicity documents.
There is considerable overlap between eco-audit and health and safety management—some countries now test the environmental quality of new buildings to ensure that they do not harm employees, that they use eco-friendly construction materials and do not waste energy. Energy efficiency and better employment conditions mean savings on power bills and less absenteeism.
Barton and Bruder (1995:xv) see local eco-audit as a key measure in the delivery of sustainable development as ‘a process for establishing what sustainable development means in practice—how to interpret it locally, how to test whether you are achieving it’. They recognized two components in eco-audit: (1) external—
collation of available data to produce a state-of-the-environment report, and (2) internal—the state-of-the-environment report as a foundation for efforts to assess policies and practices (Barton and Bruder, 1995:12). First-time audits are usually more complex than follow-up audits.
Various bodies and companies publish eco-audit guidelines or manuals which can help other auditors, and there is also use of computers, expert systems and information technology (retrieval systems like LEXIS conceptual, or hypertext searching). However, guidelines and computer aids are not enough: effective environmental management demands commitment. Some companies, authorities and educational establishments have tried to do eco-auditing on the cheap, which tends to give inadequate results. Doing this also poses risks from institutional politics—e.g. ministries may compete; companies may be rivals; internal squabbles may distort things.
Once standards like BS 7750 improve and spread, together with better training and accreditation of auditors, these problems should be reduced (Buckley, 1995:
292–293; Gleckman and Krut, 1996). The standards that have so far evolved mainly relate to developed countries, and require modification for use in poorer countries.
There is also a need for internationally recognized standards (or even a single world standard) for eco-audit. Worries have been voiced that some standards are determined more by politics, special-interest groups and public opinion than by objective science (Ludwig et al., 1992; Rensvik, 1994; Reisenweber, 1995). Box 4.2 presents some eco-audit-environmental management system standards.