How to assess environmental performance in companies?

Environmental performance indicators (KPIs) are the primary mechanism for demonstrating how effectively a company achieves its environmental objectives.

In the current environment, companies are confronted with the constant need to adapt to new market demands.
A growing number of companies have assumed that acting in an environmentally responsible manner is more than a legal obligation, it positively affects the success of their business. Improving environmental performance has become part of corporate strategy.

The definition of strategic objectives in the environmental area must be supported by a set of indicators that allow to assess the impact of the implemented measures and to check whether the objectives are being achieved.

The definition of indicators, also known as KPIs (Key Performance Indicators), allows companies to evaluate their performance in the environmental area. On the other hand, the measurement and analysis of indicators allow the reporting of what is measured, assigning responsibilities, monitoring and evaluation, and triggering improvement actions.

We list the following best practices in defining KPIs for environmental performance evaluation:

  • KPIs must be relevant
  • KPIs must be related to strategic objectives and environmental policy
  • KPIs must be measurable

When defining KPIs, consideration should be given to the measurability, which means that the best option is to choose a quantitative indicator.  Defining qualitative indicators can lead to a subjective assessment. On the other hand, a very complex indicator or one that is difficult to measure is not appropriate, since the cost of obtaining it may make its operationalization unfeasible.

  • KPIs must be clear as to their calculation formula

The calculation formula must be defined and the sources of information for the data supporting the indicator must be identified.

  • KPIs must be comparable
  • KPIs must have environmental data in a comparable format, ensuring that performance can be evaluated over time and in comparison with other companies.
  • KPIs should be calculated and analysed with a defined frequency

 

The frequency with which KPIs are calculated and who is responsible for their calculation must be defined. Improvement action plans should emerge as a result of their analysis.

One of the supports used for the definition of KPIs in the area of environmental performance is the standard IS0 14031: Environmental management – Environmental performance evaluation – Guidelines.

 

The ISO 14031 standard distinguishes three types of environmental performance indicators:

1. Management Performance Indicators

Environmental performance indicators that provide information about management efforts to influence the environmental performance of the company.

Example of indicators:

  • % of employees with training in the environmental area
  • Degree of compliance with legislation
  • % of suppliers certified by ISO 14001
  • Return on investment in environmental improvement projects (e.g. replacement of lighting fixtures for LED)

 

2. Management Performance Indicators

Environmental performance indicators that provide information about the environmental performance of operations.

Example of indicators:

  • Cost of energy consumed per pair of shoes
  • VOC’s consumed per pair of shoes
  • Waste recovery rate1
  • Quantity of waste produced per pair of shoes

 

3. State of the Environment Indicators

These are indicators that reflect the environmental quality conditions in the area surrounding the company.

Example of indicators:

  • % concentration of selected nutrients in the soil adjacent to the company’s facilities
  • % concentration of a specific contaminant in groundwater or surface water

Concluding, we can say that environmental performance indicators (KPIs) are the main mechanism for demonstrating the effectiveness with which a company achieves its environmental objectives, so the methodology used in their definition and the accuracy used in their calculation are very important.

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