Transcript Introduction to ISO - Daniels Fund Ethics Initiative

Introduction to ISO
Jennifer Sawayda
Program Specialist
Anderson School of Management
University of New Mexico
Albuquerque, NM
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What Is ISO?
• ISO stands for International
Organization for Standardization
• ISO is an international organization
that publishes global standards to
ensure that goods and services are
safe, reliable, and of good quality.
– Tackles three aspects of sustainable
development: economic, social,
sustainable
• Companies can receive certification for
different ISO standards.
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Why Is ISO Important?
• Standards vary from country to country,
making them hard to compare.
– Is the quality of Chinese goods of the same
quality as Japanese goods?
– How do you compare the sustainability initiatives
of an American company compared to a French
company?
– How do we know?
• Companies can become certified in certain
ISO standards, assuring customers that they
adhere to best practices developed by a
global organization.
– Provides an important benchmark for global
organizations
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Facts about ISO Standards
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Formed in 1947
Over 19,500 standards published
165 member countries
A technical committee works together to
develop a standard, then shares the new
standard with the ISO community to vote
on.
– If a consensus is reached, the standard is
adopted. If not, it’s sent back to the technical
committee for additional edits.
– The committee consists of experts from
across the world.
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Benefits of ISO Standards
• World Trade Organization requires
members to adhere to international
standards of the type developed by
ISO
• Standards help companies save on
costs
• Standards reassure customers about
the trustworthiness of the company
and its products
• Standards have been shown to
contribute to economic growth
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Benefits to National Economic Growth
Based on a study published in 2012, growth in organizational
standards have impacted the following:
• Canada—17% of labor growth, 9% growth in real GDP
• France—Standardization contributes 0.81% of economic
growth (25% of GDP)
• New Zealand—Standards are estimated to lead to a 1%
increase in economy-wide GDP (2.4 billion NZ dollars)
• Germany—Economic benefits represent about 1% of GDP
• United Kingdom—Contributed to 13% of growth in labor
productivity (2.5 billion British pounds)
• Australia—1% increase in standards has led to 0.17%
increase in productivity across economy
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Benefits to Companies
Study of 11 companies (10 countries) show implementing
standards can benefit firms between 0.5% and 4% of annual
sales revenue
• Lobatse Clay (brick manufacturer, Botswana)—Standards
had positive impact of 4.96% of earnings
• Nanotron Technologies (information and communications,
Germany)—14% cost savings, 19% increase in sales
revenue
• PT Wijaya Karya (pre-cast concrete manufacturer,
Indonesia)—0.43% contribution to total revenue
• Festo Brasil (automation technology provider, Brazil)—
Positive impact of $1.83 million on total earnings
• NTUC Fairprice (supermarket chain, Sinapore)—$10.88
million in total benefits over 10-year period.
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Types of ISO Standards
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ISO 9000: Quality Management
ISO 14000: Environmental Management
ISO 19600: Compliance Management
ISO 22000: Food Management
ISO 26000: Social Responsibility
ISO 27001: Information Security
ISO 50001: Energy Management
ISO 31000: Risk Management
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Let’s examine some of these
more closely to see how
they relate to ethics…
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ISO 9000—Quality
• A series of quality assurance standards to ensure consistent
product quality under many conditions
• Why is it important?
– Designed to ensure safe and quality products and processes
among certified companies
– Important for global companies to compete
• Provides framework for documenting how business records,
trains employees, tests products, and fixes defects
• To become certified, an independent auditor must verify that
company’s factory, laboratory, or office meets ISO quality
standards
• GE Analytical Instruments (United States), Huawei
Technologies (China)
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ISO 14000—Environmental
• Comprehensive set of environmental standards that
encourage a cleaner, safer, less wasteful world
• Why is it important?
– Helpful to the environment
– Companies from different countries can find acceptable global
solutions to environmental problems despite differing
regulations
• Intent is to promote more uniform approach to
environmental management and help organizations
attain and measure improvements in environmental
performance
• SKF Group (Sweden), NIPPO Batteries (India)
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ISO 2600—Social Responsibility
• Corporate social responsibility guidelines used to promote a
common understanding in area of social responsibility
– Designed to be used by all types of organizations
• Because they are guidelines rather than requirements, it
cannot be certified
• Why is it important?
– The intent of this standard is to use social responsibility to
improve lives of workers, natural environments, and communities
– Common understanding of social responsibility
– Promotion of communication, transparency, and trust among
stakeholders
• At least 60 countries have adopted ISO 26000 as their
national standard
• Toshiba attempted to incorporate standard into operations
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7 Core Subjects of ISO 26000
7 Key Principles of ISO 26000
• Accountability
• Transparency
• Ethical Behavior
• Respect, consideration, and response to organizational stakeholders
• Respect for rule of law
• Respect for international norms of behavior
• Respect for human rights
7 Core Subjects of ISO 26000
• Organizational Governance
• Human Rights
• Labor Practices
• The Environment
• Fair Operating Practices
• Customers (Consumer) Issues
• Community Involvement and Development
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ISO 31000—Risk Management
• Provides principles and a framework for risk management
– Defines risk as “The effect of uncertainty on objectives”
• Because they are guidelines rather than requirements, it
cannot be certified
• Why is it important?
– Businesses can use this standard to compare their own systems
with ISO 31000 as a benchmark; also provides guidelines for
internal and external audit programs
• 5 principles of effective risk management, including
continual improvement, full accountability for risks,
application of risk management in all decision making,
continual communications, and full integration in the
organization’s governance structure
• More than 40 countries have adopted ISO 31000 as
national risk management standard
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ISO 19600—Compliance
• Compliance management standard that not only addresses
risks and legal requirements but is also intended to meet the
needs of stakeholders
– Deals with both mandatory requirements (e.g. court judgments,
laws, permits) and voluntary (principles, environmental
commitments, industry standards)
• Because they are guidelines rather than requirements, it
cannot be certified
– Intended to assist organizations in improving their approaches to
compliance management
– This allows for small and medium sized organizations to adapt the
solutions to their systems
• 12 principles grouped into 4 themes: commitment,
monitoring and measurement, implementation, and
continual improvement
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ISO 19600 continued
• 3-step process
– Identify compliance risk by relating obligations to activities to
identify areas where noncompliance could happen
– Sources of noncompliance should be analyzed against the
type of consequences and risk of noncompliance
– Results of analysis should be evaluated against level of
compliance risk the organization is willing to accept
• Compliance objectives should
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Meet identified requirements
Be consistent with compliance policy
Be measurable
Be communicated
Be monitored
Undergo updates
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ISO 19600 continued
• Leadership can support compliance management by:
– Establishing and upholding organizational values
– Ensure the compliance management system is consistent with
the organization’s strategy
– Ensure that adequate resources are allocated and assigned
appropriately
– Clearly communicate the compliance management system to
all stakeholders
– Establish accountability mechanisms that apply to all staff
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A Final Thought…
Although adhering to ISO standards may be costly, for
many global organizations the benefits far outweigh the
costs. Major benefits include:
• Being able to compete against other global companies
with quality products and efficient processes
• A reputation for adopting best practices
• Cost savings and sales revenue
• Better relationships with stakeholders
• And more!
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