Explaining ISO 14001:2015 Clause 4.1 Understanding the organization and its context

In this article, I’m going to review the requirements of Clause 4.1 Understanding the organization and its context. I’m going to break this tiny 2 sentence clause down and turn it into something you can all understand. You’ll then be able to apply this to your own organization's system and understand what the requirements will look like for you. No more confusion or guessing!

Clause 4.1 Understanding the organization and its context is one of the smallest clauses in ISO 14001, so there can’t be that much to understand about it can there? Well, let's see.

Ok, Clause 4.1 states that

The organization shall determine external and internal issues that are relevant to its purpose and that affect its ability to achieve the intended outcomes of its environmental management system.

Then it goes on to say

Such issues shall include environmental conditions being affected by or capable of affecting the organization.

I always say with this clause that ‘it’s about having a long hard look at yourself’! The requirements of this clause are about the organization identifying internal and external factors that influence the environmental factors relevant to the outcomes of their activities, products, or services. This is about an organization assessing the risks and opportunities influencing or impacting their business and the potential environmental impacts as a result of the delivery of their product or service.

So, the question for us is ‘what does this look like in a business?’

A tool or tools that I normally see being used to address this clause requirement are the PEST Analysis and/or a SWOT Analysis.

The PEST Analysis sometimes referred to as PESTEL or PESTLE is a great tool to identify external issues and it works well when combined with a SWOT Analysis. PESTEL stands for Political, Economic, Social, Technological, Environment, and Legal.

You can see by using these words as a prompt, forces a business to look at what influences these categories bring to their business. I have only seen these used in conjunction with a SWOT analysis and overall, the SWOT seems to be the most used tool in businesses that I audit. I will explain and demonstrate how a SWOT analysis will work and align with the requirements of this clause shortly.

Before I continue though, I really need to ensure that it is clear that nowhere in clause 4.1 does it say ‘you shall conduct a SWOT analysis’ – in fact, the clause doesn’t even have a requirement for documented information to be maintained or retained as evidence. This can be a bit tricky for us as auditors – I want you to be really careful if you are an auditor as there is no way that you can raise a nonconformance by saying ‘that there was no documented evidence of the external and internal issues determined’. How you obtain the evidence would then be by interview to see whether the organization has in fact determined these internal and external issues and can demonstrate that they know what they are.

Now, in saying this, it is very common that you will see ‘something’ documented – whether they do conduct a SWOT analysis of which you will see the completed output or they have a brainstorm at their management review meeting and it’s documented in the minutes – normally you will see a trace of it somewhere in the system.

Ok, so onto this SWOT Analysis then! SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT is normally drawn up into 4 quadrants, with each quadrant named one of the options of Strengths, Weaknesses, Opportunities, and Threats. 

This is a fantastic tool to use as it aligns really well with the internal and external requirements of clause 4.1. So now you can add to the rows the heading of Internal for Strengths and Weaknesses and External for Opportunities and Threats. I always say that Strengths and Weaknesses are Internal and what is actually happening now. And then Opportunities and Threats come from external influences and are what has the potential to occur.

Now that we have the final template ready to go we can use it to help us fill in each of the quadrants. It would be beneficial to involve staff members or team representatives in this process so that a broad scope can be identified across the business.

So let’s start with Strengths – remembering that these are internal strengths of our business that are actually occurring right now. Ask yourself the question “What does your business do well?” To help you I’ll prompt you with some more questions on this:

• Do you bring a lot of environmental experience to the business or industry?
• Do you have a low environmental incident rate?
• Do you have strong environmental leadership and participation?
• Does your business actively identify and control potential environmental aspects? OR
• Do you have a rigorous environmental training and induction process?

Now you can move on to Weaknesses – again remembering that these are internal weaknesses that are actually occurring right now. Ask yourself the question “What does your business NOT do well?”. To help out again I can prompt you with some other questions:

• Do you tend to follow others in the industry rather than lead?
• Does your business lack environmental knowledge and experience?
• Are there regular environmental incidents that occur that go unreported?
• Is Environmental leadership lacking?
• Does the business ignore proactive environmental aspects and impact identification? OR
• Does the business lack an Environmental training and induction process?

Fantastic – now that’s started giving you a list of the Internal and actual factors for Strengths and Weaknesses. Keep working on these as you will find that over time you will pick up and recognize other areas to add. Something really important to note here is that you do not complete a SWOT analysis just once. It is an ongoing and regular process. It is your business's way of staying on top of any new threats to the business as well as identifying opportunities for the business.

Right, let's look at Opportunities next. Opportunities are external factors that a business can leverage to achieve an objective, goal, or target and simply improve! Ask yourself the question “What opportunities are there that we can take action on to improve?” A hot tip here – why don’t you look at your list of Weaknesses for an idea of where some opportunities might be?

Some questions to prompt you here might be:

• Could you improve Environmental knowledge within the business? And How?
• How could you reduce the occurrence of environmental incidents?
• How could you support your workers to report incidents or potential environmental impacts?
• How could you initiate proactive environmental impact identification?
• How could you initiate the implementation and review of risk treatments or controls?
• Is there an opportunity to provide Environmental training on a regular basis?
• Is there an opportunity to communicate Environmental requirements to workers? OR
• Could you involve your workers in the Environmental system and processes more?

Now the final quadrant is for Threats. Threats are external factors that could potentially cause difficulties for the company. Some examples of this might be:

• Changes or updates in Environmental legislation that are not identified by the business
• An Environmental breach and fine could occur
• A significant environmental incident could occur
• Transfer of Environmental knowledge could be compromised if a key staff member leaves

Fantastic! Look at that! You’ve completed your SWOT analysis.

Now, if you review your SWOT, the outputs of this should meet the requirements of Clause 4.1.

Doesn’t that requirement make so much more sense now? And you know why? Because we’ve made sense of it and have broken it down AND produced the output to meet those requirements. When you see it in your own context everything makes more sense again.

I love it when this happens!

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