New Bottom Line Volume 5.22 – Evaluating Corporate Environmental Performance

October 21, 1996

I received an e-mail recently from Pam Johnson, who teaches an advanced topics course in organizational behavior for OB majors at Miami University. “I wonder,” she asked, “what advice you all might provide about how they should go about evaluating corporate claims of environmental performance. Any suggestions?”

It’s a large question. As I thought about it, my brief answer to her gave rise to the additional thoughts I share here with you. In fact there are many ways to approach the question:

  • Compare what they do to what they say they do or intend to do. (What Stewart Brand once called the “talk-to-do ratio.”) This is the approach of Green Cross, a US “eco-label”, which certifies that a manufacturer’s claim, say that a product contains and certain percentage recycled content, is true.
  • Compare what they do to some ‘objective’ standard–either of process or outcome. Organic food certification is an example of the former; for example, did the grower follow certain procedures and avoid others? Pesticide residue testing is an example of the latter–regardless of practices; for example, does a food product carry more or less than a specified level of residues? At the risk of oversimplifying, the ISO 14000 environmental management standards are another example of the former, management systems-based approach the European Eco Management and Audit Scheme (EMAS) is another example of the latter, performance based approach.
  • Compare present performance with past performance. Observe the trendlines of key performance indicators. Toxic Release Inventory is one of the most commonly used–but to be meaningful should be assessed both as total releases and in relation to production, revenue or other relevant data series. – Compare what they do to what their competitors do.
  • This “benchmarking” approach is an important internal tool for monitoring best practices, and ensuring that a company is keeping up with best practices. While this is most often done as an individual company’s reconnaissance function, we have found it a useful collaborative process–even among competitors, where the information can be “blinded” to preserve confidentiality, while still enabling a company to compare itself to its peers.
  • Compare process and performance to existing protocols–of which there are many. In addition to the transnational and national standards like ISO 14000, EMAS, and BS7750 there are a host of criteria and checklists offered by a wide range of organizations such as the International Chamber of Commerce, The Global Environmental Management Initiative, Ceres, the Business Council for Sustainable Development, The Natural Step and no doubt many others

Whichever framework is used, there are several considerations relevant for both management and external watchdogs to keep in mind:

  • Look at real data reflecting physical reality in context— eg, energy per pound of product, or toxic releases per dollar of revenue–and pick relevant measures. [ASG Transport and Logistics, for example, tracks new business performance metrics like revenue per litre of fuel burned rather than tons of cargo shipped.]
  • Avoid such measures as “spending on EH&S”–which some companies actually flag as a positive indicator (I thought only governments were that foolish)–and which, I assert, is not.
  • Look for trends, not perfection. Environmental perfection is unfortunately not available in a physical world, since every transformative process has dissipative impacts. What does that mean in English? That there are no “green” companies, only companies more or less green than others. The goal then, is to move steadily in that right direction…and to do so rapidly enough to matter–ecologically and financially.
  • Be compassionate about the difficulties, and rhythms, of changing organizational and individual habits. We often forget, when we rail against institutions public and private (and we each have our favorites), just how challenging change really is. How well do any of us do with personal resolutions to exercise or lose weight or drop old habits? How much more difficult for an organization to overcome old habits, protected turf and institutional imperatives. (I offer this thought not as an excuse for inaction, but as a reminder of why potentially bold initiatives like “re-engineering” so often wind up taking the easy way out.)
  • Be ruthless about honesty. Compassion isn’t about being soft, or being lax. Honesty was always the best policy, more so in the wired world where most everything is available to most everyone. As Mark Twain once said, telling the truth is so much easier, because it there’s so much less you have to remember.

(c) 1996 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

May be posted intact–including this notice–in any non-commercial forum.
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