The Impact Of ISO Regulations On Stakeholders

ISO 14001 and AA1000 Regulations

Discuss about the Impact of ISO Regulations on Stakeholders.

The major aim of this report is to analyze the organizational impact of the ISO 14001 and AA1000 regulations. Thus, this study focuses on analyzing how the AA1000 and ISO14001 regulations can easily protect the stakeholders. On the other hand, this report also sheds light on the impact of the regulations how the investors can see the viability of a company in the long-term basis in that they can make the investment plans. Most importantly, this report focuses on the context of the Kingdom of Saudi Arabia in order to conduct the entire analysis on the two regulations. Moreover, this study highlights the impacts of the regulations over the organizational sustainability, local stakeholders and investors of the companies. 

The “ISO 14001 Environment Management System (EMS) standard” is the globally identified standard for environmental management what was published first in 1996. It is the systematic framework which is helpful for managing the long term as well as immediate environmental influences of the products, processes as well as the services of a particular enterprise (Heras?Saizarbitoria, & Boiral, 2013). The “ISO 14001 standard” has been implemented based on the typical ISO “Plan-Do-Check-Act cycle”. Therefore, a company has to comply with several clauses of the “ISO Standard” for gaining the certification for their environmental management system. An organization should have to implement their procedures, protocols as well as the policies in terms of ensuring the fact that its influences on the environment are kept to a minimum range. It has also been designed for helping the businesses commercially remain successful without overlooking the impacts and responsibilities of the environmental aspects.

Figure 1: ISO 14001 Environmental Management Standard

(Source: Zhu, Cordeiro & Sarkis, 2013, pp.232)

The “AA1000 Assurance Standard” is the standard in order to strengthen as well as assess properly the quality and the creditability of the environmental, economic and the social reporting of an organization as well. The prime aim of this standard is for being utilized by the external auditing bodies that can ensure the reports of an organization on the social accounts (Junior, Best & Cotter, 2014). However, it can also be utilized for guiding any company while establishing its abilities, systems as well as the processes of accountability. The stakeholder engagement is the central concern behind the implementation of the AA1000 Assurance Standard. AA1000 Assurance Standard gives a holistic standard to assess that the social reports or accounts of a company systematically resolve the proper range of economic, environmental and social impacts as well as performance. It also seeks to reflect the concerns of the stakeholders as well as highlight whether these have or have not been resolved by a company.

Impact of ISO 14001 and AA1000 Regulations on Protecting Stakeholders

Figure 2: AA1000 Assurance Standard

(Source: Bhaduri & Selarka, 2016, pp.33)

In the context of Corporate Social Responsibility, the stakeholder engagement is the major concern and it is the key component of achieving the triple bottom line. The organizations mainly intend to engage their stakeholders in dialogue for finding out what environmental as well as social issues matter most to them regarding their performance in terms of improving the accountability and decision-making (Mayamurugan, 2016). Therefore, in regards to this point, protecting the stakeholders is the most essential concern for all the organization. Thus, both of the two regulations, ISO 14001 and AA1000 play significant roles in protecting the stakeholders of the organizations.

ISO 14001 Environmental Management Standard is incorporated by the organizations in Kingdom of Saudi Arabia due to the reason of introducing an environmental management system. Most importantly, while it becomes very crucial for retaining as well as securing business either with the international or the local clients, the organizations incorporate this standard. The environmental sustainability and environment management are the serious concerns for the organizations in the Kingdom of Saudi Arabia as this country is the petroleum based nation (Testa et al., 2014). Majority of the industries in this country is comprised of oil industry. Therefore, the ISO 14001 Environmental Management Standard can possess huge implications over the protection of the stakeholders who are engaged with the huge oil industry of the organization. This standard identifies the cost savings with the greater emphasis on energy, waste and resource management. It also develops the credibility and corporate image and can also protect the shareholders, assets and directors.

AA1000 Assurance Standard has direct implication over the protection of the stakeholders. In the Kingdom Saudi Arabia, this regulation is utilized within the organizations as the means of driving the entire performance through the learning as well as innovation. With the help of the incorporation of this standard within the organizations in the country, the good quality processes of stakeholder management can inform potentially the internal decision making as well as enable innovation and learning (Perego & Kolk, 2012). In this way, this standard can enhance and improve the organizational performance. Therefore, it must be stated that, all the principles of AA1000 Assurance Standard must be applied by the organizations wishing for using the standard.

The investors play a crucial role in the organizations in order to allocate capital with the expectation of a future return in the financial context. The investors have the responsibility for committing the capital with the expectation of the financial returns. They use investments in terms of growing their money (Mayamurugan, 2016). Investors have to face several challenges such as timeframes, preferences, and capital and risk tolerances. Thus, both the regulations ISO 14001 and AA1000 can influence on the process through which the investors see the long-term viability of a company in that they plan for investing.

Impact of ISO 14001 and AA1000 Regulations on Investors

ISO 14001 Environmental Management Standard can help the investors for seeing the long-term viability of the organizations in the Kingdom of Saudi Arabia in that the companies can make their investment plans. This is simply because; ISO 14001 Environmental Management Standard can easily recognize the cost savings with the greater emphasis on energy, waste as well as resource management while investing in the business (Arimura et al., 2016). On the other hand, it can also decrease potentially the public liability insurance costs for the organizations during implementing the investment plan for ensuring the long term viability of the organizations in the nation.

The materiality principle, completeness principle and responsiveness principle of the AA1000 Assurance Standard can help the investors for seeing the long-term viability of the organizations especially the oil industry in the Kingdom of Saudi Arabia in that the companies can make their investment plans (Manetti & Toccafondi, 2012). This standard is flexible enough to be utilized by the several companies in the Kingdom of Saudi Arabia from the diverse backgrounds as well as over timeframes. It can resolve the proper range of economic impacts and performance with the help of which a suitable investment plan can be built by the organizations in the country to assure the organizational viability in long-term basis.

ISO 14001 and AA1000 regulations are playing significant roles in maintaining the sustainability of the organizations over the world (Horner & Wilmshurst, 2016). For the organizations in the Kingdom of Saudi Arabia, ISO 14001 and AA1000 regulations can effectively influence sustainability factor of the organizations in the respective industries.

As per the AA1000 Assurance Standard, this regulation maintains the organizational sustainability by assessing the social accounts of the organizations and seeking to echo the concerns of the stakeholders of the company. Stakeholders and investors are the important success factors for the organizations (Castka & Prajogo, 2013). On the other hand, AA1000 Assurance Standard also seeks for instilling a continuous development culture through the responsiveness of stakeholder.

As per the ISO 14001 Environmental Management Standard, most important part of this regulation in terms of maintaining the organizational sustainability is that this standard can effectively improve the environmental performance of the supply chain of the organizations. The Kingdom of Saudi Arabia is the oil based nation and majority of the organizations are belong to the oil industry (Mock, Rao & Srivastava, 2013). Hence, in this country, the organizational sustainability is directly related with the environmental sustainability factor. Thus, this regulation can play a significant role in order to maintain organizational sustainability by maintaining as well as improving the environmental performance.

Conclusion

After conducting the entire analysis of the report, it can easily be stated that both the ISO 14001 and AA1000 regulations ultimately aims to protect stakeholders and implement the effective investment plans, which directly enhance the organizational sustainability. In this regard, this study has successfully depicted the feature of the ISO 14001 and AA1000 regulations over the protection of the stakeholders and on the effective process of implementing investment plan. On the other hand, this report has also analyzed broadly the functionality of the two regulations over the procedure of maintaining organizational sustainability.

References

Arimura, T. H., Darnall, N., Ganguli, R., & Katayama, H. (2016). The effect of ISO 14001 on environmental performance: Resolving equivocal findings. Journal of environmental management, 166, 556-566.

Bhaduri, S. N., & Selarka, E. (2016). Corporate Social Responsibility—Guidelines and Best Practices. In Corporate Governance and Corporate Social Responsibility of Indian Companies (pp. 33-42). Springer Singapore.

Castka, P. & Prajogo, D., (2013). The effect of pressure from secondary stakeholders on the internalization of ISO 14001. Journal of Cleaner Production, 47, pp.245-252.

Heras?Saizarbitoria, I., & Boiral, O. (2013). ISO 9001 and ISO 14001: towards a research agenda on management system standards. International Journal of Management Reviews, 15(1), 47-65.

Horner, C.A. & Wilmshurst, T.D., (2016). Stakeholder Engagement and the Gri: Implications for Effective Risk Management. Corporate Ownership & Control, p.209.

Junior, R. M., Best, P. J., & Cotter, J. (2014). Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), 1-11.

Manetti, G., & Toccafondi, S. (2012). The role of stakeholders in sustainability reporting assurance. Journal of Business Ethics, 107(3), 363-377.

Mayamurugan, R. (2016). ISO 14001: Environmental Management System. In Integrated Waste Management in India (pp. 117-121). Springer International Publishing.

Mock, T. J., Rao, S. S., & Srivastava, R. P. (2013). The development of worldwide sustainability reporting assurance. Australian Accounting Review, 23(4), 280-294.

Perego, P., & Kolk, A. (2012). Multinationals’ accountability on sustainability: The evolution of third-party assurance of sustainability reports. Journal of Business Ethics, 110(2), 173-190.

Testa, F., Rizzi, F., Daddi, T., Gusmerotti, N. M., Frey, M., & Iraldo, F. (2014). EMAS and ISO 14001: the differences in effectively improving environmental performance. Journal of Cleaner Production, 68, 165-173.

Zhu, Q., Cordeiro, J., & Sarkis, J. (2013). Institutional pressures, dynamic capabilities and environmental management systems: Investigating the ISO 9000–Environmental management system implementation linkage. Journal of environmental management, 114, 232-242.