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Unit 5: Environmental Auditing Answers to Learning Activities
Lecture 5
Environmental Auditing
STRUCTURE
Overview Learning Objectives 5.1 Introduction to Environmental Auditing (EnA) 5.1.1 Objectives and scope 5.1.2 Types of environmental audits 5.2 General Audit Methodology 5.2.1 Basic structure of En A 5.2.2 General steps in En A procedure 5.3 Elements of Audit Process 5.3.1 What to audit? 5.3.2 Who should audit? 5.3.3 Why an audit? 5.3.4 How to audit? 5.4 Waste Audits and Pollution Prevention Assessments 5.5 EnA in Industrial Projects 5.6 Liability Audits and Site Assessment 5.7 Auditing of EMS 5.7.1 Audit objectives, roles and responsibilities 5.7.2 Scoping and review 5.7.3 Preparing the audit 5.7.4 Conducting the audit 5.7.5 Content of audit report Summary Suggested Readings Case 5.1: Waste Audit - The Viscose Rayon Unit Case Model Answers to Learning Activities
OVERVIEW
In Unit 4, we discussed the preparation and review of a EIA report, and in the present Unit (i.e., Unit 5), we will discuss another tool for environmental management ā environmental auditing. As environmental legislations are becoming increasingly stringent across the world, industries are required to demonstrate
improvements in environmental performance for their survival and growth. In the wake of environmental regulations that proliferated in the 1970s and 1980s, environmental audit was born as an environmental management tool for industries and other organisations seeking to monitor their compliance performance on environmental matters. The main purpose of environmental audit is to identify, assess and address environmental concerns in order to establish environmental quality assurance.
That said, in the first three Sections of this Unit, we will discuss the basics of environmental auditing (EA) by explaining the objectives, scope and types of EA as well as the methodologies, stages and procedures involved in carrying out an auditing. We will also discuss waste, liability, industrial and EMS audits.
LEARNING OBJECTIVES
After completing this Unit, you should be able to:
discuss the objectives of an environmental audit; describe the basic steps and elements of an environmental audit; explain waste audits and pollution prevention assessments; discuss liability, industrial and EMS audits; discuss the potential of environmental audit as a tool for environmental management to identify, assess and address environmental concerns; conduct/co-ordinate an environmental audit and critically evaluate its outcomes.
The objectives of an environmental audit are to evaluate the efficiency and efficacy of resource utilisation (i.e., people, machines and materials), to identify the areas of risk, environmental liabilities, weakness in management systems and problems in complying with regulatory requirements and to ensure the control on waste/pollutant generation.
The areas an environmental audit deals with can be categorised as under:
Design specification and layout: While setting up an industry, adequate provisions are made in the design specification and layout to augment the production capacity but corresponding provisions to meet the environmental criteria are often overlooked. Adequate provisions are, therefore, necessary to upgrade pollution control measures to meet the future environmental standards that are getting stringent day by day. The audit will help in identifying specific areas of concern to meet the future requirements of environmental measures. Resource management: The resources include air, water, energy and other raw materials. The audit will provide data to the management on the efficient use of the resources per unit production, and, thereby, help reduce resource consumption and waste minimisation. Pollution control systems and procedures: The audit helps ensure that the systems and procedures governing the environmental activities/operations of pollution control equipments are rightly followed and determine the efficiency of the system in identifying conditions and inviting corrective actions in a timely and effective manner.
Emergency plans and response/safety system: As the emergency plans more often than not remain in the safe custody of senior management, staff may not have immediate access to the right action during an emergency. The problem becomes acute when new persons are employed/deployed. The review of the emergency response system will ensure adequate knowledge, alertness and readiness of the staff concerned to effectively face an emergency. Medical and health facilities/industrial hygiene and occupational health: The productive element of an industry is dependent on the health of its human resources. The primary facilities to suit the occupational needs of the industry are, therefore, vital. Audit in this regard will provide an insight into the actual requirements to warn suitable orientation of existing facilities. Confirmation to regulatory requirement: The regulatory mechanism of environmental compliance is gradually becoming more and more comprehensive. New regulations and standards are being stipulated at such a pace that they render the existing systems archaic. Factory managers may not be fully aware of the latest requirements and this will make the top management/owners vulnerable for prosecution under various environmental acts. An audit helps compare the existing status with the stipulation and standards prescribed by various agencies and ensure compliance.
Scope
The scope of an environmental audit can fall under either of the following two options:
(i) To limit scope of the audit to an assessment only of the degree of compliance with policies, requirements-type documents and procedures.
5.1.2 Types of environmental audits
In this Subsection, we will discuss the two main types of environmental audits, i.e., objective-based and client-driven.
Objective-based types
As mentioned earlier, environmental audit covers assessment of any activity that impinges on the environment. The scope and objectives of the audit more usefully distinguish different audit categories and how the audit results are to be used. However, you must note that objectives and scope are often a combination
ļ LEARNING ACTIVITY 5.
Obtain a form for submission of Environmental Statement from local pollution control board office and list three benefits of this statement. Note : a) Write your answer in the space given below. b) Check your answer with the one given at the end of this Unit.
of several audit types and are usually defined on a case-by-case basis. Organisations have developed audit programmes to fit their particular needs. Based on objectives, environmental audits can be categorised as under:
(i) Liabilities audit: Compliance audit, operational risk audit,
acquisition audit and health and safety audit form liabilities audit. These are often conducted as a prelude to gaining insurance cover and as a means of demonstrating the regulatory compliance. Compliance auditing is probably the most common form of environmental audits; it is a verification process whereby the facility establishes the extent to which it is complying with environmental legislations, regulations, emission limits, etc. Operational risk concentrates on the potential frequency and consequences of environmentally damaging activities in the raw material and product storage/handling and manufacturing process. Compliance with regulations does not necessarily reduce liability due to operational risks.
Acquisition audits assess the liability due to contaminated land and building remediation costs. Health and safety audits normally form part of health, safety and environment (HSE) audit and involve assessment of adequacy of personal protective equipment (e.g., safety shoes, goggles, helmets, etc.), emergency preparedness and disaster management plans.
(ii) Management audit: Corporate audit, system audit, policy
audit and issues audit form management audit. These pay considerable attention to management systems as they guide the efficient and effective running of the operations. A corporate audit is initiated by the main Board of a parent company and is concerned with organisation structure, roles
Figure 5. Environmental Audit Categories
Environmental Audit Type s
Liabilities Audits Management Audits Acti vities Audits
Compliance Audit Corporate Audit Site Audit Operational Risk Audit Systems Audit Waste Audit Acquisition Audit Policy Audit Product Audit Healt h & Safety Audit Issues Audit Cross-boundary Audit
Client-driven types
The different types of audits are based on the client, who has commissioned or ordered the audit procedure:
(i) Regulatory external audit: This often entails an examination carried out by or for an environmental regulatory agency, with the goal of ensuring that a facility is meeting the relevant legislation and regulations. The regulatory agency can use the methodology of audit as a tool to systematically enhance its overview, including the possibility of verifying the accuracy of any reports, which a company is required to submit to the authority.
(ii) Independent external audit: This is conducted by external auditors entitled to perform audits. As the environmental factors have gained importance for a firm's market relations, shareholders such as banks and investment funds, insurance companies, environmental groups, potential buyers, customers, local government and environmentally- aware citizens are demanding independent external audits to assess how the firm deals with environmental issues.
(iii) Internal environmental audit: This often involves an inquiry commissioned by management. In practice, such audits are commonly ordered by senior management located at some distance, in both physical and operational senses, from the factory or site of environmental concern. In such cases, the environmental audits are internal in that the results will remain within the organisation. However, for the facility under investigation, the internal audit will have the same effect as an external audit. One reason why firms conduct internal environmental audits is to diminish their liability to pay fines, damages or clean-up costs as the result of breaking the law (e.g., releasing more emissions than permitted).
(iv) Third party audits: These represent the audits certifying organisations carry out to verify as to whether internal/ external audits meet the standards set.
In Table 5.1, we illustrate the client-driven audit types:
Table 5. Environmental Audit Types: Client-driven
Category of Audit Ordered By Desired Re sult Regulatory External Regulatory Authority Enhanced oversight Independent External Buyer, bank, customer, insurance firm, etc.
Objective information
Internal Top management, Members of Board
Reduced risk
Third Party Top management, Members of Board
Certified environmental protection system
(vi) A process, which includes specific procedures to promptly prepare candid, clear and appropriate written reports on audit findings, corrective actions and schedules for implementation.
(vii) A process, which includes quality assurance procedures to assure the accuracy and thoroughness of environmental audits.
5.2.2 EA steps
The four general steps involved in an audit procedure are:
(i) Audit preparation: This includes choice of auditor/audit group, collection of background material and planning of the audit orientation. Audit preparation is crucial in determining the methodology, practical tools and materials that will be required for the completion of the audit. In many cases, the available materials such as manuals, questionnaires, etc., may not be well suited to the type of activity that is to be audited, or the type of audit that is performed. This means that part of the preparatory activities may have to involve development of audit-specific tools or further development of existing materials and tools. In such cases, this may require a preliminary review of the facility or activities to map out specific details and requirements to be observed in the development of the particular tools.
(ii) A systematic scrutiny or review of a facility: Depending on the orientation and goals of the audit, the focus of the scrutiny differs. For example, an environmental audit can be conducted without dealing with the processes involved in production. However, an audit, which is considered part of a programme of preventive environmental protection, needs to
deal with the production processes and material flows. Common to all audits is an analysis and evaluation of the information that has been obtained and an analysis of the outcome vis-a-vis the goals and expectations of the initiator of the audit. This helps in identifying the areas of improvement.
(iii) Reporting: This step involves reporting of observation of deficiencies and possible alternatives. It is important to be aware that an environmental audit by itself does not solve any problems. In fact, during the work on the audit, it may appear that the environmental problem is increasing because the audit process brings to attention the hitherto unknown problems or deficiencies. Audits often point to the need for the changes in organisation and improvements in education, increased environmental responsibility, and investments in new equipment and environmental protection technology. An important pre-condition for the success of an audit, especially if it is internally initiated, is that everyone is prepared to accept the consequences and take steps to solve the deficiencies and problems, which the audit may reveal. Thus, the persons whose areas of responsibility have been the object of scrutiny must make decisions and have plans in place to eliminate the problems.
(iv) Follow up: Following up of the results is an important part
of the audit process. An evaluation of the results of the remedial actions is a logical step. This can be done either as part of the subsequent audit or as part of a continuing process of enhancing environmental protection procedures. However, we must note that mere following up on the results may result in a control routine and a stagnation in work on environmental problems. It is, therefore, important that a follow up process also analyses the methodology and
Having discussed the basics of an environmental audit, let us now look into the issues involved in planning an audit.
5.3 ELEMENTS OF AUDIT PROCESS
In this Section, we will discuss how to plan an environmental audit. In planning an environmental audit, it is important to decide about the scope of the audit within an organisation (given that an audit need not necessarily cover the entire organisation), audit team, objective of audit and audit methodology. We will discuss these in Subsections 5.3.1 to 5.3.4.
5.3.1 What to audit?
An audit can cover anything from environmentally-related decisions to the function and maintenance of an individual piece of environmental protection equipment. In other words, concerning what should be audited; many definitions permit a rather broad approach to organisational, administrative and technical matters.
A typical result of preliminary audits is that some sort of organisational structure is created within the firm, or just at the production site and that some procedures for dealing with environmental problems are established. An obvious result of these actions is that future audits ought to evaluate whether the organisation and the procedures function in the ways that they were intended. A natural turn of these developments is that environmental audits become more and more management systems-oriented as a firm's environmentally-related activities become increasingly formalised and systematised.
For instance, in the management context, the transition from problem solving to quality assurance mechanisms, which attempt to prevent problems, is a natural development. The process seems to be no different in the environmental management context as well. The pattern of transition, in fact, is reminiscent of financial audit where a distinction can be made between records investigation and internal control evaluation. As methods of internal control are developed, for example, audits can concentrate increasingly on verifying those organisations, practices, procedures, the divisions of work and responsibility and other features which function as they were intended. Increasingly, in the same way, quality environmental audit is being equated with the audit of quality management systems, even where there are other types of quality audits, which are more technically-oriented towards processes and products. In short commonly recognised elements that needs auditing include policy, principles, systems, procedures, practice and performance of the particular organisation.
5.3.2 Who should audit?
The question of who should conduct an audit remains open. A clear strategy on the part of industry has been to try to reserve the use of this tool for industry itself. On the other hand, regulatory agencies have seen the possibilities of audit in their efforts to improve their insight into the environmental impacts of production. These ambitions need not be in opposition with each other, rather, they should serve as complements. The questionnaires and checklists, which companies have developed prior to conducting an internal audit often show similarities to those that the regulatory agencies use during their periodic inspections and general evaluations.
environmental regulations expressed some sort of optimal level of pollution. Yet, it is becoming more commonly understood that this is not the case. Pollution and waste always represent a loss of materials and an environmental burden, which also always entails costs for the firm and the environment.
A certain broad agreement on continued efforts and goals for environmental protection is developing. Concerned regulatory authorities, political parties, businessmen, unions, researchers, environmental organisations and increasingly environmentally aware consumers are tending to agree on the idea that sustainable development must be based on a strategy of preventive environmental protection. This strategy can be expressed in many ways, including the definition of the purposes of environmental audits.
5.3.4 How to audit?
Finally, when it comes to how to conduct an environmental audit, it is natural to relate this to the methodology and practices used within financial and quality audits. There is no advantage to have environmental audits depart radically from established procedures in related areas.
Common to both financial and quality audits is the demand to be systematic, objective and independent. This means that competent individuals who do not have direct responsibility for the areas that are to be investigated conduct the audit. Yet, to ensure that the audit process is not associated with direct methods of control and supervision, the audit should be conducted with co- operation from the personnel who work in the area under investigation. An additional advantage of involving personnel in the audit procedure is that this may lead to a better understanding of why improvements and corrective actions are necessary.
Documentation and periodicity, i.e., the frequency of reports or analyses, is a general requirement in definitions of environmental audits, even if they may seem to be redundant. The need for documentation of the audit procedure and its results should be obvious, while periodicity is a function of the purpose of the audit. If the primary purpose, for example, is to ensure that a dynamic process continues in the direction of diminishing environmental bidets , then a high frequency of audits may be required.
This last aspect of audits raises the question of the auditor's freedom to provide advice or recommendations to the organisation that is the object of scrutiny. An advisory capacity is often thought to be in conflict with the requirement of objectivity, because the auditor runs the risk of examining his or her own proposals in a future audit. Yet, this has not hindered the making of recommendations by those involved with financial or quality audits. The audit process assumes that the competent and experienced auditor recommends improvements in an objective and independent way. This means that it must be clear to all parties involved in an audit that the process of environmental audit does not assume any part of the operative responsibility for environmental protection that is the prerogative of management.
