Sustainability Measurement GIN

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1999 Greening of Industry Network ConferenceBest Practice Proceedings

MEASURING PROGRESS TOWARDS SUSTAINABILITY

PRINCIPLES, PROCESS, AND BEST PRACTICES

Joseph Fiksel

Jeff McDaniel

Catherine Mendenhall

Battelle Memorial InstituteLife Cycle Management Group

505 King Avenue

Columbus, Ohio 43201-2693(614) [email protected]
mailto:[email protected]:[email protected]


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ABSTRACT

A number of leading companies in the U.S., Europe and Japan have made a commitment tobecome sustainable enterprises, and have launched proactive programs to improve theenvironmental and social performance of their products, processes, services, and facilities.However, one of the key challenges faced by these companies is how to track their progresstowards sustainability and communicate it to both employees and other important stakeholders.This paper is intended to assist business decision-makers who wish to initiate continuousmeasurement and improvement of their triple bottom line, i.e., the economic, environmental,

and societal performance of their products, facilities, and enterprise. First, a set of guidingprinciples is presented, suggesting that performance measurement should: 1) focus on bothresource and value indicators, 2) explicitly represent the triple bottom line, 3) consider the fullproduct life cycle, and 4) combine both leading and lagging indicators. Next, a comprehensiveperformance measurement process is described, including specific steps for planning,implementation, and review, based upon established practices within the business community.Finally, examples are given of five well-known companies that are recognized leaders in thefield of sustainability measurement. The intent of this paper is to provide both a conceptual

understanding of the state of the art, and a survey of best practices across several industries, thuscreating a pragmatic foundation for establishing a customized sustainability measurementprocess within any company. The paper is based upon Battelles experience in developing andimplementing performance measurement processes for a variety of industrial clients, includingseveral leaders in the sustainability movement. In particular, the performance measurementprocess is based on the results of a multi-year program sponsored by the Electric Power ResearchInstitute (EPRI).


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INTRODUCTION

As the new millennium dawns, many leading companies in the U.S., Europe and Japan are responding tothe challenges of global population growth and environmental pressures by adopting a commitment tosustainability (Hart, 1996). Business leaders speak of sustainable development, sustainable growth,sustainable products, sustainable processes, and sustainable technologies. Many have launched proactiveprograms that include life cycle accounting, design for eco-efficiency, community outreach, cleantechnology development, and a variety of other initiatives. In 1999, a group of U.S. companies includingDuPont and General Motors collaborated in supporting a high-visibility National Town Meeting on

Sustainability. Their motivations are not purely altruistic recent research has demonstrated that pursuitof sustainability can not only result in environmental improvements and societal benefits, but can alsoincrease economic value for the firm (Kiernan and Martin, 1998; Dixon, 1999).

Yet few, if any, companies can respond definitively to the question, Which of our products, processes,services, and facilities are sustainable? Answering this question requires the ability to measuresustainability in a quantitative, or at least qualitative fashion. However, measuring sustainability differsfrom measuring other dimensions of business performance in several important respects. First, thispractice is relatively new, so that there is a lack of commonly accepted or mandated measurement

standards. Second, sustainability is complex and multi-faceted, covering a broad spectrum of topics fromhabitat conservation, to energy consumption, to stakeholder satisfaction and financial results. Finally,measurement of sustainability extends beyond the boundaries of a single company and typically addressesthe performance of both upstream suppliers and downstream customers in the value chain.

While many firms are beginning to address this challenge, so far the main focus has been on the choice ofappropriate performance indicators. For practitioners of performance measurement, there are manyadditional issues that need to be addressed , including the timing, data requirements, accountability

assignments, communication, and pragmatic utilization of these indicators. We argue that sustainabilityperformance measurement(SPM) must be approached as a systematic business process in order to beintegrated effectively into company strategic planning and day-to-day operations. This paper sets forthsome fundamental principles for SPM, and describes a three-phase process for planning, implementing,and reviewing an SPM process. The focus is on the initial planning phase, which begins with articulationa sustainability policy and concludes with establishment of specific performance targets.

The paper illustrates the application of the SPM principles and process by drawing upon industry bestpractices. Some important lessons can be learned from the companies that have already begun their

journey towards sustainability, and are already measuring and reporting on their performance. A reviewof publicly available data shows that The Body Shop, BP Amoco, Collins & Aikman Floorcovering,Monsanto, and Volvo are applying these principles and following most of the SPM process steps.Analysis of their policies, objectives, performance indicators, and targets provides a number of insightsabout how the above-mentioned challenges can be addressed.

It i h th t th h d b t ti t d h ill h l th i t d l


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SUSTAINABILITY MEASUREMENT PRINCIPLES

Four fundamental principles can help companies address the challenges associated with measuring andreporting sustainability. These are:

1. Address the dual perspectives of resource consumption and value creation.2. Include economic, environmental, and societal aspects.3. Systematically consider each stage in the product life cycle.4. Develop both leading and lagging indicators.

RESOURCE AND VALUE

The first principle of sustainability measurement is that evaluations should

address the dual perspectives of resource consumption and value creation.

A sustainable organization should strive to minimize resource consumption while maximizing valuecreation. Here, resources are defined broadly to be natural or anthropogenic stocks that are required forthe creation, use and disposition of a product or service. Examples of resources include materials, energy,labor, and land. Value is defined as a condition, attributable to a companys activities, which benefits oneor more of the organizations stakeholders (Fiksel et al, 1998). Examples of value creation includeincreased profitability, reduced pollution, improved nutrition, and liberation of time. Figure 1 listsgeneral categories of performance associated with resource consumption and value creation theseprovide a foundation for any company to select appropriate performance indicators.

Resource

Energy

Material

Water

Land Waste

Cost

Human capital

Value

Functional performance

Information content

Customer satisfaction

Environmental quality Economic value added

Business competency

Human health


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TRIPLE BOTTOM LINE

The second principle of sustainability measurement is that evaluations shouldinclude economic, environmental, and societal aspects.

Effective sustainability measurement should consider the complete triple bottom line of economic,environmental, and societal performance (Bennett and James, 1999). These aspects need to be integratedand balanced in order to obtain a comprehensive understanding of product or service sustainability fromthe perspective of different stakeholders. For example, an automobile consumes economic resources interms of operation and maintenance costs, environmental resources in terms of fossil fuel, and societal

resources in terms of personal time spent driving. It also creates economic and social value, although itmay detract from environmental quality. Today, most performance measurement frameworks focusexclusively on economic or environmental performance, and very few address societal concerns (James,1997). However, based on the recent resurgence of attention to social responsibility, we anticipate anincreased focus over the next decade on measuring the societal impacts of products and services.

LIFE CYCLE CONSIDERATION

The third principle of sustainability measurement is that evaluations shouldsystematically consider each stage in the product life cycle.

Resource consumption and value creation take place throughout the life cycle, including the supply,manufacturing, use, and disposition of a product. Historically, companies have focused almost exclusivelyon their internal operations and have not considered the implications associated with activities of theirsuppliers or customers. Yet an evaluation that focuses exclusively on one life cycle stage (e.g.,manufacturing) may fail to capture significant product benefits or impacts that occur in either upstream ordownstream stages (Fiksel, 1996). Referring again to the automobile example, designers have recentlybegun to consider the end-of-life stage, and the potential impacts of disassembly, recycling, recovery,refurbishment and re-use. In applying life cycle thinking, it is important to consider not only the physicallife cycle of the product, from cradle to grave, but also the life cycles of relevant facilities and capitalequipment both inside and outside the enterprise.

LEADING AND LAGGING INDICATORS

The fourth principle of sustainability measurement is that evaluations should

combine both leading and lagging indicators of performance.

Lagging indicators (also referred to as outcome indicators) are measures of the results or outcomes (e.g.,reduction in material intensity) that are attributable to improvements in a companys business processes.Most companies use lagging indicators to report results and they are preferred by the general public and


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SUSTAINABILITY PERFORMANCE MEASUREMENT (SPM) PROCESS

Public discussion about measuring sustainability thus far has focused on what should be measured. Forindustrial practitioners, this question is not sufficient, since it addresses only one component of aperformance measurement process. Other important issues include how frequently to measure, whoshould be accountable for measurement, and how the results are to be utilized. In other words,sustainability performance measurement should be viewed as an ongoing business process, i.e., a set oflogically related tasks or activities undertaken to achieve a defined business outcome. By understandingthe entire performance measurement process, practitioners can identify and use the indicators and metricsthat are most appropriate for their business.

SPM PROCESS OVERVIEW

A variety of performance measurement processes have evolved in industry practice. These processesgenerally consist of a series of steps that can be grouped into three phases: Plan, Implement, and Review(Baker, 1999). Companies have applied these steps to track a broad range of activities, includingenvironmental management, facility operations, and technology development programs. Based uponrecent work sponsored by the Electric Power Research Institute (EPRI), Battelle has codified generallyaccepted industry practices into the process model shown in Figure 2. The process involves a three-phase

structure ofPlan,ImplementandReview, which is analogous to the ISO 14031 framework forEnvironmental Performance Evaluation. While the general model is universal, the actual sequencing andimplementation of these steps will vary from company to company due to their differing businessstrategies, environmental impacts, and organizational structures.

ContinuousImprovement

1. Develop

Sustainability

Policy2. Identify

Major Aspects

3. Establish

Objectives

4. Select

Indicators

& Metrics

10.Gather

Feedback

6. Obtain

Support

7. Integrate

with Business

Processes

5. DetermineTargets

8. Track &

Report

Performance

11. Review

Planning

Steps

9. Improve

Performance

Plan Phase

Implement Phase

Review Phase


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determine the scope of measurement, which can be as narrow as a specific product, or as broad as theentire enterprise. The Plan phase steps are

Step 1. Develop Sustainability Policy. If it does not already exist, the company must articulate asustainability policy. This statement generally provides the basis for a strategic transformation ofthe business from a linear model of development to a more holistic, cyclical model.

Step 2.Identify Major Aspects. The second step answers the question, What aspects of ourperformance are most important? The aspects of sustainability are often expressed in terms ofthe categories illustrated in Figure 1.

Step 3.Establish Objectives. For a subset of the aspects identified in Step 2, the company must establish

improvement objectives. It is advisable to select a small number of key aspects that provide thebasis for sustainability objectives.

Step 4.Select Indicators & Metrics. The most challenging step is selecting sustainability indicators thatcorrespond to the stated objectives. To select appropriate performance indicators, a companymust assess how each of the major activities within the scope of measurement (e.g., Product useby customers) contributes to the selected aspects (e.g., Energy consumption). Quantitative orqualitative metrics must be associated with each selected indicator.

Step 5. Determine Targets. To complete the Plan phase, managers must agree on specific performancetargets that will represent milestones for short and long-term sustainability improvements.

Once a performance indicator framework has been fully designed, the actual process of measuring,tracking and reporting performance begins. To assure an effective measurement framework, it isimportant to understanding the challenges that will likely be encountered during theImplementphase.For instance, many indicators that might be valuable for decisions-making cannot be tracked easily, e.g.,the quantity of greenhouse gases emitted during the life cycle of a product system could be valuableinformation, but quantifying this indicator may be a burdensome exercise. Similarly, quantitativelyassessing the contribution of a product to a consumers health or well-being might be technicallyinfeasible, although qualitatively assessing the relative value of one design option versus another may bea viable approach. The steps in theImplementphase are obtaining support, integrating with otherbusiness processes, tracking and reporting, and initiating improvement efforts.

Step 6.Obtain Support. Following the development and demonstration of the measurement framework,the support of line managers must be obtained for successful implementation.

Step 7.Integrate with Business Processes. The tools and procedures associated with sustainabilitymeasurement need to be integrated with existing systems and processes.

Step 8.Track & Report Performance. The accountable organizations track their progress toward thespecified targets, and report results to senior management and external stakeholders.

Step 9.Improve Performance. Based on the results of performance measurement, organizational teamsfocus on product, process, or operational changes that will improve performance.


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Step 10.Gather Feedback. Soliciting organizational feedback on the measurement process itself willoften reveal drawbacks or gaps in the existing framework.

Step 11. Review Planning Steps. The company should periodically review and refine the selectedaspects, indicators, metrics, and targets of value.

Since most companies are just beginning to address the challenge of measuring sustainability, this paperfocuses on the Plan phase. The intent is to help practitioners develop a framework of indicators, metrics,and targets that will prove most helpful to their company. Therefore, the next section describes the fivesteps of the Plan phase in more detail.

STEP 1: DEVELOP SUSTAINABILITY POLICY

The first step in the Plan phase is developing a sustainability policy, which articulates the companysoverall aims and principles of action with respect to its economic, environmental, and societalperformance. The goal is to create a policy that both supports the business strategy and addresses theconcerns of company stakeholders.

The activities of a company affect multiple stakeholders in different ways. For example, community

groups might be concerned about air emissions or other releases from manufacturing plants, whileemployees have interests ranging from safety to the companys image and stewardship activities. Insurersand lenders may be concerned about environmental costs and potential liabilities, while non-governmental organizations and interest groups are concerned with issues such as labor conditions,greenhouse gas releases and the use of renewable energy sources. Finally, shareholders and investors areinterested in new technology investments, and how sustainability influences creation of economic valuefor the firm.

Although stakeholders are important, the company retains a great deal of discretion regarding the

emphasis of its sustainability initiatives. The companys overall business strategy should influence howthe sustainability policy and the remainder of the SPM process are designed. For example, a companythat has developed a strong brand identity might consider focusing on environmental and social issuesthat could damage their image. As examples, Nike and Levi-Strauss revamped their productresponsibility efforts after receiving negative media coverage related to the activities of major suppliers.

This assessment of the business strategy answers questions such asq How does the company define success?q

What are its specific short and long-term business goals?q How can environmental and societal concerns support or hinder efforts to achieve these goals?q How could SPM results help the company achieve its strategic, tactical, and operational goals?

Synthesizing an understanding of stakeholders concerns with these business strategy issues enables thecreation of an effective sustainability policy.


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pertain to overall company practices. Examples of such company-wide aspects include managementsystems implementation (e.g., ISO 14001), auditing programs, and community development.

Table 1. Aspects of Product Sustainability

Economic Environmental Societal

Direct

Raw material cost

Labor cost

Capital cost

Material Consumption

Product & packaging mass

Useful product lifetime

Hazardous materials used

Quality of Life

Breadth of productavailability

Knowledge enhancement

Employee satisfaction

Potentially Hidden

Recycling revenue

Product disposition cost

Energy Consumption

Life cycle energy

Power use during operation

Peace of Mind

Perceived risk

Complaints

Contingent

Employee injury cost

Customer warranty cost

Local Impacts

Product recyclability

Impact upon local streams

Illness & Disease Reduction

Illnesses avoided

Mortality reduction

Relationship

Loss of goodwill due tocustomer concerns

Business interruption due tostakeholder interventions

Regional Impacts

Smog creation

Acid rain precursors

Biodiversity reduction

Accident & Injury Reduction

Lost time injuries

Reportable releases

Number of incidents

Externalities

Ecosystem productivity loss

Resource depletion

Global Impacts

CO2 emissions

Ozone depletion

Health & Wellness

Nutritional value provided

Food costs

Companies have applied a variety of approaches to perform review and select the aspects that are mostimportant for performance tracking. One recommended approach involves a sequence of three tasks:

1. Identify all aspects of sustainability that are potentially important2. Assess or estimate the magnitude of these aspects using available indicators3. Rank the aspects in terms of relative importance.

Completing the first task requires activities such as conducting brainstorming sessions, reviewingprevious successes and problems, and interviewing stakeholder organizations. Assessing the magnitudeof the sustainability aspects identified requires either quantifying them in terms of resource or valuemetrics, or at least qualitatively rating them on a semantic scale. Finally, the organization is left todetermine the most significant environmental aspects by assessing their relative importance, which can beaccomplished through various group voting techniques. Having determined which aspects are mostsignificant decision makers can then proceed to select the few that merit performance tracking


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q Eliminating usage of toxic materialsq Increasing material utilization ratiosq Improving the ecosystem quality on managed propertiesq Reducing the costs of waste management activitiesq Developing inherently clean and safe technologiesq Increasing employee satisfaction and well-beingq Supporting reduction of poverty in developing countries

As shown by these examples, objectives should address the triple bottom line, and should be orientedtowards either resource conservation or value creation.

STEP 4: SELECT INDICATORS AND METRICS

Once managers have agreed upon the critical objectives, they can proceed to select the performanceindicators and accompanying metrics for their sustainability program. The indicators and metrics help tomake the sustainability policy actionable by providing specific guidance to managers and decision-makers. They also help to demonstrate a tangible commitment to external stakeholders.

Performance indicators

A sustainability performance indicator (SPI) is defined as a quantifiable attribute of an enterprisesactivities that characterizes the potential contributions of these activities toward the enterprisessustainability objectives. Examples of SPIs include air emissions, stakeholder satisfaction ratings,contributions for conserving habitat, and revenues associated with clean technology applications. Notethat it is important to have a balanced set of both leading and lagging indicators; neither are sufficient ontheir own. Examples of lagging and leading sustainability indicators are shown in Figure 3.

No. of eco-efficiency audits

No. of process re-designs

% of employees receiving

sustainability training

Businessprocess

indicators

Sustainabilityoutcome

indicatorseffects

Leading examples

Mass throughput reduction

CO2 emission reduction

Stakeholder satisfaction

Lagging examples

Needed to motivate Needed to provide

feedback


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Several criteria can help managers choose the most appropriate set of performance indicators. Thefollowing selection guidelines have proven useful in a variety of industries.

1. Comprehensive. Does the set of performance indicators address all of theorganizations major aspects and objectives?

2. Controllable. Can the organization, group, manager or employee significantlyinfluence the desired results?

3. Cost-Effective. Can the necessary data be obtained from existing sources orotherwise easily collected?

4. Manageable. Is the set of indicators limited to the minimal number requiredto meet the other criteria?

5. Meaningful. Will individuals throughout the organization and externalstakeholders easily understand the indicators?

6. Robust. Do the indicators address inputs and processes (leading indicators)and outcomes (lagging indicators)?

7. Timely. Can measurement occur with sufficient frequency to enable timely,informed decision-making?

These guidelines support successful implementation by avoiding commonly experienced problems. Forexample, if managers are held accountable for indicators that they cannot significantly influence,resentment or apathy can easily result. Similarly, some personnel evaluation programs have falteredbecause an unwieldy number of indicators made the program overly complex.

Performance Metrics

A performance metric defines a specific means of measuring and tracking a performance indicator. Ingeneral, a variety of metrics can be chosen for any given performance indicator. For instance, potentialmetrics for solid waste include annual volume (tons/year), annual improvement (% reduction), or quantityavoided (tons recycled/year).

Metrics can be classified in several different ways. For example, qualitative metrics are those that rely onsemantic ratings based on observation and judgement, while quantitative metrics are those that rely onempirical data. A second important distinction is between absolute and relative metrics. Absolute metricsare defined with respect to a fixed measurement scale, e.g., total annual hazardous waste generated.

Relative metrics are those that are defined with respect to another metric or variable, e.g., total hazardouswaste per unit of energy produced. Another approach is to use time-based relative metrics, i.e., thosewhich compute the change in a particular quantitative metric over a given time period; for example, thepercent reduction of total hazardous waste from 1992 to 1993."

Finally, several companies are striving to use normalizedmetrics, which measure sustainabilityf i f d i N li i bl bili i b l


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STEP 5: DETERMINE TARGETS

After the indicators and metrics have been identified, the company is ready to commit to short or long

term targets, which establish what level of performance it intends to achieve. In brief, indicatorsdesignate a measurable dimension of performance, metrics provide a means of quantifying the indicators,and targets provide a basis for tracking and assessing improvement.

Companies sometimes choose not to set targets until they have established a baseline performance levelagainst which progress can be measured. A thorough understanding of current capabilities minimizes therisk of over-commitment. However, establishing targets cannot be delayed indefinitely because thesetargets guide decision-making efforts and support stakeholder communication. Managers can evaluate

their options relative to these targets, and stakeholders can better assess a companys performance basedupon their ability to achieve stated targets. The challenge faced by operating managers at a mid-size U.S.electric utility demonstrates the necessity of explicit targets. The company had committed to reduce thenumber of air opacity exceedances; however, the company had not set a target level of performance.Without this guidance, the managers took incremental steps to marginally improve compliance but did notsignificantly alter their established practices because they did not know whether further changes werewarranted. Thus, improvement efforts can flounder unless explicit targets are established.

REMAINING STEPSThe fifth step concludes the Plan phase. Afterwards, companies begin using the set of objectives,indicators, and targets to report and improve their performance. As described at the beginning of thissection, these steps can be organized into an implementation phase and a continuous improvement phase.

BEST PRACTICE COMPANIES

A review of recognized sustainability leaders shows that at least a few companies are applying the SPM

principles and process steps. Since only a small number of companies have publicly stated asustainability policy, other companies will find the experiences of these leading companies valuable asthey progress on the path towards sustainability.

The authors chose five companies for this evaluation: BP Amoco, Collins & Aikman Floorcoverings,Monsanto, The Body Shop, and Volvo. Each of these companies represents a different industry, and hasdemonstrated some innovative approaches to sustainability measurement. The analysis revealed thatthese companies are generally applying both the principles and the process steps to report their

sustainability performance. However, some gaps were also uncovered in each program.

One important caveat is that this study was based exclusively on publicly available data, e.g., thecompanies annual reports and web sites. Since externally published measures nearly always focus oncorporate level performance, this analysis is limited to company-wide performance indicators.


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statements on the company's environmental, animal protection, and social/stakeholder performance, wasrecognized by an award from UNEP (the United Nations Environmental Programme).

BP Amoco is committed making a positive contribution to society. They take environmental precautionsand support community development for areas in which they operate. BP Amoco believes that there isnot a trade-off between financial performance and standards of care, but rather believes that the two areasare mutually reinforcing. Environmental issues considered by BP Amoco include climate change, airquality, and renewable energy technologies.

Collins and Aikman Floorcoverings has demonstrated that environmental sustainability can also yieldadvantages in cost-effectiveness. They are the only carpet manufacturer in the world reclaiming old

carpet and recycling it into new, high-performance carpet. Collins and Aikman understands theimportance of addressing the triple bottom line, and has instituted several programs to improveperformance. They have also formed a sustainability laboratory comprised of outside experts.

Monsanto has embraced sustainable development as part of its core strategy, and a few years ago spunoff its chemical manufacturing operations to focus on life science-based businesses. To create value forstakeholders, Monsanto is designing products that use fewer raw materials, produce less waste, requireless energy, and enable users to be more productive. Moreover, the company hopes to use its productdevelopment expertise to create new markets for sustainable products in agriculture and nutrition.

Volvo is currently working towards becoming a world leader in the transportation equipment industry,based on its performance in the areas of safety, environmental care, and quality.1 The company intends togain competitive advantage and contribute to sustainable development through environmental programsthat are characterized by a holistic view, continuous improvement, technical development, and resourceefficiencies.

APPLYING THE PRINCIPLESThe authors first evaluated whether and how the best practice companies had applied the foursustainability performance measurement principles. As summarized below, each of the evaluatedcompanies is following these guidelines but their approaches vary.

1. Address the dual perspectives of resource consumption and value creation.2. Include economic, environmental, and societal aspects.3. Systematically consider each stage in the product life cycle.

4. Combine leading and lagging performance indicators

RESOURCE AND VALUE

All of the companies reviewed in this paper track and report how their operations consume resources and


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customer satisfaction. In contrast, the environmental reports of most organization focus mainly on theresource side, and more specifically, tend to only report reductions in environmental burdens.

Table 2: Noteworthy Approaches to Measuring Resource and Value

Financial Indicator Environmental Indicator Societal Indicator

Resource Monsanto uses Total CostAccounting to trackenvironmental expenditures.

BP Amoco records thetotalamount of discharges towater, broken down byproduction process.

Collins and Aikmanmeasures employeesatisfaction by trackingsurvey results, retention rate,

and internal promotion rate.

Value Monsanto demonstratedincreased eco-efficiency ofone manufacturingimprovement, whichsaved$6 million in raw materialsusage, decreased wastehandling, and increased

manufacturing capacity.

Volvo tracks how managersincorporate life cycleassessment tools into majorproduct developmentprograms.

The Body Shop reportssocietal indicators includingthe results of EthicalAuditing, ISEA principles,Social Auditing, andCustomer, Employee, andStakeholder Satisfaction

surveys

THE TRIPLE BOTTOM LINE

All of the reviewed companies utilize the triple bottom line to some extent, as shown in Figure 4.

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Indica

torComposition


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However, Figure 4 also reveals important differences and similarities among the types of indicatorspublicly reported by these companies.

All of the companies emphasize environmental performance, as environmental indicators comprisehalf or more of the total indicators reported.

The Body Shop emphasizes societal indicators more than the other companies. The practice ofmeasuring societal performance has reemerged during the past couple years and many companies aregrappling with how to measure this dimension of performance (Zadeket al, 1997).

Financial indicators receive relatively little attention. In some ways, the lack of focus on economicperformance is understandable because these companies are public corporations and thereforeproduce a separate annual financial report with in-depth accounting results. However, this lack of

financial indicators is indicative of the fact that many companies do not adequately convey the costsand benefits of their environmental and sustainability programs. These programs can increaserevenues, lower operating costs, and improve asset utilization, but relatively few companies havedeveloped the capabilities to effectively track and report those benefits.

LIFE CYCLE CONSIDERATION

As with the other principles, all of the companies have considered the impacts of their products or

processes at life cycle stages other than the manufacturing stage. The tools and methods used by the bestpractice companies range from traditional life cycle analyses (LCA) to simpler, more qualitativeapproaches. By considering upstream and downstream activities, these companies are able to leveragetheir design, production, and logistics capabilities to improve the overall impacts associated with theirproducts, services, and operations.

Table 3. Approaches to Life Cycle Consideration

Company

Life Cycle

Perspective Description

The BodyShop

Yes

Has established LCA scheme that consists of six sections: origins offeedstocks, methods of extraction and/or cultivation, processing, resourceconsumption, waste generation, and distribution. One effort analyzed thecompanys forecasting and planning processes to reduce the waste due toobsolete and excess inventory.

BP Amoco YesHas environmental programs to reduce habitat loss from upstreamdevelopment activities. Since the implementation of these programs,

habitat loss has decreased 70%.

Collins andAikman

YesThrough a five-year effort, created a carpet backing system that is madewith 100 percent reclaimed content. This flooring product is the first thatis recyclable back into itself in a closed-loop fashion.

Has integrated life cycle considerations into technology developmentprograms For example working with the U S Dept of Agriculture to


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LEADING AND LAGGING INDICATORS

All of the companies report the use of both leading and lagging indicators. Since leading indicators tend

to be internally-focused, it is not surprising that the majority of externally-reported indicators were in thelagging (i.e., outcome-oriented) category. Some particularly effective examples of combining leading andlagging indicators are presented in Table 4. These examples are a good illustration of how businessactivities can be linked to sustainability results. For example, Volvos leading indicator is the number ofR&D programs addressing material recycling, while related lagging indicators include the total quantityof material and number of parts recycled.

Table 4. Effective Use of Leading and Lagging Sustainability Indicators

CompanyBusiness

Activi tiesLeading Indicators

(Metrics)Sustainability

ResultsLagging Indicators

(Metrics)

The BodyShop

EmployeeSatisfaction

Survey (scores)Lower

absenteeismRate (%)

BP AmocoRisk assessment& management

Programs (scores)Enhanced

public opinionSurvey (scores)

Collins andAikman

Water recyclingprogram

Status (qualitative) Decreasedwater use

Rate (gal/yd2 carpet)

Monsanto Audits Program (scores)Improved

complianceFines ($ and #)

VolvoLife Cycle

AssessmentsPrograms (#)

Increasedrecycling

Quantity (kg)Items (#)

In summary, each of the best practice companies is, to varying degrees, implementing each ofsustainability measurement principles. Moreover, some of their measurement practices are particularlynoteworthy. For companies beginning sustainability programs, these examples demonstrate how they cantackle the unique challenges of measuring and reporting sustainability performance.

SPM PROCESS IMPLEMENTATION

The next part of the analysis addressed how companies actually developed their performance

measurement programs. Because this study was based on publicly available information, the specific pathundertaken by each company was not evaluated. Rather, the analysis focused on whether or not thecompanies had completed each of the process steps shown in Figure 2 (page 5).

STEP 1: DEVELOP SUSTAINABILITY POLICY


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The Body Shop

is dedicated to the pursuit of social and environmental change. It has aholistic mission statement, embracing human and civil rights, ecological sustainability

and animal welfare.

BP Amocos goals are simply stated- no accidents, no harm to people, and no damage

to the environment. We will continue to drive down the environmental and health impact

of our operations by reducing waste, emissions, and discharges, and using energy

efficiently. We will produce quality products that can used safely by our customers.

Collins and Aikman believes that business can and must play a leadership role intransitioning from exploitive to sustainable manufacturing systems so that people,

business, and the environment can prosper.

The conditions of our world- the stresses being placed on natural and social systemsthat sustain us- eventually will require all of us to solve the sustainable development

puzzle. Monsanto is determined to be a leader among businesses in this effort. Wecommitted to this course several years ago, and we think our scientific and technological

skills can provide us special opportunities to have an impact.

Environmental Care is a Volvo Core Value. Volvo is to be ranked as a leader in termsof Environmental Care among the worlds top producers of automotive and transport

products, equipment, and systems. Volvos environmental programs shall be

characterized by a holistic view, continuous improvement, technical development, and

resource efficiency. Volvo shall, by these means, gain competitive advantage and

contribute to a sustainable development.

STEP 2: IDENTIFY MAJORASPECTS

Before deciding which indicators to track, each company underwent a process of evaluating how itsproducts, processes, and business activities could and did affect the environment. However, their processfor determining which interactions were the most significant was not publicly disclosed. Severalimportant findings emerged and are shown in Table 5,

q Only two companies (BP Amoco and Collins &Aikman) track the revenues associated with theirsustainability efforts.

q While all of the companies are reporting at least one dimension of economic performance, noneare currently tackling the complex issue of measuring the externalities associated with theircompany.All f h i ki id i f i l i di i f


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Table 5: Sustainability Aspects Examined2

AspectThe Body

Shop BP AmocoCollins and

Aikman Monsanto Volvo

Direct Solar PowerRevenues

Green ProductRevenue

EnvironmentalR&D

HiddenEnv. Costs,

StockDisposals

Env. Costs Env. Costs

ContingentEnv.

Disasters,Fines

Fines andSuperfund Sites

Relationship CustomerSatisfaction

PublicConcern

Economic

Externality

MaterialWater

Recycling,

LCA

WaterRecycling

Water andWaste

Recycling

WaterRecycling,

LCA

WaterRecycling,

LCA

Energy

Energy,Fuel,

RenewableEnergy

Energy, SolarEnergy.

Clean Fuel

Energy,Non-fossil

Fuels

Energy,Fuel

Energy,Fuel

LocalEffluent

Discharges,Landfill, Spills

Discharges,Oil Spills,

Habitat Loss,Hazardous

Waste

Dyeing WastesHazardous

Waste,Spills

HazardousWaste

Regional Incineration

HydrocarbonEmissions,Injection

Wells

Air EmissionsAir Emissions,Injection Wells

NOx, SO2,Solvents

Env

ironmental

Global CO2Greenhouse

Gases,CO2

CO2 CO2CO2, CFC11,Greenhouse

Gas

Quality ofLife

EmployeeCustomer

EmployeeSurveys,

Retention,Promotion

Assessments,Teams

Surveys

Peace ofMind

Social Audit

cietal


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While the lists of indicators summarized in Table 5 are fairly extensive, they are not complete. Forexample, the table does not show organizational indicators such as audit scores, management systemcertifications, and risk management programs. These process indicators are equally important and oftenlead to several dimensions of improved performance.

One final point is that nearly all of the sustainability aspects reported by the companies had correspondingindicators and metrics for tracking performance (see Appendix for details). This seemingly obviousconnection is often not made - many companies have identified important environmental and societalaspects, but have not developed the means to measure their performance relative to those aspects.

STEP

3: ESTABLISH

OBJECTIVES

Each of the companies completed the third step of establishing improvement objectives. While all of thecompanies had one or more environmental objectives, some lacked societal and financial objectives.Examples from each company are listed in Table 6 and a complete list of objectives is provided in theAppendix.

As with Step 2, a positive finding was that performance indicators supported each stated objective. Thus,the clich, What gets measured, gets managed, applies equally well to sustainability objectives. Theimprovement path for these companies includes stating what they intend to achieve and having a specificmeans for assessing their progress towards these goals.

Table 6. Triple Bottom Line Objectives

Company Financial ObjectiveEnvironmentalObjective Societal Objective

The Body

Shop

To increase the

proportion of recycledplastic accessories

To follow social and

ethical best practices

To provide learning anddevelopment programs

BP Amoco To reduce greenhousegas emissions

To reduce fatal accidentsin operations

Collins andAikman

To make the industrysfirst green competitive

product

To increase overallmaterials efficiency

Monsanto To create value whilereducing waste

To improve soil quality To enable better health,better nutrition,improved quality of life

Volvo To track environmentally To take account of To involve all employees


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STEP 4: SELECT INDICATORS AND METRICS

Once a company understands its important aspects and has established sustainability objectives, the

decision-makers can specify indicators and metrics for tracking performance. Of course, all of thecompanies reported indicators and metrics, but additionally each of them have a few metrics that are insome way distinct from the ones commonly used by industry.

As shown in Table 7, these innovative metrics often are able to convey the companys implementation ofits sustainability policy more effectively than conventional metrics. For example, a unique feature ofMonsantos program is its approach to measuring the companys ability to conserve habitat. Mostcompanies use annual contributions to conservation organizations as their indicator for wildlife habitat

preservation. Instead of using this leading indicator, Monsanto quantifies the increase in yield fromusing their seeds. Based on the yield improvement, the company reports the amount of land that can beprotected rather than used for farmland.

Table 7. Examples of Innovative Performance Metrics

Indicator Conventional Metric Innovative Metric

Wasteproduction

Tons/year % compared to industry benchmark per unit of product(Collins and Aikman)

Energy kWh per annum Relative reduction and % reduction (Volvo)

Wildlifehabitat

Amount of moneydonated to conservationorganizations

% increase in yield from seeds(reducing the need for more farmland)(Monsanto)

Educationprograms # of facilities withprograms % promoted from within company (Collins andAikman)

Stakeholderperception

Scores on surveys Scores on Ethical, Social, Customer, Employee, andShareholder Audits(The Body Shop)

Employeesatisfaction

Surveys Results of frequent employee surveys, with scorescompared to external norms.(BP Amoco)

While using innovative indicators and metrics might be the preferred choice for company decision-makers, many external stakeholders are advocating that companies standardize their sustainabilityperformance reporting process. Unlike financial reports, sustainability results generally cannot be easilycompared between companies or industries As shown in Table 8 comparing the results of the best


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energy consumed per unit of output, are widely applicable. However, indicators for material intensity,such as materials consumed per unit of output, are more relevant in some industry sectors than others.Additionally, the amount of effort required to measure some of the standard indicators was sometimes

considerably more extensive than previous reporting efforts (NTREE, 1999).

Table 8: Comparing Sustainability Performance

Indicator Metric #1 Metric #2 Metric #3 Metric #4

CO2

Emissions

Company total

Tons

(Body Shop)

Company total

Billion pounds

(Monsanto)

Total from BP and

equity partnersMillion tonnes(BP Amoco)

Normalized amount

Lbs/yd2

of carpet(Collins & Aikman)

EnergyConsumption

Relative reduction,%(Volvo, Collinsand Aikman)

Normalized use,kWh per 1,000units(Body Shop)

Total,million gigajoules

(Monsanto)

STEP 5: DETERMINE TARGETS

The final step in the performance measurement process is developing a set of targets that states thedesired level of improvement. Sometimes, performance measurement programs falter because of a lackof clear targets. Targets enable external stakeholders to assess the companys progress, and provide clearguideposts for internal decision-makers. As shown in Table 9, the best practice companies have at leastsome specific targets but gaps exist. The data visualization methods of BP Amoco and Volvo are

noteworthy because they clearly communicate the level of achievement.

Table 9. Sustainability Targets

Company Set Targets? Comments

The BodyShop Some The Body Shop has stated explicit targets for several of its indicators

BP Amoco Some Progress towards selected targets is shown graphically

Collins andAikman

Some Targets for energy usage, water usage, air emissions, and waste arepublished


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REMAINING STEPS

Much of the specific information about how the companies implement and improve their performancemeasurement process is not publicly available; however, two points are observable and worth noting. Thefirst point concerns how companies report their performance (implementation). Each of the best practicecompanies reports its current and historical levels of performance so that external and internalstakeholders clearly understand how much the company has improved (see Table 10).

Table 10. Use of Trend Data

Company Trends Comments

The Body Shop Yes Since 1991

BP Amoco Yes Since 1993

Collins and Aikman Yes Since 1993

Monsanto Yes For on-site, air, injection, POTW, and offsite releases and

chemical spills, from 1995-1997

Volvo Yes Some trends graphed since 1989, though most from 1995 topresent

The second important point is relative to the companies continuous improvement efforts. To support thiseffort, three of the best practice companies externally report their performance relative to otherorganizations. As with the trend data, these benchmarks help stakeholders evaluate how the company is

progressing (see Table 11).

Table 11. Sustainability Benchmarking Practices

Company Benchmark? Comments

The Body Shop Yes Reports energy efficiency relative to several benchmarks,

including emissions per unit of GDP in the UKBP Amoco Yes Provides benchmark data for Social and Safety Reporting

Collins and Aikman Yes Reports performance relative to other companies in their market sector

Monsanto No If conducted, not publicly reported


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SUMMARY OF FINDINGS

Some important lessons can be learned from the companies that are already tackling the challenge ofmeasuring and reporting their path towards sustainability. A review of publicly available data shows thatThe Body Shop, BP Amoco, Collins & Aikman Floorcovering, Monsanto, and Volvo are applying thefour principles and following most of the measurement steps. For example, all of these companies:

q Measure and report the three dimensions of sustainability: economic, environmental, andsocietal.

q Report their efforts to conserve resources and create value.q Consider the entire life cycle of their products and services, rather than concentrating

exclusively on their core operations.q Track both leading and lagging indicators.q Have a clearly articulated sustainability policy.q State how company activities can hinder or enable sustainability, and how the company

intends to improve performanceq Measure and report innovative metrics that are relevant to their organizations program

While each of these companies measurement programs is commendable, some important differencesexist.

q As expected, the choice of measures of value generated by company activities varies widely;for example, Collins & Aikman measures air quality improvement due to VOC reduction,while Monsanto measures soil conservation due to improved agricultural practices.

q Only one company, The Body Shop, has applied an extensive stakeholder auditing process tomeasure societal performance and is attempting to quantify many societal indicators byscoring Stakeholder Perception.

q The specific indicators used by companies vary considerably and thus the measurementresults are not directly comparable.

q Only two companies, BP Amoco and Collins & Aikman, publicly track the revenuesassociated with their sustainability efforts.

q One company, Monsanto, states few targets for company-wide future performance because ofsignificant variations between the types of value created and wastes generated by the differentbusiness units.

q Three of the companies benchmark their progress relative to competing firms (se Table 11).

Finally, one of the dominant themes that emerges from these similarities and differences is the continuedfocus of sustainability measurement on the environmental dimension. This focus is a legacy of historicalpractices, and continues to occupy most of the attention of external stakeholders. As mentioned earlier,the practice of societal reporting is relatively new and being led by a few path breaking companies,including The Body Shop.


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THE STRATEGIC IMPORTANCE OF SUSTAINABILITY MEASUREMENT

The newfound awareness of sustainability within the business community signals an emerging synthesis

between traditional business values and the concepts of environmental and social responsibility.However, for sustainability to become integrated into company strategies and operations, a systematicperformance measurement process is essential. To support this transformation, this paper has presented aset of principles, a systematic process, and a number of best practice examples. This research hasdemonstrated that:

1. SPM is a rapidly evolving practice2. SPM is valuable for demonstrating progress to both internal and external stakeholders

3. Leading companies are already addressing many of the challenges associated with measuring andreporting economic, environmental, and societal performance4. More importantly, SPM helps company employees make decisions that reduce resource

consumption while creating value across throughout their supply chain

The sustainability performance measurement principles, process, and best practices outlined in this papercan help companies as they take on the complex task of moving from resource intensive operations tomore eco-efficient, value-maximizing organizations. SPM practices will play an increasingly importantrole as environmental and societal considerations begin to permeate business activities. Already,

companies in the automotive, chemical, energy, food production, packaging, and other industries areusing this type of information to improve their decision-making efforts. For example,

q Designers assess how the sustainability profiles of competing product concepts compareq Marketers analyze how their product or service satisfy their customers by lowering the cost of

ownership and creating tangible and less tangible benefitsq Production managers apply life cycle costing methods to quantify hidden environmental costsq Strategic planners assess the consequences of environmentally driven scenarios.

The need for sustainability awareness is becoming an imperative, as global pressures intensify. Theworld population will soon surpass six billion, while concerns about climate, water, land, and habitatpreservation continue to mount. Rapidly developing economies around the world are creating growingmarkets for goods and services. These conditions are creating opportunities for companies tofundamentally change how they engage suppliers, operate facilities, and service customers. In addition tonew technologies, new production methods, and new management systems, these companies will need anew language to communicate their performance goals and progress. A well conceived sustainabilityperformance measurement process will respond to that final, fundamental need.


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BIBLIOGRAPHY

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Bennett, Martin, and James, Peter. Sustainable Measures: Evaluation and Reporting of Environmentaland Social Performance. Greenleaf, Sheffield, UK. 1999.

The Body Shop web site. The Values Report, 1997. http://www.the-body-shop.com/aboutus/values.html,(June 23, 1999).

BP Amoco web site,Environmental and Safety Report, 1998. http://www.bpamoco.com/reports/enviro/,(June 21, 1999).

BP Amoco web site,Health, Safety, and Environmental Data, 1998.http://www.bpamoco.com/reports/enviro/, (June 22, 1999).

Bridger, Mac. Carpet In/ Carpet Out: The Continuing Journey at Collins and Aikman. IndustrialEcology IV, The Future 500 Conference, April 29, 1999.

Canadian Institute of Chartered Accountants. Reporting on Environmental Performance. CICA, Toronto.1994.

Collins and Aikman, Catalyst: Elements of Change, 1998.

Collins and Aikman web site,Environmental Statement, 1999.http://www.collinsandaikman.com/environmental/index.html, (June 24, 1999).

Collins and Aikman, Practical VisionInteriors and Sources Magazine, 1998.

Dixon, Frank, Environmental Leaders Achieve Superior Stock Market Performance in the ElectricUtility Sector, The Annual Public Utility Reporters Environmental Conference, New Orleans,

LA.May 25, 1999.EPRI. Environmental Performance Measurement: Design, Implementation, and Review Guidance for the

Utility Industry. TR-111354. 1998.

EPRI. Environmental Performance Measurement: A Framework for the Utility Industry. TR-106078.1996.

Epstein, Mark J.Measuring Corporate Environmental Performance: Best Practices for Costing andManaging an Effective Environmental Strategy. Institute of Management Accountants,

Foundation for Applied Research. Irwin, Chicago, IL. 1996.Fava, James, and Smith, Joyce.Integrating Financial and Environmental Information for Better

Decision Making. Journal of Industrial Ecology. Winter 1998.

Fiksel, Joseph; McDaniel, Jeff; and Spitzley, David. Measuring Product Sustainability. The Journalof Sustainable Product Design. 1998.
http://www.the-body-shop.com/aboutus/values.htmlhttp://www.the-body-shop.com/aboutus/values.htmlhttp://www.bpamoco.com/reports/enviro/http://www.bpamoco.com/reports/enviro/http://www.bpamoco.com/reports/enviro/http://www.bpamoco.com/reports/enviro/http://www.collinsandaikman.com/environmental/index.htmlhttp://www.collinsandaikman.com/environmental/index.htmlhttp://www.collinsandaikman.com/environmental/index.htmlhttp://www.bpamoco.com/reports/enviro/http://www.bpamoco.com/reports/enviro/http://www.the-body-shop.com/aboutus/values.html


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Indicators Task Force. A Report on Canada's Progress Towards a National Set of EnvironmentalIndicators. Environment Canada, Ottawa. 1991.

James, Peter. The Sustainability Cycle: A New Tool for Product Development and Design.Journal forSustainable Product Design. July 1997.

Kiernan, Matthew, and Martin, James, Wake-Up Call for Fiduciaries: Eco-Efficiency DrivesShareholder Value, Todays Corporate Investor. December 1998.

Metcalf, K.; Williams, P.; Minter, J.; and Hobson, C. Environmental Performance Indicators forEnhancing Environmental Management. Total Quality Environmental Management. Summer,1996.

Monsanto web site, Sustainable Development Report, 1997.http://www.monsanto.com/monsanto/about/sustainability/default.htm, (June 15, 1999).

National Round Table on the Environment and the Economy.Measuring Eco-efficiency in Business:Feasibility of a Core Set of Indicators. Renouf Publishing, Ottawa, Ontario. 1999.

OECD. Towards Sustainable Development - Environmental Indicators. OECD Code 971998031P1. July1998.

Ranganathan, Janet, and Ditz, Daryl. Measuring Up: Toward a Common Framework for TrackingCorporate Environmental Performance. WRI, Washington, DC. 1997.

Sustainable Systems Associates Ltd. Applying Sustainable Development to Business: Realizing theBenefits. Queen's Printer for Ontario, Ontario, Canada. May, 1998.

Volvo web site,Environmental Report, 1998. http://www.volvo.com/environment/index.htm, (June 17,1999).

Zadek, Simon; Pruzan, Peter; and Evans, Richard. Building Corporate AccountAbility: EmergingPractices in Social and Ethical Accounting, Auditing and Reporting. Earthscan, London. 1997.

1999 G i f d k C f
http://www.monsanto.com/monsanto/about/sustainability/default.htmhttp://www.monsanto.com/monsanto/about/sustainability/default.htmhttp://www.volvo.com/environment/index.htmhttp://www.volvo.com/environment/index.htmhttp://www.volvo.com/environment/index.htmhttp://www.monsanto.com/monsanto/about/sustainability/default.htm


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A1

APPENDIX SUMMARIES OF SPM PROGRAMS

THE BODY SHOP

Aspec t Object ive Ind icatorLeading/Lagging Metric Target

AirConserve natural resources andcontrol air pollution

CO2 emissions Lagging Compensation for CO2

emissions via tree planting

Tons emitted

Compensate for all CO2 emissionsthrough tree planting or otherinitiatives by the year 2010

Air freight Leading % reductionBy 2000, reduce proportion of exportfreight going by air to no more than2.5% of total export freight

Electricityconsumption

Lagging % reduction kWh

By the year 2000, all UK shops willreduce energy use to 35,000 kWh perannum

Gas consumption Lagging

kWh Total use per 1,000 packs

distributed from warehouse

% increase in efficiency

Electricity generationby renewable sources

Lagging % increase

Energy Conserve energy resources

Fuel use Lagging Liters

Water consumption Lagging m3

m3 per 1,000 unit packsdistributed from warehouse

Effluent treated Lagging m

3

Monthly burden to sewer

Water

Conserve water and controlpollution

Improve utility modeling

Discharges to water Lagging Number ecological waste

water treatment systemsestablished

Ecological wastewater treatmentsystems will be established at UK andUS sites by the year 2000

Investigate transfer of treated waterto surface water instead of sewers in1998.

1999 G i f I d t N t k C f


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A2

THE BODY SHOP (continued)

Aspec t Object ive Ind icator

Leading/

Lagging Metric Target

EMAS certification Leading #sites certifiedBy August 1998, all principal UKoperating sites will be audited andverified to EMAS standards.

Recycling Lagging Tons of waste recycled (by

material)

Disposal to landfill Lagging Tons

Disposal incinerated Lagging Tons

By 2000, all solid waste arising fromwaste water treatment atWatersmead will be utilized on-sitethrough ecological treatmentprocesses

Waste

Dispose waste in the safestpossible way

Increase proportion of recycledplastic accessories

Increase recovery of plastic

Increase in-store refill

Implement a system formonitoring waste produced on

behalf of The Body Shop by thirdparty manufacturers Spills Lagging Numbers

Social audit process Leading Scores

Ethical audit Leading Scores

Supplierenvironmental rating

Leading Scores

Customer satisfaction Lagging Scores

Employee satisfaction Leading Scores

Shareholdersatisfaction

Leading Scores

Absences Lagging Rate per 1,000 employees

Socialresp

onsibility

Follow social and ethical bestpractices

Improve environmental rating ofmaterials suppliers

Continue dialogue withemployees

Create equal opportunities

Provide learning anddevelopment programs

Accidents Lagging Rates per 1,000 employees

Audits Leading Scores

Environmentalexpenditure

Leading $ (not in place as of 1998)By 1998, the Body Shop willinvestigate the implementation of afull cost accounting system

LCA Leading Number of assessments % decrease in raw

materials purchasedEnvironmental

ManagementPerformance

Conserving natural resourcesand controlling pollution

To become a sustainablebusiness

Implement best practices inenvironmental management

Stock disposals Lagging % of costAnnual stock disposals will be nomore than 2% of the cost of ex-

warehouse sales by end of 1997

1999 Greening of Industry Network Conference


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A3

BP AMOCO

Aspec t Object ive Ind icato rLeading/Lagging Metric Target

On-siteemissions

Lagging

Tons/year Emissions per unit of

throughput

% reduction

CO2 emissions Lagging Emissions per unit of

throughput

Tons/year,

Establish baselines of emissions

Create short and long term targets forimprovement

Hydrocarbonemissions

Lagging Emissions per unit of

throughput

Tons/year

Lower annual hydrocarbon emissions165,000 tons by 2001

Air

Reduce greenhouse gas emissions

Achieve year-on-year reduction of air

emissions per unit of throughput

Reduce hydrocarbon emissions

Greenhouse gasemissions

Lagging Emissions per unit of

throughput

Tons/yearEnergyconsumption

Lagging

Solar energyproduction

Lagging

Megawatts % increase $ of solar energy revenue

Increase solar turnover to 1 billion by 2007

Fuel production Lagging Million tonsBecome an unleaded company in the nextthree years

EnergyUse

Clean fuelprogram

Leading CitiesTake clean fuel program into more than 40cities worldwide over the next two years

Waterconsumption

Lagging

WaterAchieve year-on-year reduction ofwater consumption and discharges

per unit of throughput Discharges towater

Lagging Tons/year by process

Environmentaldisasters

Lagging Number

Habitat loss Lagging % reduction Number of programsLand

Environmentalconservationprograms

Leading Financial contributions for

protecting habitat

% reduction in habitat loss



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A4

BP AMOCO (continued)


Hazardous waste Lagging

Recycling Lagging

WasteAchieve year-on-year improvementby reducing sum of waste emissionsper unit of throughput

Releases toinjection wells

Lagging

Peoplemanagementappraisals Leading

Scores Feedback

Socialinvestment

leading #of projects

Days away fromwork

Lagging Days per 200,000 hours % improvement

Employeesatisfaction Leading

Scores FeedbackSo

cialResponsibility

Create trust and mutual advantage inall relationships

Reduce fatal accidents in operations

Peer reviews andself-assessments

Leading Scores #performed


Risk assessmentand managementprograms

Leading ScoresBecome ISO 140001 certified at major sitesand publish verified site improvementreports

Environmentaloperating costs

Lagging $ millions

Public opinionsurveys

Lagging Scores

Fines Lagging Number CostE

nvironmentalManagement

Performance

Drive down environmental and healthimpacts of operations

Oil spills Lagging Number Gallons spilled



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A5

COLLINS AND AIKMAN FLOORCOVERINGS

Aspec t Object ive Ind icatorLeading/Lagging Metric Target

Decrease total air emissionsTotal airemissions

Lagging Lbs/yd2of product % reduction

Realize a 90% overall reduction in total airemissions during the years 1993 to 1999

Decrease green house gasemissions

CO2 emissions Lagging Lbs/yd2of product % reduction Comparison to industry average

Achieve a 37% overall reduction in CO2emissions during the years 1993 to 1999Air

Reduce problems associated

with VOC emissions

Total VOC

emissionsLagging

% reduction

Mg/m

2*hr

Comparison to industry average

Lower energy consumption Energy usage Lagging mBTU/yd

2of product

% reduction

Achieve a 37% overall decrease innormalized energy use during the years1993 to 1999

Energy

Employ non-fossil fuel energysources

Water usage Lagging Gal/yd

2of product

% reduction

Comparison to industry average

Realize a 45% overall reduction innormalized water use during the years 1993

to 1999

Water recyclingprogram

LeadingWater Decrease water consumption

Solution dyedyarn usage

Lagging Percentage

Waste reduction Lagging Lbs/yd

2of product

% reduction

Achieve a 82% overall reduction innormalized waste generation during theyears 1993 to 1999Material

utilizationIncrease overall materialsefficiency

Closed loop-recycling Lagging Comparison to industry average

EmployeeSurveys

Leading Scores Comparison to top-ranked

companies

Retention rate Lagging Comparison to industry average

SocialResponsibility

Promotions fromwithin

Lagging Percentage

Financial Become a sustainable companyCompetitivenessof green products

Lagging Revenues from green products



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A6

MONSANTO

Aspect Object ive Indicator

Leading/

Lagging Metric TargetOn-siteemissions

Lagging Thousand poundsAir Improve air quality

CO2 emissions Lagging Billion pounds

Energyconsumption

Lagging Million giga-joulesEnergy Reduce energy use

Fuelconsumption

Lagging % reduction

Water

Improve water quality

Reduce water use

Waterconsumption Lagging Liters saved per hour

Land

Improve soil quality

Make land as productive as possible;feeding people, protecting habitat

Soil conservation Lagging Billion tons lost

Hazardous waste Lagging % reduction

Recycling Lagging Waste to product

Tons

Releases toinjection wells Lagging Thousand poundsWa

ste

Create value /reduce waste

Increasing efficiency throughout the life-cycle of products

LCA Leading

Reduction in waste

Reduction in disposal costs

Reduction in footprint

Complete streamlined LCAevaluations for at least three majorproduct uses in 1998

Socialresponsibilityassessment

Leading #of activities

feasibility of activities

Social

responsibility

Enable better health, better nutrition,improved quality of life

Support enhanced personal productivity Medicinal drugaccess programs Lagging #served



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g yBest Practice Proceedings

A7

MONSANTO (continued)



Sustainabledevelopment teams

Leading Percent participation

Information sharingnetworks

Leading Success stories

Fines Lagging Number

Amount ($)

Environmentalexpenditures

Lagging Total costs ($)

Chemical spills Lagging number

Responsibility forsuperfund sites

Lagging Number of sites

EnvironmentalManagemen

tPerformance

Decrease product impact

Minimize numbers of incidents

Technology programs Lagging % increase in crop yields



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Best Practice Proceedings

A8

VOLVO

Aspec t Object ives Ind icatorsLeading/Lagging Metrics Targets

Total solventemissions

Lagging

% reduction Emissions/net sales Tons

In 1998, achieved target of a 25% solvent emissions reduction

SO2 equivalents Lagging TonsOver the next five years, atmospheric emissions attributable to theGroups transport operations will decrease by 5% per ton-kilometer

NOX emissions Lagging % reduction Emissions/net sales Tons

In 1998, achieved 5% reduction of NOx emissions

Greenhousegas emissions

Lagging Tons

CFC11equivalents

Lagging Kg

Air

Minimize thequantity of airemissions

Reduce totalatmosphericemissions

attributable totransportoperations

Lower contributionto greenhouseeffect of CO2emissions frombuses

CO2 emissionsduring usephase

Lagging % reduction Emissions per ton-

kilometer per vehicle

Compared with 1995, the contribution to the greenhouse effect of CO2emissions from buses sold in 1999 shall be 11% lower in the case of citybuses, and 4% lower in the case of intercity buses and tourist coaches

Energyconsumption

Lagging

% reduction Consumption/ net

sales

Tons

In 1998, achieved target of a 10% reduction in energy consumption

Energy

Minimize the

energy consumedby our products

Become a worldleader in thedevelopment oflow-emission gasturbines (smallerthan 10 MW)

Fuelconsumption

Lagging % reduction

Fuel consumption of new cars sold in the EU in 2008 shall be 25% lowerthan in 1995

The average fuel consumption of engines complying with Euro2 standardshall be 5% lower in 1999 than in 1995.

WaterLower water

consumption

Water

consumptionLagging

% reduction

Consumption/netsales

Water consumption shall be reduced by 30% over a five-year period.

In 1998, achieved target of a 10% water consumption reduction



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A9

VOLVO (continued)

Aspec t Object ives Ind icato rsLeading/Lagging Metrics Targets

Noise Lagging dB(A)Reduce the noise level of Volvo wheel loaders by 4-5 dB(A)from present levels by the year 2002

Hazardouswaste

Lagging Tons

Lagging Kg #of items recycled

Create dismantling instructions that simplify the recycling ofthe Volvo 5000 and 7000 bus models in 1999

Reduce waste to landfill by 10%

Improve control of chemicals

Minimize consumption of rawmaterials and production of wasteand residual products

Facilitate safe waste management Recycling

Leading recycling researchWaste

Address complete product life cycle,including energy and raw materialconsumption, and waste and by-products generation

Develop intelligent transport solutionswith low environmental impact

LCA Leading #programsIn 1998, achieved target of integrating LCA in ten majorproduct development projects

Socia

l

Responsibility

EmployeeSurveys

Leading

Scores Comparison to top-

ranked companies

1999 Greening of Industry Network Conferencei di


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A10

VOLVO (continued)

Aspec t Object ives Ind icato rsLeading/Lagging Metrics Targets

Audits Leading Scores Number of audits

Complete environmental audits in all majority-ownedproduction plants

Taking a leading position regardingenvironmental standards, whereverwe operate

Ensuring a similar degree ofenvironmental concern is exercisedby our working partners

Europeanenvironmentalcertifications

Leading Number of products

and plants withcertifications

By 2001, marine and industrial equipment will be inaccordance with EU standards

Parts of truck product range shall comply with Euro3

Involve all employeesEnv. trainingprograms

Leading #employees who

have completedprogram

Establish and implement global communication program in1999

Enhance the skills of its personnel within its corporatestructure in Sweden no later than 1999

Develop new services for electronic information processingand a globally integrated infrastructure in 1999

Formulate, communicate and monitorclearly-defined goals

Environmentalmanagementprograms

Leading

#of plants andunits that haveimplemented

programs

Establish environmental management systems in 40 of theGroups units

Ensure that 75% of all Volvo employees are satisfied with

the companys environmental management program.

Env. Relatedinvestment

Lagging

Environment-related investmentas % of totalinvestment

EnvironmentalManagementPerform

ance

Track variation of environment-related investment and productdevelopment costs

Env. RelatedR&D

lagging

Environment-related R&D costsas % of total R&Dcosts

Sustainability Measurement GIN

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