Environmental Performance_Method Ot Compare_eviance

THE BIG PICTURE:

A Method to Compare Facilities’

Environmental Performance

White Paper

Enviance

The Big Picture: A Method to Compare Facilities’ Environmental Performance

The Big Picture: A Method to Compare Facilities’ Environmental Performance White Paper

As market, social and regulatory pressures

increase for businesses to effectively manage

their environmental programs, many

companies strive to not only understand their

overall corporate environmental

performance, but how facilities are operating

in relation to one another from an

environmental perspective. This white paper

explores an Enviance System component

that’s often overlooked: using environmental

compliance and sustainability data, such as

emissions and water, in a summary mode to

produce “smart scores” and compare

facilities’ environmental performance.

In fact, as companies expand their use of

solutions in the Enviance System, the metrics

they can produce also expands.

Why Compare Environmental

Performance?

Many companies use regulatory compliance

as the primary environmental indicator. This

makes good sense since most facilities have

tracked their violations, deviations, and

required tasks for many years. Beyond

compliance, other companies use

sustainability metrics as the main

environmental indicator. Sustainability

metrics provide a broader view of the

environmental picture for a facility and fit

nicely within corporate summaries. The

usefulness (and now, the availability) of

both these indicators in a quantitative fashion

actually makes a combination of them a very

good environmental measure. We call this

combination Environmental Performance.

So why go through the effort of developing

and tracking a unified environmental

performance measure for different facilities?

Why would a company want to compare

environmental performance across facilities?

Well, to start, it can be the most complete

environmental metric for corporate and

facility managers. Stakeholders, such as

nearby communities, environmental groups,

and local government, can use environmental

performance as a way of understanding a

facility’s commitment to the environment. In

addition, boards of directors may wish to

see how business units compare, using rollup

of facilities’ scores. Environmental

performance also plays a vital role in

insurance premium management,

providing a useful overall picture that can

help keep insurers informed of actual risk,

thereby potentially lowering premiums or

keeping increases to a minimum.

Environmental performance can also be used

for regulatory leverage. The ability to show

a thoughtful and measurable environmental


index can help facility managers when

dealing with regulators and the response to

potential or actual violations. Inspectors may

also be less inclined to cite minor problems if

they see that a facility quantifies its

environmental performance. Comparing

environmental performance at the facility

level incentivizes employees who operate

and maintain the processes and equipment

that controls or reduces emissions and

discharges to the environment. The feedback

mechanism provided by measuring and

communicating environmental performance

help keep employees motivated to protect the

environment. Environmental performance

can be used as part of a larger EHS

scorecard.

Getting Started

Quantifying environmental performance at

an industrial facility can involve numerous

criteria. The list of potential input parameters

that should be considered would include:

• Environmental discharges, emissions

• Media to which the pollutants are

discharged

• Toxicity of pollutants

• Sensitivity of nearby receptors

• Area or size of the facility

• Number of employees

• Compliance history

• The extent of remediation or cleanup

activities at the site

• Sustainability metrics

• Facility complexity

• Cost

The potential applicability of so many factors

can make getting started very daunting. How

can all these factors be worked into a

meaningful concept without getting overly

complex? The simple answer is that

individually, they cannot. We need to use

broader indicators that can account for many

or all of these factors without creating a

system that is too complex or unwieldy to

use. Looking at the list above, we can

achieve some measure of all these

components by selecting three key input

criteria: Complexity, Compliance, and

Sustainability. Let’s take a moment to see

why this approach offers a broad set of

measures while keeping the process

relatively simple.

From a common sense point of view, it

would be almost meaningless to compare the

environmental performance of a petroleum

refinery to that of a small furniture

manufacturing facility. In general, facilities

should be of similar levels of complexity to

legitimately compare one to another. As

such, we suggest that a complexity rating be

developed that provides a reasonable

boundary for comparison purposes. The most

important thing here is to attain a sense of the

overall effort and resources needed for

environmental purposes at facilities. In this

way we would avoid comparing an apple to a

raison, but we can, and will, compare an

apple to an orange. Keep in mind that you

can develop your own complexity rating if

you’d like. The approach to rating


complexity provided below is not cast in

stone.

Complexity Rating

Keeping the goal of a workable simplicity in

mind, we define three levels of complexity.

The highest level would be for facilities that

are included in the 28 major source

categories within the Prevention of

Significant Deterioration (PSD) regulations.

Facilities with a medium complexity rating

include those not on the PSD list, but with

greater than 100 full-time employees and at

least five permits from regulatory agencies.

Low complexity ratings are for those

facilities with less than 100 employees and

that do not reasonably fit into one of the

other two categories.

Since we will be scoring facilities on

environmental performance and comparing

only within the same complexity rating, we

will give each rating a total potential

maximum score. Again, this is arbitrary, and

you may want to assign a different total

maximum score to each level. For our

purposes, the following maximum scores

would be:

• Highest Complexity –

Total Maximum Score of 10,000

• Medium Complexity –

Total Maximum Score of 1,000

• Lowest Complexity –

Total Maximum Score of 100

Measuring Environmental Performance -

Compliance

Compliance is a reasonable component of

environmental performance for diverse

industries, and assumes that the regulatory

agencies address many aspects of

environmental activity that are difficult to

otherwise unify, including media, location,

toxicity of materials, risk to workers and

surrounding population and remediation.

Elements of regulatory compliance include:

• Scheduled tasks, inspections and

reports

• Emissions, discharges and wastes

disposed

• Unscheduled activities, such as MOC,

compliance inquiries, regulatory

visits and information requests

• Compliance agreements and orders

• Audits and assessments

In addition, the compliance component of

environmental performance should also

include internal and policy obligations.

Measuring Environmental Performance -

Sustainability

Widely used, sustainability is most useful for

comparing different facilities within the same

corporation or business unit. There can,

however, be a potential overlap with

compliance. In fact, sustainability is not

always quantified as a common practice.

Sustainability is commonly used to compare

facilities within the same company, but is not


always quantified as a single score.

Nonetheless, sustainability metrics have

become widely used over the last few years

and many companies are now scoring

sustainability of their operations. In order to

represent the environmental performance

scoring concepts in a reasonably short space,

this paper assumes sustainability metrics are

developed for facilities and it assumes a

score can be reasonably derived from those

metrics.

Step #1: Start Weighting

Companies have different environmental

priorities and it’s impossible to establish one

weighting scale for the market or even a

specific industry. Start by assigning weights

based on what’s important to your company.

For example purposes, this white paper is

assuming a weight for compliance of 0.65

and 0.35 for sustainability. Just be sure that

the total of your weighting scale equals 1.0.

Step #2: Establish Common Weighting

Factors for the Compliance Component

The next step is to identify weight values

within individual components. One media or

regulatory program is usually more dominant

than others in your facility, company or

industry. Create a ranked order of what’s

important in terms of media and then spread

responsibility reasonably across all media.

Below is a sample of ranked weighting

factors:

• Greatest Risk…………… 0.25

• Next Two Greatest……... 0.15

• Next Two Greatest …….. 0.15

• Next Two Greatest …….. 0.125

• Next Two Greatest ….…. 0.125

• Next…………………….. 0.10

• Next…………………….. 0.05

• All Other………………... 0.05

• Total…………………….. 1.00

Below are sample compliance weighting

factors for two different facilities, A and B:

Facility A

• Water………………….... 0.25

• TRI……………………... 0.15

• Waste…………………… 0.15

• Air……………………… 0.125

• Remediation……………. 0.125

• Unscheduled response actions 0.10

• Noise………………….... 0.05

• All Other……………….. 0.05

Facility B

• Air…..…………………… 0.25

• Waste……………………. 0.15

• Remediation…………….. 0.15

• Water…………………… 0.125

• TRI……………………… 0.125

• Unscheduled response actions 0.10

• Noise……………………. 0.05

• All Other……..…………. 0.05

Step #3: Define Success for Each Program

Area

Within each program area, your compliance

component score will depend on how well

you perform your required tasks and how

well you meet your regulatory emissions or

discharge limits. Tasks need to be included

as a component because compliance with


regulatory requirements often is

accomplished by performing tasks. Classify

tasks as routine, significant or major. Routine

tasks occur quarterly or more frequently.

Examples of routine tasks include daily

visible emissions evaluation, quarterly

RATA and quarterly stormwater visual

monitoring. Significant tasks occur semi-

annually and annually, such as short term

development reports, Title V permits

certifications, etc. Major tasks – occurring

once every 2-3 years – include permit

application and investigations.

Taking air as an example, permitted/allowed

emissions could have a weight value of 0.60

and tasks have a weight value of 0.40. Within

the tasks category, routine tasks could have a

value of 0.25, significant 0.35 and major

0.40. If there are no major tasks, use

calculation logic to reweight the routine and

significant components.

Using the air example, measuring

environmental performance consists of

adding the emissions score and task score.

• Emissions score = Permitted / Actual

(max: 1.1)

o Permitted releases =

X; Actual releases =

1.05 X

o Component score

would be 1/1.05 =

0.952

• Task Score

o Task completed on

time = full value

o Task completed but

task was late = half

value

o Task incomplete = 0

For example suppose Facility A has:

• 66 routine tasks, of which 60

were completed on time, and

6 were late

• 5 Significant tasks, all of

which were completed on

time, and

• 2 Major tasks, one of which

was completed late

The task component compliance score would

be:

0.25*(63/66)+0.35*(5/5)+0.4*(1.5/2) = 0.888

Companies can also encourage facilities to

do this on their own and come up with their

own scores.

Step #4: Calculate Performance

Using the air example at Facility B,

performance could be calculated as such:

• Air weight factor 0.25; Max 10,000

* 0.25 = 2,500

• Permitted Emissions Component

o 2,500 * 0.60 * 0.952 = 1,428

(possible: 1,500)

• Task Component


o 2,500 * 0.40 * 0.888 = 888

(possible: 1,000)

• Score (Emissions + Task) = 2,316

• Air score (decimal fraction format) =

0.926

Calculating a score for all media could look like this:

Step #5: Environmental Performance

The overall environmental performance

score, in this example, is the total of the

compliance score (weighted at 0.65) and the

sustainability score (weighted at 0.35). As

such, with a maximum possible score of

10,000, the sample environmental

performance score would be:

• Compliance score * 0.65 +

Sustainability score * 0.35

• 9,565 * 0.65 + 9,850 * 0.35 = 9,665

Facility performance can be leveraged using

the facility environmental score to compare

facilities, then business units, ultimately,

contributing to a corporate environmental

performance score.

Conclusion

Compliance and sustainability within

common complexity ratings comprise a

simple and attainable means of scoring a

facility’s environmental performance.

Broadly defined levels of complexity allow

Program Area Weight Factor Performance Measurement Performance Score

Air 0.25 2,316 0.926

Waste 0.15 1,431 0.954

Remediation 0.15 1,484 0.989

Water 0.125 1,154 0.923

TRI 0.125 1,250 1.000

Unscheduled 0.10 933 0.933

Noise 0.05 498 0.995

All Other 0.05 499 0.997

TOTAL 1.000 9565 0.9565


for comparison of environmental

performance across diverse facilities (apple v

orange). The ability to compare different

facilities on a simple, common basis will

help corporate managers identify facilities at

which improvements are most needed.

Facility environmental managers will be able

to display the high degree of success they

typically achieve while using the same

techniques to improve their performance.

The Enviance System enables organizations

to use routinely collected data to

automatically produce the score by which

facilities can be compared. And looking

ahead, the configuration in the Enviance

System is reproducible, which means that

companies can refine, alter and create new

scores as environmental factors and issues

evolve.

About Enviance

Enviance is the leading provider of

Environmental ERP software. With more

than a decade of experience providing

environmental data management and

expertise, Enviance’s proven system is used

by the world’s largest corporations and

government agencies.

Enviance maintains deep domain expertise in

EHS management and technology, and has

more than 17,000 users in more than 49

countries, including American Electric

Power, Arch Coal, Chevron, CH2M Hill,

Dimension Data, DuPont, Freescale

Semiconductor, Fujifilm, Georgia-Pacific,

Los Angeles World Airports, Pfizer,

Syngenta, and the U.S. Army. Full customer

list. Industry leaders have used Enviance to

streamline GHG management since 2006.

For more information, visit:

www.enviance.com

http://www.enviance.com/customers/customer-list.aspx

http://www.enviance.com/customers/customer-list.aspx

http://www.enviance.com/

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