How ISO 14001 and AA1000 regulations protect stakeholders
Assignment
Analyze how ISO 14001 and AA1000 regulations protect stakeholders. Do these
regulations and reports have an impact on how investors see the long-term viability of an
organization or company in which they plan to invest?
What are examples of this in the Kingdom of Saudi Arabia where this reporting occurs? In
a 4 page paper, explain how these regulations impact future investors, local stakeholders,
and the organization’s or company’s sustainability.
Use APA style guidelines, citing references as appropriate.
Solution
Introduction
Companies have reporting and regulatory standards that govern their performance and
conduct. For a company to be socially responsible the management and employees of a company
follow certain environmental and corporate standards amongst which are mentioned in this
paper. ISO 14001 is based on environmental management and provides guidelines to businesses
on how to deal with environmental factors and reduce negative effects that can be brought about
by environmental changes. AA 1000 are composed of reporting standards to enhance the
accountability of employees and organizations in general. This paper explains the impact of ISO
14001 and AA 1000 reporting and regulatory standards on the overall stakeholders of a company
and its sustainability.
Analyze how ISO 14001 and AA1000 regulations protect stakeholders
ISO 14001 consists of regulations that protect all stakeholders through the management
of environmental issues. ISO 14001 fulfills the needs of stakeholders through the development of
uniform requirements internationally. ISO 14001 promotes efficiency thereby increasing the
confidence of investors because audit as a regulatory standard is provided. Studies have revealed
that the adoption of ISO 14001 improves compliance of organizations with environmental
regulations which includes all the stakeholders (Arimura, Darnall, and Katayama, 2011, p. 170-
182). ISO 14001 requires that organizations’ suppliers stick to environmental measures meaning
that the surrounding populations are protected through corporate social responsibility of the
organization. According to Gilbert, Rasche, and Waddock, (2011, p. 23-44), AA 1000 focuses on
the administration and implementation of accountability in an organization. Practitioners are
provided with an approach to evaluate a company’s adherence to the set principles of AA1000.
Impact of ISO 14001 and AA1000 on the viability of an organization
ISO 14001 and AA1000 3
The regulatory standards have impacts on the choices and decisions of potential investors
given the compliance of a company with the ethical standards. However, their limitation in scope
may be a basis for their not having an overall impact. For example, ISO 14001 is limited to
environmental management while AA1000 is limited to accountability of the organizations in
reporting (Sealy, et al, 2010, p. 1083-1096). An overall impact can thus be attained through the
combination of all the two reporting and regulatory standards. A company that upholds the
practice of AA 1000 is deemed viable for economic investment owing to the fact that leaders are
accountable for their investment actions (Waistell, 2012, p. 6).
Examples of this in the Kingdom of Saudi Arabia
An example of an organization that has adopted the ISO 14001 is Schneider Electric
Company. King Khalid Award on the other hand has adopted the AA1000 standards. The two
companies have been getting some benefits due to the adoption of these reporting and regulation
standards (King Khalid Awards Gala Held in Riyadh, 2015). Environmental management is
important as a corporate social responsibility check for the Schneider Electric Company since it
is directly involved with the products that can impact to the environment. For example, the
company is involved with installing switches and sockets which should be environment friendly
to protect against harming the people who use them. King Khalid Award is involved with
awarding competitive companies and should thus promote responsible competitiveness among
companies in Saudi Arabia.
How these regulations impact future investors, local stakeholders, and the organizations’
or company’s sustainability
ISO 14001 and AA 1000 Boost the Companies’ Reputation
ISO 14001 and AA1000 4
A company that is socially responsible which is advocated by the ISO 14001 and AA
1000 has a high profile with potential investors. Such a company has a good reputation with not
only investors but also the general public. Accountability promotes further the reputation of all
the employees and the corporate image. For instance the King Khalid Award is known to uphold
accountability and social responsibility among Saudi companies which enhances its reputation.
The company’s reputation with the authorities is also improved due to the competitive and
environmental responsibility. Dissatisfaction in the authorities can lead to closure of any
business and companies that have adopted the above reporting standards are out of the risk of
being closed down.
ISO 14001 Promotes Compliance to Environmental Legislations Thus Reducing
Environmental Incidents
The ISO 14001 is in line with environmental management. Environmental management
includes factors such as, employees, equipment and technical infrastructure. Through the
adoption of ISO 14001, the Schneider Company has been able to keep the environment safe for
the working of employees. Equipment life has also been enhanced and extended which has been
made possible in environmental management. Technical infrastructure has also been made more
reliable and efficient in the company as members are made to account for the maintenance of all
the tools. Climatic changes and other environmental challenges that influence the working of the
business are explained including how they can be solved so as to minimize the negative effects.
The ISO 14001 has standards that stipulate the qualities of various aspects such as air, soil and
water so as to reduce the pollution of these aspects.
Both AA1000 and ISO 14001 Have Supported the Improvement of Cost Control
ISO 14001 and AA1000 5
Accountability involves budgeting and reporting the progress and implementation of the
proposed finances. Investors will always seek to know how the company uses their funds after
which they can decide whether to invest further or withdraw their financial assistance. Since ISO
14001 ensures that equipment life is extended, the company does not have to spend more
finances replacing the equipment thus avoiding unnecessary costs. In AA 1000, the management
reports all their expenditure to the stakeholders thus the investors get to know how their funds
are utilized and motivates them to invest more. Practitioners also get the chance to evaluate the
difference between companies that have adopted the reporting and regulation standards and
advice the potential investors accordingly.
Improve Employee Ethics
Employee ethics can be improved in different aspects. For example, through the adoption
of ISO 14001 employees are obliged to promote environmental safety for the sake of their
colleagues, equipment and customers. This implies corporate social responsibility at an
organizational level. Through the adoption of AA 1000 accountants and other organizational
staff have the obligation to report their work to the authorities, management and the investors.
The accountability of these employees is promoted thus improving the ethical characteristics of
the whole organization. Leadership is taken a step ahead in AA 1000 since their communication
with their subordinates and other stakeholders is defined as transparent (Waistell, 2012, p. 6).
Accountable leadership and overall working of employees brings about sustainability of a
company as it is able to cope with environmental and corporate challenges.
ISO 14001 and AA1000 6
Conclusion
The company consists part of the members of the society since some of the employees
are part of the community surrounding the organization. The organization also becomes a society
as it incorporates all the traits of a society such as leaders and subordinates. The society can be
defined as the overall stakeholders of the organization. Adoption of ISO 14001 and AA 1000
standards helps in creating a socially responsible company. Corporate social responsibility is a
necessary tool for the company’s success as it determines how much an investor will want to be
involved in the business dealings. Accountable organizational leaders promote ethical characters
in the people they lead which are upheld by the AA 1000 reporting standards.
ISO 14001 and AA1000 7
References
Arimura, T. H., Darnall, N., & Katayama, H. (2011). Is ISO 14001 a gateway to more advanced
voluntary action? The case of green supply chain management. Journal of environmental
economics and management, 61(2), 170-182. Retrieved from;
http://repository.cc.sophia.ac.jp/dspace/bitstream/123456789/33775/1/20120002A.pdf
Gilbert, D. U., Rasche, A., & Waddock, S. (2011). Accountability in a global economy: The
emergence of international accountability standards. Business Ethics Quarterly, 21(01),
23-44. Retrieved from;
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=9477005&fi
leId=S1052150X00010253
King Khalid Awards Gala Held in Riyadh (2015). Retrieved from;
http://www.accountability.org/about-us/news/announcements/king-khalid-awards-gala-
held-in-riyadh-on-december-8th-2015.html
Sealy, I., Wehrmeyer, W., France, C., & Leach, M. (2010). Sustainable development
management systems in global business organizations.Management Research
Review, 33(11), 1083-1096. Retrieved from;
https://www.researchgate.net/profile/Walter_Wehrmeyer/publication/228414312_Sustain
able_development_management_systems_in_global_business_organizations/links/00463
51d5c2f66abd6000000.pdf
ISO 14001 and AA1000 8
Waistell, D. (2012). Principles for Accountable Leadership—The AA1000 Series. The Journal of
Values-Based Leadership, 1(2), 6. Retrieved from;
http://scholar.valpo.edu/cgi/viewcontent.cgi?article=1033&context=jvbl
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