Pulse Point Newsletter for October 30, 2000
Published by Alliance Consulting International
Partners in Environmental and Occupational Health and Safety
MEXICO'S VOLUNTARY ENVIRONMENTAL AUDIT PROGRAM: REVIEW OF ITS EIGHT YEAR HISTORY
by Enrique Medina, MS, CIH
From its inception at the end of 1992 to August 2000, Mexico's Federal Attorney General for Environmental Protection (PROFEPA for its Spanish acronym) has conducted a total of 1,614 voluntary environmental audits of industrial facilities. This article presents highlights of a recent report on the Environmental Audit Program.
PROFEPA is the enforcement branch of the Secretariat of Environment, Natural Resources and Fisheries (SEMARNAP), and is responsible for industrial verification, environmental emergencies, natural resource and fisheries compliance programs, and environmental audits.
The Voluntary Audit Program includes both government-owned facilities as well as private industry. To date, public sector companies represent 36.5% of all audited facilities, while 63.5% are in the private sector.
Among the 589 public sector audits are 389 PEMEX oil and petrochemical facilities, 33 Federal Electrical Commission installations, 82 National Railroads (FNM) yards and 70 Airport Services (ASA) facilities throughout Mexico, which are in the process of completing the audit process.
Private sector involvement in the audits has been concentrated among the major industrial groups. The 1,025 audited facilities represent steel, cement, automobile manufacturing, the chemical and petrochemical industry, pharmaceuticals, and the food and beverage industry. PROFEPA claims that the audited companies account for 60% of Mexico's industrial production output.
After the audit, an "Action Plan" is developed and agreed to between the audited facility and PROFEPA. The facility has a specified period of time to implement the corrective measures. Once this is accomplished, the facility receives a "Clean Industry Certificate" from PROFEPA, which demonstrates its compliance with Mexico's environmental, and health and safety rules and regulations. The certificate was initially valid for one year and was recently extended to two years. Facilities can become recertified after undergoing a verification process led by a certified third-party auditor. As an added incentive, PROFEPA developed a "Green Seal" logo that certified facilities can display on their products, as proof that the manufacturing facility meets Mexican environmental compliance requirements.
Through August of this year, 1,431 audits have been completed and 183 are in progress. Of those completed, a total of 628 have been issued certificates, including 123 recertifications. 128 facilities that underwent audits dropped out of the program for a number of reasons, such as closures, changes in ownership, or non-compliance with the Action Plan.
PROFEPA recently conducted a survey of 166 facilities in the audit program to determine if there had been any changes from pre-audit levels in a number of environmental indicators. Of these facilities, 135 had a Clean Industry Certificate, while the other 31 were in the advanced stage of completing their action plan. The results showed that air emissions had been reduced by 22.5% in 107 of the facilities reporting air pollutants, for a total of 1.8 million tons per year. Water consumption in 145 facilities had dropped by 18.6% or 34.75 million cubic meters per year. This is equivalent to a 90-day water supply for the Metropolitan Area of Mexico City. Wastewater discharges were also down by 41.2%. Liquid fuel consumption had decreased by 10.65% or enough gasoline for 760,000 cars for one year. The results for hazardous waste generation showed that liquid wastes were down by 5% (almost 1 million liters/year), while solid hazardous waste increased by 5.2% with 127 facilities reporting a combined 90,000 tons per year more waste than before. PROFEPA interprets the last result as indicating that more hazardous waste is being properly classified and shipped to authorized facilities. In economic indicators, PROFEPA reported that 115 facilities invested $74.4 million US dollars in environmental protection.
The number of audited facilities has increased in most years from 19 in 1992, to 223 in 2000 (plus an additional 183 in progress, for an annual total of 406). Initially, PROFEPA financed the cost of the audits to private industry with support from a World Bank loan ending in 1997, when 217 audits were conducted in a single year.
While the majority of audited facilities are in the high risk, large industry category, PROFEPA's report indicates that the program has attracted small facilities with as few as four employees, and even some hotels, hospitals and other low-risk operations.
One major industrial sector that has not been well represented in the PROFEPA audit program is the maquiladora industry. Maquiladoras are foreign-owned manufacturing companies located mostly along the northern border states, which operate under special tariff and tax incentives to import pre-manufactured components and make products for the export market. There are currently about 3,500 maquiladora plants in Mexico employing over 1.2 million workers and generating almost $80 billion dollars annually in foreign revenues. Still, only 155 maquiladoras have participated in the PROFEPA voluntary audit program. This represents 4.4% of all maquiladoras.
Maquiladora industry representatives point to a number of reasons for this low level of participation. One is the PROFEPA audit protocol, which is thought to be tailored more to high-risk industrial processes than to maquiladora plants. Another is the perceived bias of the third party auditors, who are certified based on their knowledge of the PROFEPA audit protocol and whose audit reports are subject to final approval by PROFEPA. There is also competition from other standards, most notably ISO 14000, which exporting companies are increasingly being required to adopt in order to continue selling in the world markets.
Cost may also be a consideration. While the cost of an audit varies significantly depending on the size and complexity of the facility, the low end of the price spectrum (without including in-house staff and management time, or legal counsel expenses), ranges between $20,000-$40,000 US dollars.
The PROFEPA audit program has been very successful in auditing most of Mexico's high-risk, large, industrial public sector facilities, which had traditionally operated with antiquated technologies and poor environmental management practices. The program's coverage has been more limited among the private sector. The 1,025 audited private facilities represent a small part of the more than 360,000 manufacturing companies of all sizes operating in Mexico as of 1998, (according to the statistics from the Secretariat of Commerce and Industrial Development [SECOFI]). As an example, the 135 audited facilities in the automotive sector represent less than 8% of all automotive-related manufacturing companies in Mexico. Only 1% of the 2,930 electrical and electronic manufacturing companies have been audited. There are 206 pharmaceutical facilities of which 28 have been audited, and only 188 of the 708 chemical manufacturing facilities registered have undergone audits.
Now that most public sector facilities have been audited, the challenge for the continued growth of the PROFEPA Voluntary Audit Program is to successfully attract a greater number of private sector companies. From a facility's perspective, key factors to consider include the level of routine enforcement, their compliance status, community relations, future of plant operations, the company's export orientation, compatibility between audit protocol and internal environmental management systems, and audit cost. In the next administration, PROFEPA will need to take a good look at its program and develop a new set of incentives and disincentives to attract the next generation of audit candidates.The full Spanish language report on the PROFEPA Audit Program is posted on the agency's website at www.profepa.gob.mx.
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