Environmental Management: Principles and practice

Eco-auditing
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,

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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.

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♦
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).