What to measure and why?What to measure and why?

Environmental Manager Environmental Manager SymposiumSymposium

Gábor HarangozóGábor HarangozóCorvinus University of Budapest, Corvinus University of Budapest,

HungaryHungary

Rochester, 5th May 2008Rochester, 5th May 2008

5th May 2008 Gabor HARANGOZO - CUB

Background of the topicBackground of the topic

Environmental issues are (getting) Environmental issues are (getting) a big challenge for our society, a big challenge for our society, including corporations as wellincluding corporations as well

In order to deal with them we In order to deal with them we need to measure environmental need to measure environmental performance of companies („We performance of companies („We cannot manage what we cannot cannot manage what we cannot measure properly”)measure properly”)

5th May 2008 Gabor HARANGOZO - CUB

Desired outcome Desired outcome (long (long term)term)

Provide Provide in practice applicablein practice applicable support for support for environmental environmental managersmanagers on the issue on the issue

„ „What to measure and What to measure and why?”why?”

5th May 2008 Gabor HARANGOZO - CUB

Hypothesis (short term)Hypothesis (short term)

H1: Measuring and improving H1: Measuring and improving environmental performance is in environmental performance is in interest of corporations.interest of corporations.

H2: By measuring EP, H2: By measuring EP, environmental managers can environmental managers can help significantly in improving help significantly in improving EP (and CP).EP (and CP).

5th May 2008 Gabor HARANGOZO - CUB

Aspects of the topicAspects of the topic

1.1. What to measure? (How to What to measure? (How to measure?)measure?)

2.2. Why to measure?Why to measure?

3.3. Role of the environmental Role of the environmental manager in performance manager in performance measurementmeasurement

5th May 2008 Gabor HARANGOZO - CUB

Environmental performance of Environmental performance of companiescompanies

???

5th May 2008 Gabor HARANGOZO - CUB

Components of EPComponents of EP

Environmental loadEnvironmental load

Environmental actionsEnvironmental actions

Environmental management Environmental management

toolstoolsState of the environment

5th May 2008 Gabor HARANGOZO - CUB

EPIs based on ISO 14031EPIs based on ISO 14031Environmental Performance Indicators - EPIs

Operational Performance Indicators OPIs

Management Performance

Indicators - MPIs

Environmental Condition

Inds - ECIs

INPUT

•Materials

•Energy

•Services (supporting)

•Transport (supply)

OUTPUT

•Products

•Services

•Wastes (toxic, reciclable etc.)

•Emissions (air, water, noise, etc.)

•Transport (delivery)

•Policies and programmes (e.g. EMS)

•Compliance (legally, internal goals etc.)

•Financial performance (environmental costs, saving)

•Community relations, communikation

LOCAL

•Air•Water•Soil•Flora•Fauna•Humans•Aesthetics, heritage and culture

GLOBAL

FACILITIES AND EQUIPMENT

•Machinery

•Operation

5th May 2008 Gabor HARANGOZO - CUB

What to measure?What to measure?

Outcomes vs. Drivers (OPIs vs. MPIs)Outcomes vs. Drivers (OPIs vs. MPIs) Absolute vs. Relative indicatorsAbsolute vs. Relative indicators Industry specific vs. Company specificIndustry specific vs. Company specific Improvement over timeImprovement over time Optimal number of indicators: Optimal number of indicators:

not the number, but relavancy what mattersnot the number, but relavancy what matters

5th May 2008 Gabor HARANGOZO - CUB

Purposes of Purposes of measurementmeasurement

Environmental qualityEnvironmental quality Regulatory complianceRegulatory compliance Competitive advantageCompetitive advantage Risk management (reduction of Risk management (reduction of

liabilities)liabilities)

5th May 2008 Gabor HARANGOZO - CUB

Role of EM in performance Role of EM in performance measurementmeasurement

Link targets between EP and CPLink targets between EP and CP Convince corporate managers on returns Convince corporate managers on returns

on EP measurement and improvementon EP measurement and improvement Communicating the results of performance Communicating the results of performance

measurement to stakeholdersmeasurement to stakeholders Organizing the performance management Organizing the performance management

processprocess Setting attractive targetsSetting attractive targets Specifying indicatorsSpecifying indicators Quantifying indicatorsQuantifying indicators Making a report for managersMaking a report for managers

Help to shift corporate culture (to accept Help to shift corporate culture (to accept environmental issues)environmental issues)

5th May 2008 Gabor HARANGOZO - CUB

Steps in the futureSteps in the future

How exactly EM can link EP and CP?How exactly EM can link EP and CP? Limits in linking EP with CPLimits in linking EP with CP