Tuesday, August 30, 2011
Walmart and CDP Should Ask Suppliers for ISO 50001 Certification
Supplier scorecards from large companies such as Kaiser Permanente and Walmart, along with global carbon registries such as the Carbon Disclosure Project (CDP), have driven a marked increase in the number of companies reporting sustainability and environmental data. Large organizations and the CDP should now add ISO 50001, the new energy management standard, to their company scorecards and questionnaire. Driving adoption of ISO 50001 will lead to energy savings, reduced carbon emissions and more efficient supply chains.
What is ISO 50001?
ISO 50001 is the new ISO certification that implements a foundation process for energy management. ISO standards enhance the business process and have been around for decades. Many companies throughout the world have adopted these standards for quality (9001) and environmental management (14001).
ISO certification requires third-party verification. This certification increases consumer confidence and improves the company's brand image. More than a million companies are now certified with the ISO quality standard (9001), and some even have ISO 9001 signs and banners touting this achievement on the front lawn of their facilities.
Key elements of the ISO 50001 energy management standard include establishing an energy baseline, energy goals, monitoring metrics, and management oversight. Particularly important is that the standard focuses on ongoing monitoring and improvement, not just being a snapshot in time of a facility or operations.
When standards are not based on continuous improvement and monitoring, performance can lag, which can lead to a false sense of confidence. We already see this with some new buildings that were as LEED-certified as new builds but became out of spec and, in some cases, below code over time because management's attention to operations waned after achieving certification.
The ISO 50001 standard can be applied to a single facility or multiple facilities.
Who is using it?
Leading organizations are already adopting 50001, including Delta Electronics in China, Schneider Electric of France, Dahanu Thermal Power in India, AU Optronics of Taiwan and Bad Eisenkappel in Austria. Other companies such as Alcoa, 3M, Eaton and Nissan are becoming ISO 50001 certified in conjunction with the Department of Energy's Superior Energy Performance program.
Why is it promising?
The 50001 standard directly helps companies save money. In addition, with improvement of the energy management process being tied with company goals, third-party verification directly enables companies along the supply chain to differentiate, and purchasing companies have more confidence in their supply chain.
Why do we need another certification standard?
It's certainly true that the world is flooded with product- and company-level certifications. Ecolabelling.org lists 424 of them, and companies should be very cautious about expanding their supplier criteria. Organizations, however, should adopt standards that have a proven ability to save money and provide competitive differentiation. ISO 50001 promises to be one of these standards.
Adopting ISO 50001 is advantageous because the ISO framework is already a well-accepted global standard that is supported by hundreds of ISO practitioners and is also familiar to senior management. Some organizations already certified with 9001 and 14001 are currently considering 50001.
The contents of company and supplier scorecards matter. The questions asked on scorecards, CDP submittals and other rating systems matter. When LEED award points for bike racks for its green building certification, hundreds of building owners added bike racks, even if there was no clear, safe way to use bikes.
When Walmart added a question about carbon footprint to its sustainability scorecards, thousands of suppliers decided to calculate their company's carbon footprint for the first time.
Such companies as Walmart and IBM will improve the competitiveness of their supply chain by asking their suppliers if key facilities are ISO 50001 certified. We've seen that business benefits from a more systematic focus on quality and environmental management, and a similar opportunity exists with a more methodological focus on energy management.
Although scorecards don't actually need more questions, ISO 50001 questions should be added to some of the less-effective ones. This allows for more focus on energy reduction, where the best financial and environmental returns reside.