Environmental Sustainability Metrics

There is a lot of talk these days about environmental sustainability, global warming, carbon footprints and green house gas. An off shoot of all these “new” environmental issues is the desire to measure them through indices or metrics. In fact, a huge cottage industry has sprung up on developing, refining and re-defining these environmental indices and metrics. If you Google “environmental sustainability index”, you will get over 472,000 web pages! Googling the term “environmental metric” will get you 138,000 pages. Each set of “new” metrics comes with a new glossary of environmental buzz words.

There is the Environmental Sustainability Index of 2005 put out by the Yale Center for Environmental Law and Policy which ranked the United States 45 out 146 – behind Congo and Botswana. Finland was ranked #1 while North Korea was #146. The same group also issued the 2008 Environmental Performance Index (EPI) which ranked the United States at 39 out of 149 – behind Albania and Uruguay. This time Switzerland was ranked first and the last place went to Niger. It is rather curious that the Yale Center that published these rankings stated emphatically in its executive summary that “the EPI’s real value lies not in the numerical rankings but rather in careful analysis of the underlying data and performance metrics.” If that’s true, why publish the numerical rankings at all?

The EPI does have some intrinsic value in that it looks at the two fundamental aspects, namely, environmental health (impact on humans) and ecosystem vitality (impact on ecosystem and climate change). The term “aspects” leads us directly to ISO 14001 Environmental Management Systems. One of the key elements of ISO 14001 is the requirement to identify all the “significant environmental aspects” of an organization’s operation. The ISO 14001 standard defines an “environmental aspect” as an “element of an organization’s activities, products, or services that can interact with the environment.” The environmental aspects of a company’s operation can be used as practical indices or metrics for its environmental sustainability.

To identify the environmental aspects, you need to look at all the activities throughout your entire operation that could affect the environment – both positively and negatively. Focus on four areas: material usages, energy consumption, water usages and pollutant releases.

For material usages, look at how much raw material you purchase to make your products and how much of it actually ends up in the products that goes out your door to your customers. If a lot of it ends up as scrap or waste byproducts, you have a negative environmental aspect in that part of your operation. If you recycle a lot of your waste by-products, that would be a positive environmental aspect.

On energy consumption, track your kilowatt-hour usages and natural gas consumption. You can track it in terms of unit consumption per unit of goods produced.

On water usages, you should focus on conservation. For example, look at how much water is consumed per unit of production and how much waste water you generate. Pollutant releases include wastewater discharges, hazardous waste generation and air emissions. This is by far the easiest metric to track since most are regulated through environmental laws. Your performance can be easily monitored through your wastewater treatment plant permits, your air permits and hazardous wastes manifests. Every July 1 of each year, the government requires most industries to provide a full accounting of its emissions to the environment during the previous year under the Toxic Release Inventory (commonly referred to as Form R). The TRI is by no means a perfect metric but it does force industry to reconcile its environmental releases.

How do you go about quantifying these environmental aspects?

Many companies use a matrix that looks at the environmental impact from the standpoint of severity and frequency. You can assign a numerical value of 5 to an activity’s severity rating if its environmental impact is severe. If that activity occurs all the time, you also assign it a value of 5 for frequency. The “overall” environmental risk would be 25 (the product of severity and frequency).

For example, if you emit a hazardous air pollutant through your stack continuously, the overall environmental impact of that emission would have a risk value of 25. In general, if you have an activity that is regulated by law or if it impact human or public health, it should carry a high severity rating. Once you go through all the activities within your operation and have assigned an overall environmental risk to each one, you will have either a table or chart showing you which specific activities you should focus on to reduce your environmental risk.

The best way to do this is to involve your line supervisors and have them go through the process of identifying these environmental aspects. Ownership is the key to success in this endeavor. The more people involved in the process, the more ownership your employees will have and you will end up with a more complete and accurate picture of your environmental aspects. An effective EMS always requires bottom-up involvement in addition to top-down support.

water-spray-3One final note of observation on reducing water consumption at a manufacturing plant: I once worked for a multi-national food processing conglomerate. One of its plants was consuming an inordinate amount of water as it performed its daily plant wash down. The cleanup crew was observed to be hosing every bit of food scrap down the drain with excessive amount of water. This lead to hydraulic overloading of its wastewater treatment plant. As it turned out, the factory had only one single water meter that measured the totally water consumption for the entire plant. The shift foremen had no idea how much water their staff was using on a monthly basis. I was able to convince the plant engineer to install individual water meters at various processing lines and to bill the shift supervisors directly for their actual water consumption. The water wastage dropped significantly as soon the supervisors saw their budgets being charged for actual consumption. Their staff began sweeping the food scrap off the floor before hosing it down. This was a clear case where a metric can be used to hold people accountable for undesirable environmental behavior.

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7 responses to “Environmental Sustainability Metrics

  1. Why only focus on four areas? While I do concur with the four mentioned areas of material usages, energy consumption, water usages and pollutant releases, I am wondering why not also look at waste & recycling; air, noise & dust; soil and as you’re already doing an impact assessment, why not also look at risks? In my experience it gives a more coherent picture of the situation.

  2. Thank you for your comment. Waste and recycling can all be included as part of pollutant releases and material usages. For example, when you look at the environmental aspects of material usages, one of the negative aspects is waste.

  3. Your proposed use of a frequency/severity matrix is right on point. However, those considering such a matrix should carefully evaluate how to define both frequency and severity parameters used.

    First, if the results are to truly be aligned with “the business”, the matrix parameter must reflect those used by the business. Specifically, the severity component must reflect this. Otherwise, the EHS function will create a risk definition that is different from how management defines risk, which creates problems (I have lived that personally).

    Secondly, boiling the risk ranking down to a single number seems attractive in that it is easy and does provide gross rankings. But then what? How do you reduce a risk that is ranked a 10 on a 5×5 matrix?

    By presenting results in the context of both risk components (frequency and severity), you identify the more appropriate means of reducing the risk. A ranking of 10 could be

    – a frequency of 2 and severity of 5. In this case, addressing the severity would be the more effective risk reduction approach. A potential option may be to implement a financial solution to mitigate the economic loss incurred.

    – a frequency of 5 and a severity of 2. In this case, the financial impact is not necessarily significant, so an economic solution is not effective. However, a management system solution is more likely the appropriate approach.

    A presentation on this environmental risk assessment method can be viewed at the link below. However, the cited presentation goes beyond just the risk assessment as it also discusses taking the output from that process and calculating a risk avoidance ROI.

    http://www.slideshare.net/lmheim/roia-presentation

  4. Thank you for your comments. You are correct that a 2-dimensional matrix does have its limitations. As you said, the trick is to “define” risk and that is more an art than a science. How to mitigate that risk – once defined – is another challenge.

    The fellow who is responsible for reducing fire risk would love to have the plant operate under 5 feet of water. But we all know that’s not going to happen.

  5. I viewed the slide presentation on risk identification and came away with the following impression. The slides are mainly talking points in the form of those dreaded bulletpoints. Without the author there to elaborate on those talking points, the cryptic bulletpoints are rather …uh pointless. To convey his message to his online audience, he would be better off by posting a report written in complete sentences in PDF format.

    Talking points without a talker is not a good way to communicate ideas – especially technical ideas. Please go to my other blog http://bit.ly/gcS8c for more on this.

  6. Norman – I suggest that defining risk is neither art nor science – but is “business”. I have a unique background of technical environmental management (including being formerly in-house at a Fortune 150 company) and traditional risk management at the environmental practice in the world’s largest insurance broker/risk management service provider. I have seen the good and bad of different perspectives on defining environmental risk. My overall opinion is that the more successful “environmental risk managers” are those that work closely with the traditional risk management functions in their companies. Why? Because the risk management function continually reviews, evaluates and refines their definition of “risk” with senior management to best reflect the financial position of the company. Environmental staff may not always take this approach and frequently define “risk” in their own terms. Again, I have first hand experience in this regard. The misalignment between environmental and management does not stem from art or science, but on different views of internal financial benchmarks and their application.

    Certainly, not everyone may agree.

    As far as the slides, I am sorry that you focused more on the presentation format than the technical content. People who concentrated on the content have provided very positive feedback on what they learned from the information – mainly in the context of learning about aligning with risk management frameworks.

    • Larry,

      Thanks again for your comments. I think we are playing with words: art, science or “business”. If you have to constantly refine and re-define the meaning of risk, you are dealing with an art. Perhaps the art of business? Risk is what management is willing to bear.

      You completely missed my point about your presentation form. I assume you were trying to convey your message on risk management not just to the experts in your field who can decipher those cryptic bulletpoints easily. But if you were trying to teach the non-experts about your business, I am afraid you have failed miserably with those coma-inducing slides. People who are put into a coma by those bullet points will not havwe a chance to see or read the excellent content hidden behind them. I encourage you to write a paper (sans bullet points) in PDF format on risk management explaining what it is in normal everyday language (no jargon), send it to me and I will gladly post it on my blog.

      As I said, business people stopped writing reports or memos 10 or 15 years ago. Everything is in bulletpoints now. I have seen a vice president in a Fortune 100 company made a great presentation with his bulletpoints. He was there. He explained and elaborated on every single bulletpoint to the audience. Everyone in the meeting understood him. He then passed his bulletpoint presentation to his staff (who were not there at the meeting) to implement his ideas. By the time the bulletpoints got to the mid or low level managers for action, it was hallucination time! They were guessing what he meant. They were reading between the points! Very funny but sad.

      The best professor I know is the one who can explain a complicated subject to the non-experts. Most business managers are non-experts.

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