SME Directory of Malaysia, Malaysia Business Portal

The deterioration of the world’s environment in the name of development is a major cause for concern. Both individuals and businesses especially have a social and environmental responsibility to fulfil. With the rapid development in today’s industrialised world, the issue of preserving and managing our environment has become crucial. The increasing awareness of the importance of good environmental management systems is evidenced by the amendments made to the Environmental Quality Act 1974 and other environmental regulations which serve to ensure stricter compliance of environmental standards. Malaysia also adopted the National Environment Policy in 2002 as a means of addressing environmental issues in an integrated manner while more and more companies are striving to attain the MS14001 EMS certification.

ALLOCATIONS UNDER 9TH MALAYSIA PLAN AND BUDGET 2008
In the 9th Malaysia Plan, the Government will step up enforcement and increase preventive measures to ensure a balance between development and environmental sustainability. For this purpose, the Government has allocated RM510 million for cleaning, preserving and beautifying rivers; RM350 million for coastal management; RM200 million for reforestation and another RM70 million for the management of wildlife and protected areas.

Under Budget 2008, the Government has committed themselves to ensuring a balance between physical development and preservation of the environment. The phenomena of climate change and environmental pollution poses a challenge at the global and regional levels, both for developed and developing countries and should be addressed firmly and by every sector and citizen.

An amount of RM1.1 billion has been allocated for flood mitigation programmes in Sungai Muda, Sungai Kelantan, Sungai Damansara, Sungai Prai and Kuala Lumpur Flood Mitigation Project to reduce the occurrence of floods throughout the country. In addition, an allocation of RM120 million is provided for preservation and cleaning as well as river beautification programmes throughout the country.

The Government also proposed several significant additions in tax incentives, including increasing the Investment Tax Allowance on expenditures for energy conservation and energy saving initiatives for company use, to further promote energy efficiency and the use of renewable energy.

Malaysia has the potential to gain from investments made to reduce greenhouse gas emissions that contribute to global warming. Under the Kyoto Protocol, companies that succeed in reducing emission of greenhouse gases are given a certificate of Certified Emission Reduction (CER) which can be traded. To encourage companies to participate in this project, incomes derived from trading of CER certificates will be given tax exemptions.

WHAT IS AN ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)?
EMS provides a framework for managing environmental practices that integrates with overall business goals in a systematic way. Various models can be applied to develop, implement and maintain an EMS. One of the more common models used by industries is the model described by the ISO 14001 standard which was developed by the International Organisation for Standardisation (ISO). The ISO 14001 standard EMS model focuses on continuous improvement through an on-going cycle of actions called the continual improvement cycle which incorporates the elements of planning, doing, checking and acting.

An EMS typically begins with a strong environmental policy which describes the organisation’s approach in managing its environmental affairs and reflects its commitment to protect the environment and human well-being. The environmental policy establishes the framework for environmental leadership and serves as a contract between an organisation’s employees and its stakeholders. As such, commitment and strong support from top management is essential in making an EMS a success. Developing the environmental policy also helps to lay the groundwork for the planning phase of the EMS cycle. It is in this stage that active management support is sought, a multi-disciplinary EMS implementation team is formed and an introduction meeting is held to brief employees on the implementation of EMS. On top of that, the scope and budget for the implementation of EMS is also pre-defined. In other words, it is important that management provides all the resources necessary for the successful implementation of EMS.

PHASES OF AN EMS MODEL AS PRESCRIBED BY ISO 14001

1. Planning
This phase is critical to the subsequent phases in the EMS cycle as it identifies what an organisation does which can potentially harm the environment. In this phase, all business activities conducted and products and services provided by an organisation are evaluated to identify the environmental aspects associated with business operations and thus to uncover any signs of potentially harmful impacts to the environment. These environmental aspects include chemical use, energy use, use of natural resources or solid or hazardous waste generation, all of which can cause adverse impact on the environment such as soil contamination or chemical spills. In view of the fact that there are countless aspects and impacts, organisations will need to evaluate which aspects are controllable. For instance, it is not possible to control how raw materials are made but it is possible to control the type of materials used and how they are managed in a production process. As such, focus is given to the aspects which are controllable and these aspects are ranked using a predetermined set of criteria. Each organisation must develop criteria which are important to achieving its environmental and business goals. Examples of criteria include costs associated with addressing the aspect, potential savings from addressing the aspect and community concerns associated with the aspect. Once the aspects are ranked according to the predetermined criteria, aspects which are considered important to the organisation will be filtered out and this allows the management of an organisation to focus their resources on priority areas.

It is important to identify an organisation’s specific objectives and targets as they are linked directly to specific aspects and impacts. Environmental objectives should be regarded as specific goals that are set whereas targets are quantitative or qualitative measures of environmental performance against set goals. Collectively, objectives and associated targets serve to measure progress.

2. Implementation
It is important to define, document and communicate all roles and responsibilities to facilitate effective implementation of the EMS. As EMS concepts may be foreign to first-timers, training is necessary to ensure support from employees in implementing the EMS. A general awareness course may be necessary to raise the level of awareness of the content of an EMS which comprises the environmental policy, significant environmental aspects, objectives and targets. Following this, employees will need to undergo job specific training which is tailored to their respective work scopes to ensure that they understand significant environmental aspects of their jobs and the potential outcome of not following EMS instructions.

Communication is another crucial element of the implementation phase of EMS and includes both internal and external communication to support continual protection to the environment. Internal communication focuses on communication within the organisation and can come in the form of posted reminders of key EMS goals and actions, period meetings with senior management to report on the EMS or employee suggestion boxes about awards for successful projects. External communication refers to communication with external stakeholders such as regulators, customers, suppliers or vendors. Examples of external communication with external stakeholders include informing customers about EMS efforts, meeting with vendors and suppliers to explore options for green chemicals and communicating EMS efforts to local regulators.

Documentation also plays an important role in this phase of the EMS. Documentation that describes the EMS such as the EMS manual is crucial in describing the core elements of your organisation’s EMS as well as information on management procedures and work instructions.

For operational control, steps are taken to ensure that operations and activities do not exceed specified conditions or violate the relevant regulations. Operational controls can be physical controls, engineering or administrative controls and are based on significant aspects identified beforehand. In order to control these aspects, existing physical controls are reviewed to see if they are sufficient, otherwise operational controls will need to be developed.

Another activity crucial to this EMS phase is emergency response which is applicable to any Small Medium Enterprise (SME), whether or not an EMS is already in place. SMEs can build on existing procedures and plans to develop their Emergency Response Plan for the EMS. Suggested items which should be addressed in the Emergency Response Plan include type and location of hazardous substances used and stored onsite, arrangement with local emergency responders, locations and functions or emergency equipment and evacuation routes.

3. Checking and Corrective Action
Checking evaluates how an organisation is doing and corrective action responds to any issues identified. Implementing a monitoring and measurement mechanism helps to determine if objectives and targets are being met, operational controls are being achieved and compliance is being met. For example, suggested items which should be monitored and measured include amount of hazardous waste generated, amount of solvents used for parts cleaning and the use of checklists to determine compliance with relevant regulations. Databases are used to track this information and serve to support both the production quality programme and the EMS altogether. Typically, plant managers will look to these databases to check for conformance to the EMS as well as to plan material purchasing and staffing.

In reality, despite devoting our best efforts, non-conformance or business activities not meeting applicable EMS criteria will occasionally occur and must be addressed. For example, non-conformance could be the result of employees not receiving required training, work instructions not being followed or documented work instructions not being available or EMS documentation not being kept up-to-date. The root cause of the problem is then identified and corrective or preventive action will be taken. Procedures are then undertaken to define the party responsible for handling and investigating the non-conformance. Recurrence of the non-conformance is prevented through implementation of operational controls, training, monitoring and measurement and management review.

EMS audits are carried out either internally or by an external party to ensure that the system is working properly. Organisations that choose to implement an EMS that conforms to the ISO 14001 standard will be audited to document whether the EMS documented does in fact conform to the requirements of the standard. Only if the organisation passes the audit can it claim that it is an ISO 14001 registered organisation.

4. Management Review
This phase involves a periodic meeting between top management personnel to evaluate the EMS. A review is essential to ensure that the EMS is implemented as planned and therefore is producing the expected results. Some of the items considered in a management review include EMS audit results, reports of spills or other hazardous incidents, progress against objectives and targets or details regarding implementation of EMS procedures. It is also in this phase that management ensures that there are sufficient resources to overcome any issues identified.

BENEFITS OF AN EMS

The advantages of having an EMS in place can be categorized as follows:

1. Cost Saving
An EMS can uncover many opportunities for improving efficiency. In smaller establishments such as SMEs, the steps required to identify any potential harmful impact of work aspects to the environment are simple and the solutions are quite reasonable. Organisations benefit from improved operating practices as well as lower operating costs. An EMS shows you where areas of environmental improvement best fit into your business and help you weigh the costs and benefits of changes so that you can make well-informed decisions.

2. Better Management of Environmental Legal Obligations
Comprehensive EMSs have the structure that ensures that you identify and meet all environmental legal requirements. It aids a business owner in avoiding violations and its subsequent repercussions as well as helps in making future investment decisions to comply with future regulations.

3. Increased Competitiveness
Whether you are doing away with unnecessary chemicals or reducing energy costs, there will be some form of savings. Those savings can be used to grow your business in terms of boosting the returns to shareholders or rewarding your employees. At a more basic level, some large companies have even made ISO 14001 certification a pre-qualification for SME suppliers before doing business with them. Sony Electronics has developed a pilot programme for ISO 14001 certification for SME suppliers and subcontractors to involve them in environmental management.

4. Improved Environmental Performance
It is not surprising to note that many business owners and managers have taken        a reactive approach towards environmental management. Many act only when they    reach the crisis stage. It is in their best interest to carry out proactive planning with an            EMS to avoid future surprises which could be detrimental on both the environment         and their business. An EMS helps you get to the root causes and prevents problems        from going unnoticed.

5.   Good Public Image
Transparency on whether a company is operating in an environmentally-sound         manner is the key in building public trust and credibility. Obviously, this type of        transparency will also affect investor decisions.

CURRENT ENVIRONMENTAL PRACTICES IN MALAYSIA

Organizations are getting increasingly aware of the importance of good environmental management systems. This is clearly observed in recent statistics. As at April 2005, a total of 566 organisations in Malaysia have been accredited with the MS 14001 EMS certification.

It is evident that Malaysia has put in place various initiatives to preserve the environment while utilising resources efficiently. These initiatives include the following:

• Discouraging open burning in fields and plantation sites while encouraging the composting of felled trees and crops in an environmentally-friendly way which in turn prepares land for replanting by using natural fertilizer;
• Discouraging the use of chlorofluorocarbons (CFCs) in various industrial, commercial and household appliances; and
• Encouraging the recycling of resources for example, in the plastic manufacturing industry, materials are being regenerated through the forming process in an effort to reuse biodegradable products in an environmentally-friendly way.

INCENTIVES FOR ENVIRONMENTAL MANAGEMENT

In an effort to support an enhanced level of environmental pro activity, the government provides a range of fiscal activities which includes the Pioneer Status tax exemption and the Investment Tax Allowance for the manufacture of environmentally-friendly products, the provision and supply of environmentally-friendly services and specific activities which contribute towards the presentation of the environment. The said incentives are available for the following activities:

1. Storage, treatment and disposal of toxic and hazardous waste
2. Waste recycling activities which are high-tech in nature for instance, recycling agricultural wastes, chemicals and the production of reconstituted wood-based panel boards or other products
3. Energy-generating activities using biomass which are renewable and environmentally-friendly. Examples of biomass resources include palm oil mill waste, rice mill waste, sugar cane mill waste, timber/sawmill waste and paper recycling mill waste
4. Energy conservation services

Accelerated Capital Allowance with a special initial rate of 40% and an annual rate of 20% for total write-off within 3 years is given to organisations for their capital expenditure on machinery and equipment incurred, for which the machinery and equipment are waste generators and the organisations are looking to set up facilities to store, treat and dispose their waste. This incentive is also available to companies undertaking waste recycling activities.

CONCLUSION
Improving the quality of our environment requires the cooperation of the government, organisations and the community. The government can encourage organisations to be environmentally responsible by providing fiscal incentives. Within organisations, commitment from top level management and employees is quintessential in planning, implementing, checking and reviewing work aspects which may result in potential harmful impacts to the environment. Members of the community can also play their part by supporting the various “green” initiatives promoted by the government which indirectly contributes towards sustainable development and long-term environment preservation.

Environmental Management and Research Association of Malaysia (ENSEARCH)
ENSEARCH is a non-profit association of organisations, professionals, students and people with interest in learning and promoting effective ways to manage the impacts of human activities on the environment. The members of ENSEARCH believe that all are responsible for managing and mitigating the impacts of their corporate, professional and daily living activities on the environment. Thus, the motto of the association is “ENSEARCH for a Better Environment.”

For more information, please contact:

ENSEARCH
No. 30-3, Jalan PJU 5/16, Dataran Sunway
Kota Damansara, 47810 Petaling Jaya
Selangor, Malaysia
Tel: 603-6156 9807 / 8
Fax: 603-6156 9803
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Website: www.ensearch.org

Department of Environment
Ministry of Natural Resources and Environment
Level 1-4, Podium 2 & 3
Lot 4G3, Precinct 4
Federal Government Administrative Centre
62574 Putrajaya, Malaysia
Tel: 603-8871 2000 / 8871 2200
Fax: 603-8889 1973 / 75
Website: www.doe.gov.my

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