Strategic Sustainability

The State of the Art in Corporate Environmental Management Systems

Robert Sroufe, Sarkis Joseph

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781874719618
• eBook ISBN: 9781351281508
• Topic: Business
• Subtopic: Business General
• Index: Business

The last decade has seen increasing awareness of the importance of understanding corporate environmental management systems (EMSs) and their relationships with sustainability, competitiveness and institutional practice. It is now assumed that most large companies have some version of an EMS in place with systems ranging from informal policies and practices to formalised third-party certified systems that are widely publicized by companies and are now integral to their strategic direction. No matter what level and type of system a firm chooses, both practitioners and researchers wish to examine and better understand the extent to which these systems are cross-functional, how they impact on performance evaluation, their capability to monitor supply chains and the life-cycles of products and services and, most importantly, whether these systems actually make a contribution to better environmental performance.  This book provides intriguing insights into strategic and sustainable EMSs. It provides clear evidence of benefits that should exceed the costs (tangible and otherwise), and help practitioners understand the attributes of well-developed and strategically focused EMSs. It also demonstrates the link to performance measures such as reputation, improved position in the marketplace, cost, quality, waste reduction and numerous sustainable development-based metrics and issues. The comprehensive scope of topics spans several industries and provides environmental systems insight involving sustainable management systems, strategic and operational impacts of environmental systems, cross-country comparisons of EMS design processes and results, product-based environmental systems, EMS impacts at innovative organisations and environmental systems integration within specific industries.  The book is split into three sections. First, the book covers the broad issues of planning and designing an EMS and includes topics such as performance evaluation, comparisons between multinational environmental systems, sustainable development and links between already established quality systems and an EMS. The second section focuses on EMS implementation and operation and incorporates some corporate or industry-specific case studies. The third and final category of the book highlights the use of an EMS to evaluate business processes.  Strategic Sustainability will be essential reading for both managers faced with decisions regarding their own EMSs and to researchers seeking additional insights from state-of-the-art examples for further theoretical development and testing.

Part I
EMS planning and design

1
EPIDesign

Integrating Corporate Strategies into the Development Process of an Environmental Performance Evaluation System

Enrico Cagno, Lorenzo Tardini and Paolo Trucco

Politecnico di Milano, Italy

Environmental performance evaluation (EPE) can be defined as ‘the measure of the interactions between the business activity and the environment’ (Bennett and James 1999). This definition considers EPE as an internal administrative tool designed to provide continuous, reliable and verifiable information to determine whether an organisation’s environmental performance is meeting the objectives set by management. Thus, EPE can be regarded as a set of process and managerial tools that play a strategic role within an organisation’s environmental management system (EMS). As well as supporting management in evaluating the environmental performance of the company and identifying potential areas for improvement, a series of EPE indicators synthesise data and information and make the results fully available to stakeholders.

This chapter examines the role played by an EPE system based on environmental performance indicators (EPIs) within a company’s EMS. In particular, it provides a critical review of the real applicability of various models presented in the literature. Although a large variety of EPI models are proposed in the literature, minimal support is given to companies wishing to design a set of indicators that best represents and evaluates their environmental policy and objectives.

The chapter also presents a tool—EPIDesign—that offers a structured approach to the definition of an EPE system to ensure consistency with a company’s corporate strategy and to help control environmental impacts such as natural resources consumption, use of substances/dangerous materials, emissions and waste generation. A questionnaire is provided to enable management to highlight critical interactions between business strategy and environmental performance. The findings from the questionnaire help management identify the most appropriate environmental indicators for the specific characteristics of the company from a large database of available indicators. Finally, two real-world case studies are presented—Coca-Cola Italy and Nestlé Italy—which demonstrate how EPIDesign can be implemented and which provide a critical analysis of the results.

The role of performance indicators in environmental management systems

EPE is a set of process and managerial tools capable of providing continuous, reliable and verifiable data on the degree to which environmental objectives are achieved.

Current EMS schemes, such as the EU Eco-Management and Audit Scheme (EMAS) and the international EMS standard ISO 14001, require an explicit and verifiable commitment to improve environmental performance but do not involve the adoption of a formalised EPE system. However, the performance indicators play a critical role within the EMS since they can synthesise data and information, make the results fully available to stakeholders and support management in controlling environmental performance and identifying potential areas for improvement (see Table 1.1). Moreover, when environmental targets are incorporated into the planning process, EPIs provide a measure of the actions taken and their coherence with that process.

In addition to the general characteristics of a good indicator, such as objectivity, simplicity, synthesis, measurability, comparability, reliability and low cost (NRTEE 1997), environmental indicators must (Azzone and Dubini 1992; Azzone et al. 1996):

• Illustrate the development of the company’s environmental results (regarding emissions of pollutants, risk of accident, etc.) so as to provide appropriate information for the needs of different stakeholders
• Assess a company’s contribution to conservation of the environment, underlining the possibilities and/or needs for improvement
• Relate the company’s various activities to its environmental impacts, obtaining an overall view of all the critical aspects
• Take a long-term view in order to compare a company’s environmental efforts with the outcomes which, typically, are seen some time later

Thus, the implementation of an EPE system is an effective tool in supporting the efforts made by a company to demonstrate to all interested parties that (Azzone et al. 1996):

• Management has a long-term commitment to meet targets in reducing the direct or indirect environmental impacts of company activities
• Environmental objectives are an integral part of company strategy
  TABLE l.l Different users and functions of environmental indicators inside and outside the firm

  User/decision context	Function for user
  Corporate manager	To monitor a firm’s environmental development in relation to strategic targets (derived from concern about future impacts of environmental developments)
  	To identify most harmful wastes and emissions
  	To communicate corporate environmental performance/attitude to stakeholders (shareholders, environmental authorities, clients)
  	To reference performance in preceding periods/years
  Production plant manager	To identify opportunities for efficiency improvements
  	To convey information on efforts to limit the environmental impact of plant operations
  Marketing manager	To identify new market opportunities
  	To defend market positions and provide reference point competitors
  Purchasing manager	To promote accountability and business-to-business relations
  Environmental authorities (compliance situation)	To test compliance with laws and regulations
  Authorities (national)	In voluntary agreements; communicating a firm’s effort towards environmental improvement
  	Useful for constructing databases that are helpful in developing and implementing a government’s environmental policy
  Investors and shareholders	Indicator for financial performance
  	May indicate environmental liabilities that could affect a firm’s financial performance
  Consumers	To meet needs of green consumer

  Source: Olsthoorn et al. 2001
• Company policy is based on preventative (performance control and improvement) rather than corrective actions
• The requirements imposed by laws and regulations are considered in company activities

Given these opportunities, however, there are certain critical elements to be faced in implementing an EPE system, both in the definition of the system itself and in the collection of data. According to NRTEE (1997) these problems concern:

• Complexity of data collection
• Difficulties in comparing data from different companies (because different companies could calculate the same indicator in a different way)
• Difficulties in integrating physical data on environmental degradation with financial data on environmental protection measures and with qualitative information
• Difficulties in comparing data from different activities, companies or periods, as information may refer to highly heterogeneous contexts with regards to company size, technologies and norms

Characteristics and applicability of the models proposed in the literature

The progressive spread in companies of consistent environmental management approaches heightens the importance of measuring performance and, thus, the use of environmental indicators. In the literature, a number of authors have proposed specific models which they claim can satisfy various company requirements. These models are not modifications or adaptations of indicators already used in other areas of management control, but rather an independent family of indicators defined to assess a company’s environmental performance.

In the next section we analyse some of the main models proposed in the last ten years. Given the plethora of examples in the literature we have selected the most recent (often the result of improvements to previous versions) and most complete. For ease, the models are listed under the names of their authors or approving authority.

International Organisation for Standardisation

The ISO 14031 standard, approved in 1999, is part of the ISO 14000 series of EMS standards. It proposes criteria and guidelines for the development of a system to assess environmental performance. To this end, it suggests a vast range of indicators for different environmental aspects. ISO 14031 has become the reference standard to which companies tend to refer when designing and implementing their own system to assess environmental performance.

ISO 14031 describes two general categories of indicator that should be part of an effective EPE:

• Environmental performance indicators (EPIs): these are divided into management performance indicators (MPIs) and operational performance indicators (OPIs). MPIs provide information on a company’s environmental efforts and help to keep the environmental problem in mind by checking the state of the resources, skills and knowledge that can be used in reaching the desired level of performance. OPIs guarantee information on the environmental performance of company operations/activities, distinguishing between input (consumption and use of resources) and output (emissions and waste) indicators
• Environmental condition indicators (ECIs): these reveal the state of the environment (local, national, global) and provide tools to assess the present and potentia...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Foreword
• Introduction
• Part I: EMS planning and design
• Part II: Implementation and operation
• Part III: Environmental management system evaluation
• Abbreviations
• About the contributors
• Index