a management system for sustainable development

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integration of environmental policies into economic and social development .... into account both risk management and sustainable development principles.
A MANAGEMENT SYSTEM FOR SUSTAINABLE DEVELOPMENT – A NEW CHALLENGE Liliana Nitu 1*, Lucian Nitu 2 1. Romanian Association for Quality, Romania, Bucharest, 1st. District, 1 Iani Buzoiani, Bl. 16 A, Et. 10, Ap. 40-41, phone: 040 21 224 10 52, e-mail: [email protected] 2. Romanian Society for Certification, Romania Summary Sustainable Development is now a very popular topic taking into account the current climate changes. But sustainability cannot be a standalone activity; it must be instilled into each organization. The paper will present key elements of a management system designed for supporting an organization in ensuring sustainable development. The management system is based on sustainable development principles, but keeping, at the same time, the PDCA management system approach. A practical tool for assessing, in a quantifiable manner, the current performance of the organization regarding progress in sustainable development will also be presented. Keywords Sustainable development, management system, risk management, internal audit. 1. INTRODUCTION Sustainable development (SD) was defined for the first time in 1987 in the report “Our common future” by Dr. Gro Harlem Brundtland, prime minister of Norway and president of the World Commission on Environment and Development, as “Development…that…meets the needs of the present without compromising the ability of future generations to meet their own needs”, and was re-defined in the documents of the UN Conference for Environment and Development, which took place in Rio de Janeiro in 1992, focusing on the political level, by integration of environmental policies into economic and social development policies, at the local, regional and global levels. In a recent interview, Gro Harlem Brundtland said that, even if the definition of sustainable development is the same, humanity today understands much better the economic, social and environmental pylons of sustainable development, and how these pylons are interconnected [1]. Now, the key concept of the definition is integration of economic, social and environmental issues and certain principles were defined. From these definitions are derived three dimensions of needs which define sustainable development, as follows: • Social well-being and equity for both employees and affected communities • Economic prosperity and continuity for the business and all interested parties • Environmental protection and resource conservation, both local and global To achieve sustainable development at the global level, we have to start to ensure sustainable development of each company by keeping a continuous balance among these dimensions, paying the same attention to all of them (figure 1). A practical way to improve the sustained development in a company is to extend the existing management systems or to develop a new one in such a way as to cover the principles of sustainable development.

2. KEY ELEMENTS OF A MANAGEMENT SUSTAINABLE DEVELOPMENT

SYSTEM

DESIGNED

FOR

As is well known, a management system is a consistent set of interrelated and interacting arrangements and practices to establish a policy and related objectives and to achieve those objectives. These arrangements should ensure a continuous improvement of an organization's operation and its processes. Depending on the objectives the organization is setting up, the management system will focus on the quality of the product, on environmental protection etc. Using this definition, a framework can be established for developing a management system for sustainable development, by determining adequate policies, objectives and processes, on the basis of an analysis of the market conditions regarding economic, social and environmental issues. The system should take into account all types of needs that can be associated with an interested party.

Global level Natural resources consumption

Poverty eradication

Ecosystems Pollution

Security?

Land use

Organizational level Using recycled renewable &materials Waste reduction Health and safety work environment Purchasing and interest etc

Industry

Infrastructure

Agriculture

Social inequity

Local level Houses

Health System

Waste Education Employment Human well being

Transportation Electricity

Figure 1 –Levels of sustainability

Accordingly, the framework for a management system designed for sustainable development should involve the classic Plan – Do – Check – Act loop, which should be extended to cover the scope and processes required to address the sustainability issues (figure 2). 2.1 Analysis of economic, social and environmental conditions

Each organization is a part of an entire system, at the regional, national and international levels; therefore, if it wants to stay in business, it has to move in the same direction in which the entire system is moving.

Figure 2 - Key elements of a sustainable development management system

From this point of view it is very important to identify correctly the current and future business environment. In this step it is vital to understand economic, social and environmental constraints: • Economic constraints may include: economic forecasts, government policy, tax policy, rental rates, sale prices, demand levels, interest rates etc. • Social constraints may include: government policy, population growth, absorption rates, labour availability, salary levels, health and safety requirements etc. • Environmental constraints may include: government policy, surrounding environment (flora, fauna), neighbourhoods, land availability, natural resources availability etc. An important item at this stage, too, is to identify all interested parties, principal groups affected by the organization’s activities, their needs and expectations, which will, for sure, conflict with each other. The interested parties include: • internal interest parties, which have direct interests in the organization: management team, employees, unions, shareholders. • external interest parties, identified as: ƒ the organization’s partners, who have a direct commercial interest, such as suppliers, customers, banks, and insurers. ƒ dialogue partners that have an interest or requirements concerning the performance of the organization, such as the local population, NGOs, associations • authorities: government, local authorities, and professional associations. A wide involvement of all interested parties, through interviews and dialogue, may be conducted to establish a complete set of indicators needed for a real sustainability assessment. The interviews should address at least two questions:

• •

What are the potential impacts of the organization’s activity and your concerns relating to them? How do you propose to measure these impacts?

As a result of this analysis the organization can identify the sustainable development issues (desired and undesirable effects) associated with the business activities of the organization and its output. 2.2 Decision of top management. Policies and objectives As in any management system, the involvement of top management is essential, the first level of implementation being the global level, through establishing company values and vision, leadership principles and policies. What is different, in this case, is how the policy and objectives are established. Organizations will set their own policies and strategic objectives based on the results of previous analysis of conditions, the requirements and needs of interested parties and the applicable legal requirements. The policy statement, with respect to sustainable development, would lead the planning process and determine values which management, employees and other groups such as suppliers must strive for. A vital step is to develop a rigorous approach for aligning one’s own objectives with whole-society goals for sustainable development. The objectives have to be consistent with the vision and policy of the organization, compliant with sustainable development principles, tailored to local issues, and priorities based on interested parties’ concerns. It means that they have to be tailored to the organization’s current conditions and requirements while retaining their whole-society scope. The strategic objectives will determine how to manage activities to achieve the desired results. An important tool in this stage is risk management at the strategic level, which involves broaching those issues (internal and external) that can affect each pylon of sustainable development. Implementation of risk management at the strategic level may include: • creating or updating the policy of the organization and the management system, by taking into account both risk management and sustainable development principles • establishing the organization's strategic objectives and planning, based on a risks approach • incorporating risk-management specific concepts and processes • establishing criteria for acceptability of risk, consistent with the requirements of interested parties and current legislation. It will be necessary to develop new management tools, like building consensus or force field diagrams, together with a new cultural orientation and an extension of the management system (refinements of the practices and procedures, an improvement of reporting practices). A sample of such objectives is presented below (table 1):

Table 1 – Strategic sustainable development objectives Strategic sustainable development objectives of the company Economic Dimension Environmental Dimension

Competitive product Investments Reducing non-sustainable resources, using recycled, renewable materials Reduction of waste Reduction of pollution

Embracing equal opportunity Exemplary working conditions

Social Dimension

2.3 Determine processes & sequence & interactions The transposition policy of sustainable development in operational terms is a very difficult task which will affect the entire organization. This involves the changing of organizational culture and the attitudes of employees, the definition of new responsibilities, the establishment, perhaps, of new organizational structures and practices for information and reporting. At this stage, the organization should establish the links between the existing main activities, viewed as processes and their outputs, and the organization’s sustainable development objectives – and, at the same time, the organization should determine what kind of new processes are needed (e.g. public consultation, risk communication, mediation and negotiations etc.). For each identified process, its significance (High, Medium or Low) will be established in contributing to the organization’s strategic objectives. The performance measurable objectives and targets at the process level should be defined, too, in operational terms, to be able to understand the gap between actual and expected levels of achievement, and to determine how to manage, effectively and efficiently, these processes (key competences, resources, information, controls etc.). Performance measures will generally be established for each process, corresponding with performance targets, to indicate the extent to which the organization is achieving these performance expectations [2]. Performance measures are an important source of feedback for effective management (see table 2 for a sample).

Table 2 - Transposition of sustainable development policy Objectives Responsible Processes Resources Responsible Performance Responsible measure(s) for for & outputs needed for for SD evaluating managing achieving necessary measures objective to meet process or obtaining objective outputs Reduction of General waste Manager Target: 10%

1. Design & Specific Process Development Software owner (xxx Euro)

Waste materials / product

Mngmt. Syst. Resp.

2.Production New Process equipment owner (xxx Euro)

Waste materials / year

Mngmt. Syst. Resp.

2.4 Risk Assessment - economic, social, environmental Risk Management should be implemented at all levels of an organization, from the strategic to the operational level [2]. The result of the risk assessment should be considered in documenting the process operation and risk treatment plans. At this stage of developing the management system for sustained development, the organization should:

• • • • •

determine the level of risk from economic, social and environmental points of view, associated with each identified process use the generic risk management process (identify, analyse, evaluate) for establishing a comprehensive list of events that might influence the achievement of the established objectives regarding sustainable development, at each process level; determine compliance with the criteria or standards for acceptability of risk provide necessary information for process decision making determine what will be done to respond to identified risk (treat risks plans)

2.5 Implement processes & Risk Treatment Plans Organizational culture is changing as a result of training activities, which should support the objectives dictated by the new policy for sustainable development. Another useful tool, in this sense, is the motivation and reward system that should reflect the new organizational values. The business planning process should be changed, too, to reflect the priorities of sustainable development, and the process of consultation with interested parties should be extended. Improving the information and communication within the organization will ensure that management and employees understand the policies and objectives that have been established, and receive information they need in order to properly assess the performance of the processes involved, in accordance with the established objectives. All processes within the organization should be operated in accordance with the established procedures and risk treatment plans, with respect to regulations, industry practices or internal and external standards. 2.6 Regular & ad-hoc checking. Interested parties feedback In this stage all processes and products are monitored and measured, as applicable, against the planned policies, objectives and requirements, and the opportunity to be determined for developing innovative processes. Moreover, in order to ensure that sustainable development policies and objectives and entire management systems are still appropriate, taking into account the complex and rapidly changing business environment in which the organization operates, there will be continuous monitoring of information coming from all interested parties, such as: new technologies, new standards and best practices in the specific field, customer feedback, competitors’ strategies, new legislation and regulations, trade union feedback, community feedback, supplier feedback. The result of the monitoring and measuring processes could apply to corrective / preventive / improvement actions and will be reported. 2.7 Internal audit An important role in monitoring the implementation of the management system is played by the internal audit process. As a result, the organization can improve each process and can reduce risks. Both the audit program and the audit plan will reflect the key risks and controls, the processes to be audited being prioritized by the level of risk associated with them. Usually we conduct audits to evaluate the effectiveness of a management system – quality, environmental and so on. In this case auditors should be equally aware of the other dimension of performance: efficiency. A sample of a tool used to assess, as quantifiably as possible, the current performance of the organization regarding sustainable development progress is presented below (table 3). For an internal audit process, for each requirement, the auditor will

evaluate and determine the extent to which the organization considers adequate actions. The scale used means: 1 – there is little or no evidence that this requirement is being met (major nonconformity); 2 – there is evidence, but not systematically, that this requirement is being met (minor nonconformity) 3 – there is systematic evidence that this requirement is being met, but there are improvement opportunities (recommendation) 4 – there is evidence that this requirement is being met to a very great extent (conformity)

Table 3- Evaluation form Criterion for SD Leadership and management involvement for SD

Requirements

Evaluation NA A scale from 1 to 4

Management is committed to SD? Management is developing mission, vision and policy regarding SD? Management is professionally competent for SD? The decision-taking process is adequate for SD? Management reviews SD performance? Management is a personal example regarding SD? …………. …… ……

Average score

For every criterion, the average score will be determined. The final score is the average score of all criteria. To obtain the performance of the organization regarding sustainable development, as a percentage, the final score is multiplied by 25. The results will be analysed, both as a total and for each criterion, using suitable graphics and diagrams, to establish the strategic plan for improvement, using appropriate tools. Some examples are presented below (figure 3).

Figure 3 – Results of internal audit

2. 8 Management review & System improvement resolution To ensure continuous improvement, it is essential that top management periodically review the adequacy, effectiveness and efficiency of the sustainable development management system. The frequency of these reviews, obviously, will be greater in the early years of implementation, to identify the potential problems in advance, and to act quickly. To be effective, such a review will take into consideration the following: • identifying and correcting potential problems before they affect system performance • identifying causes of problems and analysing any changes required within the system performance • analysing the current stage of meeting established objectives • feedback from all identified interested parties and reviewing objectives accordingly, etc.

3. CONCLUSION To obtain an effective management system, the sustainable development concept must be integrated at all levels of the organization and throughout the PDCA cycle: in the planning, information, control processes, etc. Moreover, such a management system must focus on several essential aspects: • Dialogue, negotiation and consensus • Changing the culture, perception, attitude and behaviour • The continuous learning process in benefit and together with interested parties

The benefits of a sustainable development management system are that such a system allows the organization to achieve its objectives, including business objectives, through more efficiently managed processes. For interested parties, the management system ensures that the organization respects legal requirements and their own needs, ensures that risks have been identified, and takes appropriate control actions so that the organization will not adversely affect their interests.

REFERENCES [1] Bugge, H. C., Watters, L., A Perspective on Sustainable Development After Johannesburg on the Fifteenth Anniversary of Our Common Future: An Interview with Gro Harlem Brundtland, Georgetown International Environmental Law Review, vol. 15, p. 359-366 [2] Developing Performance Measures for Sustainable Development Strategies, Office of the Auditor General of Canada, www.oag-bvg.gc.ca [3] Climate Change Impacts & Risk Management. A Guide for Business and Government, Australian Greenhouse Office, 2006, www.greenhouse.gov.au [4] Performance Audit Manual, Minister of Public Works and Government Services Canada, 2004 [5] 4th E Practice Guide, Integrating Environmental Consideration into Performance Audit Work, Minister of Public Works and Government Services Canada, 2007