CURRENT VIETNAMESE LAWS AND REGULATIONS ON ENVIRONMENTAL PROTECTION

The World Trade Organization (WTO) Committee on Trade and Environment (CTE) has brought environmental and sustainable development issues into the mainstream of WTO work.

IMPLEMENTING AN ENVIRONMENTAL MANAGEMENT SYSTEM THROUGH

ISO 14001: A CASE STUDY AT LEVER VIETNAM, HANOI BRANCH

by

Le Thang Long

A research study submitted in partial fulfillment of the requirements

for the degree of Master of Business Administration

Dr Barbara Igel

Dr Arne Deussen

National Economics UniversityHanoi, Vietnam

Asian Institute of TechnologySchool of ManagementBangkok, ThailandApril 2001

The author extends his special thanks to Dr Nguyen The Chinh and Mr Dinh Van Tru for theirassistance in collecting information and ideas in establishing the research framework Mr MaiDuc Lam also spent his valuable time to provide information for this research study.

Environmental management has recently emerged as a competitive edge in the internationalmarket Vietnamese companies can no longer ignore this phenomenon in the way joining theworld business community However, they are far behind world level practice in environmentalmanagement and now pacing to catch up with their rivals in advanced countries

ISO 1400 standards series developed by the International Organization for Standardization iswidely acknowledged as a solution for business entities based in developing countries to competeequally in the world market in terms of environmental management Vietnamese enterprises arenow paying more attention to environmental management and, thus, considering the option ofimplementing ISO 14000

This research aims at discovering the practice of ISO 14000 standards series in a Vietnamesefacility: Lever Vietnam, Hanoi Branch The author wants to analyze the practice of building anEnvironmental Management System through a standard of the ISO 14000 series, ISO 14001namely “Environmental Management System specification” Base on the analysis the researchstudy draws the lessons for implementing ISO 14001 at the facility and suggestsrecommendations to improve the EMS of the facility

Table of Content ACKNOWLEDGEMENT I ABSTRACT II TABLE OF CONTENT III LIST OF FIGURES V LIST OF TABLES VI

CHAPTER 1: INTRODUCTION 1

I BACKGROUND 1

II PROBLEM STATEMENT 2

III R ESEARCH OBJECTIVES 2

IV RESEARCH METHODOLOGY 2

1 Primary information: 2

2 Secondary information: 2

V SCOPE AND LIMITATIONS 3

1 Scope: 3

2 Limitations: 3

VI PLAN OF THE RESEARCH 3

VII PRESENTATION OF THE RESEARCH 3

CHAPTER 2: LITERATURE REVIEW 5

I ENVIRONMENTAL MANAGEMENT SYSTEM AND SUSTAINABLE DEVELOPMENT 5

II ISO 14000 STANDARDS SERIES AND THE PROSPECTS OF EMS 7

1 What is ISO 14000 standards series 7

2 General Description of ISO 14001 12

3 ISO 14000 standards series and EMS 14

4 Benefits of implementing ISO 14001 17

CHAPTER 3: IMPLEMENTING ISO 14001 AT LV HANOI 19

I CURRENT VIETNAMESE LAWS AND REGULATIONS ON ENVIRONMENTAL PROTECTION 19

1 The Law on Environmental Protection 19

2 Government Decree 175-CP 20

II SOCIAL TRENDS AND PUBLIC PERCEPTION OF ENVIRONMENTAL PERFECTION 22

III COMPANY PROFILE 22

IV ISO 14001 AT THE FACILITY 24

1 Corporate environmental policy 24

2 Planning 25

3 Implementation And Operation 30

4 Checking and Corrective Action 40

5 Management Review 41

V D IFFICULTIES IN IMPLEMENTING ISO 14000 AT LV H ANOI 42

1 External difficulties 43

2 Internal difficulties 44

3 Impacts of ISO 14001 implementation 45

4 Provision for future environmental actions of LV Hanoi by EMR 47

CHAPTER 4: CONCLUSIONS AND RECOMMENDATIONS 48

I C ONCLUSIONS 48

1 The ultimate purpose of ISO 14000 standards series 48

2 Perspectives of implementing ISO 14000 standards series in Vietnam 49

1 For LV Hanoi 49

2 For State authorities 52

3 Recommendation for further studies 53

BIBLIOGRAPHY 54

LIST OF FIGURES

LIST OF TABLES

Chapter 1 Introduction

The World Trade Organization (WTO) Committee on Trade and Environment (CTE) has broughtenvironmental and sustainable development issues into the mainstream of WTO work TheCommittee's first Report, which was submitted to the WTO Ministerial Conference in Singapore

in 1998, notes that the WTO is interested in building a constructive relationship between tradeand environmental concerns On the way joining WTO, Vietnam will soon take environmentalprotection into serious concern and environmental issues can no longer be ignored from businessconsideration

Historically, environmental management in corporations and small companies alike has not beenincluded in the “inner circle” of senior management Many organizations placed environmentalmanagement on the back burner until compliance issues arose or contamination was found on theproperty When those instances occurred, senior management suddenly gained an intense interest

in the subject

Today, many organizations are beginning to think beyond environmental compliance towardsenvironmental performance Access to vital information about the compliance status of acompany, how many pounds are emitted or who is responsible, can easily be accessed over theInternet This leads to an unprecedented awareness by the public of whether an organization has apositive or negative impact on the environment Those who are responsible for the bottom line of

a company are also beginning to recognize that a well-designed Environmental ManagementSystem (EMS) can have a profound impact on a company This impact not only extends to theshort-term bottom line and public image, but also to the long-term financial health of a company

At this time an EMS that has been certified to the internationally recognized InternationalOrganization for Standardization’s ISO 14001 Standard is considered the state of the art inenvironmental management

Businesses are increasingly adopting the global environmental management system, ISO 14001,

in order to more effectively and efficiently manage their environmental impacts This voluntarysystem, as well as all EMSs, has the potential to provide facilities with a structure to minimizetheir environmental impact, ensure compliance with environmental laws and regulations, andaddress wasteful uses of natural resources For these reasons, EMS may greatly affect theenvironmental performance of facilities that adopt them and subsequently impact their financialperformance, as well

Only recently could organizations have their EMS certified, as the final version of theinternational EMS standard was published in late 1996 Since then, over 10,000 facilities aroundthe world have had their EMS certified (Gallagher et al., 1999) While businesses are increasinglyadopting these systems to better manage their environmental impacts, little is known about thepotential these systems have for environmental protection, social welfare, and future publicpolicy In Vietnam, ISO14001 is still considered among entrepreneurs as a source of expense orobligation, and the adoption of this standard is limited within a small number of companies,

may not be able to comply with international regulations and standards when they go competingglobally thus hindering their entrance into world market.

II Problem statement

Companies doing their business in Vietnam are now bearing potential risk of losing their grounddue to poor environmental performance A complete and effective Environmental ManagementSystem is now crucially important for every business entity to proactively deal with the newbusiness environment at the time being There are numerous types of EMSs among which, theISO 14001 EMS has emerged as the most widely accepted international standard forenvironmental management and has the potential to harmonize EMS worldwide When EMS iscertified with ISO14001 standard, a company can reach farther than compliance with regulationssince they are able to rely on environmental management to differentiate themselves fromcompetitors

The business Lever Vietnam is doing belongs to chemical industry, which has been identified asone of the most potential source threatening the living environment of the society Furthermore,the company’s market is consumer goods, cosmetics for exact, and this product category requireshigh standards on industrial sanity and safety Managing environmental performance becomes avital task to keep the company alive in this competitive business environment Therefore, it isworth looking at the practice of implementing ISO 14000 at Lever Vietnam to study why andhow a Vietnamese facility uses ISO 14001 as an essential tool to strengthen its EMS

III Research objectives

facility;

14001 standard series

IV Research methodology

IV.1 Primary information:

overall perception about the current practice of implementing ISO14000 in Vietnam

IV.2 Secondary information:

V Scope and limitations

V.1 Scope:

This piece of research only focuses on EMS at the firm level, it does not intend to assess thepossibility and prospects of implementing ISO14001 at the industry or the nation level Theresearch also implies an in-depth analysis of possibility but not a feasible study for implementingISO14001 standards at the company Instead, this case study is an investigation of the practice ofimplementing ISO 14001 at Lever Vietnam Hanoi Branch (hereinafter is referred to as LVHanoi), located at Nguyen Trai Road, Thuong Dinh, Thanh Xuan, Hanoi

V.2 Limitations:

It might be difficult to reveal much primary information from the company The legal system forenvironmental control in Vietnam has not been built to such an effective level that canstandardize the environmental records for many kinds of company The company chosen may nothave recorded a sufficient database for its EMS and is, thus, unable to give out much detailedinformation

VI Plan of the research

The time plan of the research can be divided into five stages:

VII Presentation of the research

Chapter 1: Introduction

This part presents the rationale of the research, research methodology, background and statement

of the research problem, objectives, scopes and limitation of the study

Chapter2: Literature review

This part reviews the definition of an EMS and its importance to sustainable development Therole of EMS in the modern business competition and how ISO14000 standards can be used inbuilding an effective EMS for a facility will be discussed Basic concepts and viewpoints based

on which the research is conducted will be justified in this chapter Also at the focus are thegeneral principles and benefits when implementing ISO14000 into a firm

Chapter3: Implementing ISO14001 at the facility

This part will focus on analyzing environmental practices of LV Hanoi and base on the analysisthe current EMS will be evaluated to work out the weaknesses and rooms for improvement in thecompany’s current EMS An overview of Vietnam’s legal system on environmental protectionwill be provided to support the analysis The study of the current system will be the mainarguments used for later recommendations.

This section will also discuss prospects and feasibility of implementing ISO14000 standards intothe facility The main benefits and obstacles in the implementation process will be examined indetails to assess the reality of applying ISO14000 to strengthen the company’s EMS

Chapter 4: Conclusions and recommendations

Chapter 2 Literature review

I Environmental Management System and sustainable development

Environment, health and human development in the future depend heavily on what we are doing

at the mean time Environmental problem has become so serious that if we do not change the way

we exploit natural resources, the way we manufacture and even our lifestyle, the Earth willcontinue to be hurt and the living environment to which our lives belong will continue to bedestroyed Examples of hottest environmental problems include: depletion of Ozone layer,Greenhouse effect, ecological imbalance, air and water pollution, toxic chemical substances,exhausted natural resources, and environmental impacts on living quality Those problems aregetting worse and worse and they are affecting all countries, developed or developing.Environmental problem itself at the same time increases interdependence among the countriesand no single solution can be acceptable for all actually The problem also can never be solvedwithout regarding the social-economic and other specific situations of each country ororganization As such, the second principal of the 1972 Stockholm Conference stated: “Allcountries are responsible to ensure that all activities within their control and legal regulations willnot damage the environment or cause the aspects out of control by other countries”

Individuals and business of all types must accept responsibility for the stewardship of the Earth,not only as a means of pollution control and resource management, but also as a way of balancinghuman activities with nature’s expertise in renewing itself Future prosperity, which is essentialfor a healthy global economy, depends on preserving the Earth’s natural wealth and sustaining ahealthy ecological balance

The 1992 Rio Conference introduced the world to the concept of sustainable development, anotion coined by the Brundtland Commission Report, Our Common Future Briefly stated,sustainable development is an approach to development that utilizes the Earth and its resources in

a manner that does not compromise the ability of the future generations to meet their needs.Partially resulting from agreements reached at the Rio Conference, sustainable developmentemerged as the foundation upon which national (and even some local) governments and manymajor organizations worldwide elected to build their environmental policies for the 21st century.The significance of the sustainable development concept to the emerging worldwide paradigmshift in environmental management is evidenced by the fact that the international businesscommunity voluntarily elected to adopt many codes and charters that promote sustainability inone form or another One of the most visible examples is the Business Charter for SustainableDevelopment developed by the International Chamber of Commerce This charter lays out 16principles for environmental management that translates sustainability into operation terms Over

1200 corporations, including more than 25% of the Fortune 500, have endorsed these principles.(Dufresne, 1997)

Anticipating this trend, over the past several years many business firms worldwide have adoptedformal environmental management systems as procedures for systematically identifyingenvironmental aspects and impacts of their operations, setting explicit goals for compliance,

An Environmental Management System (EMS) is a management structure in which organizationscan assess their environmental impacts It creates a system to assess, catalogue, and quantifyenvironmental impacts, not simply activity by activity, but throughout an entire organization Thegoal of EMS adoption is to help organizations ensure that their operations articulate and achievespecified environmental goals, normally including at least compliance with environmental laws,management of other major environmental risks and liabilities, and potentially positiveenvironmental improvements as well An EMS supplies the framework to do so by creating asystematic structure to adopt a written environmental policy; to identify all environmental aspectsand impacts of their operations; to set priorities, goals and targets for continuous improvement intheir environmental performance; to assign clear responsibilities for implementation, training,monitoring, and corrective actions; and to evaluate and refine implementation over time so as toachieve continuous improvement both in implementation of environmental goals and targets and

in the EMS itself (Gallagher et al., 1999)

Five principles make up an EMS and the basic elements of an EMS are set up respectively tothese five principles, namely policy and commitment, planning, implementation, measurementand evaluation, and review and improvement Implementation of EMS starts with an initialreview, which is not defined as a principle, and then follows the five principles (Figure 2.1) Figure 2.1 Environmental Management System Loops

Source: Sturm and Igel (1996)

Evaluation of an EMS should, therefore, follow each basic element of the system to assess thespecific procedures as well as efforts exerted into those procedures Management’s vision andcommitment, and employees’ competence are the keys to assess an EMS Management’s visionand commitment determine the missions and structure of an EMS, what is it built for and howshould it operate Employees are the persons who implement and participate in daily operationand, therefore, their knowledge in environmental management is essential to the smoothoperation and future development of the EMS

Continual Improvement

The reasons for the business community to build up an EMS do not come solely from the publicinterest about sustainable development In fact, an effective EMS can make the road less traveledfor those organizations, which strive for perfect environmental performance An organization canchoose to be a leader or a follower within their field By identifying the environmental costs of itsoperations broadly and by initiating prevention-based measures in all aspects of productmanufacture, distribution, use, and disposal, organizations can handle their responsibilitiesproactively instead of reactively Organizations can use integration of environmental controlsthroughout a business and implementation of a life cycle approach to product and process designanalysis to prevent pollution by identifying and effectively managing all activities with potentialenvironmental impacts Organizations choosing this path will set standards for other companies

to follow and will consequently achieve competitive advantage

II ISO 14000 standards series and the prospects of EMS

II.1 What is ISO 14000 standards series

The world’s first standard for environmental management system (EMS), BS 7750, wasdeveloped by the British Standards Institution in 1992 BS 7750 is the model for ISO 14000standards series, which is developed by the International Organization for Standardizations (ISO).ISO 14001, which establishes the requirements for an EMS, was finalized in 1996

II.1.1 ISO 14000 - Introduction

After the success of the ISO 9000 series of quality standards, the International StandardsOrganization is nearing completion and publication of a comprehensive set of standards forenvironmental management This series of standards is designed to cover the whole area ofenvironmental issues for organizations in the global marketplace

II.1.2 History of Development

The ISO 14000 series emerged primarily as a result of the Uruguay round of the GATTnegotiations and the Rio Summit on the Environment held in 1992 While GATT concentrates onthe need to reduce non-tariff barriers to trade, the Rio Summit generated a commitment toprotection of the environment across the world The environmental field has seen a steady growth

of national and regional standards The British Standards Institution has BS 7750, the CanadianStandards Association has environmental management, auditing, eco-labeling and otherstandards, the European Union has all of these plus the eco-management and audit regulations,and many other countries (e.g USA, Germany and Japan) have introduced eco-labelingprograms

After the rapid acceptance of ISO 9000, and the increase of environmental standards around theworld, ISO assessed the need for international environmental management standards Theyformed the Strategic Advisory Group on the Environment (SAGE) in 1991, to consider whethersuch standards could serve to:

performance; and

 Facilitate trade and remove trade barriers.

In 1992, SAGE's recommendations created a new committee, TC 207, for internationalenvironmental management standards The committee and its sub-committees includerepresentatives from industry, standards organizations, government and environmentalorganizations from many countries The new series of ISO14000 standards are designed to cover:

II.1.3 Why these new standards?

A set of international standards brings a worldwide focus to the environment, encouraging acleaner, safer, healthier world for us all The existence of the standards allows organizations tofocus environmental efforts against internationally accepted criteria

At present many countries and regional groupings are generating their own requirements forenvironmental issues, and these vary between the groups A single standard will ensure that thereare no conflicts between regional interpretations of good environmental practice

The fact that companies may need environmental management certification to compete in theglobal marketplace could easily overshadow all ethical reasons for environmental management.Within Europe, many organizations gained ISO9000 Registration primarily to meet growingdemands from customers ISO 9000 quality registration has become necessary to do business inmany areas of commerce Similarly, the ISO 14000 management system registration may becomethe primary requirement for doing business in many regions or industries

II.1.4 Who do the standards apply to?

The standards apply to all types and sizes of organizations and are designed to encompass diversegeographical, cultural and social conditions For ISO14001, except for committing to continualimprovement and compliance with applicable legislation and regulations, the standard does notestablish absolute requirements for environmental performance Many organizations, engaged insimilar activities, may have widely different environmental management systems and

performance, and may all comply with ISO14001

II.1.5 What do the standards apply to?

This is primarily for the company to decide, and to clearly document the extent of coverage.However, limiting coverage to a small and inconsequential area may provide competitors with an

ideal marketing opportunity There does not appear to be a limit to the coverage of theenvironmental management system in that it can include the organization's products, services,activities, operations, facilities, transportation, etc From a slightly different viewpoint, all of theelements in the previous sentence should be considered for environmental impact resulting fromcurrent practices, past practices and future practices, and should further be reviewed for theirimpact under normal, abnormal and emergency conditions

II.1.6 What does the ISO 14000 Series cover?

The ISO 14000 series currently compose of five types of standards, a guide, and a set of termsand definitions that tie the verbiage of the standards together, including 15 sub-standards and aguide formerly designed as a standard The five types are classified into two discrete broadergroups namely organization-evaluation and product-evaluation Figure 2.2 illustrates the ISO

14000 standards series and the interconnection between them There are three evaluation standards - Environmental Management System specification (ISO 14001),Environment Auditing (EA), and Environmental Performance Evaluation (EPE) The latter twostandards are actually interrelated with ISO 14001 as they provide guidance for implementation

organization-of an EMS audit and for monitoring and measurements organization-of key characteristics, two importantelements of ISO 14001 There are two product-evaluation standards, Product Labeling andProduct Life Cycle Management, and a guide Environmental Aspects in Product Standards(EAPS) was formerly a standard (ISO 14060) but was then redefined as a guide Table 2.1presents details of ISO 14000 standards series’ key elements

Figure 2.2 ISO 14000 standards series

Source: Woodside et al (1997)

Product evaluation

Product Labeling

ISO14001 EMS Specification

EP

EA

Organization evaluation

Terms and Definitions

Future standards

Table 2.1: ISO 14000 standards series

Environmental Management Systems (EMS) Standards

ISO14001

Environmental Management Systems Specification: This standard lays

out elements of an EMS, it applies to organizations of all sizes, andthose who seek registration to the standard must conform to allrequirements delineated within

ISO14004

Guidance Document for EMS: This document provides guidance on

setting up an EMS; it is most useful for those organizations withimmature systems

Environmental Auditing (EA) Standards

ISO 14010

General Principles of Environmental Auditing: This document

provides general principles of environmental auditing; it is meant toapply to all types environmental auditing and covers topics such asobjectivity, independence, competence, due professional care, andaudit criteria

ISO 14011

Audit Procedures- Auditing of Environmental Management Systems:

This document provides guidance for the EMS audit; although its use

is not required, it provides pertinent information on how to develop anaudit plan and conduct of an EMS audit

ISO 14012

Qualification Criteria for Environmental Auditors: This document sets

forth guidance for qualification criteria for internal and externalenvironmental auditors who perform EMS audits

Environmental Labels and Declaration Standards

ISO 14020 Principles of All Environmental Labeling: This document providesguidance on the goals and principles that should be consistently

incorporated into all types of environmental labeling programs

ISO 14021

Self-declaration of Environmental Claims – Terms and Definitions:

This document is meant to apply to manufacturers who are declaringthat their product has an environmental attribute

verification of environmental labeling claims

ISO 14024

Practitioner Programs: Guiding Principles and Procedures for Multiple Criteria (Type 1): This document lays out the principles and

protocols for environmental labeling programs

Environmental Performance Evaluation (EPE)

ISO 14031

Environmental Performance Evaluation: This document addresses

performance indicators for operations in terms of emissions andefficiencies of processes; it also addresses performance indicators forthe environment itself

Life-Cycle Assessment Standards

ISO 14040 Principles and Framework: This document provides a clear overviewof the practice, applications, and limitations of LCA to a broad range of

potential LCA users

ISO 14041

Goal/Scope Definitions and Inventory Analysis: This document

describes special requirements and guidelines for the preparation,conduct, and critical review of the life-cycle inventory analysis

phase of the life-cycle assessment

the life-cycle assessment of impacts

Terms and Definitions

definitions used in the various ISO 14000 documents

Environmental Aspects in Product Standards (EAPS)

Guide 64

(formerly

ISO 14060)

Guide for Environmental Aspects in Product Standards: This guide

helps standards writers avoid inserting specifications in productstandards that could turn out to be environmentally detrimental

Source: Woodside et al (1997)

II.2 General Description of ISO 14001

ISO 14001 requires an Environmental Policy to be in existence within the organization, fullysupported by senior management, and outlining the policies of the company, not only to the staffbut also to the public The policy needs to clarify compliance with Environmental Legislation thatmay effect the organization and stress a commitment to continuous improvement Emphasis hasbeen placed on policy as this provides the direction for the remainder of the Management System

Those companies who have witnessed ISO 9000 Assessments will know that the policy isfrequently discussed during the assessment, many staff are asked if they understand or are aware

of the policy, and any problems associated with the policy are seldom serious TheEnvironmental Policy is different; this provides the initial foundation and direction for theManagement System and will be more stringently reviewed than a similar ISO 9000 policy Thestatement must be publicized in non-technical language so that it can be understood by themajority of readers It should relate to the sites within the organization encompassed by theManagement System, it should provide an overview of the company’s activities on the site and adescription of those activities, a clear picture of the company’s operations

The preparatory review and definition of the organization's environmental effects is not part of aISO 14001 assessment, however, examination of this data will provide an external audit with awealth of information on the methods adopted by the company The preparatory review itselfshould be comprehensive in consideration of input processes and output at the site This reviewshould be designed to identify all relevant environmental aspects that may arise from existence

on the site These may relate to current operations, they may relate to future, perhaps evenunplanned future activities, and they will certainly relate to the activities performed on site in thepast (i.e contamination of land)

The initial or preparatory review will also include a wide-ranging consideration of the legislationthat may affect the site, whether it is currently being complied with, and perhaps even whethercopies of the legislation are available Many of the environmental assessments undertakenalready have highlighted that companies are often unaware of all of the legislation that affectsthem, and being unaware, are often not meeting the requirements of that legislation

The company will declare its primary environmental objectives, those that can have mostenvironmental impact In order to gain most benefit these will become the primary areas ofconsideration within the improvement process, and the company’s environmental program Theprogram will be the plan to achieve specific goals or targets along the route to a specific goal anddescribe the means to reach those objectives such that they are real and achievable TheEnvironmental Management System provides further detail on the environmental program TheEMS establishes procedures; work instructions and controls to ensure that implementation of thepolicy and achievement of the targets can become a reality Communication is a vital factor,enabling people in the organization to be aware of their responsibilities, aware of the objectives

of the scheme, and able to contribute to its success

As with ISO 9000 the Environmental Management System requires a planned comprehensiveperiodic audit of the Environmental Management System to ensure that it is effective inoperation, is meeting specified goals, and the system continues to perform in accordance withrelevant regulations and standards The audits are designed to provide additional information inorder to exercise effective management of the system, providing information on practices, whichdiffer to the current procedures or offer an opportunity for improvement

In addition to audit, there is a requirement for Management Review of the system to ensure that it

is suitable (for the organization and the objectives) and effective in operation Managementreview is the ideal forum to make decisions on how to improve for the future

II.3 ISO 14000 standards series and EMS

Many businesses have developed their own environmental management procedures for years, butuntil recently there was no trend toward formalizing or standardizing them more generally Evenwithin many corporations they remained largely the responsibility of a single office responsibleprimarily for regulatory compliance and risk minimization, such as a Vice President forEnvironment, Health and Safety, rather than an organization-wide mission for which allmanagers would be held accountable

Initially, environmental management tools such as environmental inspectors and environmentalmanagement systems (EMS) are voluntarily implemented within the firms but theseimplementation by then impact on managerial solutions relating to the risk of international banks,insurance companies or stakeholders This fact requires sufficient legal solutions not only within

a particular country but worldwide also

Corporations in 1990s are rethinking what effective environmental management means and whatthe actual payoffs are Mere compliance with regulations is no longer adequate One problem isthat regulations vary from country to country, and would lead to patchwork environmentalperformance if used as a basis for a global environmental management paradigm Further, mostregulations evolved in prescriptive frameworks that sidestepped the issue of true environmentalbenefit Prescriptive frameworks could no longer cover all the practices in daily business life andthus being unable to keep the practice under control Modifications or revisions of regulationswill take time chasing the today fast changing business environment As the disadvantages of thecommand-and-control regulatory approach became more apparent, the stage has to be set for amore management-focused approach Increased interest by the public and other stakeholders incorporate environmental management decision-making also fueled this evolution Fromconsumer choice to investor demands, the scrutiny of corporate environmental management has agreater influence now that at any time in the past

Many organizations have so far reviewed or evaluated their own environmental practice to draw

an overall assessment for their environmental management activities But within their resources,tools and knowledge, those review and evaluation may not be able to ensure that the organizationnot only meets but also continuously the legal and regulatory requirements For an effectivemanagement, those review and evaluation must be conducted within a structured managementsystem that is integrated into the overall management activities

There are numerous types of EMSs The ISO 14001 EMS, however, has emerged as the mostwidely accepted international standard for environmental management and has the potential toharmonize EMSs worldwide Since when it was first introduced, and as it has been designed, ISO

14000 standards series employ a systematic structure to identify, mitigate, and preventenvironmental harm, thus, integrating environmental practice into management activities At aminimum, organizations that adopt the ISO 14001 standard accept a responsibility to adopt awritten environmental policy; to identify all environmental aspects and impacts of theiroperations; to set priorities, goals and targets for continuous improvement in their environmentalperformance; to assign clear responsibilities for implementation, training, monitoring, andcorrective actions; to document their procedures and results, and evaluate and refine theirimplementation over time, so as to achieve continuous improvement both in their attainment ofenvironmental goals and targets and in the EMS itself An organization that adopts an ISO 14001EMS can be certified as conforming to it by an approved third party “registrar” Commitment toongoing continuous improvement of the EMS as required in ISO 14001 standards certification is

expected to have the potential to reduce the organization’s environmental impacts significantlyover time Similar procedural standards, varying somewhat in their details, have been adopted inGreat Britain (BS 7750) and the European Union (the Eco-Management and Auditing Scheme, orEMAS) (Andrews et al., 1999) Table 2.2 presents a comparison between ISO 14001 and otherEMS standards

Table 2.2: Comparison of EMS Standards

Article 3, Paragraph bANNEX I, Part C

ANNEXA.1.2(Guide)

Only recently could facilities have their EMSs certified, as the final version of the internationalEMS standard was published in late 1996 Since then, over 10,000 facilities around the worldhave had their EMSs certified In the United States, approximately 450 facilities have receivedISO certification by November 1999 and within the year 2000, this number is expected toincrease by approximately 50 percent (Darnall et al., 1999)

Significantly, the substantive decisions that make up the content of the EMS are left almostentirely to the discretion of the adopting organization itself An ISO 14001 EMS can be used topursue a wide range of self-selected environmental goals and priorities: examples includecompliance with regulatory standards, improving environmental performance beyond regulatoryminimal, reducing unregulated environmental impacts, improving environmental sustainabilityper se, or others ISO 14001 does not prescribe substantive environmental performance standards,nor does it direct which of many possible environmental goals should be given priority It doesnot prescribe the introduction of specific pollution-prevention or sustainability-related practices

It does not mandate how fast or how far “continuous improvement” must proceed, nor even howquickly an organization must actually achieve compliance with environmental regulations Nordoes it require that even the EMS itself, let alone the documentation of its achievements orfailures, be made public An EMS is thus a formal set of procedures and of voluntary butinternally documented assertions as to how an organization intends to manage its potentialimpacts on the natural environment and related aspects of its operations

Many experts have discussed about whether ISO 14000 can provide an alternative forenvironmental regulations applied in the countries around the world Some argued that as ISO

14000 has been developed as a voluntary system and because the ultimate aim of this standardseries is to go beyond all regulatory requirements, this standard series should launch a strongreform in environmental regulations, particularly the philosophy among environmentalstakeholders They assert that the standard series can serve as a tool to promote an evolutionarychange away from the command-and-control approach toward more cooperative environmentalenforcement efforts Some other have reviewed the development of ISO 14000 to indicate thatthis standard series is designed to primarily help organizations comply with applicableenvironmental regulations and that the standard series is a framework for business managers toself-regulate their organizations For such, regulations should still play a key role in thedevelopment of ISO 14000 standard series though necessary changes must be taken to deal withthe modern environmental practice

II.4 Benefits of implementing ISO 14001

Benefits of implementing ISO 14001 are many but can be focused into six main points.(Woodside et al., 1997)

management that is system-dependent and not person-dependent

organization’s EMS, thereby promoting improvement of environmental performance

 Supports integration of relevant levels and functions into the EMS

to employees and interested parties its commitment to sound environmental management

Chapter 3 Implementing ISO 14001 at LV Hanoi

I Current Vietnamese Laws And Regulations on Environmental Protection

I.1 The Law on Environmental Protection

While Vietnam's 1992 Constitution contains references to environmental issues, a solid legalbasis for dealing with such issues was only created in 1994, when the Law on EnvironmentalProtection (LEP) was enacted The initial impetus for this law was the National ResearchProgram on the Environment, which submitted a first proposal for the law at a nationalconference on the environment in 1990 At that time, environmental issues were only dealt withmarginally in a few laws, such as the Law on the Protection of People's Health, the Land Law andthe Decree on Dike Protection Apart from industrial pollution, Vietnam's environment is alsoendangered by the rapid depletion of forest, mineral and marine resources and the irrational use

of water resources The objective of the LEP is to remedy and prevent all such negative impacts

of human activities (as well as those caused by natural disasters) and to encourage the effectiveutilization of the environment for sustainable development in the country In particular, the LEP

is intended to regulate:

activities, the quality of life and long-term sustainability;

 Conflicts between overall sustainability and benefits from the use of individualcomponents of the environment;

The LEP is an "umbrella" law; it does not replace earlier laws with an environmental component

or overlap with other laws regulating the use of natural resources Its main features can besummarized as follows:

water, air, ecosystems, and the like), but does not specify the types of economic activity to

be regulated;

however, specify standards or Government agencies responsible for them;

machinery not meeting environmental standards (without specifying limits or standards),(ii) types of pollutants which must be treated before discharge into the environment, (iii)

management and treatment of hazardous wastes, (iv) allocation of managementresponsibilities among central and local Government agencies;

 The Law applies to both Vietnamese and foreign enterprises Environmental impactassessments (EIAs), to be approved by Ministry of Science, Technology and Environment(MOSTE), are required for all existing and new business establishments;

damage and plants can be shut down if they do not comply with standards, but in practicefirms are rarely fined or encouraged to internalize environmental costs;

executive arm) is charged with the primary responsibility for environmental management,and coordinating the activities of other agencies

With regard to the latter, a recent United Nations Development Program (UNDP) report onenvironmental aspects of investment in Vietnam remarks:

"In assessing the capacities of MOSTE and the NEA in relation to the implementation andenforcement of environmental laws, it should be noted that at present there are few staffemployed specifically for this purpose In particular, there are no lawyers with broadenvironmental law training "

This is also true for others involved in ensuring compliance with environmental legislation, such

as judges and technical inspectors, both at the central government and the local level

The LEP provides for two ways in which conflicts about environmental issues can be resolved:through decisions by the administrative organs or through the courts The former is the moreusual way There is also a reference to a dispute resolution mechanism for environmentalconflicts involving two or more provinces, but the LEP does not make clear how conflicts aboutenvironmental issues at the ministry level are to be solved

I.2 Government Decree 175-CP

Government Decree 175-CP (GD 175-CP) was issued in 1994 to provide, as its official titlereads, "Guidance for the Implementation of the Law on Environmental Protection" Some of thekey areas covered by the articles of this Decree are:

protection in production areas and construction of factories;

conservation of biodiversity and ozone depletion which were signed by Vietnam;

 The organization of environmental inspection functions at various central and localgovernment levels, with MOSTE in an overall controlling function;

The LEP and the Decree, together with the other laws listed below, provide a fairly extensivelegal framework for environmental protection However, the legal and regulatory framework isnot applied in a coherent way:

"The main difficulty with the present scheme of environmental protection legislation isthe lack of knowledge, coordination and consistency in implementing the variousprovisions "

This is partly a consequence of the fact, already mentioned, that qualified staff is in short supply(the same is true for monitoring and laboratory equipment) To an extent, the problem can besolved by increasing public participation in pollution monitoring and in the preparation of localenvironmental protection plans Such participation has been of crucial importance in theindustrialized market economies

Another problem in implementing the LEP is that many of the standards and regulations forpollution control, which the Decree has identified as being required, do not exist yet In 1993,MOSTE's Office of Standardization, Metrology and Quality Control was charged with thepreparation of new environmental standards for water, air and soil Mixed working groups withrepresentatives from central and provincial government agencies and scientific institutes didformulate a number of ambient and discharge standards, which were formally adopted in March

1995 But, partly as a consequence of inadequate resources, work on standards is far fromcomplete, which makes it very difficult to enforce environmental legislation

The legal and regulatory system of Vietnam has shown two basic weaknesses that diminish thevalues of environmental perfection

First is ineffective legal frame and tools to monitor and regulate environmental practices at allfacilities, therefore, a fair competition regarding environmental protection becomes almostimpossible Standards and regulations are there, but they are too difficult to be enforced Specificstandards and parameters, which are the base for any regulatory procedure, have not beendeveloped fully to help identify clearly areas and methods of regulating Frequent changes to thesystem also contribute to the mist of environmental legislation Ambiguity and confusion are,thus, overshadowing the practice of legal regulation Organizations who intend to invest inenvironmental management may face a bitter fact that their competitors still stay out of the game.Investments in EMS are costly and the resources spent are indicated right at the businessoperation result, in product price on the market What have they received in reverse? Thecompetitors are not regulated or even not punished strictly by the legal regulations, they are notforced to enter the game and they can reserve the money to spend on other items Obviously, thecompetitors would be more competitive on the market, bringing an adverse result toenvironmental management This is a gift that no one likes receiving

Second is the lack of competent legal authorities and staff to track the adoption of legal and otherregulatory requirements on environmental protection Environmental education has just enteredVietnam for around half a decade, hurriedly equipped people with various backgrounds butenvironmental management The lack of well-trained environmental workers has presented sincethe raise of environmental protection awareness, causing a big gap between the needs and supply

of qualified environmental state workers Exerted efforts are still not enough to fill the gap, andthe whole legal system is still struggling to fill up their structure with qualified personnel

II Social trends and public perception of environmental perfection

The Vietnamese society, along with economic improvement, has been more and more consciousabout environmental issue But whether the level of consciousness is high enough to have anyinfluence in business decisions still remains a head aching question Environment is largelyconsidered as an ethics among the society, but how people should act beyond awareness is stillunknown by many citizens Social response to the environmental management practice is stillperceived as merely sanitary, dust and waste management, all are ordinary environmentalproblems Industrial environmental problems are not well aware among most of the Vietnamesepeople, even urban residents The needs for protecting the environment is well understood asconsequences of environmental degradation and its effects on human daily life are obvious, butthe causes of and methods to deal with those problems have not been communicated effectively

to the community Green production and green product are still strange concepts to a largeproportion of the society, let alone environmental labeling or EMS certification In other words,environmental education has been incomplete and ineffective though it is only at the level ofraising awareness (MOSTE, 1999)

The fact mentioned above raises a significant question: What do business entities exert effortstowards environmental perfection for? The answer seems to be easy, as it was written in manybooks, articles and essays But it is not that easy to work out a proper answer in such a lessdeveloped country like Vietnam, where the social consciousness about environmental protectionseems to have little effect on business image and decisions Business entities running in Vietnammostly aim at and many are obliged to exporting their goods International market is highlycompetitive, as trade barriers still exist elsewhere under both price and non-price forms.Environmental regulation is a new form of trade barrier erected by developed countries in order

to bar the wave of low-cost products rushing in day by day from developing countries Developedcountries, most are environmental protection pioneers, have gone far away with theirenvironmental management practice, leaving a big gap that developing countries have to spendhuge amount of time and efforts to catch up with In a strategic vision looking forward anintegration of global economy, developing countries must for seek equality in environmentalpractice not to be the low hand in the international competition Environmental perfection is,thus, a strategic move for Vietnamese business entities towards integration into world market.But in short term consideration, it is problematic spending scarce resources in exchange for agreen label of little use, virtually weakening the firm’s competitiveness In such a context,striving for environmental perfection, initial though, could be considered as a bold decision

III Company profile

Lever Vietnam Hanoi branch, known as Lever Haso before 2000, is a branch of Lever VietnamCorporation, a joint venture between three partners: Vietnamese partners include VietnamChemical Corporation (VINACHEM) and Hanoi Soap Company (HASO); and the other partner

is Maatschappij Voor Internationale Beleggingen (MAVIBEL), The Netherlands Previously,MAVIBEL has founded two separate joint ventures with VINACHEM and HASO namely LeverViso and Lever Haso respectively In 1999, the three partners agreed to merge the two jointventures into a bigger one and the Ministry of Planning and Investment has issued a licenseallowing the merger with a vision for operation of 40 years The new joint venture, namely LVHanoi, produces personal and homecare and personal health products at international quality,including shampoo, tooth brush and other oral care products, soap, skin care cream and other skincare products, and detergent A summary of each partner’s contribution in the company’s legalcapital is shown in table 3.1.

Table 3.1: Capital contribution of Lever Vietnam

The company established two branches, one at 53 Le Hong Phong, Da Nang city and the other at

233 Nguyen Trai Road, Hanoi The new joint venture, located at Kien Thiet living quarter, Hiep

joint ventures, one is located at the headquarter and the other is at, Hanoi branch

Lever Vietnam is obliged to export at least 10% of its annual production in soap and shampoo atKien Thiet plant and 30% of nation-wide production in detergent Export is expected to be themain source of foreign exchange for the company, as Vietnamese government guarantees noforeign exchange by for spending needs of the company This obligation has driven the companytowards more international competition as the only way to get foreign exchange in-flow

Lever Vietnam Hanoi branch (LV Hanoi) is located on the site of the past Lever Haso, which wasformerly the joint venture between HASO and MAVIBEL The operation of LV Hanoi ismaintained the same as that of Lever Haso, except for a new reporting procedure for managementboard, which was once autonomous but is now only a branch of a bigger corporation LV Hanoitook over a well-structured production and operation procedure from Lever Haso, which ransmoothly before, and an EMS as well The site has been also certified with ISO 9002 standard inApril 1999 The EMS of the late Lever Haso was well developed under supervision of themanagement board but not yet certified or sought to be certified with ISO 14000 standards series.During the interviews with us, Mr Mai Duc Lam, the facility’s EMR, has emphasized manytimes the importance of having been certified with ISO 9002 to the implementation of ISO 14000standards series at LV Hanoi: ‘That the facility has been certified with ISO 9002 standard hasgiven us not only the idea and enthusiasm to go on with ISO 14000 standards series but alsomany operation procedures that have proved effectively.’

IV ISO 14001 at the facility

Lever Vietnam Hanoi Branch was certified with ISO 14001 Specifications standard in April 1999and this research work is to study how the facility carried on with the implementation of thestandard series, how the certification has affected the facility’s EMS so far and from whatperspectives difficulties have come to the implementation The business environment in Vietnam

is somewhat different from the condition ideal for the implementation of ISO 14000 standardseries The practice of Lever Vietnam, therefore, should contain ramifications from the practiceelsewhere in the world This research aims at exploring those ramifications to workout somepractical facts of implementing ISO 14000 standards series in Vietnam

IV.1 Corporate environmental policy

The environmental policy of LV Hanoi is integrated into company’s Health, Safety andEnvironment policy and has been designed to reach the wide public Their partners, presscommunity and the public can easily access its environmental policy from its annual reports andother releases Most of the information is released through public press on occasions but notreadily accessible at any time and through popular means like the Internet The facility has built awebsite to introduce its policies, commitments, and the like including its environmental policybut this website no longer works as it has not been updated for long Information about facility’senvironmental policy is kept within control because the number of Internet subscribers inVietnam is now around 200,000 (Phuong Nam Co., 2001), so limited that Internet is not an idealmeans of spreading information LV Hanoi do not want to spend their money on such a lesseffective communication mean at the moment, they prefer press or other means instead

In the other hand, it is a habit of Vietnamese businessman to limit the information released It isunderstood within the facility that information should be released only to those personstrustworthy; a certain phone call is not a good reason for an item of information to be gone

To make their employees aware of environmental policy, LV Hanoi introduces its environmentalpolicy right at the orientation of new employees During the orientation, employees are provided

a documented environmental policy with general explanation for what ever not yet understood.Questions raised about the policy and employees’ role in implementing the policy are alsoanswered immediately to give them the best initial view of what they are expected to fulfill.Practice proves that once employees are aware of the company’s environmental policy right atthe very start, they will have the feeling of full involvement and shared responsibility and, thus,become willing to develop and realize what they have been involved in Environment Day heldannually is also a good chance to direct employees’ attention to the environment managementpractice, encourage them to participate in the review process of environmental policy by updatingthe new challenges to their work, if any, into the facility’s list of significant environmentalaspects The policy is reviewed in the facility-wide meeting to make the awareness buildingprocess a continual circle Not only on that special day can employees have a chance to reviewand raise their opinions about the policy but also they do see the policy every day they work, attheir worksites, at the bulletins or even in the cafeteria In every plant, posters and banners areused to remind the workers about the policy as well as the environmental objectives and targets atthe time being

Contractors do not yet receive orientation and thus are made aware of the company’senvironmental policy in another way around Every time outsiders enter the gate of the company,