Clean Environment and ISO 14000
as appeared in Semi-Annual Report, June 1996
The investment philosophy of Clean Environment is built on the conviction that sustainable environmental practices are an important component of total corporate success. We believe, and the results we have achieved for our unitholders over the past four and one-half years demonstrate, that great companies purchased at sensible prices are the most certain way of generating excellent investment results.
Our conviction has now gained international acceptance. ISO 14000 is a broad set of international standards for environmental management, auditing and labelling, which should be formally approved by the International Organization for Standardization (ISO) this summer. Companies will voluntarily begin to register their facilities as being in compliance with ISO 14000 standards, signaling to their customers, suppliers and employees that environmental issues are a formal component of their management structure and procedures.
Although companies will not be required to comply with the standards, market forces - such as purchasing agreements, supplier arrangements, and consumer demand - will push many firms to seek registration for competititve reasons. There is already a great deal of interest shown by conferences, workshops and newletters.
Besides a formal Environmental Policy, to be in compliance, a company commits to programs of oversight, training, communication, documentation, emergency preparedness, measurement and self-auditing. The policy also must include a commitment to "continual improvement", provide a framework for setting and reviewing environmental objectives and targets, and be communicated to all employees and made available to the public.
Potential Benefits
Effective resource utilization results in improved cost-effectiveness, greater profitablilty and enhanced competitiveness. This why we believe that companies which emphasize sustainable practices will experience above average investment returns.
As ISO 14000 comes to be widely promulgated, more and more companies will experience these benefits and more, including:
- insurance premiums and financing charges drop as potential environmental liabilities are reduced.
- procurement policies of governments will increasingly require compliance with ISO 14000 standards.
- environmental standards of countries will tend to converge on the new standards.