February 22, 2011
I recently attended a local environmental conference and a senior manager from a local company gave a stirring talk about the recent investments and upgrades made at her facility to improve sustainability and energy efficiency, including upgrading their boilers and other “roll up your sleeves” strategies. She mentioned that her company noticed significant reductions in fuel usage, and they were approaching their ROI. Afterwards, I asked her how this good news was being received by her stakeholders: upper management, employees, customers, regulators, etc. Not very well, she said. People nod their heads, approvingly, then just walk away. The problem, I said, is that people cannot grasp the meaning of “boiler upgrades”, even “cost savings”, but need real, understandable metrics to truly determine value. The metrics for these types of changes that would resonate to stakeholders would be fuel use avoided and/or greenhouse gas (GHG) emissions reduced. And even these could be enhanced by translating them into “number of cars taken off the road” or “equivalent number of trees planted.”
Environmental metrics is a new item for us in the field. We used to occupy our time with purely compliance related metrics (i.e., Are our emissions exceeding our permit limits? Any accidents this quarter? Were we cited this year?). Now, more and more companies are linking environmental performance to overall business performance. While this is a greater burden on the environmental professional, it is also potentially more rewarding if we can make the link of how EHS or Sustainability is helping the company’s business, whether bottom line financial benefits and/or satisfying its stakeholders.
So what strategies exist that make sense for you to monitor and measure performance?
- Measure what can add value to your company, and link it to money saved.
- See what others in your industry report and be similar for beneficial comparisons.
- Express metrics in ways for stakeholders too busy for or not understanding the details to make sense of it (i.e., GHG emissions, cars off the road, etc.).
- For reputation, ensure that metrics are accurate, relevant, unbiased, validated.
- Accurately shows trending (i.e., fuel usage reduced by X% compared to …)
This last point may be the most important. Good metrics can result in the best strategic investment of you valuable funds to improve the chances of meeting future goals and continual improvement. Looking at it the other way, poor metrics could lead to inappropriate strategies, wasting valuable resources. The correct set of metrics can also show to powerful stakeholders your company’s performance vis-à-vis EHS, Energy, and Sustainability to show overall organizational value. Spend time to strategize and develop the right environmental and energy metrics to benefit you and your company.