A global framework for environmental performance indicators (EPIs) is being developed by organizations such as the International Organization for Standardization and the World Business Council on Sustainable Development. These developments are setting the stage for a standardized metrics system and should provide information that will lead to improved decision-making for environmental sustainability. Using powerful new data warehousing technology and the Internet, businesses will be able to integrate environmental, financial and other performance information to provide stakeholders with a more complete and accurate picture of their performance. The result will be a comprehensive, 'balanced scorecard' approach to environmental performance evaluation. Equally important is the ability of such tools to allow for performance comparison on a company, industry sector or broader basis by storing vast amounts of data accessible around the world.
Environmental management systems
Businesses1 around the world are coming under increasing pressure to reduce or eliminate the environmental impacts of their operations. In order to accomplish these goals, they need to implement effective environmental management systems (EMS) to measure, monitor and report on the environmental aspects relating to their activities, products and services.
In the fall of 1996, the International Organization for Standardization (ISO) published the ISO 14001 standard setting out the requirements for an EMS2. This voluntary standard provides businesses with an internationally-recognized and accepted framework for implementing and maintaining a cradle-to-grave system for environmental management. However, the standard contains no environmental performance requirements, and implementing and maintaining such an EMS is not sufficient in and of itself. According to the tried and true adage, 'You can't manage what you can't measure.' Therefore, to improve their environmental performance, businesses need to measure and monitor this performance. And, to ensure accountability, they will need to report on the results to the appropriate stakeholders.
Environmental performance evaluation
In time, all businesses whose activities have environmental impacts will be required, whether by regulation, international trade or public pressure, to track and report on their environmental performance. To be meaningful to stakeholders, the information reported will need to be comparable, such that stakeholders will be able to compare an individual company's performance against industry best practices and other agreed-upon benchmarks.
In fact, a global framework for such an environmental performance measurement, monitoring and reporting system is already emerging. A number of companies and organizations around the world are currently engaged in this area, developing criteria for environmental performance evaluation (EPE), evaluating the use of various environmental performance indicators (EPIs), and designing standard reporting frameworks3. These developments are setting the stage for a standardized metrics system that should allow businesses to manage their environmental performance in a more sustainable manner and to compare this performance against targets and over time.
For example, common EPI design principles are gaining widespread acceptance, such as comparability, reliability, understandability, relevance, etc. Specific indicators are being developed in such key areas as material and energy use, non-product output and pollutant releases. In time, companies can be expected not only to use EPIs to benchmark their performance internally, but also to compare their performance against that of other companies on a sectoral or other basis.