IV. MEASURES FOR INTEGRATING ENVIRONMENTAL CONSIDERATIONS INTO AGRICULTURE

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E. Environmental management systems: possible effects of the ISO 14001 standard on Malaysian exports

Increased use of standards regarding environmental management systems, and in particular the development of international standards under the ISO 14000 series, have generated both interest and concern in Malaysia. The principal concern is that to the extent that the ISO 14000 (in particular the ISO 14001 certification standard) becomes a de facto condition for doing business, at least in certain sectors, Malaysian producers will face additional costs. Such additional costs, it is argued, may be higher for Malaysian firms, in particular small and medium-sized firms, than for their competitors in developed countries, which are already implementing environmental strategies and are using more environment-friendly production processes. On the other hand, the continuous environmental improvements encouraged by ISO 14000 may induce cost savings, e.g., through reduced input costs resulting from a more efficient use of materials and energy. Also, participation in ISO 14001 provides a basis for the certification of a firm’s environmental management system, which may give it greater credibility with overseas clients and the government. The government itself may benefit from ISO 14000 to the extent that environmental management systems put greater emphasis on self-regulation on the part of industry, providing enforcement officers with more time to spend on controlling the most polluting industries. A National Committee on Environmental Standards has been established in Malaysia to study the impacts of the ISO 14000 series.

The potential effects of ISO 14001 on exports from Malaysia are difficult to project. Any such effects are expected to occur principally in relation to firm-to-firm operations, in particular with overseas customers. The closest analogue to environmental management systems can perhaps be found in the ISO 9000 series on quality control, and experience with ISO 9000 may shed some light on the possible impact of ISO 14001. It should be noted, however, that the impact of ISO 14001 relative to that of ISO 9000 may be reduced by the fact that, whereas quality concerns are of direct importance to all companies, environmental concerns may be of relevance mainly to industries in certain environmentally sensitive sectors. Thus, ISO 14001 may have relatively little effect on certain sectors.

As to the costs of participation, two elements are important: (a) the additional costs involved in meeting the environmental objectives of environmental management systems; and (b) the costs involved in registration.

With regard to element (a), the main requirement of ISO 14001 is for producers to establish and maintain an environmental management system based on self-determined environmental policy and goals. Compliance with all applicable environmental regulations is a minimum requirement. It should be noted that in the case of Malaysian producers, that requirement refers to domestic environmental legislation in Malaysia. Statistics from the Department of Environment show that the rate of compliance with domestic environmental regulations varies from sector to sector. It may also vary according to farm size. It should also be noted, however, that ISO 14001 also expects participating companies to go beyond the levels of the environmental requirements established by law, by committing themselves to the continuous improvement of environmental management systems. That aspect may imply additional costs for many producers in all sectors. At the same time, environmental management systems themselves may contribute to environmental improvements and economic benefits, e.g., through savings on input costs or improved business opportunities.

With regard to (b), obtaining and maintaining certification is expensive. In general, companies in developing countries may have to rely on the services of expensive consultancy firms when setting up environmental management systems. In addition, registration fees may be an important cost factor. In the case of Malaysia, it is likely that MAC will become responsible for accrediting registrars.

Table 7. Regulatory standards for palm oil mill effluent

Table 8. Status of compliance by palm oil mills, 1991

Table 9. Palm oil industry response to effluent-related fees, 1978-1982

Table 10. BOD Load reduction in the crude palm oil industry, 1978-1989

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