1. Carl Wirdak Occidental Petroleum Corporation GEMI Gemstones Environmental Management Systems GEMI Conference March 2003

2. GEMI Gemstones – March 2003 2 EMSs - What are they? This survey addresses the use of environmental management systems (EMSs) in organizations. Can range from the formal ISO 14000 approach to one that is based on organization-specific procedures and practices. For the purpose of this survey, either end of the EMS spectrum is considered valid.

3. GEMI Gemstones – March 2003 3 Survey Overview 175 registrants attending 47 surveys completed –27% response rate Thank you to all participants!

4. GEMI Gemstones – March 2003 4 Do companies have an EMS? 33 of 40 companies have an EMS No EMSs in use by –Academics –Agencies –Consultants –but this is a very limited sample

5. GEMI Gemstones – March 2003 5 How mature are the EMSs? Most EMSs are still toddlers There are a few teenagers out there # of EMSs

6. GEMI Gemstones – March 2003 6 EMS Drivers Business needs drive adoption and implementation of EMSs

7. GEMI Gemstones – March 2003 7 What are the “other” drivers? Believe in the importance / usefulness of an EMSs to drive continuous improvement To obtain performance improvement Desire functional integration and performance focus Competitors actions Company President's initiative Relationships with local regulators & public opinion Socially responsible investment community It was the right thing to do

8. GEMI Gemstones – March 2003 8 EMS Elements Environmental policy Training, awareness and competence Documentation and records Operational control Emergency preparedness and response Non-conformance corrective and preventive action Cost tracking Environmental aspects Legal and other requirements Objectives and targets Environmental mgmnt program(s) Communication Monitoring & measurement Audit / assessment Management review 30% >80% >90% 100%

9. GEMI Gemstones – March 2003 9 EMS Verification All companies verify their EMS Systems 6 years and older favor internal verification by 3:1 margin Systems < 5 years favor internal verification by 4:3 margin

10. GEMI Gemstones – March 2003 10 Verification Frequency Every company verifies its EMS at least every 3 years Companies that use external verifiers are biased to more frequent reviews

11. GEMI Gemstones – March 2003 11 ISO 14000 Certification 58% certified –Majority of systems have been in place more than 5 years –60% (11 companies) use external verifiers 42% not certified –10 of 14 have been in place < 5 years –7% (1 company) uses external verifiers

12. GEMI Gemstones – March 2003 12 Does EMS help in decision-making? If EMS is ISO certified, average is 3.5 –Absent ISO certification, the average is 2.2 If EMS in place > 5 years, average is 3.6 –If < 5 years, average is 1.9

13. GEMI Gemstones – March 2003 13 Other EMS Benefits What’s in it for companies that institute an EMS? –Helps improve compliance and environmental performance and reduce risks –Enhances relationships with variety of external constituents

14. GEMI Gemstones – March 2003 14 Goals and Targets Companies link EMS goals with overall business goals Typically, annual targets and action plans are established if a company has an EMS Only 50% of firms link performance vs. goals to compensation NoYes Targets No Goals Yes 21 2 80 Number of Companies

15. GEMI Gemstones – March 2003 15 Monitoring & tracking performance 94% track environmental performance 82% track progress against EMS goals 85% compare performance across facilities Roll-up of EMS information

16. GEMI Gemstones – March 2003 16 Communication of EMS information Internal CommunicationExternal Communication

17. GEMI Gemstones – March 2003 17