|Measuring Up - Toward a Common Framework for Tracking Corporate Environmental Performance (WRI, 1997, 48 pages)|
In this high-tech world of instant communication, the financial profiles of companies flash across our computer screens. We compare assets and liabilities and project future profitability. We base our investment decisions on information illuminated by conventional business standards that reflect conventional perceptions of what determines business performance. But society's expectations have changed and corporate environmental performance has become increasingly important. Yet, no agreement exists on how it should be measured and reported.
In Measuring Up: Toward a Common Framework for Tracking Corporate Environmental Performance, Daryl Ditz and Janet Ranganathan argue that the time for an overhaul of how we keep score of business environmental performance has come. Although most firms keep tabs on environmental compliance under existing laws, such measurements fail to distinguish superior performers, rarely lower regulatory burden, and may not even enter into future business decisions. Measuring Up calls for the adoption of four categories of environmental performance - materials use, energy consumption, nonproduct output, and pollutant releases - that emphasize resource efficiency, pollution prevention, and product stewardship.
The report demonstrates that the full potential of such corporate environmental performance indicators (EPIs) is realized only when they serve decision-makers both inside and outside company walls. Just as a company's financial statement can be relied upon to provide information that is comparable, transparent, and complete, the EPIs of a company could be used to rate its environmental performance. In this way, EPIs can provide the information necessary to measure and motivate progress towards environment goals. The adoption of a standard framework for EPIs will facilitate comprehensive analysis of resource consumption and pollution beyond individual companies to entire sectors of industry, or even countries.
Using examples drawn from within the business community, Measuring Up demonstrates how such EPIs are already being used inside firms to drive improvements in resource efficiency, while increasing profitability. These business cases also point to the importance of having comparable EPIs. Without comparability, businesses can't benchmark their performance against other firms, nor can they take credit for their successes.
Concurrent with the growing business interest in EPIs, others outside firms are seeking ways to factor corporate environmental performance into decisions, such as what products to buy, what firms to invest in, and whether progress towards corporate and national goals is being achieved. Measuring Up describes several examples from around the globe of how regulators, communities, governments, the financial sector, and others are using EPIs. But all of these uses are dependent on EPIs that are available in a comparable transparent format.
Ultimately it will be in the interest of firms, and others alike, to converge upon a standard set of universally reported EPIs. Without this there cannot be consistent standards of accountability for business environmental performance, or practical means for companies or countries to gauge and communicate progress towards environmental goals. With this in mind, the authors outline recommendations that lay the foundation of a new framework for measuring corporate environmental performance.
Measuring Up complements earlier publications by the World Resources Institute such as Green Ledgers: Case Studies in Corporate Environmental Accounting by WRI's Technology and the Environment program and Environmental Indicators: A Systematic Approach to Measuring and Reporting on Environmental Policy Performance in the Context of Sustainable Development by WRI's Resource and Environmental Information program.
We would like to express our appreciation to the Andrew W. Mellon Foundation for their financial support of the research presented in this report.
- Jonathan Lash
World Resources Institute