Industrial Environmental Performance Metrics: Challenges and Opportunities (1999)

Compared with small or medium-sized enterprises, large organizations often have greater resources to devote to improving environmental performance. With this in mind, it should be noted that this report carries the bias of the study committee, the bulk of whose members are presently, or have been, employed by larger firms.¹ The lessons and recommendations presented here may not apply to all industries or even all firms within the sectors analyzed. However, the committee believes that despite these limitations the results of this study provide a framework that will be useful to a wide range of industries as they seek to improve their development and use of industrial environmental performance metrics.

The four sectors studied—automotive, chemical, electronics, and pulp and paper—represent very different parts of the industrial system, as illustrated by the simple materials flow model in Figure 3-1. The automotive industry purchases both manufactured parts and refined materials, which it uses to manufacture vehicles. Some waste or nonproduct output that results from the manufacturing process is recycled directly into the input stream. Most vehicle parts and materials are reused or recycled at the end of their useful lives, some by the auto industry itself, others by industries separate from the original equipment (new-vehicle) manufacturers. The chemical industry primarily refines input materials and manufactures products and wastes. The industry also uses some of its product and

Figure 3-1

Analytic framework for the industry case studies.

NOTE: The electrical ground symbol indicates where materials, wastes, or products are disposed of or lost to the environment.

nonproduct output materials as input to other processes. The electronics industry buys semifinished parts, performs some further refinement, manufactures products, and produces nonproduct output and waste, some of which can be recycled. Semiconductors, for example, are incorporated into a wide range of finished electronics goods such as computers, whose disposal is becoming of increasing concern as more and more enter the waste stream. The pulp and paper industry often grows, harvests, and refines its own materials. It also uses some nonproduct output to generate energy and recycles significant fractions of both pre- and postconsumer products.

The analytic framework described in Figure 3-1 focuses primarily on materials flows and assumes that energy is integral to all aspects of operations. Environmental metrics examined in this context are applied to the production process and sometimes downstream to the end of a product's life, but they generally are not applied upstream to raw materials acquisition (except in the case of the pulp and paper industry, where there is an obvious link between raw material and product).

As knowledge about industrial impacts on the environment has improved, companies have been asked to begin to look beyond these limits. The boundaries of concern have begun to expand to include more of the product life cycle and the environmental performance of suppliers. Also emerging are societal concerns related to such issues as biodiversity and sustainable development, which traditionally have not shown up on industry's radar. Relating these concerns to typical industrial operations will be difficult. It will require the use of weighting schemes, long-term forecasting, and subjective judgments, all of which are presently subject to considerable uncertainty. Current practice still displays elements of the type of thinking prevalent 30 years ago, when environmental considerations were essentially independent of business decisions. This is beginning to change, however, both as a result of the competitive advantages being realized

and the long-term issues (e.g., ecosystem impacts, sustainability, and associated socioeconomic issues) that increasingly dominate discussions on environmental policy.

The following industry studies examine environmental performance metrics in three categories: resource use, environmental burden, and human health and safety. Corporate human health and safety metrics, while sometimes related to environmental metrics, are not the focus of this report. Nonetheless, because health and safety metrics are often tracked and reported by the same corporate unit responsible for environmental compliance, they are included in the summaries of metrics currently in use.

The diverse industries examined in this report serve to illustrate different aspects of metrics and their potential uses. The automotive case study explores the full spectrum of operational and product-related metrics used by an industry producing a finished consumer product. The chemical sector produces refined raw materials that are used primarily as feedstocks in other industries. This characteristic has pushed the industry to explore the use of weighting and normalization in its metrics. The analysis of the electronics sector details the use of metrics in the manufacture of semiconductors, which are incorporated into a wide range of finished goods. Addressed in this case study is the question of what measures of environmental performance are relevant to the final assembled product. The pulp and paper sector maintains some control over many stages of product life cycle, from raw materials acquisition to end-of-life processing (i.e., recycling). This presents the industry with the challenge of being more comprehensive in its metrics.

All four case studies present metrics in terms of an input-output flowchart and a matrix relating the metrics to manufacturing operations and products. Each provides basic background, including a description of the industry's production processes. Metrics currently in use are discussed in detail, as are the challenges to and opportunities for improving current metrics or developing new ones. The automotive study includes a number of metrics that are common to the other three sectors. Therefore, a full description of many of these common measures will not be undertaken for each industry.