Management system guidance
4.0 Context of the Organization
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4.1 Understanding the organization and its context
You should allow additional time to establish a suitable understanding of the circumstances, and the market in which your organization operates. To be compliant, evidence should be obtained that demonstrates that your organization is reviewing all pertinent internal and external issues at periodic intervals.
Clause 4.1 requires your organization to identify the internal and external issues that matter to its purpose and that influence whether its EMS can deliver its intended outcomes. These issues must include environmental conditions that your organization affects or that are capable of affecting it, for example pollution levels, the availability of natural resources, climate change, biodiversity and ecosystem health.
What changed in ISO 14001:2026
ISO 14001:2015 already required environmental conditions to be included in the context review, and Amendment 1:2024 added a separate requirement to determine whether climate change is a relevant issue. ISO 14001:2026 absorbs that climate change sentence into the main requirement and now names a wider set of environmental conditions: pollution levels, natural resource availability, climate change, biodiversity and ecosystem health. Climate change therefore remains important, but it is now one of several environmental conditions to be considered, and Annex A.4.1 stresses that these conditions are interconnected and can change suddenly or gradually.
To assess whether your organization has a high-level, conceptual understanding of its internal and external issues that affect it, either positively or negatively, its ability to achieve the intended outcomes, you should describe the processes used by your organization to identify internal and external issues and make reference to all objective evidence, including examples of these issues.
Examples of organizational issues might include:
- Environmental conditions, such as air and water quality, land use and existing contamination, availability of natural resources, climate, biodiversity and ecosystem health, which are capable of affecting or being affected by the organization;
- External: cultural, social, political, regulatory, financial, technological, economic, natural and competitive issues, whether international, national, regional or local;
- Internal: organization's activities, products, services, environmental performance, strategic direction, culture and capabilities (people, knowledge, processes, systems).
Environmental conditions
Environmental conditions work in two directions. Your activities may affect them, for example by drawing water from a stressed catchment or discharging to a sensitive river, and they may affect you, for example through flooding, drought, heatwaves, raw material scarcity or tighter controls on emissions. Consider conditions at local, regional and global level, and remember that they interact: climate, for instance, influences water availability, air quality and the health of ecosystems.
Ecosystem health means the overall condition of an ecosystem, such as a woodland, wetland, river or coastal habitat, and its ability to keep functioning and recover from disturbance. Organizations depend on ecosystems for resources and services such as clean water and climate regulation, and their activities can protect, enhance or degrade them. Useful sources of information include local authority and environment agency data, river basin and flood risk maps, air quality monitoring, protected site designations and national climate projections.
Climate change is one of the environmental conditions your organization needs to consider when analyzing its internal and external context and determining the needs and expectations of relevant interested parties (see 4.2).
While some organizations may already address climate change issues, others will be considering it for the first time. Where relevant climate change issues are determined by the organization, these will need to be addressed within the EMS, along with any other relevant environmental conditions.
In all likelihood, most organizations will be affected by climate change in some way. Those affected businesses will, therefore, need to adapt to the challenges of climate change to continue to meet their objectives, strategy, and operational purpose.
You will need to determine and understand the various environmental conditions, internal and external issues, typically experienced in your type of organization that can have positive or negative impacts. Evidence needs to be obtained to provide assurance that organizations will regularly or as necessary review and update their external and internal issues.
The standard does not specify that these internal and external issues, or their monitoring and review, be documented, so there might not be ‘lists of issues’ or records of reviews. However, information can be obtained via interviews with relevant top management in relation to your organization’s context and its strategic direction, the identified issues and conditions, and how these may affect the intended outcomes of the EMS.
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.
Collate evidence to provide assurance that your organization is regularly, or as necessary, reviewing and updating its external and internal issues. Although there is no requirement for documented information to define the context of the organization, your organization will find it helpful to retain the types of documented information listed below to help demonstrate compliance:
- Business plans and strategy reviews;
- Competitor analysis;
- Economic reports from business sectors or consultant’s reports;
- Use the ‘SWOT Analysis Template.docx’ for internal issues;
- Use the ‘PESTLE Analysis Template.docx’ for external issues;
- List of external and internal EMS issues and environmental conditions;
- EMS action plans and objectives;
- Annual reports;
- Minutes of meetings (Management review and, e.g. design review minutes);
- Process maps, tables, spreadsheets, mind mapping diagrams.
In addition to reviewing any documented process, the audit approach must include interviews with relevant top management in relation to your organization’s context and its strategic direction, identified issues and conditions, and how these may affect the intended outcomes of the EMS.
Internal issues
Ensure that your organization has considered how relevant environmental conditions, including climate change, affect its internal capabilities and operations. The determination of relevance must align with any statutory and regulatory requirements that are applicable to your activities, products and services and with the contractual requirements of your customers and suppliers.
Using a SWOT Analysis Template identify and analyze your organization's strengths, weaknesses, opportunities and threats. Below are typical examples, however each issue will be focused on the individual organization:
Strengths are characteristics of our organization that allow operation more efficiently and effectively than competitors. We consider:
- What does our organization do well?
- What advantages does our business have over other internal sections or external organizations, including competitors?
- What makes our organization different from competitors?
Weaknesses are areas that are recognized as needing improvement. We consider:
- What can be done better?
- What causes problems or complaints (information from root-cause analysis)?
- Which capabilities need modifying, strengthening or divesting for the future?
Opportunities are trends, circumstances or business opportunities that may be taken advantage of. We consider:
- What are the changes in technology or markets?
- What local and global events may be useful?
- What are the changes in customer/societal values?
Threats can be external or internal and are anything that can adversely affect business or operations. External threats could be economic, new legislation or even a new competitor in the market. Internal threats could be a skill or staff shortage within our organization. We consider:
- What obstacles are there for ongoing operation?
- Are there any potential competitors to the business?
- Who might be the new competition?
- The relevance and impact your operations have on climate change, natural resources, biodiversity and local ecosystems;
- Are there any potential changes to staffing, products, services or technology that could threaten operation or business?
Examples of internal issues suitable for SWOT Analysis include:
- Governance, organizational structure, roles and accountabilities;
- Policies, objectives and the strategies in place to achieve them;
- Resources (including human), knowledge and competence;
- Environmental culture within the organization and the level of employee engagement;
- Current environmental performance, such as energy and water use, waste and emissions;
- Process for the introduction of new products, materials, services, tools, software, premises and equipment.
External issues
Organizations should include environmental conditions, including climate change, as external issues in their PESTLE analysis and make a statement on their relevance. This should be discussed during management review meetings and recorded in the meeting minutes.
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 a 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.
What is happening politically in the environment in which we operate?
- Trading policies;
- Funding, grants and initiatives;
- Home market lobbying/pressure groups;
- International pressure groups;
- Wars and conflict;
- Government policies, term and change;
- Inter-country relationships and attitudes;
- Effects that climate change has on your operations
- Political trends;
- Internal political issues;
- Shareholder needs and demands.
What is happening with respect to ecological and environmental issues?
- Local air quality, water availability and water quality;
- Pollution levels and existing land contamination;
- Availability and cost of natural resources and raw materials;
- Climate change, extreme weather and flood risk;
- Biodiversity and the health of nearby ecosystems and protected sites;
- Environmental regulations;
- Stakeholder/investor values;
- Market demand for lower-impact products and services;
- Competitors and differences between competitors;
- Competitiveness of the organization and what affects its ability to compete.
What is happening technology-wise which can impact what we do?
- Maturation of existing technologies;
- Technological developments or trends that affect or could affect the business;
- New product development and potential markets: government, international, resource sector, etc.;
- Productivity improvements through automation;
- Telecommunication infrastructure;
- Online connectivity and digital data.
What is occurring socially and culturally in the markets in which we operate?
- Current or emerging trends in lifestyle and their implications;
- Demographic trends that may affect market size (growth rate, income, population shifts);
- Whether these trends represent an opportunity or a threat;
- Changes in consumer behavior;
- Increasing environmental awareness;
- Urbanization;
- Consumer demands; personalization and high-end experiences;
- Public demand for transparency and participation in decision-making.
What is happening with changes to legislation?
- Possible changes in regulation/legislation;
- Impacts of these changes on business;
- Stability of government;
- Regulation affecting externally provided processes, products and services;
- Government bureaucracy – rules and regulations;
- Legal constraints.
What is happening within the economy?
- National and internal financial trends (trends in economic forces);
- Economic trends that may have an impact on business activity;
- Emerging markets;
- Inflation, employment levels, supply;
- Energy available;
- Global financial situation.
Examples of external issues suitable for PESTLE Analysis include:
- Cultural, social, political, legal, financial, technological, economic and natural surroundings including the environment in which the organization operates;
- Who the competitors are and any contractors, subcontractors, suppliers, partners and providers;
- National and international law;
- Industry drivers and trends which have influence on the organization;
- The organization's products and services and their influence on the environment over their life cycle.
Reviewing your organization's context could include interviews with senior management, questionnaires, surveys and 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.
We recommend that clients consider which environmental conditions, including climate change, are relevant to their operational context. Their relevance will vary greatly depending on the size and sector of your organization, the products and services provided, its position in the supply chain, its geography, and the scope of your organization’s environmental management system.
The issues and environmental conditions determined in 4.1 can give rise to risks and opportunities for the organization or its EMS. These are determined in 6.1.4 Risks and opportunities and acted on through 6.1.5 Planning action. The knowledge gained must also be considered when establishing and maintaining the EMS (4.4) and when setting its scope (4.3), and changes in these issues are an input to management review.
There is no requirement for the outputs of Clause 4.1 to be documented. If you currently discuss and consider the requirements verbally during management review meetings, continue to do so. If your organization already retains documentation of the results of strategic planning via PESTLE analysis forms or Management Review Minutes, then environmental conditions and climate change considerations may be captured in those documents.
You should seek and record evidence that your organization has determined the external and internal issues relevant to its purpose and to the intended outcomes of its EMS, that these include the relevant environmental conditions it affects or is affected by, such as pollution levels, natural resource availability, climate change, biodiversity and ecosystem health, and that these issues are reviewed and updated at planned intervals or when circumstances change.
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