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Towards strategic sustainability performance evaluation: a study of Portuguese
companies
Dias-Sardinha, I.M.
Publication date
2004
Link to publication
Citation for published version (APA):
Dias-Sardinha, I. M. (2004). Towards strategic sustainability performance evaluation: a study
of Portuguese companies.
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Chapterr 3.1
Fromm environmental performance evaluation to
eco-efficiencyy and sustainability balanced scorecards: A
studyy of organizations operating in Portugal
Idalinaa Dias-Sardinhaa, Lucas Reijnders", Paula Antunesc
aa
IVAM, University of Amsterdam, the Netherlands and FCT, New University of Lisbon, Portugal
bb
IBED, University of Amsterdam, the Netherlands
cc
FCT, New University of Lisbon, Portugal
Publishedd as: Environmental Quality Management, Winterr 2002: 51 -64
Abstract t
Inn response to increasing interest in sustainability, the environmental strategicc objectives of organizations are increasingly being broadened.. Not only environmental, but also social and economic performancess are coming up for evaluation. Joint evaluation of these threee performance components is now commonly called the "triple bottomm line" or sustainability performance evaluation.
Thee extent to which environmental, social, and economic issues are incorporatedd varies among organizations. Sustainability evaluation impliess the hard work of evaluating the long-term viability of environmental,, social, and economic aspects of organizational performance,, as well as their interfaces. Many authors dealing with environmentall performance evaluation have stressed the importance off linking performance measurement to the environmental strategic objectivess of organizations and to performance references.
Inn this article, we first briefly explain a conceptual framework that linkss evolving types of environmental strategic objectives, performancee evaluation, and specific performance references. We thenn discuss empirical results obtained from surveying a sample of organizationss operating in Portugal. Next, we compare our findings withh those of other empirical studies.
Basedd on answers given by the organizations studied, and the interestt expressed by companies operating in Portugal, we present cascadingg balanced scorecards with a set of aspects to be consideredd as references in performance evaluations when eco-efficiencyy and sustainability are the main strategic objectives. Finally, wee draw conclusions from our work.
Conceptuall framework
Ourr proposed conceptual framework serves both descriptive and normativee purposes. It draws on literature regarding corporate environmentall management models and environmental and businesss performance evaluation.
Wee propose six primarily environmental strategic objectives that may guidee performance evaluation (see also Dias-Sardinha and Reijnders,, 2001), as shown in Table 1. Of these, pollution prevention, eco-efficiency,, eco-innovation and (eco)-ethics are types of environmentall strategic objectives that go beyond traditional pollutionn control/regulatory compliance. They may be interpreted as stepss of varying magnitude in the direction of environmental sustainability. .
Eachh performance evaluation component needs specific references andd measurements relating to the corresponding strategic objectivess (Kaplan and Norton, 1996; Thoresen, 1999; Robert at al. 2002).. The strategic objectives and their respective performance referencess are presented in Table 1.
Forr large companies, performance objectives (in combination with measurements)) should be cascaded downwards within the companyy from the corporate level to business units, and ultimately too support functions and operations (Dias-Sardinha and Reijnders, 2001;; Epstein and Wisner, 2001). In such companies, multiple strategicc objectives may be applied.
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Inn the empirical research presented here, we looked at the statementss of industrial and service organizations operating in Portugall regarding environmental management. We asked them aboutt their environmental strategic objectives, their practices, and theirr environmental performance evaluations, using a questionnaire withh closed and open questions.
Wee analysed the type of indicators the organizations use, and want too use, in environmental performance evaluation, considering whetherr these seem linked to environmental strategic objectives and whatt these organizations have as performance references for evaluation.. The questions also allowed for indications about future needss regarding performance evaluation.
Thee questionnaire was presented to participants at two conferences onn the EU Eco-Management and Audit Scheme (EMAS, 1993), organizedd by Portugal's Instituto Nacional de Engenharia e Tecnologiaa Industrial (INETI). These conferences took place in Lisbonn and Porto, on 27 and 29 September 2000, respectively. Thee participants at these conferences were mostly from environmentall services or industrial organizations, and were particularlyy interested in environmental management issues. The participantss from services were mostly environmental experts who workedd for industrial organizations. The industrial participants were mostlyy technical people active in the fields of environment, health andd safety, or quality. In addition, some managers participated. Thee questionnaire was announced during the conferences and the participantss were invited to fill it out. During the two months following thee conference, participants who did not respond were contacted by telephonee and mail and asked to complete the questionnaire. Mostt of the industrial organizations surveyed were medium-sized companies.. Four were facilities in large industries {cork, electric appliances,, electricity production, and cement). Other industrial sectorss represented included textiles, plastics, paper, printing, building,, paints, metal-mechanic, foundries, solid waste treatment, automotivee parts, and tanning.
Onlyy one industrial organization was part of a larger company that operatedd internationally. Most of the responding industrial organizationss produced products for the national market. Five also producedd for the international market.
Thee service organizations were, with one exception, all operating nationally.. The service organizations included eleven consultancy/engineeringg organizations active in worker health and safety,, environment, financial, and quality issues; two sectorial associations;; a laboratory; a university; and two public services belongingg to national and local governments.
Thee final effective response rate for organizations was 49%, with 18 industriall and 17 services organizations represented. Our analysis wass based on the number of responding organizations. Hence, wheree an organization made more than one response (as was the casee for two industries and two service organizations), the analysis wass based on a combined response for the organization.
Questionnairee results
Currentt and Future Environmental Strategic Objectives off Organizations
Thee respondents found the strategic objectives outlined in Table 1 (withh the exception of eco-ethics) useful in describing their current andd intended environmental strategic objectives. Based on the proposedd list of six strategic objectives contained in that exhibit, 16 off the responding industrial organizations reported their current and futuree strategic objectives. Their reported objectives are indicated in Tablee 2.
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a> > ,> > o o 0> > o o o o £ £ a a to o a> > c c o o c c co o CD D O O 2 2 1 1 03 3 a a ra ra Q. . c c a> > 3 3 O O * * CD D CO O 3 3i i
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Onlyy four industrial companies mentioned eco-efficiency as a near-termm goal. Three mentioned sustainability as a more distant future goal. .
Servicee companies advocate eco-efficiency, eco-innovation, and sustainability.. Thus, we expect that, in the near future, eco-efficiency (integratingg pollution control and prevention) will become a more popularr strategic objective among these organizations.
Industriall Environmental Performance Evaluation
Off the 18 industrial organizations responding, six stated that they havee a formal system for environmental performance evaluation (EPE),, while ten stated that they do not have a formal EPE system. Ninee companies mentioned that they use, or will use, environmental performancee indicators.
Nonee of the service organizations reported internal environmental performancee evaluation systems. However, service companies gave exampless of indicators that industries might use, and they were similarr to the ones reported by industrial organizations.
Off the nine industrial organizations that report having performance indicators,, six have an EMS. Most of their environmental indicators relatee to operational aspects of manufacturing and use absolute values,, although some are based on relative values. Indicators mostlyy related to use of raw materials, energy, and water, and to
emissionss and effluents. Also mentioned were the financial costs of pollutionn control and workplace safety.
Recyclingg and reuse got scant attention. None of the organizations usedd indicators relating to environmental impacts, products, and life-cyclee thinking. In addition, evaluation of management environmental performancee was almost neglected. Hence, most indicators are thosee expected to be used in the evaluation of operational pollution control/regulatoryy compliance and pollution prevention practices, butt they are fragmentary (cf. Dias-Sardinha and Reijnders, 2001). Organizationss narrowly interpreted social and economic indicators. Thosee social indicators utilized were restricted to health and safety issues;; economic indicators were restricted to the financial aspects off environmental efficiency, such as energy efficiency.
Otherr social and economic indicators that have been advocated withinn the framework of sustainability, such as those relating to ethics andd financial business performance (e.g., GRI, 2000), were nearly absentt in the responses of industrial organizations.
Usee of Performance References
Basedd on a proposed list of performance references, industrial organizationss and service companies were asked to indicate which theyy use, or may use in the future, when performing or advising on environmentall performance evaluations. Table 3 shows the performancee references chosen by responding industrial organizationss according to the frequency with which they were mentioned. .
Tablee 3 - Performance references of industrial organizations Performancee references of
organizations s
1.. National legislation and ISO 14001 2.. Best technologies and comparison withh previous performance results 3.. European legislation and norms
suchh as EMAS
Environmentall strategic objective
Thee references used fit the strategic objectivee of pollution control/compliance andd part of pollution prevention (see Tablee 1 and Dias-Sardinha and Reijnders,, 2001)
Benchmarkingg against sector leaders was not mentioned by any industriall organization, although three consultancies stated they wouldd consider this as a future performance reference. Other references,, such as Factor X (Reijnders, 1998), AA 1000 (Accountability,, 1999), SA8000 (CEPAA/ SAI, 2000), or GRI (2000), weree not mentioned by any industrial or service organizations.
Sustainabilityy Performance Evaluation: Incentives and Barriers Althoughh sustainability is viewed as a distant goal by most industrial andd service organizations, we asked some questions regarding integratingg a sustainability performance evaluation process into organizationall activities. Based on two proposed lists, respondents weree asked to indicate which aspects they would consider to be barrierss to, or incentives for, sustainability performance evaluation. Thosee mentioned most often are shown in Table 4.
Tablee 4 - Incentives for, and barriers to, implementation of sustainabilityy performance evaluation
Incentivess for sustainability performancee evaluation
1.. To be able to evaluate the direction
towardss sustainability 2.. To allow for comparison of
performancee within the sector 3.. Interest of shareholders and clients
inn sustainability performance 4.. Possible future legislation
regardingg sustainability performancee evaluation
Barrierss to sustainability performance evaluation n
1.. Lack of sufficient information about howw to measure sustainability 2.. No references to compare the results 3.. Not imposed by law
4.. No model of sustainability
performancee evaluation available that couldd be applied in stages
5.. No current formal implementation of environmentall performance evaluation n
Seventeenn industrial organizations and 16 service organizations indicatedd that they would be interested in a handbook about implementation,, measurement, and performance reference values forr sustainability performance evaluation. The respondents stressed thatt the information and manual should be clearly written and suitablee for adaptation by organizations, and should contain practicall examples. Respondents also noted that this material shouldd be aimed at corporate and/or business decision-makers.
Comparingg our results with previous studies on
environmentall performance evaluation
Mostt of the previously published studies we have reviewed suggest thatt companies are using what Bennett and James (1999d) have calledd "the first generation of performance evaluation models." This generallyy matches what we found in our study, as reported here. Below,, we briefly discuss some of the pertinent studies.
Bennettt and James
AA study for the Association of Chartered Certified Accountants (ACCA)) (Bennett and James, 1999d) provides some indication of the relationn between the environmental performance evaluation process proposedd by ISO 14031 and actual EPE practice in organizations in thee United Kingdom. This study involved the top 100 companies in thee U.K. and focused on the use of several different categories of indicators. .
Thee most reported indicators were those relating to issues such as effluentt COD {chemical oxygen demand) or BOD {biological oxygen demand),, solid wastes, emissions, and resource consumption (e.g., energy,, materials, and water). These indicators were used mainly in responsee to regulatory requirements.
Lesss than 50% of the companies surveyed used relative indicators thatt measured the efficiency of energy, materials, and water use. Somee indicators used by the respondents were related to environmentall financial costs and gains, but these were restricted to thee areas of energy and waste.
Manufacturingg indicators were much more developed than managementt indicators, as was the case in our own study.
Charackliss and Richards
AA work published by the U.S. National Academy Press (Characklis andd Richards, 1999) found that the environmental metrics of four industryy sectors were essentially manufacturing related. The indicatorss used were mostly operational and related to pollutant releases;; greenhouse gas emissions; percentage of recycled materiall utilized; energy, material, land, and water use; packaging; andd reporting of environmental incidents. There were few indicators relatedd to products. Supply chain indicators were nearly absent. Thesee results are not very different from those for the sample that we reportt on here.
ISO/TRR 14032 Examples
Thee examples of environmental performance evaluation case studies givenn in ISO/TR 14032 (1999) again permit us to draw similar conclusions. .
KPMGG Study
Anotherr study done by KPMG (1999) on environmental reporting by thee largest companies world-wide in 1999 indicates that most quantitativee data disclosure related to waste disposal and air emissionss with respect to company plans and targets. However, comparedd to 1996 reports, companies in 1999 placed more focus on energyy conservation, employee involvement, supplier requirements, legislativee compliance, and sustainable development.
Onn average, the large companies studied by KPMG seem to have moree ambitious reported objectives than do the companies surveyed inn the other studies mentioned above or the sample discussed here. Itt is not clear, however, to what extent the reported objectives of the KPMGG study companies actually correspond to better practice (Jung efa/.,2001). .
Boirall Study
Wee found that companies with an EMS seem more likely to practice pollutionn prevention. This finding fits with Boiral (1998, in Roy et al., 2001),, which finds that an interest in environmental management systemss relates to development of preventive approaches and resultss in a need to integrate environmental concerns into existing managementt systems.
Eco-efficiencyy and sustainability performance
evaluation n
Ass pointed out above, companies operating in Portugal are interestedd in sustainability performance evaluation. In addition, severall companies intend to change their strategic objectives to includee eco-efficiency in the near future. Moreover, there have been additionall queries by companies operating in Portugal regarding the availabilityy of key indicators to evaluate their future performance.
Previouss Performance Evaluation Proposals
Inn recent years, several proposals have been made regarding environmentall and sustainability performance evaluation and reportingg tools.
Thee ISO 14031 (1999) standard concerning environmental performancee evaluation suggests a number of useful indicators, and advocatess using management performance indicators. Roy et al. (2001)) stress the importance of the latter. So does Mauser (2001), whoo has shown that management performance is an important determinantt of companies' future environmental performance.
Olsthoornn et al. (2001) have stressed the standardization of environmentall performance evaluation; based on empirical data, theyy have presented a set of five indicator categories that may be includedd in an environmental performance evaluation standard tool orientedd to external communication.
Itt is, however, doubtful whether a single, standard set of five indicator categoriess is adequate. As strategic objectives and performance referencess change, suitable performance indicator categories may alsoo need to change. Moreover, Olsthoorn et al. (2001) proposed indicatorss that are mostly useful in evaluating only the environmental dimensionn of sustainability.
Thee Global Reporting Initiative (GRI, 2000) offers a more complete approachh to sustainability evaluation aimed at an external audience. GRII assumes integration of the social, environmental, and economic dimensions.. However, the environmental and social externalities neededd to evaluate sustainability performance are only briefly referencedd (GRI, 2000).
Velevaa and Ellenbecker (2001) have developed a five-level indicator frameworkk and have suggested a standard set of 22 indicators of sustainablee production; these are helpful for both internal practice andd external use. The five levels show some similarity to the analyticall framework summarized in Table 1.
Thee 22 standard indicators work well for evaluating company environmentall performance when the organization is focused on the strategicc objectives of pollution control/regulatory compliance and pollutionn prevention, but they work less well for more advanced objectives.. Thus, the standard indicators presented by Veleva and Ellenbeckerr (2001) have limited utility for performance evaluation whenn eco-efficiency or sustainability is the strategic objective. Thee SIGMA Project (BSI ef al., 2000) and Epstein and Wisner (2001) havee proposed using the balanced scorecard (BSC) for organizationall sustainability performance evaluation. The inventors off the balanced scorecard (Kaplan and Norton, 1996) have defined itt as "a set of measures that gives top managers a fast but comprehensivee view of the business."
Thee original BSC format includes four perspectives: financial; customers;; internal processes; and learning and growth. The financiall perspective in a BSC indicates what financial performance aa business strategy is expected to achieve (Figge ef al. 2002; Kaplan andd Norton, 1996). Changes to the traditional BSC may allow for indicatingg the level of social and environmental performance that an organizationn expects to achieve.
Largerr companies use balanced scorecards in multiple forms, some off them integrating environmental issues. These fit into "the third generationn of environmental performance evaluation" in the
classificationn model of Bennett and James (1999d).
Epsteinn and Wisner (2001) have proposed that the perspectives mentionedd by Kaplan and Norton (1996) should include objectives, goalss and measurements regarding environmental strategy. Figge et al.al. (2002) have increased the number of perspectives to be used by
includingg a fifth non-market perspective. Bieker and Waxenberger (2002)) have also proposed a fifth perspective called "society." Thee SIGMA Project (BSI ef al., 2000) applies four perspectives, with changess of scope in two of them. The scope of the financial and customerr perspectives is enlarged to encompass sustainability and stakeholders,, respectively. We follow this model, but propose to adaptt the scope of the first perspective (sustainability) to the actual strategicc objectives of the organization.
Ourr Proposal for Thematic Cascading Balanced Scorecards Inn Tables 5 and 6 we propose aspects for inclusion in a thematic cascadingg BSC that can serve as references where eco-efficiency (Tablee 5) or sustainability (Table 6) are the strategic goals of an organization. .
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mm = CO SS C CO T J 5 E E coo £ 3>Tö c öö 2 - o- £ EE « - 3 -- Ë 2 ty>> c *5Wee chose to make the BSC thematic to avoid creating a balanced scorecardd that was too complex (c.f. Kaplan and Norton, 1996). See figg 1 for a depiction of a cascading sustainability balanced scorecard. .
Figg 1 - Cascading sustainability balanced scorecard
Department t VV Business
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Epsteinn and Wisner (2001) stress that, for large companies, strategic objectivess at the corporate level should be cascaded downwards to businesss units and ultimately to departments, which complements ourr previous proposal (Dias-Sardinha and Reijnders, 2001). The cascadingg downwards of objectives and measurements should take notee of the level of aggregation required. The objectives and measurementss should fit the lowest level of the organizational hierarchyy where decisions can be made appropriately, as pointed outt by Olsthoom etal. (2001).
Thee use of a cascading BSC may reduce the gap between reported statementss at the corporate level and reported performance of actual practicee (Jung ef a/., 2001). It may also lead to better exploitation of thee multiple functions of environmental indicators (Johnston and Smith,, 2001; Zackrisson ef a/. (1999) in Robert et al. 2002).
Thee BSCs proposed here allow for cascading from the corporate levell to the business unit and to individual departments. They also providee for causal links among the four relevant perspectives: learning;; processes; stakeholders; and the strategic objectives of eco-efficiencyy or sustainability.
Wee have noted environmental, social, and related economic aspects andd measurements that may be included in a balance scorecard for appropriatee evaluation of eco-efficiency and sustainability. Operationall aspects and related measurements that fit the strategic objective,, and which have been found to positively correlate with performancee outcomes (i.e., leading and lagging indicators), also aree included. In addition, we have included aspects referring to local andd global environmental and social issues.
Thee actual balanced scorecard format used in any individual organizationall setting will depend on specific factors such as the organization'ss operating country and culture, the relevant economic sector,, the size of the organization, and the unique strategic objectivess of the organization. Companies will need to limit the numberr of aspects included in a business balanced scorecard, as Kaplann and Norton (1996) have stressed.
Thee suitability and practicability of the balanced scorecard approach outlinedd here will be tested in companies operating in Portugal in the nearr future.
Conclusions s
Basedd on the questionnaire answers we received from the surveyed companiess operating in Portugal, the following conclusions can be drawn: :
Thee respondents found the strategic objectives of regulatory compliance/pollutionn control, pollution prevention, eco-efficiency, eco-innovationn and sustainability (as outlined in Table 1) useful for describingg their current and intended practices. Organizations sometimess combine two or more environmental strategic objectives. Pollutionn control/regulatory compliance and pollution prevention weree the main strategic objectives applied by the responding organizations.. Several companies state that they intend to change theirr strategic objective to eco-efficiency in the near future.
Thee small and medium-sized companies questioned seem not to practicee formal environmental performance evaluation. However, suchh evaluation is common among the larger industrial organizationss surveyed. The latter are also more likely to have an environmentall management system, and seem more ambitious as to environmentall improvement.
Whenn companies apply the strategic objectives of pollution control/regulatoryy compliance and pollution prevention, there seems too be a positive relationship among company strategic objectives, performancee references, and the indicators used. However, the set of indicatorss used is fragmentary. Those in use by industrial organizationss are mainly quantitative and absolute. Few relative or efficiencyy indicators are used. The reported indicators serve to measuree the performance outcomes of activities and some aspects off the efficiency of the enterprise. Management performance measurementss are rarely used. The social and economic indicators mentionedd by respondents were associated with worker health and safetyy and with environmentally relevant manufacturing efficiencies (e.g.,, energy efficiency).
Benchmarkingg against sector leaders was not mentioned. However, thiss may change for companies that are subject to the EU's IPPC (Integratedd Pollution Prevention and Control) Directive (2001), which requiress the use of "best available techniques."
Respondentss showed an interest in eco-efficiency and sustainability performancee evaluation. Accordingly, we have proposed aspects andd measurements relating to eco-efficiency and sustainability performancee evaluation as part of our balanced scorecards.
Acknowledgements s
Wee would like to acknowledge Cristina Rocha and Constancy Penedaa of Portugal's Instituto Nacional de Engenharia e Tecnologia Industriall (INETI) for their help in presenting the questionnaires at the Lisbonn and Porto conferences. We also wish to acknowledge the cooperationn of our respondents.
References s
Chapterr 3.2
Evaluatingg environmental and social performance of
largee Portuguese companies: A balanced scorecard
approach h
Idalinaa Dias-Sardinhaa, Lucas Reijnders ö,
aa
IVAM, University of Amsterdam, the Netherlands and FCT, New University of Lisbon, Portugal
bb
I BED, University of Amsterdam, the Netherlands
Publishedd as: Business Strategy and Environment {in press)
Abstract t
AA thematic balanced scorecard format was used to address environmentall and social performance evaluation of thirteen large companiess operating in Portugal. Financial aspects of environmental andd social company activities are also included. Companies were categorisedd as to their actual performance status using a predefined performancee framework. Three categories were found: compliance withh the law while emphasising pollution control, pollution prevention andd eco-efficiency. Management tools and procedural matters were foundd to be most relevant for categorisation. Often, reported informationn did not allow for quantitative evaluation of environmental burdenn reduction. Use of the thematic balanced scorecard format wass useful to better understand the strengths and weaknesses of linkss between objectives and measurements, initiatives and achievements.. Improvement as to environmental performance was foundd to be paralleled by increased social performance, suggesting thatt a multi-level "sustainability" performance categorisation of these Portuguesee companies is feasible. Driving forces for environmental managementt initiatives were found to differ by category of performance. .
Introduction n
Environmentall performance evaluation is, according to International Standardd Organization (ISO) 14031 (1999), a "process to facilitate managementt decisions regarding an organization's environmental performancee by selecting indicators, collecting and analysing data, assessingg information against environmental performance criteria, reportingg and communicating and periodically reviewing and improvingg this process".
Manyy environmental performance evaluation models for organizationss have been proposed (e.g., Azzone era/., 1996; Azzone andd Manzini, 1994; Bartolomeo, 1995; Bennett and James, 1999; BMUU and UBA, 1997; Callens and Tyteca, 1995; Eagan and Joeres, 1997;; ISO 14031, 1999; Lehni, 1999; Mauser, 2001; Olsthoorn etal., 2001;; Skillius and Wennberg, 1998; Thoresen, 1999; Young and Richard,, 1999; Wehrmeyer, 1995).
Withh the emerging interest in corporate social responsibility, models forr sustainability performance evaluation have also been proposed forr self-assessment, benchmarking and reporting (e.g., Atkinson, 2000;; Azapagic, 2003; BSI et al., 2001; DJSGI, 1999; GRI, 2002; Velelaa and Ellenberg, 2001). These models cover environmental, sociall and economic aspects of company performance.
Thee operationalization of environmental and sustainability performancee evaluation in companies needs guidance regarding the choicee of adequate objectives, targets to achieve and indicators (Bennettt and James, 1999c; Upham, 2000). Besides, evaluation formatss needs to be designed on the basis of the company's current andd intended future performance level.
AA variety of company's environmental management classifications havee been proposed to deal with the development over time of company'ss environmental responses and environmental performancee (e.g., Callens and Wolters, 1998; Ghobadian et al., 1998;; Hunt and Auster, 1990; Roome, 1992). Those models deal with differentt perspectives on or dimensions of company environmental performance.. Companies are classified in terms of stages or types dependentt on criteria that are related to those perspectives e.g., internall processes and business environment.
Thosee models have been criticized as to the subjectivity of classification,, their mostly (linear) evolutionary character and the difficultyy to put them in to practice (Hass, 1996; Hemel, 1998; Kolk, 2000;; Mauser, 2001). On the other hand environmental management classificationn models have also been argued to be useful (Aragon-Correa,, 1998; Bakker 2001; Bieker and Gminder, 2001). Kolk (2001) hass in this context stressed the importance of specifying managementt characteristics and performance indicators.
Too deal with the need for guidance regarding performance referencess (also called performance criteria or performance destinationn points) we defined an essentially evolutionary performancee framework (Dias-Sardinha and Reijnders, 2001) (see fig 1).. This framework links environmental and "sustainability" strategic objectives,, performance references and performance evaluation format,, while specifying management characteristics and performancee indicators.
Figg 1 - Performance framework
Organization n .. Internal Drivingjorcej j Strategic c objectives s (1-6) ) * * Performance e references s (1-6) ) ^^ • Jl l / \ \ Performance e evaluation n (Balancedd storecard) (1-6) ) f f
-4->'' • Environmental and sustainability strategic objectives (1-6) that requiree (1-6) specific performance references
" ~ PP . Strategic objectives and associated performance references may have consequencess for the format and content of organization' s performance evaluation •• . Comparing performance evaluation results with performance goals ... ^ . Performance status of the organization evaluated
•• • • Internal and external driving forces influence strategic objectives and activities
Thee performance framework includes six broad strategic objectives: compliancee with the law while emphasizing pollution control, pollutionn prevention, eco-efficiency, eco-innovation, eco-ethics and sustainability.. The first three strategic objectives and associated performancee references are summarized in table 1, as they are particularlyy relevant to the study present here.
Tablee 1 - Strategic objectives and related performance referencess for organizations
Strategicc objectives
Compliance e
Compliancee with relevant regulations,, voluntary agreements {suchh as covenants) and general codess of conduct voluntarily adheredd to, emphasising on pollutionn control
Pollutionn Prevention
Optimisationn of resource consumptionn and prevention of wastee (including emissions) with emphasiss on production and highlyy negative-impact wastes, in linee with financial targets of the company,, such as cost reduction
Eco-efficiency y
Reductionn of resource intensity andd minimization of environmental impactss of production and products/services,, together with valuee creation by continuous incrementall improvement
PERFORMANCEE REFERENCES
•• No violations of regulations, voluntary agreements andd general codes of conduct voluntarily adhered to.. Violations include both substantive and procedurall environmental matters.
Procedural:: such as having an adequate mnnitnrinrj and/orr environmental management system
•• Reference values of best preventive technologies andd practices available to the sector
•• Proactive attitude concerning future changes in the law •• Reduction of environmental burden with up to a
factorr of 1.5 (FX .<30% reduction) (Berkel van, 2000) iff compared with average company in compliance Procedural:: Effective management stmntnra fnr pollutionn prevention, preferably following standards relatedd to an environmental management system, with effectivee monitoring and information systems •• Application of most eco-efficient practices,
technologies,, and products/services available, preferablyy using a product life-cycle perspective •• Reduction of environmental burden up to a factor of
44 (30%<.FX<75% reduction) if compared with averagee company in compliance
•• Value creation coupled with continuous improvement t
Procedural:: Following standards relatarl tn an environmentall management system Adaptedd from Dias-Sardinha and Reijnders (2001).
Strategicc objectives such as given in the table 1 may be found in companiess as result of strategic planning or due to the introduction off emergent concepts (Kolk, 2000). They reflect major differences in expectedd environmental and, where applicable, social performance. Thoughh the framework is essentially evolutionary no claim was made ass to linear progress along the categories or to precise borders betweenn categories.
Forr each strategic objective core performance references were indicatedd referring mainly to the internal dimension as: procedural matters,, use of management tools and technology and the reduction off environmental burden. The latter (Reijnders, 1998) was expressed inn terms of quantitative reduction of yearly non-product output
(e.g.,, waste, emissions) and resource input (e.g., water, energy) beyondd compliance per unit of output.
Thee strategic objectives and associated performance references mayy be linked to specific performance evaluation formats. The performancee evaluation format was further developed on the basis of ann empirical study (Dias-Sardinha et ai, 2002) concerned with 35 mainlymainly medium sized organizations operating in Portugal (industries andd environmental services).
Itt was found that the suggested broad strategic objectives and associatedd performance references were considered useful with the exceptionn of the eco-ethics category. Categories found to be useful byy those organizations were current (compliance, pollution prevention)) and intended (eco-efficiency, sustainability) strategic objectivess and performance status. It also was found that some of thosee organizations combine two or more of the proposed broad strategicc objectives and that also some social issues were addressed.. This is in line with Mauser's (2001:29) observation that "thee idea that more than one ideal strategy can lead to an optimal environmentall performance may be much closer to reality". The link betweenn the strategic objective(s) and performance references on onee hand and measurements and performance achievements on the otherr hand was fragmentary for those organizations. Therefore, to improvee operationalization of performance evaluation, while focussingg on the links between strategic objectives and measurementss and expected achievements a thematic balanced scorecardd format (modified from BSI era/. 2001) was proposed to be appliedd by organizations that strive for sustainability. It covers four mainn dimensions of or perspectives on and environmental and social aspectss of company performance and the financial aspects thereof. Thesee cover a broader range of characteristics than the core
performancee references outlined by Dias-Sardinha and Reijnders (2001). .
Inn this paper, we further investigate the link between the broad strategicc objectives and the format of performance evaluation by usingg a thematic balanced scorecard format for performance descriptionn of thirteen large companies operating in Portugal.
Regardingg the companies studied we will deal with the following researchh questions:
