ENVIRONMENTAL PERFORMANCE EVALUATION PROGRAMME

Objectives of the Environmental Performance Evaluation (EPE) Programme

i. Environmental Strategic Objectives of Organizations

There are six strategic objectives that may guide performance evaluation.
These objectives are primarily environmental. Actual choices of such strategic
objectives will be dependent on the internal drivers and capabilities of
organizations and the relation that they have to stakeholders.
The most common environmental strategic objective of organizations is
compliance with the law, and where applicable voluntary agreements such as
covenants and general codes of conduct, voluntarily adhered to. Typically,
environmental strategic objectives fit bigger corporate strategies, e.g. pursuing an
improvement of image, communication with stakeholders and/or market share. The
other strategic objectives mentioned in presuppose compliance but also go beyond
this strategic objective. Going beyond compliance may lead to an evolutionary
improvement of environmental performance and an increased integration of the
economic and social aims implied by the sustainability concept in organizational
activities. The potential for an evolutionary development of performance in
relation to the environment towards sustainability is inevitable.
The strategic objectives chosen here reflect major differences in intended
environmental performance. Pollution prevention, eco-efficiency, eco-innovation
and eco-ethics may all be interpreted as steps (of varying magnitude) in the
direction of environmental sustainability. Compliance, pollution prevention and
eco-ethics are strategic objectives that in practice tend to be defined in a rather
uniform way. This is different for eco-efficiency, eco-innovation and sustainability.
Ecoefficiency may be used as a synonym for dematerialization or reduction
of resource intensity but also as equivalent to the exploitation of winwin
situations, in which both environmental and financial performance of the
organization benefit. The opted definition here focuses on the reduction of resource
intensity and the minimization of environmental impact together with value
creation by continuous incremental improvement.
By way of contrast, eco-innovation stresses not incremental but radical
changes using a product/service life cycle perspective. There is a bewildering
variety of definitions of sustainability. As to environmental performance this can
be operationalized as the requirement that organizational activities leave the
environment no worse off at the end of each accounting period than it was at the
beginning, complemented with environmental restoration or remediation when
long lasting environmental damage is also detrimental to contemporaries.
Restoration of the ozone layer and remediation of heavily polluted soils are
examples of the latter. (Shokravi et al.,2012)

ii. Linking Performance Evaluation to Strategic Objectives

According to Dias-Sardinha (2000), the process of performance evaluation

should check how the organization stands with respect to the strategic objectives
outlined in Table 1: compliance with the law, pollution prevention, eco-efficiency,
eco-innovation, eco-ethics or sustainability. Two of the types of performance
evaluation referred to are evidently much broader than environmental. They
include social and economic aspects of organizational activities.

In compliance, not only compliance with the environmental regulation is

implied but also with social and economic legislation. In the context of
sustainability, it is usual to refer to the triple bottom line including social and
economic aspects. For the other four strategic objectives (pollution prevention,
eco-efficiency, eco-innovation and eco-ethics) the emphasis is on types of
environmental improvement beyond compliance. The relevant performance
evaluations in organizations will however always include evaluation of
economic/financial aspects. In eco-efficiency, cost reduction and value creation
will probably be major drivers of organizational activity evaluation. Moreover,
when eco-ethics and/or eco-innovation are the strategic objective financial
evaluation is necessary if only to ascertain that the organization remains
economically viable.

In the case of all environmental strategic objectives, moreover, there will

be social considerations such as prevention of workplace accidents and whether
the organization will be attractive enough, e.g. to attract an adequate labour force.
However, these extensions of performance evaluation, to other than
environmental aspects, will not be fully developed for these primarily
environmentally oriented strategic objectives.

iii. Performance Goals for Performance Evaluation

Each of the strategic objectives outlined is linked with performance goals.

It is stated that the degree of environmental ambition decides the subsequent
setting of individual environmental performance indicators goals. In part, the
criteria should reflect the environmental improvement to be achieved. They need
to be defined before performance evaluation. For this purpose, it is chosen here to
concentrate on the environmental burden and its reduction by a factor X, leaving
aside the intricacies of measuring the value of X. The reference value for the
factor X may be the environmental burden reduction value obtained by an average
company that is in compliance. The value of X actually achievable may be
strongly sector dependent. Substantial work in the field of environmental
improvement has been done pertinent to the industrial sector. (Thoresen J., 1999)

As to the radical improvements following from eco-innovation, reductions

of environmental burdens in excess of a factor of four seem appropriate. For
attaining sustainability, reductions in environmental burden increasing to a factor
of 50 have been mentioned. The actual values to be reached on a global level are
strongly dependent on assumptions as to population size and size and nature of
production and consumption. Each of the specific performance evaluations needs
core indicators that are central to evaluate specific performance, so, for instance,
the compliance-oriented performance evaluation will have core indicators that
reflect the existence or absence of violations of regulations. In the case of
pollution prevention, eco-efficiency and eco-innovation core indicators should
relate to the level of reduction of environmental burden of the organization and
the adequacy of procedural arrangements. (Harvey D. ,1994)

Performance goals may be used in performance evaluation in a briefed form:

a) Compliance
no violations of regulations, voluntary agreements and general codes
of conduct voluntary adhered to: such violations relate to both
substantive environmental matters and procedural matters such as
having an adequate monitoring and/or environmental management
system (EMS).
b) Pollution prevention
best preventive technologies and practices available to the sector
proactive attitude concerning future changes in the law
reduction of environmental burden by up to a factor of 1.5
c) Eco-efficiency
use of most eco-efficient practices, technologies and product/services
available
reduction of environmental burden by up to a factor of four
d) Eco-innovation
use of predefined goals, e.g. 100% share of eco-innovated production
and products
sector leader achievements in eco-innovative markets
reduction of environmental burden by over a factor of four
e) Eco-ethical
specified principles, e.g. zero discharge, zero waste, use only
renewable energy
f) Sustainability
application of the Precautionary Principle
integration of all costs that are currently external in cost accounting
(total cost accounting) and achieving an acceptable profit while doing
so
using sustainable generated renewables for dissipative used in- and
outputs
 reduction of environmental burden by up to a factor of 50 (dependent
on among other factors the sector and assumptions as to overall
production and consumption)
prevent export of negative product/service life cycle related impacts on
future generations

iv. Purpose of the Environment Performance Indicators

The first objective of environmental performance indicators is to measure

and evaluate environmental burdens, environmental problems that need to be
solved and outcomes of environmental efforts comprehensively in order to
promote environmental activities of organizations and to obtain information that
helps decision making regarding these activities.
The second objective is to provide a common foundation of information
between an organization and interested parties in order to facilitate that interested
parties, such as consumers, business partners, residents in local communities,
shareholders, and financial institutions, understand environmental activities of the
organization. Organizations have significant impacts on the environment through
their business activities. As the necessity of building a sustainable society rises,
organizations have the responsibility of disclosing what environmental burdens
they cause, what activities they implement to reducing these environmental
burdens, and what environmental efforts they exercise. For external interested
parties, environmental information has become necessary for their evaluation and
choice of organizations. Environmental performance indicators could be used as
environmental information in environmental reporting.
The third objective is to provide a common foundation of information for
macro-level environmental policies of the national and local governments.
External interested parties have a number of methods to evaluate environmental
efforts of organizations. However, there has not been a standard method yet.
Furthermore, no definition of information, method of calculation, the boundary of
information gathering, units and so on have been standardized. When an
organization or external interested party evaluate environmental efforts, it is
important to understand the background of business activities of the organization
that causes environmental burden, yearly changes of the environmental burden,
and environmental efforts using these performance guidelines. These guidelines
do not intend to evaluate organizations with quantitative values of environmental
performance indicators alone. (Lehni M., 1999)

v. Plan-Do-Check-Act Model
The plandocheckact cycle is a fourstep model for carrying out change.
Just as a circle has no end, the PDCA cycle should be repeated again and
again for continuous improvement.

Figure 1: Plan-do-check-act cycle

a) When to Use PlanDoCheckAct

As a model for continuous improvement.

When starting a new improvement project.

When developing a new or improved design of a process, product

or service.

When defining a repetitive work process.

When planning data collection and analysis in order to verify and

prioritize problems or root causes.

When implementing any change.

 b) PlanDoCheckAct Procedure

Plan. Recognize an opportunity and plan a change.

Do. Test the change. Carry out a small-scale study.

Check. Review the test, analyze the results and identify what
youve learned.

Act. Take action based on what you learned in the study step: If
the change did not work, go through the cycle again with a
different plan. If you were successful, incorporate what you
learned from the test into wider changes. Use what you learned to
plan new improvements, beginning the cycle again.

c) PlanDoCheckAct Example
The Pearl River, NY School District, a 2001 recipient of the

Malcolm Baldrige National Quality Award, uses the PDCA cycle

as a model for defining most of their work processes, from the
boardroom to the classroom.
PDCA is the basic structure for the districts overall strategic
planning, needsanalysis, curriculum design and delivery, staff
goal-setting and evaluation, provision of student services and
support services, and classroom instruction.

References

Shokravi, S., S. Maheswararajah, A. Smith, S. Halgamuge, and C. Burvill. Environmental

performance evaluation for industrial processes. Submitted to Environmental
Impact Assessment Review, 2012.

Dias-Sardinha I. 2000. Choosing the Environmental Performance Evaluation (EPE)

framework based on the environmental conceptual objectives of the organization.
 Research Workshop on Corporate Environmental Management, ERP
Environment, Manchester.

Thoresen J. 1999. Environmental performance evaluation a tool for industrial

improvement. Journal of Cleaner Production 7: 365370.

Harvey D. 1994. Performance Measurement: The New Agenda. Business Intelligence:

London. ISO. 1999. ISO 14031: Environmental Management Environmental
Performance Evaluation Guidelines. ISO: Geneva. James P. 1994.

Lehni M. 1999. Eco-Efficiency Indicators: A Tool for Better Decision-Making

Executive Brief. World Business Council for Sustainable Development (WSBCD):
Geneva. http://www.wbcsd.ch [15 June 2000].

http://asq.org/learn-about-quality/project-planning-tools/overview/pdca-cycle.html

http://www.hse.gov.uk/managing/plan-do-check-act.htm