Table Of Content'ntarj
A BUSINESS GUIDE
Environmental Performance
and
Competitive Advantage
Ministry of the Environment
ISBN0-7778-7538-1
k BUSINESS GUIDE
Environmental Performance
and
Competitive Advantage
May 1998
Prepared for:
Ministry of tine Environment
by:
The Delphi Group
Copyright:
Queen's PrinterforOntario, 1998
Thispublication maybereproducedfornon-commercialpurposeswith
appropriateattribution.
Cettepublicationtechnique n'estdisponiblequ'enanglais.
PIBS3648E
©
Pnntedonrecycledpaper 1000-05-98
DISCLAIMER
Information presented in this guide is derived from publicly availablesources.The views and ideas expressed in this guide are
thoseoftheauthorsand do notnecessarilyreflecttheview/sand policies ofthe Ontario Ministryofthe Environment. Mention of
trade names, commercial products or supplier names do not constitute endorsements or recommendations for use by the
Ministry. The Ministry encourages the distribution of information and strongly supports the concurrent promotion of resource
conservation, pollution prevention and industrial competitiveness in Ontario. Resource conservation includesthe efficientuse of
energy, waterand otherinputraw materials, aswell asthe reduction ofwaste residuals.
Similarly,thegenericopportunities presented bytheauthorsofthisguidedo notrepresentrecommendationsforimplementation
atspecificsites.Theauthorsoftheguide are notresponsibleforanysuch implementation withoutpriorconsultation andfurther
detailed siteevaluation.
COPYRIGHT
Queen'sPrinterforOntario, 1998.This publication maybe reproduced fornon-commercial purposeswith appropriateattribution.
Any person whowishesto republish partorall ofthis reportshould applyforpermission to do so to the Ontario Ministryofthe
Environment, Communications Branch, 135 St. ClairAvenueWest,Toronto, Ontario, M4V 1P5, Canada.
ACKNOWLEDGEMENTS
Thisguide was prepared forthe Ontario Ministry ofthe Environment (MOE), Industry Conservation Branch byThe Delphi Group,
aspartofa Ministryfunded project.The Delphi Groupisan environmental consultingcompanyspecializinginthestrategic man-
agementofenvironmental issues and marketanalysisofenvironmental technologies.
Thefollowingpeople provided valuable inputand assistance intothe project;
John Woodruffe, WoodruffeAssociates Inc.
George Stuetz, Consultant
John Phyper, Phyper&Associates Ltd.
Dave McLeod, Phyper&Associates Ltd.
The Delphi Groupwould lii<etothankthosemanagerswho respondedtoa surveyconducted on environmental performanceindi-
cators, as well as the following individuals who provided valuable comments: Peter Corbyn, Automotive Parts Manufacturers'
Association; Rob Milne, ConsumersGas; LarryOnisto, Ontario Hydro; Brad Earhardt,JM SchneiderInc.; and Gil Friend, Gil Friend
&Associates.
The Ministryofthe Environment has a numberofprograms in placethatworkto assist business become more competitive and
address environmental issues in a cost-effective manner. The Industry Conservation Branch can further advise you on the pro-
grams and workshops availableto assistyou. Please contact;
Abdi Hussein
2 St. ClairAvenueWest, 14th Floor
Toronto, Ontario
M4V 1L5
Fax; (416) 327-1261
Telephone; (416) 327-1456
Table of
PREFACE
i
Contents ABOUTTHISGUIDE
ii-v
PARTA
I. AddValuethroughtheUseofPerformanceIndicators
Increased MarketShare
Improved Productivity/NetProfit
ReducingtheCostofCompliance
EnhancedShareValue
ImprovedCorporate Imageand Reputation
II. StepstoDevelopandReportEnvironmental PerformanceIndicators
1. IdentifytheCore BusmessObjectives jj
2. TheBigPicture: IdentifyEnvironmental RisksandOpportunitiesto 12
MeetBusinessObjectives
3. IdentifyOperational Impactsonthe Environment 14
4. DetermineEnvironmentalObjectivesandTargetstoSupportCore 16
BusinessObjectives
5. DevelopanAction Planto Reach Environmental Objectives 17
6. Developthe EPIsSupportingCoreBusinessObjectives 21
7. Collectthe DataforEPIsand MeasurePerformanceOutcomes 23
8. Communicateand ReportEffectively 25
PARTB
EPIsused byVariousCompanies: Examples 29
RelationshipofEPIsto Environmental ManagementSystem Policies, 37
ObjectivesandTargets
SummaryofBestPractices: Europe, USA, Canada 39
Noranda Forest'sEffective UseofEPIs 45
PublicEnvironmental ReportingInitiative(PERI) Guidelines 47
Additional Resources en
LISTOFTABLES
Table 1: ExamplesofUsingEnvironmental Indicatorsto Meet 2
BusinessObjectives
Table2: UsingEPIstoAddressExternal StakeholderIssues 26
LISTOFRGURES
FigureOne: Stepsto Developand ReportEnvironmental 10
Performance Indicators
RgureTwo: Relationship Diagram: Policy, Objectives,Targets, 33
EPIsand Reporting
Preface CompetitiveOntariobusinessesarecritical toourfutureeconomicsustainability.
Atthesametime, aJlthepeopleofOntariohavetheunquestionablerighttoa
healthyenvironment.Today, thereisagrowingunderstandingthattheseare
compatiblegoals; noonehastotradeonefortheother.
Moreandmore,Ontariocompanies recognizethatgoodenvironmental
performanceisgoodbusiness.ThisguidebookEnvironmentalPerformanceand
CompetitiveAdvantage:ABusinessGuide,isanaid.Itdemonstrateshowaddressing
environmental issuesinasystematicwaycan providenewopportunitiestofocus
oncorebusinessobjectivessuchasimprovedproductivity,increasedmarket
share,enhancedcorporateimage,highersharevalueandreducedcostof
environmentalcompliance.
Ihopethisguidewillbeusefultoyouandyourcompany.Thisisone
methodbywhichtheMinistryoftheEnvironmentissupponingfuturebusiness
competitivenessthroughinnovativeapproaches. Bysharingourknow-howand
expertise,wecansolveoldproblems in newways.Webelieveindustry,business
andindividualsmustbegiven flexibilityandoptionsasweworktowards
solutionstothechallengeofachievingadynamiceconomysetinahealthy,
safeenvironment.
I^^T
Iv.
TheHonourableNormanW. Sterling
MinisteroftheEnvironment
The Focus of this Guide
Thisguideprovidesadviceon whyandhowbusinessshouldmeasureandreport
About environmentalperformance. Itfocuseson theprocessofselectingindicators
basedonacompany'scorebusinessobjectiveswhichmayinclude
this Guide • Increased marketshare
• Improvedproductivity/netprofit
• Reducingthecostofcompliance
• Enhancedsharevalue
• Positivecorporateimage.
To thosewho have an
Environmental Management PartA,Section Idiscusseshowtoaddvaluetobusinessobjectivesfromimple-
mentingenvironmentalinitiatives.Integraltothisprocessistheuseofindicatorsto
System in place: measureandreportperformanceagainstyourcompany'ssetobjectivesandtargets.
Congratulations!
You have taken an important step in Thisguidecanprovidebenefits ifyouanswer'yes' toanyofthefollowing
addressingenvironmental issuesthatyour questions.
companyfaces. In initiatingan Environmen-
tal Management System (EMS) you may J Areyoutryingtotrackenvironmental performance?
havealreadydevelopedsomeEnvironmental G Areyoutryingtoreduceyourcostofcompliance?
tPoerifnodircmaatnecheoIwndtihceateonrvsir(oEnPmIse)n,taalsobajemcetiavness 3 DoyouhaveanEnvironmental ManagementSystem,butneedtobench-
and targets are meetingthe International markperformance? (seeNotes)
Organization for Standardization (ISO) Doyouhaveanupcomingplantexpansionorwishtobuildanewplantthat
14001EMSStandard. willrequireregulatoryapprovals?
This guide, however, takes a different i_l Doesthelocalcommunityhaveconcernsaboutyouroperation'semissions
orimpactontheenvironment?
approach in selectingEPIs. It basestheir
selection on yourcompany'score business Doyouwanttoensurethatenvironmental liabilityisminimized?
objectives. Assuch, itwill be easierforall 3 Doyouwanttoensurethatyourenvironmentalprofiledoesnotnegatively
levelsofseniormanagementto understand affectyourcorporateimage?
therelevanceofEPIstothecompany'sbusi-
nessstrategy. Althoughtheapproach isdif- Doyouwanttodemonstrateenvironmentalresponsibilitytoyourcustomers?
ferent,inanumberofcases,theactualEPIs —I Areyoulookingforamarketingadvantage?
selectedanddevelopedwill bethesameas
withintheEMSframework. Key Environmental Issues that Demand a Business Response
PartB containsfurtherdetailsand a chart KeyenvironmentalissuesandtrendswillaffectOntariocompaniesandwilldrive
illustratingthe relationship of EPIsto an thedemandforbusinesstorespond. Newsolutions, improvedperformance, new
Environmental Management System. For andsustainabletechnologies,productsandserviceswillbetheresult.
additional information ontypesofEPIsand
theirrole in an EMS, readers maywishto CostsofWaterand Energy
obtain acopyofISO 14031-Environmental
PerformanceEvaluation. Thecostofwaterisprojectedtoincreaseasthedemandsoftheaging
infrastructureandcostsofnewinfrastructurewillforcemunicipalities
tomovetofull-cost,user-paysystems. Inaddition, manyjurisdictionsare
anticipatingpotential increasedenergycosts.
PublicConcernaboutHealth
Polldatashowsagrowingconcern inOntarioandaroundtheworldaboutthe
effectsofpollutionandchemicalsonhumanhealth. Studieshaveshownthat
hospitaladmittancesforrespiratoryproblemsincreaseduringperiodswhen
thereareelevatedlevelsofgroundlevelozone,andinhaledparticulatescanbe
linkedtoincreaseddeath rates. (OntarioSmogPlan)
11 EnvironmentalPerformanceandCompetitiveAdvantage:ABusinessGuide
IncreasingPopulation
TheOntario populationbaseisprojectedtogrowby35%inthenext25years,
puttingmoredemandonagricultural land,waterresourcesandenerg)'.Asa
resultincreasedairpollution (relatedtobothindustr}'andtraffic), impairment
towaterqualit)-andquantit}',andscarcit}'ofavailablelandfillswilloccurifnot
addressed.
Sixtyoftheworld'slargestinsurancecompa-
nieshavesignedastatementurginggoverrv ClimateChange
mentsto reduce carbon emissions, asthey TheglobalconcernaboutthepotentialeffectsofCO^ andotherairemissions
haveseenweather-related insuranceclaims ontheworldsclimatepatternswill increasinglyhavean impactonbusiness,
climbtoS66 billion inthefirstsixyearsof especiallyhigh-energ}'consumingcompanies. Pressuretoreduceemissionswill
the 1990s, from S17 billion in the entire comefromvariousstakeholdersandresultinstrongerinternationalpressureand
decadeofthe1980s.
agreements, governmentlegislationandvoluntaryagreements.
TipsforSuccess Resource Use
Step2(page12)listsmorepotentialtrends Increasedeconomicgrowthandanimprovedstandardoflivingaroundthe
andissuesthatmayaffectyourbusiness. worldwillcreatemuchgreaterdemandforland,water,energv'andrawmaterials.
Thesefactorswillcontributetothecontinuingdamageoftheecologicalhealth
oftheplanet,asdemonstratedin issuessuchasozonedepletion;climatechange;
thedegradationofrenewableresources; theacceleratingrateofspeciesloss;and
theaccumulationofemissionsandwastesintheatmosphere,watersystems
andland.
The Benefits of Measuring and Reporting
Environmental Performance
Bymeasuring, reportingandcommunicatingyourcompany'senvironmental
performance,youcanaddresspublicconcernsaboutyourenvironmentalper-
formance; meetstakeholderdemandsforaccountabilit}';driveinternal change
inyourcompanyanddevelopacompetitiveadvantagethroughenvironmental
leadership.Thisguidewillassistyoutounderstandbetterhowto achievethese
benefits.
AddressPublicConcern
Publicconcernabouttheenvironmentisheretostayandaccordingtopublic
opinionresearch, anxietyisincreasingparticularlyinrelationtohealthissues.
EnvironicsInternationalstudiessuggestthata'greenwave'willagainemerge.
Theypredictthatin thenextfewyearswewillseeconsumersdemandthat
governmentandindustn,'takefurtherenvironmentalmeasures. Inaddition,
consumerswillexpresstheirdesiretospenddollarsonenvironmentally
credibleproductsandser\'ices.
MeetStakeholderDemand
Businessisfrequendycalledupontobeaccountableforitsenvironmental
performance. Stakeholders(government,thepublic,consumers, insurance
companies, financialinstitutions,corporatepurchasers,andboardsofdirectors)
wantmorethanwarmandfiizz}'greenplatitudes;theywanttoknowexactly
howacompanyisaddressingenvironmen—talopportunitiesandconcerns;and
the)'wanttoknowhowitisperforming supportedbyspecificperformance
dataandtrends.
Thelocalcommunityisanotherimportantstakeholdergroup.Whilesupportive
oftheimportanteconomicrolethatyourbusinessplays,communitymembers
alsowanttobeassuredthatyourcompanyisnotcreatinganyhealthorenvi-
ronmentalproblems.
"What gets measured and
reported reallygets done." Drive InternalChange
Itisacommon businessaxiom, that"whatgetsmeasuredgetsdone."
WoodruffeAssociatesInc. WoodruffeAssociatesInc. hastaken thisonestep further,statingthat"what
gets measuredand reported reallygetsdone." Bymeasuring, reportingand
communicatingEPIsacompanywillensuretangibleandmeasurableresults
from itsenvironmentalinitiatives.
CreateCompetitiveAdvantage
Somecompaniesarereluctanttobeopenwiththeirperformance.Yet,
othersareeager. Afterexaminingtheenvironmentaltrendssomecompanies
haveconcludedthatratherthan ignoretheenvironmental issues,theywillbe
thefirstto findacompetitiveadvantagefrom implementingand marketing
environmentallysuperiorproducts. Measuringandreponingtheirenvironmental
performancethroughtheuseofEnvironmentalPerformanceIndicators (EPIs)
isonetool todriveinternalchange,andcommunicatetheirmessage.
What are Environmental Performance Indicators?
EnvironmentalPerformanceIndicators (EPIs) measureand indicatesomeaspect
ofenerg)'and/orenvironmental performance.An EPI isaveryimportanttool
forusein reportingacompany'sperformance. Forexample,anEPI mayprovide
informationon
• Howefficientlyanorganizationorproductusesenergy,water, rawmaterials
orotherresources
• Howquicklyacompanyisreducingairorwateremissions
• Whattypesofwastearebeingreduced.
ThetypesofEPIsusedaroundtheworldaretremendouslyvariedanddepend
onthetypeofbusiness,goalsoftheorganization,impactsontheenvironment
andtheconcernsofvariousstakeholders.
Iv EnvironmentalPerformanceandCompetitiveAdvantage:ABusinessGuide
