A New Reason to Get Certified: Save Big Money

If you’re like the vast majority of readers, your company has probably gotten certified to one or more management system standards because someone told you to do so.

While certification is considered to be a cost of doing business these days, companies that invest in becoming certified to a future global energy management standard may also do so for another reason: to save big money.

The future ISO 50001 is expected to form the basis of a new third-party certification program that may rival or exceed demand for widely-used certification programs such as OHSAS 18001 on occupational health and safety, ISO 14001 on environmental management, and even the ISO 9001 standard for quality management. The latter boasts close to one million certified organizations around the world—more than any other such standard.

It’s simple economics, according to Edwin Piñero, a former U.S. presidential appointee, who chairs the International Organization for Standardization (ISO) drafting committee for ISO 50001. The coming standard is intended to help organizations manage their energy consumption and reduce greenhouse gases through a systematic approach.

“Energy hits the pocketbook a lot more visibly,” Piñero explains. “There’s much more of a one-to-one relationship between saving energy and saving dollars than you see with some environmental and quality improvements.”

There’s no question that energy costs pose an obstacle to sustainable success. The real question is whether the Geneva-based ISO can deliver a one-size-fits-all formula for reducing energy costs in the form of an international standard. If so, quality professionals, who are already familiar with management systems, should be well positioned to assist with implementation efforts.

It also appears as though the right parties have been given a seat at the table for this standard. Drafters represent a cross section of utilities, producers of energy, organizations that use energy, and companies that produce equipment and services related to energy. In all, ISO Project Committee 242 (PC 242) on energy management has attracted participation from 38 ISO member bodies, eight observer bodies, and four liaison members, as well as other internal ISO committees.

While it may be premature to say whether the yet-to-be-developed certification program will result in big savings, Piñero says he is confident that implementation alone will generate substantial cost savings for organizations.

“I think the main value comes from implementing an energy management system conformant to the standard,” he says. “Whether or not it is certified is another question. Clearly, certification has value as an independent validation, but the organizational value doesn’t really come from being certified as much as it does from having a system.”

The future ISO 50001 is expected to be released as a draft international standard (DIS) in January, well ahead of the development cycles followed by similar management system standards.

If there really is value in this standard, there’s no reason why you can’t start using the document in its draft form to save money—even before the formal accredited certification process has been developed, something that probably won’t happen prior to the release of a final standard.

Assuming there are no roadblocks—and none are foreseen by Piñero—the final standard will be issued at the end of 2010 or early 2011.

“This will provide a vehicle to conserve energy,” adds Baskar Kotte, a longtime U.S. delegate to ISO’s quality and environmental work, who also participates on PC 242.

Kotte says the new standard will share many of the familiar components found in ISO’s other management system standards, including internal audits, document control, management review, planning, policy, and others.

Even though some organizations already perform energy audits, they are probably not using a systematic approach, according to Kotte. “They have a system in place to reduce their energy cost. They don’t have a disciplined system like this with management reviews and defined management responsibilities.”

While the international consensus-building process has been largely acrimonious, there has been heated discussion over potential compatibility issues with the European Union’s recently published EN 16001 standard on energy management.

According to the European Committee for Standardization (CEN), which developed that document, EN 16001 “provides organizations and companies with a single framework to help them establish the systems and processes necessary to improve energy efficiency.” Moreover, the European document will “contribute to the setting up of a continuous improvement process that will lead to cost reductions, thereby strengthening competitiveness and continual improvement of energy use and business performance.”

Each user of the future ISO standard will be responsible for identifying key energy issues of their own energy footprint and determining objectives and targets for improvement.

An argument can be made that energy usage is already addressed in ISO 14001, however, the new standard is more sensitive to broader energy issues, according to Piñero, who also served as the White House Federal Environmental Executive.

“When you talk about energy in an ISO 14001 EMS [environmental management system], you are concentrating on the environmental impacts of energy use,” adds Piñero, who will lead a Jan. 25 video webinar, “Getting Plugged Into the Future ISO 50001” on behalf of Sustainable Success Alert, regarding the coming standard. “ISO 50001 addresses energy use much more holistically. It considers the environmental impact as in 14001, but it also looks at drivers for energy security, energy infrastructure, increasing the use of renewable energy, and reliability, among other factors. A company can identify something as significant regarding energy even if the environmental impact associated with that would not be significant in an EMS.”

The new ISO 50001 will establish an international framework for industrial plants or entire companies to manage energy, including all aspects of procurement and use. The standard will provide organizations and companies with technical and management strategies to increase energy efficiency, increase the use of renewable energy, reduce costs, reduce greenhouse gas emissions, and improve environmental performance.

As you may have guessed by now, the numerical designation of the future standard is intended to be consistent with ISO’s other management system standards, specifically ISO 9001 and ISO 14001. OHSAS 18001 is not an ISO standard.

Experts have agreed to base the ISO energy standard on a plan-do-check-act improvement cycle, similar to the approach taken in ISO 14001, and to closely follow ISO’s other management system standards wherever practical.

Since the project committee is chartered to draft only a single international standard, the future ISO 50001 is being developed as a self-contained document, meaning that all relevant terms must be defined within the document and that it must incorporate any necessary guidance for use, implementation, measurement, and metrics. While this is a departure from ISO’s other management system standards to some extent, sales of ancillary documents have historically been disappointing, suggesting that users didn’t always take the time to familiarize themselves with the guidance deemed important by drafters. ISO has not ruled out a future change in the status of PC 242 to become a full technical committee with responsibility for creating additional documents; but the main focus now is on ISO 50001.

Based on broad applicability across national economic sectors, the standard could influence up to 60 percent of the world’s energy demand. Corporations, supply chain partnerships, utilities, energy service companies, and others are expected to use ISO 50001 as a tool to reduce energy intensity and carbon emissions in their own facilities (as well as those belonging to their customers or suppliers) and to benchmark their achievements.

In the United States, hundreds of plants have already reported significant cost savings related to energy management systems, according to data released by the Department of Energy (DoE).

As a friend of mine says, selling certification is like telling your kids to wash their hands. Even though your children may do so reluctantly, they are still washing their hands.

ISO 50001 may make people want to wash their hands.

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