4.1 Understanding the Organization and its Context [ISO 14001]

What is Understanding the Organization and its Context for ISO 14001?

The organization is required to understand the internal and external issues that apply to your organization relevant to the achievement of the EMS objectives.

To be compliant, evidence should be obtained that demonstrates that your organization is reviewing all pertinent internal and external pressures at periodic intervals.

Contents

• What is Understanding the Organization and its Context?
• Where Do Variables in Organizational Context Arise From?
• Internal and External Issues
• Objective Evidence
• Examples of Organizational Issues Relating to the EMS
• Methodologies to Understanding Issues
• Example ISO 14001 Risk Register
• Other Methods to Review your Business's Context

It is increasingly important for organizations to understand, prioritise and respond to the environmental requirements of those individuals and groups they rely on to be successful. Every organization operates within a context and the context is unique to each organization.

Where Do Variables in Organizational Context Arise From?

• The products and services delivered to meet customer needs
• Financial resources available
• Personnel
• The location of activities
• The activities and processes undertaken
• The strategic vision for the company
• The customer and supplier base

The implementation of an EMS is often a strategic decision that is influenced by the context of the organization. The consideration of contextual issues ensures that all internal and external priorities that can impact the strategic objectives, processes, and the outcomes of the EMS are considered.

Internal and External Issues

• What is happening within the economy?
• What is happening politically in the environment in which we operate?
• What is happening with changes to legislation?
• What is happening with respect to ecological and environmental issues?
• What is happening technology-wise which can impact what we do?
• What is occurring socially and culturally in the markets in which we operate?

Objective Evidence

Objective evidence should be documented in order to provide assurance that your business regularly, or as necessary; reviews and updates their list of external and internal issues.

Sources of Objective Evidence might include:

• Business Strategy Plans
• Environmental Plans
• Competitor Analysis
• Annual reports and economic reports from business sectors, or consultant’s reports
• SWOT Analysis techniques for identifying internal issues
• PESTLE Analysis techniques for identifying external issues
• List of external and internal environmental issues and conditions
• EMS Action Plans and Objectives
• Management meeting minutes
• Annual Reports

A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis. This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area

Examples of Organizational Issues Relating to the EMS

• Environmental conditions capable of affecting or being affected by the organization. For example, the impacts of environmental conditions like climate change, storms and floods, air quality, water quality, land use, existing contamination, natural resource availability, biodiversity, etc.
• Internal issues: organization’s activities, products, services, strategic direction and capabilities (people, knowledge, processes, systems)
• External issues: cultural, social, political, regulatory, financial, economic, natural and competitive issues, whether international, national, regional or local

Consider different levels of the organization.

For multi-site/multi-business organizations, consider the need to determine internal and external issues at corporate level, before cascading this to facilities/businesses to identify internal and external issues.

Methodologies to Understanding Issues

Many organizations already have existing formal or informal methodologies for determining their internal and external issues, for example corporate or enterprise risk management systems or horizon scanning as part of strategic planning.

Gather input from different functions of the organization as well as input from internal stakeholders who can provide an understanding of different topic areas as will ensure that the understanding gained covers the broadest possible scope. This could be achieved through interviews, meetings or workshops.

Identify the internal and external issues that relate to context. Issues can be identified by structuring them by topic. One methodology is the political, economic, social, technological, legal and environmental (PESTLE) analysis.

Consider the risks and opportunities associated with these internal and external issues. Although this is a requirement of ISO 14001:2015 clause 6.1.1, it can be intuitive to determine risks and opportunities as part of the same process that identifies the issues.

Example ISO 14001 Risk Register

These risks and opportunities can be transferred to a more formal risk register for quantitative assessment and tracking.

Theme	External Issues	Internal Issues	Risks & Opportunities
Political	Changes in government Embargoes and sanctions Political instability War and terrorism	Changes in top management Changes in governance Company restructure or merger	Opportunity to influence restructure to optimise environmental management
Economic	Economic upturn or downturn Currency fluctuations Tariffs/taxes/grants for the industry Supply chain dependencies Increasing/fluctuating resource costs	Internal financial processes Setting aside contingency budgets	Promote other non-financial benefits such as positive publicity Consider the environment in financial processes e.g., CAPEX approval
Social	Population growth and demographics Customer/consumer attitudes and opinions Perceived environmental impact of industry Societal knowledge of environmental issues and trends Attracting and retaining talent	Environmental culture of organization Levels of literacy/language Internal restructuring	Training department to advise on how to train and communicate to different audiences on environment Environmental criteria to be included in job descriptions and job postings
Technological	Access to strategic materials New materials Cost of renewable technologies Product safety requirements New technologies	Level of investment in research and development for environmental innovation	Research alternative approaches such as off-site segregation and storage
Legal	Substance and product regulations and laws (REACH, COSHH etc.) Long term environmental policy trends Environmental legislations (e.g., industrial emissions, waste management etc.) Changes in employment law	Corporate reporting requirements	Relevant department to monitor changes in environmental policy Top management being involved in external and internal audits and ensuring corrective action
Environment	Climate change/extreme weather Local air quality Raw material scarcity Critical materials Loss of biodiversity	Limited space on site Proximity of sensitive receptors	Ensure corporate risk, procurement, material planning, business continuity functions consider impact of a changing climate

Other Methods to Review your Business's Context

• Interviews with members of the Top Management team
• Staff questionnaires
• Customer and stakeholder opinion surveys or research

Cross-functional input is essential for the specific expertise required to identify the full breadth of issues, such as finance, training, human resources, commercial, engineering and design, etc.

Not only will this ensure a broader appreciation of the context but also wider engagement, particularly with those functions not previously involved with the EMS.

Related Information You Might Find Useful

• 4.1 Understanding Context of the Organization [ISO 9001]
• 4.1 Understanding the Organization and its Context [ISO 45001]
• www.nesi.org 4.1 Understanding the Organization and its Context
• Video — ISO 14001 - element 4.0 Context of the Organization - ISO 14001 Implementation Series

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Updated: 26th February 2022
Author: Richard Keen

Richard Keen

Richard is our Compliance Director, responsible for content & product development.
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