INTERNATIONAL ORGANIZATION
FOR STANDARDIZATION

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Photo by: Shawn Hempel

The International Organization for Standardization (ISO) is a non-governmental organization based in Geneva, Switzerland, that works to develop technical standards for products and services sold around the world. The steady rise in international trade that began in the mid-19th century and has persisted until the present day provided impetus for the global standardization of goods and services. Companies with overseas operations must know that products or services they contract for outside their home country will conform to their needs, and the only way to ensure this is for both parties in the transaction to meet a single set of standards. Thus, as economic interdependence increased among nations on all continents, the need for an authoritative international standards body became increasingly apparent. To address this need, the International Organization for Standardization (ISO) was founded in 1947.

The ISO comprises national standards bodies representing 148 countries and serves a variety of functions. It facilitates communication and cooperation among its members, eases the distribution of scientific and technical information on standards and standardization, operates over 2,850 technical groups devoted to standards and other commercial and industrial research, and maintains online databases covering international standards and other organizational activities. The ISO also seeks to ensure that standards are not used as a nontariff barrier to international trade by formulating international standards applicable to the full scope of commercial activity in any locale worldwide.

Although the majority of standards promulgated by the ISO are the result of the internal activities of its technical committees and working groups, ISO standards are not necessarily handed down to companies from the central organization. Companies often send their own internal standards to the ISO for consideration as international standards. Similarly, national standards organizations work with the ISO to make accepted national standards internationally applicable.

Adherence to standards formulated by ISO is completely voluntary, but companies that do conform to them have a distinct advantage over those that do not, particularly when trading overseas. ISO standards cover the entire spectrum of scientific, industrial, and commercial activities, including computer operating systems, manufacturing processes, product quality, safety, management technique, and environmental protection. In addition to its specific quality standards, the ISO has issued two sets of general standards, ISO 9000 and ISO 14000, to govern manufacturing and organizational processes and environmental protection, respectively.

THE ISO 9000 QUALITY
STANDARDS SERIES

Released in 1987 and updated in 2000, the ISO 9000:2000 standards series governs general international quality assurance for products and services. It is divided into five specific areas. ISO 9000 is an overview, which includes guidelines for the selection, and use of quality management and quality assurance standards, provides definitions of quality concepts, and serves as a guide for the selection of ISO quality models applicable to specific industries. ISO 9001 provides a model for quality assurance in design and development, production, installation, and services. ISO 9002 provides a model for quality assurance in production and installation. ISO 9003 provides a model for quality assurance in final inspection and testing of products. Finally, ISO 9004 sets forth guidelines for developing and implementing internal corporate quality management programs and quality systems.

Each facet of the ISO 9000 standards series is general and can be applied to any industrial activity. In fact, the series' lack of specificity has led critics to note that two companies complying with ISO 9000 could conceivably produce goods that were radically different in terms of quality. The U.S. Department of Defense holds this view, stating that the ISO 9000 standards "are not adequate for use without significant supplementation." Despite these limitations, many corporations worldwide choose to adhere to the ISO 9000 standards. Under the General Agreement on Tariffs and Trade (GATT) companies may demand that their suppliers or other trading partners achieve ISO 9000 certification, and this demand will not be considered an illegal restraint of trade under GATT. Regardless of corporate opinions regarding ISO 9000, many countries are mandating that the foreign companies with which they trade achieve certification. For example, overseas producers of computer switches and pacemakers must be certified under ISO 9000 to trade with the European Union, as must computer software producers wishing to sell their goods in Japan.

Companies wishing to attain ISO 9000 certification must first register with the ISO. Prior to registration, a third-party registrar must be found to audit and evaluate the company's operations and recommend changes that must be made to ensure conformation. Prior to this audit, companies must prepare a quality assurance program; define, document, and implement new procedures; and compile a corporate quality manual and preassess the manual with the selected auditor. Many adherents to the ISO 9000 standards have found that several components are necessary to ensure certification. First, companies must carefully evaluate their trading relationships to determine whether adherence to the ISO 9000 standards will result in increased profitability. If this is judged to be the case, management must be completely committed to achieving certification and a competent registrar must be secured. Staff must be carefully educated regarding the changes in processes and products required for conformation, and a core cadre of employees must be trained to constantly audit procedures following certification and conduct the periodic audits required to ensure that standards are being maintained.

In its early years, the ISO 9000 series of standards was not adopted as readily as had been anticipated, but by the early 1990s the standards were beginning to receive more widespread use. The U.S. Commerce Department finally endorsed global acceptance of ISO 9000 in 1994, and the formation of the International Accreditation Forum during the same year also provided an impetus to ISO 9000 certification. By 2005 more than half a million organizations in over 60 countries had either implemented or were in the process of implementing the quality management framework outlined in ISO 9000. QS-90000, a separate series of standards for the many automotive industry suppliers and has be updated an recently replaced by ISO/TS 16949:2002.

Although the ISO 9000 series eventually caught on and began to fulfill its role in regulating international industrial, commercial, and management activity, even its staunchest adherents found that the series did not account for environmental protection. This oversight allowed too much latitude for differences in process between companies in different countries, particularly those in the chemical industries. The Global Environmental Initiative held in Rio de Janeiro, Brazil, in 1992 further established the need for an internationally recognized set of standards governing industrial and commercial environmental protection policies and processes. In response to this need, ISO began work on a new series of standards designed to govern environmental protection.

THE ISO 14000 SERIES OF STANDARDS

Released in 1996, the ISO 14000 series of standards is designed to supplement the ISO 9000 series, and adherence to ISO 14000 assures customers that a company has sound environmental protection policies and processes. ISO 14000 is divided into ten separate areas of standardization:

1. ISO 14001 provides a model framework for the establishment of an environmental management system.
2. ISO 14004 offers a checklist for companies wishing to implement ISO 14001, and is not mandatory for ISO 14000 certification.
3. ISO 14010 is also voluntary and establishes guidelines for corporate environmental auditing procedures, including definition of quality audit evidence.
4. ISO 14011 provides guidance for the voluntary formation of corporate environmental auditing procedures, including a general outline of an effective environmental audit.
5. ISO 14012 delineates qualification criteria for environmental auditors.
6. ISO 14020 establishes standards for scientific evidence presented in corporate environmental management audits
7. ISO 14021 allows companies to self-declare environmental claims under certain circumstances.
8. ISO 14024 provides guidelines for verifying corporate environmental management claims and delineates the criteria which must be met for companies to use ISO-recognized labels advertising their compliance with ISO 14000 environmental standards.
9. ISO 14031 establishes standards for corporate review of existing environmental management systems.
10. ISO 14040 provides guidelines and criteria for long-range environmental assessments, which are required to determine whether or not certain commercial activities can be considered environmentally sustainable.

Although the ISO 9000 standards are currently viewed favorably in the corporate world, ISO 14000 has proven more controversial. ISO 14000 does not stipulate standards of corporate environmental performance, but rather governs only the means a company must employ to make its production activities environmentally sustainable. National standards for compliance with ISO 14000 also differ widely, as the third-party audits required to attain certification are conducted differently in different countries, and with differing criteria for compliance. Finally, while the GATT agreements allow companies to stop doing business with trading partners that fail to achieve ISO 9000 certification, refusing to do business with a company that failed to achieve ISO 14000 certification could be considered an illegal restraint of trade under the GATT provisions. Companies based in the United States have been particularly unwilling to secure ISO 14000 certification, given the amount of time, money, and effort they already expend in meeting the standards of environmental performance and practice set by the federal Environmental Protection Agency (EPA). In fact, U.S. and Canadian steelmakers went on record in 1996 against ISO 14000 compliance, stating that complying with ISO 9000 should become the sole recognized method for international standardization and that adding a new series of standards would create "standards gridlock."

Although widespread corporate compliance with ISO 14000 did not occur in the series' initial years, increased awareness of environmental concerns among both government agencies and the public worldwide will provide an impetus for ISO 14000 certification in the future. For instance, the rigorous Eco-Management and Audit Scheme (EMAS) promulgated by the European Union in 1992 has proven difficult for many companies to implement, yet compliance with EMAS may become essential for firms wishing to trade in Europe. Compliance with ISO 14000 standards will automatically make a company also eligible for EMAS certification. Similarly, compliance with ISO 14000 will provide a powerful marketing tool for companies wishing to sell products to environmentally conscious consumers. Compliance with ISO 14000 also provides legal evidence of due diligence, which would mitigate in favor of any ISO 14000-certified company which was sued for creating environmental damage or hazards. Finally, ISO 14000 certification removes barriers to international trade in the same manner as does ISO 9000 compliance.

THE FUTURE

Since its founding in 1947, the ISO has published more than 13,700 international standards, covering everything from dimensions of freight containers to symbols that provide danger warnings. ISO has addressed the standardization of protocols to allow different types of computers to communicate with one another, as well as the standardization of interfaces and connections to ensure the interoperability of various technologies. Although the majority of ISO standards are specific to individual products, materials, or processes, the ISO 9000 and 14000 series provide generic management system standards that can be applied to any product or service, by any type of organization.

ISO standards are not without their critics in the business world. Critics claim that the standards can be costly and time-consuming to implement, for example. But proponents point out that ISO certification enables businesses to increase knowledge of their capabilities, improve their processes and performance, ensure consumer and stockholder confidence, and gain a source of competitive advantage. As a result, the ISO seems likely to play an increasingly important role in international trade in the future. The general lowering of tariff barriers worldwide in recent years has led to a contradictory rise in the use of standards to exclude products of certain countries or regions, a practice which global adoption of ISO standards would eradicate. Furthermore, in the case of the ISO 14000 series, increased public environmental consciousness will provide a powerful incentive for corporate compliance and in the long run will also result in the passage of public policies mandating environmental sustainability such as the EMAS.