UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl)
Towards strategic sustainability performance evaluation: a study of Portuguese
companies
Dias-Sardinha, I.M.
Publication date
2004
Document Version
Final published version
Link to publication
Citation for published version (APA):
Dias-Sardinha, I. M. (2004). Towards strategic sustainability performance evaluation: a study
of Portuguese companies.
General rights
It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons).
Disclaimer/Complaints regulations
If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: https://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible.
Sustainabilityy Performance Evaluation
AA study of Portuguese companies
Sustainabilityy Performance Evaluation
AA study of Portuguese companies
Thesiss University of Amsterdam, the Netherlands
©© 2004, I. M. Dias Sardinha Layoutt and cover: Bruno Fragoso Coverr design: Rui Sousa
Printedd by: Grafica Rodrigues, Lda., Portugal
Noo part of this book may be reproduced in any format by print, photocopy,, microfilm or any other means without the written permissionn from the author.
ThisThis study was carried out at IVAM, University of Amsterdam in a
co-operationco-operation with the Department of Environmental Sciences and EngineeringEngineering from New University of Lisbon.
FinancialFinancial support for this thesis by Fundagao para a Ciência e
TecnologiaTecnologia (FCT), programs PRAXIS XXI and POCTI with a grant ref. BDIBDI 18291 I 98 is gratefully acknowledged.
Sustainabilityy Performance Evaluation
AA study of Portuguese companies
Academischh Proefschrift
terr verkrijging van de graad van doctor aan de Universiteitt van Amsterdam op gezag van de Rectorr Magnificus prof. mr. RF. van der Heijden tenn overstaan van een door het college voor promoties ingesteldee commissie, in het openbaar te verdedigen in
dee Aula der Universiteit
opp donderdag 16 september 2004, te 10.00 uur
door r
Idalinaa Maria Dias Sardinha
Promotor r
prof.. dr. L. Reijnders
Co-promotor r
prof.. dr. M. R B. da C. Antunes
Overigee leden
prof.. dr. J. C. van Weenen prof.. dr. J. E. M. Kolk prof.. dr. R M. C. Ferrao prof.. dr. R. J. F. F. dos Santos
Myy first acknowledgements go to Lucas Reijnders. He was the most attentive,, patient and devoted promoter that a PhD researcher wishes.. He was the best "co-pilot" to work with. From the beginning off this thesis he has always offered me technical and personal supportt without which it would have been difficult to accomplish this work.. To him I give many and warm thanks.
II also want to thank for the useful help, and comments on the papers, particularlyy at the end of the project, and on the final thesis from Paulaa Antunes, my co-promoter, that were given in spite of the distance. .
II am also much indebted to Peter Koppert, my colleague at IVAM withh whom I had discussions about my work and a very good personall relationship. I also acknowledge the essential and outstandingg co-operation of all the respondents of the companies, whoo mostly did show considerable interest in my work. I would like too thank all the colleagues involved in data collection, the ones that havee given their opinion on the work and the ones have helped with itss organization.
Otherr people have been part of my life during the time this work took placee and have indirectly contributed to it, giving me a great deal of support. .
IVAMM was for 4 years the place where I worked. Many thanks, to all myy colleagues for their warm welcome and friendship. I am indebted too the friends I met in Holland with whom I shared the experience of beingg a citizen of the world in spite of still having Portuguese cultural roots. .
Thankk to my friends Ana Sofia Sampaio and Teresa Chinita that maintainn their phone and friendship line open. My warm thanks goes too you Jorge and "our love", which even at a distance is always there too fulfil part of my life. My sister and her family who I enormously love andd can rely on. My family, my mother and father who allowed me to saill by a simple phone call to a known immutable place.
II thank all the people that are not here referred but although having directlyy or indirectly been with me sharing my last five years' period. Amsterdam,, February 2004
Scopee and Research Objectives 9
Thesis'ss Outline 12
SECTIONN I - GENERAL INTRODUCTION 13
Chapterr 1.1 - Research Background 15 Chapterr 1.2 - Conceptual Research Framework 30
SECTIONN 2 - DEVELOPMENT OF THE CONCEPTUAL
RESEARCHH FRAMEWORK 33 Chapterr 2 - Environmental Performance
Evaluationn and Sustainability
Performancee Evaluation of Organisations:
Ann evolutionary framework 35 Eco-ManagementEco-Management and Auditing 8(2): 71-79
SECTIONN 3 - EMPIRICAL STUDY 47
Chapterr 3.1 - From Environmental Performance Evaluationn to Eco-Efficiency and Sustainabilityy Balanced Scorecards:
AA study of organizations operating in Portugal. . . .49 EnvironmentalEnvironmental Quality Management, Winter 2002: 51-64 (2002) Chapterr 3.2 - Evaluating Environmental and
Sociall Performance of Large
Portuguesee Companies: A balanced
scorecardd approach 75 BusinessBusiness Strategy and Environment (in press)
Chapterr 3.3 - Developing a Sustainability Balanced Scorecardd for the Environmental Services off Three Business Units of Large
Portuguesee Companies 103 CorporateCorporate Social Responsibility and
EnvironmentalEnvironmental Management (submitted)
SECTIONN 4 - GENERAL CONCLUSIONS AND REFLECTIONS .127
Chapterr 4.1 - General Conclusions 129 Chapterr 4.2 - Reflections Regarding Further Work 133
Summaryy 135 Samenvattingg 143 Fulll List of References 151
Scopee and research objectives
Muchh of the performance evaluation of companies focuses on financiall measurements. Success of companies is mostly evaluated throughh above average stock market performance and shareholder valuee creation (Johnson and Soenen, 2003). When compared with environmentall and social performance evaluation, financial performancee of company's evaluation is well established, through usee of standard indicators, regulated accounting, financial reporting standards,, screening and ratings. Nonetheless, still much has to be donee to the increase of transparency about financial performance of companiess to avoid mistrust from stakeholders (Bendell and Young, 2003)) in view of, e.g., recent scandals affecting multinational companies.. The improvement of financial accounting and business ethicss that have been claimed to be necessary in this context are outsidee of the scope of this research. However, improved practices byy companies regarding sustainability performance evaluation might contributee to increased transparency and trust.
Whenn this research started, in the autumn 1999, environmental performancee evaluation was subject to extensive research. That researchh offered insight into, e.g., indicators, environmental performancee evaluation frameworks and benchmarking (e.g., Azzonee and Manzini, 1994; Bennett et a/., 1999b; ISO 14031, 1999; WBCSD,, 1998). Bennett and James (1999c) did show that environmentall performance evaluation had a history of great diversityy and that different aspects of performance evaluation were onlyy recently being integrated. It was also shown that environmental performancee evaluation was increasingly integrated in overall companyy performance evaluation.
Relatedd with environmental performance evaluation there also was researchh regarding the development (evolution) of environmental management,, strategies and performance in companies. This has givenn rise to typologies and classifications of 'evolutionary stages' (e.g.,, GEMI, 1992; Ghobadianefa/. 1998; Roome, 1992; Shrivastava, 1995).. Such categorizations were in turn criticized mainly because of thee criteria used to define evolutionary stages and regarding their suitabilityy for operationalization (e.g., Hass, 1996; Mauser, 2001). Specificityy and clarity as to the criteria for evaluation of the "greening"
wass claimed to be necessary to improve these categorizations (Kolk, 2000). .
Inn addition, by the time that work on this thesis started sustainability performancee evaluation of companies emerged. This broadened environmentall performance evaluation of companies to include sociall aspects {e.g., AccountAbility, 1999; Ditz and Ranganathan, 1997). .
Thiss development led to efforts to integrate environmental, social andd economic domains in company's performance evaluation. Such integratedd evaluation became known as triple bottom line or sustainabilityy performance evaluation. It was argued that this performancee evaluation could contribute to overall business [performancee evaluation because of the contribution of activities in thee field of sustainability to long-term shareholders value (e.g., DJSGI,, 1999; FTSE4G0OD, 2001).
Thesee developments were also accompanied by calls to standardize environmental,, social and sustainability performance evaluation for manageriall control, strategy evaluation and disclosure of performancee by companies. This standardization was claimed to be necessaryy in view of the formalization of environmental/ sustainability management,, accountancy practice, interests of shareholders and thee right of stakeholders to be informed (Ditz and Ranganathan, 1997;Tytecaefa/.. 2002).
Thee emergence and ambition of triple bottom line or sustainability performancee evaluation does not guarantee that the social and environmentall domains of company are now treated on a par with thee financial domain. Environmental performance evaluation is for mostt companies for instance still more an operational (monitoring) matterr and less a matter of management and strategy evaluation (e.g.,, Cramer, 2002; James and Bennett, 1995; Shrivastava and Hart, 1995).. For social matters the situation is similar.
Fromm the point of view of triple bottom line value creation, social and environmentall matters are important in their own right (Cramer, 2002; Mayheww (1998) in Bennett and James, 1999c), apart from their contributionn to market share, profit or shareholder value. In line with this,, in this thesis, the company's environmental and social performancess are assumed as strategically important as financial performance. .
Inn this context, there is a major challenge to define what might constitutee strategic sustainability performance (outcome), to measuree such performance and to identify the activities that contributee to sustainability performance.
Too measure strategic environmental, social and sustainability performancee in companies a clear link is necessary between environmentall and social strategic objectives, activities and measurementss (e.g., Bennett and James, 1999c; Neely, 1999). Thiss thesis has two relevant objectives within the framework of environmental,, social and sustainability performance evaluation. Thee first objective is to verify the usefulness of a typology of performancee (evaluation) which stresses the link between environmentall and sustainability related strategic objectives that mightt evolve in companies and strategic performance evaluation. Thiss objective is the main subject of chapters 2 and 3.1.
Thee second objective of this thesis is the (further) development of a balancedd scorecard tool to improve the link between environmental andd sustainability related strategic objectives and strategic performancee evaluation by companies. Use of such a balanced scorecardd may in turn help to improve the typology mentioned under thee first objective of this thesis. This second objective is a main themee in chapters 3.2 and 3.3.
Thee second objective builds on earlier work on the joint measurementt of tangible (e.g., financial) assets and intangible assetss (e.g., employee satisfaction, environmental matters) by Kaplann and Norton (1992a, b) and others (e.g. Epstein and Wisner, 2001;; Bieker etal. 2001; Figge et al. 2002; Johnson, 1998; Zingales efa/.,2002). .
Thesis'ss outline
Thee thesis consists of four main sections.
Sectionn 1 is an introductory one. Chapter 1.1 firstly deals with the processess of environmental, social and sustainability performance evaluation.. The central concepts, the characteristics, the information hierarchy,, the functions and current frameworks of performance evaluationn are outlined. Secondly, to deal with the evolution of environmentall and sustainability related activities in companies performancee classifications and typologies are discussed. Thirdly, developmentss as to balanced scorecard, which will be applied in this thesis,, are outlined. Chapter 1.2 provides a complement to the researchh conceptual framework that is further discussed in the Sectionn 2.
Sectionn 2, which is Chapter 2, elaborates on the conceptual frameworkk of this thesis, which underlies the empirical work.
Sectionn 3 presents to the empirical part of this thesis. Chapter 3.1 describess current practice regarding strategic objectives, performancee evaluation (measurements, initiatives and achievements)) in 35 Portuguese small and medium size organizationss and ambitions of the companies concerned regarding futuree performance evaluation. Chapter 3.2 provides the performancee and performance evaluation categorization of 13 large Portuguesee parent companies and business units using the format of sustainabilityy balanced scorecard. This scorecard focuses on social andd environmental aspects of performance, and the financial implicationss thereof. Chapter 3.3 describes the development of a sustainabilityy balanced scorecard for the environmental services of 3 largee Portuguese business units.
Sectionn 4 of this thesis presents in the Chapter 4.1 the general conclusionss of this thesis and in the Chapter 4.2 the reflections for furtherr work.
Summariess in English and Dutch are included. A full list of references andd the biography of the author are included at the end of the thesis.
Thiss thesis deals with sustainability performance evaluation of organizations.. The focus is on the environmental and to a lesser extent,, social strategic objectives of companies and on their relation withh company's performance evaluation. The use of sustainability balancedd scorecards will be an important topic. Portuguese companiess will be studied.
Thiss general introduction is intended to shed light on the research backgroundd and to introduce the conceptual research framework.
Chapterr 1.1
Researchh Background
Foundationn of environmental, social and
sustainabilityy performance (evaluation) of
organizations s
Sociall performance of an organization is the result of the interactions off the activities, products or services with the social environment, particularlyy with the relevant direct stakeholders within it (Bennett et at.,at., 1999b). It might be argued that the social performance of organizationss is steered by social management. The environmental performancee of organizations is about the outcomes of the interactionss with the natural environment. This can also be defined in termss of environmental impact (effect) of environmental burden (pressure)) of an activity, product or service resulting from the interactionn with the natural environment.
Environmentall management of an organization consists of instrumentss and actions, which include the process of performance evaluation,, designed to contribute to the improvement of environmentall performance (modified from Mauser, 2001).
Sustainabilityy performance of an organization is the aggregated of thee environmental, social and economic outcomes, which in part reflectss the result of the trade-offs between each domain.
Inn this thesis, environmental, social and sustainability performance aree taken in their broad sense of performance, which includes managementt activities and outcomes.
Performancee evaluation is a process that establishes the performancee status of activities, products or services. It includes dataa collection, measurement, analysis, comparing results with predefinedd goals and revision of the total process (e.g., Bennett et a/.,, 1999b; ISO 14031,1999; Mauser, 2001).
Strategicc performance evaluation includes all the above mentioned operationall elements but includes two more, one at the beginning andd one at the end. The first element is the identification of the strategicc performance goals/ targets. Preferentially a stakeholder andd scenario analysis needs to take place to identify the relevant strategicc objectives, measures, initiatives and targets to be achieved. Thee last element of a strategic performance evaluation refers to the changee of the objectives, measures and/or initiatives initially consideredd to be adequate to meet strategic performance goals, if afterr an implementation evaluation period they prove to be inadequatee to capture the "right" strategic performance.
Regardingg companies environmental, social and sustainability performancee evaluation can take two main forms, dependent on the mainn use of the results.
First,, the performance results might serve for internal company management:: for managerial information, strategy evaluation, operationall control, internal and external reporting, self-assessment andd internal benchmarking, with indicators/ categories and performancee targets customised for each end user. The aim is to improvee directly or indirectly environmental, social and sustainability performance. .
Second,, the disclosed results of performance evaluation (reported achievementss by external reporting or other meaning) of the organizationss may be subject to benchmarking, i.e., to the screening andd rating of the results and the organizations through comparison. Thiss is normally a matter for a sector or stakeholders (e.g., for asset management). .
Forr environmental, social and sustainability performance evaluation off companies, multiple tools have been defined.
Thee main characteristics of such performance evaluation tools are usually:: 1) the use of qualitative and/or quantitative indicators/ indexes,, 2) categories or classes and aspects to cluster the indicatorss and 3) structural information that may be organized in frameworks. .
Regardingg indicators, these might be defined as a specific qualitative orr quantitative measurement of an individual aspect that can be used too track and demonstrate performance {adapted from ISO 14031, 1999). .
Thee indicators can be of different types such as pressure, state and responsee indicators (PSR model) (OECD, 1994). These fit environmentall condition (ECI), operational performance (EPI) and managementt performance indicators (MPI) suggested by ISO 14031 (1999).. The Environmental European Agency (Smeets and Weterings,, 1999) applies the DPSIR model or drivers, pressure, state,, impact and response indicators. Bennett and James (1999c) statee that whatever model may be the total environmental performancee can be calculated by applying: physical or descriptive indicators,, environmental condition or effect indicators and managementt performance indicators. The same authors also state thatt the more categories are covered in an environmental scorecard thee more effective an organisation is likely to be at environmental performancee evaluation.
Indicatorss can be clustered under categories and aspects leading to anotherr level of aggregation being subject to evaluation.
Olsthoornn et al. (2001) stated that physical aggregation, impact or environmentall categories are social constructs and that their definitionn and content differ with the contexts within which these havee been identified.
Forr a company, key performance indicators are the ones that measuree performance against key critical success factors. These mightt contribute to achieving the vision and strategy of the company. Thee ultimate objective of a performance indicator is whether it is effectivee in informing the appropriate stakeholder about the distance too the pre-defined target and in generating motivation to respond to thee result (modified from ACBE, 1996).
Duringg the last decade many publications have appeared proposing and/orr developing indicators and frameworks for environmental, sociall and sustainability performance evaluation. Regarding frameworkss for performance evaluation these might be applied for multiplee purposes such as, e.g., reporting of performance
(e.g.,, IRRC, 1996; GRI, 20O2; UNER 1994), product evaluation (e.g., Bennettt et a/. 1999a; BUWAL, 1991; Heijungs et a/., 1992), self-assessmentt (e.g., Eagan and Joeres, 1997) and internal benchmarking,, asset management or sustainable responsible investmentt (e.g., DJSGI, 1999) and internal company performance evaluationn (see examples in table 1).
Thee table 1 summarizes key characteristics of performance evaluationn frameworks for companies that can be considered the mostt relevant to the present research referred to in literature as they havee appeared over last decade. A brief analysis of the table 1 indicatess that over time there was an enlargement of the scope of categoriess applied. Stakeholders' categories increased and there wass an increase in the joint performance evaluation regarding social andd environmental matters.
Regardingg sustainability performance evaluation, some "standardization"" has been achieved within the framework of SRI (Sustainablee Responsible Investment), the Global Reporting Initiative (GRI,, 2002) and projects for CSR (Corporate Social or Sustainability Responsibility)) implementation in companies such as the SIGMA Projectt (BSIefa/., 2000).
Regardingg Sustainable Responsible Investment screening and rating off organizations by investors each practitioner has adopted its own sustainabilityy performance evaluation criteria and levels of achievement.. A relevant example of sustainability screening is the Doww Jones Sustainability Group Index (DJSGI, 1999). It rates large companiess of the Dow Jones Index (DJI) based on their sustainabilityy performance. An analysis of SRI practice revealed that comparisonn between externally disclosed sustainability performancess of organizations are still far from feasible. However, guideliness for standardization of sustainability performance evaluationn have been suggested (Brink van den, 2002).
Thee Global Reporting Initiative (GRI, 2002) guidelines for standardisationn of corporate sustainability reporting are now consideredd the reference framework for corporate measurement and reportingg of sustainability in the next years (Birchard, 2000 in Hussey etet a/., 2001). Regarding sustainability, it offers standardized environmental,, social and financial performance metrics for companiess and rating agencies.
co o CO O > > o o a> > o o c c CO O E E o o t t a> > a . . n n CO O c c CO O CO O 3 3 CO O o o c c CO O CO O Ü Ü o o en n CO O c c CD D E E c c o o > > c c V V o o CO O o o 4-> > CO O 1 _ _ 0) ) o o CO O CO O o o >. . CU U * * CO O CD D c c CO O a a E E o o o o 1 _ _ o o ^ ^ CO O o o 3 3 d) ) E E CO O eftt a> OO d> 5 0 0 ( jj 1 ->>> x 0)) ' c E l l a a E g g a.. m g.co:g g
III I
CD T3 a> > A A c c E E < < caa a> ££ u *** c COO CO CDD p CDD 2 00 s 1== Q. a. . COO 2 (OO C CDD CD rnn E 33 b CJJ .»-(DD > 3 == C LUU CD CDD t 5 ÏÏ -2 öö p — r== t o EE | Ê "cc 2 2 CDD to -5is*! !
EE CD ca 9 - EE c EE CD CD - O F F COO CO t «11 C 1 ; CDD CO 2 O -- O LU O O mm ^ a.2? ? ^^ CD CC "O o o CD D O O 22 — Iss <o c55 «5 coo -a ££ c5 22 © 33 5" OO n >> E .22 2 CDD "O aa CD >> CD ** CO "OO '5 22 c 2-a 2-a 22 c '55 COO CD CO OO "O J3 ' ~~ CO S 1 0 U U .2.0 0 CO O F F 0 0 t t CD D CO O "cfl l CD D ">"> 01 EE ffl W - -- ffl CDD c COO O > .. co CDD E 5-je e Q.. E "coo IS cc c CDD CD EE E cc c 00 0 >> > OO CD O ££ £ LU too T3 COO CD . QQ CO OO C S == ffi H COO Q. HI —.§ij| |
22 2 C0.S Q O p I CDD "m E I -§§ 8 O cB o ? \\ S OO .9 O. CD c ca* *
38 8P P
EE o$1 1
COO c too « CDD (J) 22 o CO O c/5 5 £ 3 ! ! ' cc 2 - - Q pp ^ S oo « E =5 :: « ~ c c (( O 3 O -;; s g-s ® COO CO . = .- m a > CC C E WW CD .SS to coo > CDD c ** CD && c5 EE 2 __ CO ® C T 3 t t <PP CD CD OO 2 S cc to co a>> 5 coo - » coo c to 2 "" - o 8 --- C g 2 oo « S i j CD D O O CC ^ . J?? CD EE "o e» t e m m oo co -^ 1 11 ~a "" c i 2 ^ ^ —— co O OO CD C0 ' S i ™ ™ oo . c -^ JX:: *" J3ï l ^ ^
| gg | « C O O --LLL CD . £ coo c coo r r 2 CD coo O u ) OO O c cfl Q . Q . Ü . S S oo (o üü CD coo ö)1^ ^
JOO cfl . yy > cc ca cfll 00 «ë's s caa 22 S c || CD | LUU E o.c c o o CO O 3 3 CO O > > O O 0) ) o o c c CO O E E h > > o o
r r
<D D O . . to o « « F F o o ' C C o o o o ra ra ra ra ra ra w w c c 0> > E E (0 0 c c ö ö W W 3 3 (0 0 (0 0's? ?
(OO o rara - i a> > E E c c o o > > 0> > o o (0 0 o o ** * (0 0 k . . V V o o CO O co o o o > a> > * * !--0) ) A A .ra a ** * e e o o u u (0 0 c c (0 0 a a E E o o o o i _ _ o o «*--(0 0 o o 5 5 0) ) £ £ ra ra oo a>5
EE § ®® CD U "U mm — m DD id -j ^ ww "5 o o ^^ = cc «--<33 n t o CD D i22 ~ ~ a. tt 18 C ~ 22 g. o « oo 3 c <n E OO c . . __ * - « O ) ££ — .£ -3 « o 5 5 j a a _c c co o E E < < 00 0 Q .. C OO g 00 t -JCC 0 ,, t COO Q J== Q . SS ra . ** O S;; O OO (0 EE co cc c «« 5 CDD o 00 b 0 ? ? OO CD rara c j == — rara ei» »
T ï D C C CC T J — «« - C K £ S 8 8 cc CD § -- s ww 3 <o ®® J= -= ?? » ?3 ,fcc co üü c > S f f ll CL .EE cnTó >** -= : CDD o EE oII 1
ss I
iöö <o a> oo " TS <DD =0 -S '~~ T, .9 D -j?? ™ = ££ => 11 E ^ 22 ° <S CC oi" c a>> S CD ££ g £ 22 Q . 2 >> E > cc o c LUU O LU
ll %
ggg ë ®® E o oo t ftft 2 >> s >> "f33 -®® o i ^ cc E.E OO C11 1
CCC UJ CD D oo a. cuII 2
cc ^-, OO _co '55 ^ cc UJ cuu — Q)) « ££ » -- CD OO ü yy in cc "O .22 £ « tgg cu E NN O CD '«« i§ oo E m caa >= co *== o <* « t ï ï cc © S OO Q . L U coo 'S) a> <»» ca p ee 5 x TBB L.-.2 § « ^ ^ Tll S o D-- «-2 33 C CD o o </}</} co EE E ££ 5 c oo Ta ' || g=g | 'TT .S to a» -- E "b" ca .88 * gg ^E"SS = w cc J o ££ > o. .2 Töö c .w E V )) UJ T3 CD CDD cd "o cc o c oo -So gg i s CD D CCC = yy o X !! " CD __ CD oo ^ «11 C i j . ?? 3 mm CD o "2 ~°~° c O M caa < o TJJ > - t : ' Es«« a|
£00 % ÏT5 E S T T rara -33 O yy « "--2 2 üü = —— o> CDD « ww E 4 _ _ w w co o h h >. . CO O CD D CC C :> > 3 3 Q . . CO O CU U CO O b b CDD 0 Q ï -^ b b t :: co CDD . . CC c CDD O —— CD ^^ c ëë 3 0 )) = UJJ 0 -CD D CO O O O X X u u ca a u u «« J 3 "OO 4=* s s
all c J oo ° I CDD X J P c5E° ° DD ca g -^^ w > o . ®® > . 55 c o mm <D c 55 E 'o I LL U O ra ra c c O O ra ra Z Z ra ra c c O. . LU U LU U CC C JZ Z c c 0 0 0 0 a a & & T J J 3 3 O O >> > E E 0 0 c c 0 0 o o LU U T J J C C ra ra « « E E > > r r ZZ DC LU ___ _ DO Os s
Lr Lrc c o o *-< < ra ra 3 3 (0 0 > > O O © © o o c c CO O E E i _ _ o o r r o o o. . >» » + * * . Q Q (0 0 c c CO O + J J (0 0 3 3 (0 0 "O O c c ra ra ra ra o o o o « « ^ ^ 75 5 c c V V E E c c o o > > C C V V o o CO O o o 4 - 1 1 (0 0 t _ _ 0) ) o o ra ra ra ra O O > > O O * * 'T" " O O n n .w w * * C C O O +rf f ra ra 3 3 C C « « C C O O o o co o o o c c ra ra o. . E E o o o o 1 _ _ o o «^ ^ CO O o o 5 5 <j> > E E ra ra i _ _
5a a
S-- co oo .2 g cc _ COO cö . g ' £ £ - ^^ as rag rag cc * -gg cö ^^ CO a>> co cc c E t t coo o a>> CD EE £ Q__ CD CUU <9 x>> E §É É enn a> enn Q-coo <5 co o CD D 8 ° ° BI I OO <D . ii 00 == O) "" O) gg c i—— i - af o - g g i__ 0 ) S o . . . ^^ C0 CD >> ï - ö ©© j o g oo CO O CDD 'C N X33 CU O 'SS « - a 77 F e <DD c CO .22 ^ c <00 ö ) o >> a> « EE c § oo « " -- co CO "" 2 E? 55 S | yy b o LUU CO ~ " en n ©"" = 5 oo o o CDD en = EE * ra SS E ai :yy b ^ . ! tt O CO : I tt C T J i ,, CD CD 8 : §§ g CUU fc "-^^ » c , oo ó os^§ §
uu o o S 8 g --rara cu £ C00 I - co CUU « CC XI S Ê f f 2 § --P « E E «-SS E Q == o-coo o £ 33 o a CD"" P co o c c xx .9 CUU i DD X! CC c —— O E caa ] > >>> o o o ££ 2 OO co COO CU © L X X QQ 10 ~ cc « m ** g x i II cu ca 2 ^^ m CD D coo o gg s =ëë ü ël ël coo o CC 4Ï OO cö LIJJ .g .g en OO co — Q - 33 o o - aa E OO £ o . .. M- u «« o g 2 ^ - D D «33 o 2 co ®® g - ü g CDD u i Zl >> O M T 3 OO = üü CD EE-l i c c
coo XJ a> ^ ^ o o c c c c o o OQ Q o o c c CO O to o o> > O) ) ^, , a> > 3 3 « « aa c n n c c 0> > o o c c CO O a . . co o (0 0 C C CD D Q. . a . . 3 3s s
caa ™ §§ £ aii ® oo g == <D CL-O O EE 3 o . ll É rrtt * ^ .TL ^.gg c 55 5 <DD O FF 22 S caa o. XJJ cu cc cc caa _ EE o ^ i ** £ c E m 55 cu co ® g a »» o i S - c SS Q-X3 O !2 OO E i o g , oo _ o » » ^^ e»5 ^ ^
cc S S ^^ F. « COO ( O oo a> .2 && £ § OO CD £ CUU CO a> oo E x33 .9-2 ' ü ü uu ca x i i i SS 5 == rag cuu = o .. CJ cu u JX.JX. c caa **— EE co O J2 cc -e : H ca oo "5; ca = ^^ x o -ï êê o Q.^5 aii Q.O E CJJ © CC XJil l
^^ S ss cu"i
ë ë|a?l l
2 | 1 1
co oi j l l
cc »l 0) EE <B o aa 3 c ££ co co cc co c oo ' ~ E uu cu o - o o g . . EE -^ ca THH ' S ^ caa CD cutil? ?
üü 13 CU X)a> > Q . . CO O b b CO O g> > o o O) ) oo o T>> ?J cc .0 ?? r «« S (0 0 « « CO O 3 3 (A A o o C C CO O 15 5 (OO o „„ 'S 755 § ÊÊ c a>> ?
i
ooo-s§ §
«== o (00 1. CC O OO -22 "= oo a> >*E E a>> re .CO O T3 3 OO 0) ££ -o = 0 0 E . y y OO T3 :== c oo — COO " O !== CO - " g c - ee cS 88 - «.aa 8 I
== o o cc p H w —— C . 5 m nn CD 1- — «« e ^ s - l i e ? ? ° c ^ ^ - ** <S CD Q . OO E C 211 ill
22 <5 o c LLL E n o CO O <oo 2 o cc £ CD "" CD " CC (J c OO c CO == ni E 0 0 ^ : : oo t $ == <» COO Q . * -rr _ c 22 3 a? 55 a> c c a n n L U OO 2 cc "; cc <= c É-££ 8 tt H c «« 03 c £ £ cc = EE o >> =5 w c:: C D CD mm CD . E ,TO O nn -a E E SSS o E ü c c ëë i-I a - tt c (DD O) O o'ss s55 I I
== E £ oo c c 33 o o cö ö cc co E'S E'S CC co oo 3 Hg g a)) co UU 3 CC -oo <» coo o cc c COO co E | | 00 £ EE o ££ «o coo OIP P
CC CO £ CDD . . Q) .. 0 ) t / J JÉ & « << « J L E ^ ^ caa co " c ra cc c ffl c CDD CD , - CD EE E g E cc c g *i OO O J g LUU LU 92 o CD D O O ££ <o aii 2 «« co ? H H COO <D COO E l o o Q .. Cl>1^ 1^
«« 8 8 « U - C C g-SS ™ 8mm o c c ; ; CDD = <p oo c E —— O cö oo o J= ;; co 05 SS ®5? S COO <= - 5 D coo a co * -CDD co - > 100 ,„ 1) <D a f g a a EE g - a * CDD E < £ I 8 . S Ï Ï J== S oc c g g re re _3 3 re re > > o o V V o o c c (0 0 E E k . .
o o
r r
o o Q. . X3 3 CO O c c re re CO O 3 3 CO O o o c c CO O CO O u u o o CO O CO O c c CD D E E c c o o > > c c CI) ) O O CO O o o + * * CO O 1 _ _ o o 4-« « u u CO O CO O o o >. . 0) ) * * ^ ^ a> > A A .CO O H H *^^ ^ c c o o ** * m m 3 3 C C 'S 'S c c o o o o CO O CU U c c CO O a. . E E o o u u l . . o o «^ ^ CO O o o o o E E co o « 1 1 CDD O O O 'GG i « E cc O c c |99 w cü cö COO COII I
x:: « ? 't;; T3 i= 55 c o «« to a>S i ? ?
COO CO CD "" © Q . 1 33 = = cö?? « 88 -8 22 "5 »g?^r r oo E, = o SS 2 m co iSS -> J3 <B coo CD a o COO CD oo a> x:: -o CO O cc . . COO > . ££ 2> cc » CDD - ois s
PP = CDD c s s ~~ 3 o .="" 3 2 S- g cc £ a»» To 733 E CDD O . C33 = CDD 3 i_ - SS CD CD U)) "£« c CDD 2 O uu — ', OO m ww 2-8'M M
££ 0) 3 l O O O bb en E O O EE g a.. 5 a. o * E E ÜÜ E o ö ö oo 8 $ EE f= a ££ c -33 E "O <gg O CD J'SS S 22 o. co caa g ><< O) uu co OO cö U) ) »» E E CO O N N CDD <DD u EE c CC 3 ee E >> E __ o 22 ^5 'SS o oo -o .E c c »g g ë - S ' ' raa ca EE 55 rr ° —— ~ C CC C CD CDD CD F EE E c . t ii C O OO LU , CC c CDD C CD E.2E E CD D OO CD CC -£ cöö — E-E E CDD £ CLCL </> oo ca .Ei ss 5
coo 5 -g §§ -5 SS 'S i t yy = ® (GG Q) Q) ?? I 5S O)) o £=£ £ rara _ O )) C cöö CD frfr<D D E E üü _ CD SS § 2 -- m CL '55 8 c 0 11 c ' F CDD cö £ caa E 5 , __ O 7 3 oo t a> y -- CL CD — 22 — F- <N OO co O"lis s
«« c -a x cc a> 2 ® 22 fc CD > t?5££ S tc c o o "^ ^ CO O CO O > > O O 0 ) ) o o c c <o o E E i_ _
o o
t t
I D D Q . . . Q Q CO O c c "èö ö to o 3 3 CO O o o c c ( 0 022 f
coo O 755 § CDD * 5 == ( 0Ê.2 2
*-- s
oo | ( 00 i _ 'EE ol § §
UU 0)>.E E
CDD CO O O .CO O < ü ü ££ in c EE 2 == ^ io ai (0 0 c c gE E «« S-E-2 2 oo ? CDD T 3 'ËË § co iS o ff o 8 8 o PP o U J OO 5 CL oo co == y (00 =0 . 22 c <oo — >> 2r . oo 5 too .9. cc to <"" t s OO 3 * -- to 88 "5 —— to 55 m COO a ; BB c a55 -.= uu u FF <» oo © (0 0ii i
SS 2 5 » E ^ S S oo $ is" i .. » (S 0) « ~~ 0) tf! "5"5 { -JËJË om " Q)) O ó) (U >> to E o) SS g Q = ££ O - D o «« 2 « a too .£ 3 to .££ o cc > CO O 5 ? Ü H H cc t to a> ~~ <o to E too to to F .oo * ï O too .!= .5z .i= >,, w co > .CC 3 3 C CLL CQ CQ LU "" to _ e»» $ a> cc to o - a cc *s o o -11 ra i- r 33 -o 3 E && c m — coo to EE ra Z-Z- n ~o~o __ _too o LUU y ®® T J 55 CÖ COO X> COO to ww en Q .. CO 3 CDD O >> O OO ai coo S :-12 2 (0 0 CO O 3 3 X X to o £ £ O O o o r r CO O CO O c c 3 3 0} } > > o o o o co o CD D CUU o a.8 8 == £~£ oo o 2 too -— « ss ® y CJJ 5 —l l i i
-- — CJ ?c?a a cöö C « 88 S-O cc « Ü OO "" a> CTfflCTffl » dd O -OO a i 5 a> > > >I„„ j
EE co 'c & * « « EE t o o a a 0) ) ?? a uu « E SS g1 « « . E O O t55 E a> 33 fi-E oo i_ a> "*"" O co -- * w oo 2?-o oHff 3
SS — 3 cc itt .= .£ SCompaniess performance evaluation
classificationss and typologies
Inn addition to the efforts to standardize frameworks of indicators and categoriess for performance evaluation in companies, "evolutionary" frameworkss for performance evaluation have appeared. Most of thesee reflect the adaptation of the evaluation process to an expected orr identified trend as to environmental and social performance in the companies. .
Too illustrate such "evolutionary" frameworks three typologies and/or classificationss are briefly outlined.
I.Jamess (1994) distinguished six frameworks for environmental performancee evaluation. Each differs as to drivers and approachess to measurements. The six frameworks were characterizedd by production, auditing, ecological, accounting, economicc and quality. They reflected differences in environmental measurementss between countries and industries.
2.. Bennett and James (1999d) suggested an environmental performancee measurement classification, based on the findings fromm a study with a sample of 100 companies in England. Three generationss of environmental performance measurement that correspondd with groups of key indicators were found. First generation:: key indicators on business process, regulated emissionss and wastes, costly resources and compliance (aim: performancee tracking). Second generation: key indicators on energyy and materials use/efficiency and significant emissions and wastes,, finance and implementation (aim: decision making). Third generation:: key relative indicators, indicators of eco-efficiency, stakeholders,, environmental condition and products and balancedd scorecard of these indicators (aim: external reporting). 3.. Veleva et al. (2001) suggested a progressive classification of
sustainabilityy performance evaluation with five levels. This integratess a set of 22 indicators. Their classification progresses, throughh developing and implementing indicators that are more sophisticatedd over time from compliance, facility level indicators, environmentall effect, supply chain and sustainable systems indicators.. The classification proposed by Veleva et al. (2001) allowss for ordering existing indicators and for creating new ones
whilee maintaining the indicators that have been used at lower levels. Behindd the last two classifications there is a reasoning similar to that off Hart (1994 in Shrivastava and Hart, 1995) "it would be difficult to imaginee the serious pursuit of sustainability without first having masteredd the skills required for pollution prevention and product stewardship". .
Companiess "performance/ greening"
classificationss and typologies
AA body of research that has contributed to performance evaluation is thee study of the "greening" of companies. It has given rise to multiple environmentall management frameworks (see Mauser, 2001). These cann imply classifications (continuous environmental evolution linear inn time) and typologies/ categorizations (assuming dis- or continuouss evolution in time). A common factor to all these models iss that they all reflect a positive trend, an increase of interest or of the activitiess regarding environmental concerns in organizations (Mauser,, 2001; Kolk and Mauser, 2002). For these authors these modelss are "classifications to describe trends in environmental management,, using a diversity of labels to designate process and outcomes,, such as strategies, responses or performance" (Kolk and Mauserr 2002:14).
Frameworkss have been criticized because most of the companies cannott be unambiguously attributed to one category or type and are difficultt to operationalize (Bakker de, 2001; Hass, 1996; Hemel van, 1998;; Mauser, 2001; Schaefer and Harvey (1998) in Kolk and Mauser,, 2002). There also has been criticism of the subjective and variablee character of the criteria used to define the types or classes off e.g., performance levels, responses, strategies or company's practices.. For Kolk (2000) the difficulty to operationalize these frameworkss is associated with their focus on environmental
Still,, categorizations seem useful to describe and analyse the importancee of environmental and social management issues in organizationss (Aragon-Correa, 1998; Bakker de, 2001; Henriques andSadorsky,, 1999).
Ann empirical study of Aragon-Correa (1998) did show the usefulness off the typology of the environmental corporate postures proposed by Roomee (1992) reflecting a classification of firms based on their degreess of pro-activeness in environmental management, contrastingg a study from Schaefer and Harvey, 1998, in Kolk and Mauserr 2002. Usefulness of the RDAP scale (reactive, defensive, accommodativee and proactive) was shown by Henriques and Sadorskyy (1999), who classified 400 firms into these four environmentall profiles and found that firms with more proactive profiless do differ from less environmental committed ones in their perceptionss of the relative importance of stakeholders in influencing theirr environmental practices.
Therefore,, improving environmental classifications and typologies hass continued and social matters have been integrated (e.g., Upham,, 2000; Marrewijk van and Werre, 2002).
Regardingg for instance, The Natural Step (TNS) practice of sustainabilityy in companies Upham (2000:449) has stated, "inevitably,, corporate progression to the end state of sustainability requiress progression through intermediate stages, and that progressionn will involve breaching TNS's systems conditions". The authorr suggests a progressive five level development by which a firm shouldd theoretically progress.
Recently,, to deal with corporate sustainability and corporate responsibilityy (CS-R) Marrewijk van and Werre (2003) developed a sustainabilityy matrix that shows six types of organizations at different developmentt stages, with different forms of corporate sustainability. Thee sustainability matrix structures the different ambition levels in linee with a variety of contexts and value systems in which organizationss operate. According to Marrewijk van and Werre (2003:107)) "Each organization should choose its own specific ambitionn and approach regarding corporate sustainability, matching thee organization's aims and intentions and aligned with the organization'ss strategy, as an appropriate response to the circumstancess in which it operates".
Thee types of organizations that Marrewijk van and Werre (2003) distinguishh are: pre-CS (corporate sustainability), compliance driven CS,, profit-driven CS, caring CS, synergistic CS and holistic CS, with eachh type corresponding to an ambition level, internal and external drivers,, criteria for decision-making, preferred role for the governmentt and relationship with society.
Performancee evaluation that focuses
onn strategic objectives
Fromm the business point of view, strategic objectives are key componentss of the strategy to achieve the vision of the organization. Thosee are specific things to do or to differentiate the company from directt competitors or because they might affect the business.
Thee factors that drive environmental and socio-economic managementt ambitions and activities within organizations have multiplee origins: legislation, environmental accidents and market pressuree are among the most relevant traditional drivers for action (UNCTAD,, 1993). Empirical findings suggest that companies have becomee increasingly aware of the input to their activities to from a rangee of stakeholders beyond their traditional focus on interaction withh regulators (Madsen and Ulhoi, 2001). Individual leadership mightt also help to adopt policies beyond compliance (Prakash, 2001).. Thus, there is at least some evidence that environmental and sociall matters are becoming viewed as strategic for/by companies. Too develop a strategic performance evaluation a strategic analysis throughh stakeholders' analysis and scenarios evaluation is necessaryy in the first phase of the process of evaluation. Internal and externall driving forces for action on environmental and social matters (e.g.,, Ghobadian et a/. 1998) and stakeholder management (Freeman,, 1984; Grafé-Buckens and Hinton, 1998) have been subjectt to research. The results of this research are used in the empiricall part of this thesis but are not extensively discussed here. Strategicc objectives are fit to be integrated in a balanced scorecard (BSC)) performance evaluation (e.g., Kaplan and Norton, 1992a,b), thatt allows for measuring the success of the company.
Inn case that environmental matters might be considered strategic for topp management, a business strategy might lead to the development off company's performance evaluation that includes generic environmentall strategic objectives. These might be, e.g., compliance achievement,, country specific site pollution control, and eco-efficiencyy achievement, product or service innovation.
Thee balanced scorecard implementation and therefore the strategic performancee evaluation include a cascading process from corporate too operational organizational levels. The corporate balanced scorecardd reflects corporate values and strategic objectives and identifiess actions that create corporate synergies. The balanced scorecardd for the business units reflects the market and the operationall challenges faced by it. To support functions like environmental,, health and safety, purchasing and human resources aa balanced scorecard for each of these functional departments is indicated,, reflecting each functional department in supporting corporatee and business unit's objectives (Epstein and Wisner, 2001).
Chapterr 1.2
Conceptuall Research Framework
AtAt the time this thesis has began the standardization of sustainability performancee evaluation such as given, e.g., by DJSGI (1999), GRI (2000)) and SIGMA (BSI et at., 2000) was limited. Little existed on metricss that focused on sustainability related goals (Bennett and James,, 1999c; Robert et al., 2002). Cerin and Dobers (2001:132) statedd for instance about DJSGI (1999) that "no quantitative data on thee generation of emissions or consumption of resources by companies,, or their products/ services, appears to have been used inn the sustainability assessment criteria by DJSGI (1999)."
Youngg and Welford (1999) rightly argued that to develop a good environmentall performance tool, in itself, is meaningless unless the companyy establishes a set of specific environmental targets. The samee maybe argued for strategic and social matters. Thus, a strategicc performance evaluation tool needs to have predefined strategicc objectives and targets.
Inn the conceptual performance (evaluation) framework proposed in thiss thesis such strategic objectives and targets refer both to managementt and procedures and to physical outcomes.
Inn line with the evolutionary frameworks discussed in chapter 1.1 the conceptuall framework of this thesis includes a performance evaluationn typology that provides for a link with environmental strategicc objectives. This is extended to include social strategic objectives. .
Strategicc objectives and correlated performance strategic targets or referencess are assumed to guide environmental and social performancee evaluation in companies. The generic strategic objectivess used here have been chosen from previous environmentall classifications and concepts used by practitioners (e.g.,, eco-efficiency, pollution-control, sustainability).
Eachh performance category, without clear border with the other categories'' includes performance references or goals. These correspondd to a broad category of environmental burden reduction
(byy a factor X) and a broad range of procedural and management activitiess related with environmental, social and financial associated thereof. .
Thee following fig 1 shows the structure of the main chapters of thesis andd how the chapters cover the main parts of the content of the conceptuall framework.
Figg 1 - Conceptual research framework
< 4 > >> Environmental and sustainability strategic objectives (1-6) that require (1-6)
specificc performance references/targets
^ .. Strategic objectives and associated targets that may have consequences for the formatformat and content of organization's performance evaluation
».. Comparing performance evaluation results with performance targets J^.. Performance status of the organization
44 ^. Internal and external critical factors that influence strategicobjectives and initiatives s
DEVELOPMENTT OF THE CONCEPTUALL RESEARCH FRAMEWORK
Chapterr 2
Environmentall performance evaluation and
sustainabilityy performance evaluation of
organisations:: An evolutionary framework
Idalinaa Dias-Sardinhaa, Lucas Reijndersb
aa
IVAM/University of Amsterdam, the Netherlands and University of Lisbon (UNL), Portugal
bb
IBED/University of Amsterdam, the Netherlands
Publishedd as: Eco-Management and Auditing 8(2): 71-79 (2001)
Abstract t
Performancee evaluation linked to different environmental strategic objectivess of organisations is discussed. The strategic objectives thatt are dealt with are: compliance, pollution prevention, eco-efficiency,, eco-innovation, eco-ethics and sustainability. The most commonn environmental strategic objective of organisations is compliancee with the law. Other companies go beyond compliance andd may take on board one ore more of the other strategic objectives.. This may lead to an evolutionary improvement of environmentall performance status and to integration of the economicc and social aims in the way organisations operate. Hence, thee choice of strategic objective(s) may have consequences for the performancee evaluation-linked activities in the different organisationall domains. The status of performance is derived from comparingg actual performance with pre determined performance goals.. Performance goals are proposed for each strategic objective.
Introduction n
Accordingg to International Standard Organisation (ISO) 14031 (1999) Environmentall Performance Evaluation (EPE) is a "process to facilitatee management decisions regarding an organisation's environmentall performance by selecting indicators, collecting and analysingg data, assessing information against environmental performancee criteria, reporting and communicating and periodically reviewingg and improving this process". As environmental strategies off organisations are increasingly broadened to encompass sustainability,, not only the environmental but also social and economicc performance comes up for evaluation.
Theree is a variety of frameworks to evaluate and report environmental andd sustainability performance. Authors and organisations have developedd such frameworks. Efforts have been made in an attempt too reduce variety and promote normalisation. Examples are Azzone andd Manzini (1994); Azzone et at. (1996); Bennett and James
(1999d);; BMU and UBA (1997); Callens and Tyteca (1995); Ditz and Ranganathann (1997); Eagan and Joeres (1997); GRI (2000); Lehni (1999);; ISO 14031(1999); Naimon (1995) in Skillius and Wennberg (1998);; Piet (1994); Thoresen (1999); Young and Welford (1999) and Wehrmeyerr (1995).
However,, the diversity of environmental performance evaluations thatt are actually applied remains large (e.g., Fiksel ef a/., 1999; KPMG,, 1999). Such diversity of methods is in remarkable contrast to thee rather uniform way in which the financial performance of organisationss is evaluated. Nevertheless, this diversity does not comee unexpected. As Bennett commented, environmental, and moree recently sustainability, related evaluations have been developedd over time by a wide variety of people within different organisations,, operating in a wide variety of social, economic and environmentall contexts and often serving different purposes (Bennett,, personal communication).
Thoughh such diversity apparently suits managerial decision making, itt makes it difficult to ascertain the environmental performance level off companies and to compare performance between organisations.
Furthermore,, in a survey of company reports of 1999, KPMG (1999) hass found that sustainable development was mentioned more often thann compared with the 1996 reports surveyed. However, it seemed too the authors that "some confusion existed between the use of the termm "sustainability" and the term "environment" without any clear distinctionn in the contents of the reports". Moreover a closer look showss that most of the frameworks for environmental performance evaluationn that have been studied do not include performance criteriaa or goals to guide the evaluation process (Upham, 2000). Inn this paper we present a conceptual proposal to link performance evaluationn to the environmental strategic objectives of organisations suchh as companies. We do so because we find the argument convincingg that this link is important for improving actual performancee evaluation process. The proposal takes account of the potentiall for evolution of organisations as to environmental performancee and sustainability. The status or level of performance of organisationss is, according to this proposal, established by comparingg actual measurable performance with pre-determined performancee goats or criteria.
Strategicc objectives of organisations
Manyy authors dealing with environmental performance measurementt have stressed the importance and effectiveness of linkingg performance measurement to the environmental strategies of ann organisation (Dixon (1990), Harvey (1994), Maskell (1991), Neely (1993)) in James, 1994; Thoresen, 1999). Using literature about environmentall strategies and the evolution of environmental managementt (Hall and Roome, 1995; Rondinelli era/., 1996 in Kolk, 2000;; Roome, 1992; Upham, 2000) and analysing environmental reportss and results of existent empirical work on environmental performancee evaluation (Bennett and James, 1999d), we propose sixx strategic objectives that may guide performance evaluation. Thesee objectives are primarily environmental. Actual choices of such strategicc objectives will be dependent on the internal drivers and capabilitiess of organisations and the relation that they have to stakeholders. .
Tablee 1 - Environmental strategic objectives of organisations
Compliancee - Compliance with relevant regulations, voluntary agreements (such as
covenants)) and general codes of conduct voluntarily adhered to
Pollutionn Prevention - Optimisation of resource consumption and prevention of wastes
(includingg emissions) with emphasis on production and highly negative impact of wastes, in linee with financial targets of the company, such as cost reduction
Eco-efficiencyy - Reduction of resource intensity and minimisation of environmental impacts of
productionn and products/services together with value creation by a continuous incremental improvement t
Eco-innovationn - Introducing radical environmental improvements pertinent to production,
productss and services to achieve minimum environmental impacts using a product/service life cyclee perspective
Eco-ethicss - Using specified environmentally related normative values (e.g., zero pollution) to
guidee organisational activities
Sustainabilityy - Guiding organisational activities by considerations of environmental (e.g.,
carryingg capacity), social and economic justice between the generations and regarding contemporaries.. As to environmental performance this can be operationalized when organisationall activities leave the environment no worse off at the end of each accounting periodd than it was at the beginning, complemented with environmental restoration or remediationn when environmental damage is detrimental to contemporaries.
Thee most common environmental strategic objective of organisationss is compliance with the law, and where applicable voluntaryy agreements such as covenants and general codes of conduct,, voluntarily adhered to. Typically environmental strategic objectivess fit bigger corporate strategies, e.g., pursuing an improvementt of image, communication with stakeholders and/or markett share. The other strategic objectives mentioned in Table 1 pre-supposee compliance but also go beyond this strategic objective. Goingg beyond compliance may lead to an evolutionary improvement off environmental performance and an increased integration of the economicc and social aims implied by the sustainability concept in organisationall activities. The potential for an evolutionary developmentt of performance in relation to the environment towards sustainabilityy has also been pointed out by other authors (Bennett andd James, 1999d; Naimon (1995) in Skillius and Wennberg, 1998; Shrivastavaa and Hart, 1995; Weaver and Schmidt-Bleek, 1999). The
strategicc objectives chosen here reflect major differences in intended environmentall performance.
Pollutionn prevention, eco-efficiency, eco-innovation and eco-ethics mayy all be interpreted as steps (of varying magnitude) in the directionn of environmental sustainability.
Compliance,, pollution prevention and eco-ethics are strategic objectivess that in practice tend to be defined in a rather uniform way (seee Table 1). This is different for eco-efficiency, eco-innovation and sustainability.. Eco-efficiency may be used as a synonym to dematerializationn or reduction of resource intensity (Reijnders, 1998),, but also as equivalent to the exploitation of win-win situations, inn which both environmental and financial performance of the organisationn benefit (Lehni, 1999). We have opted here for a definitionn that focuses on the reduction of resource intensity and the minimisationn of environmental impact together with value creation by continuouss incremental improvement. By way of contrast, eco-innovationn stresses not incremental but radical changes using a product/servicee life cycle perspective.
Theree is a bewildering variety of definitions of sustainability (Pearce, 1997).. Here we have opted for the two types of justice mentioned the Bruntlandd Report (1987) to be the main determinants of the content off sustainability: justice between the generations and social justice concerningg contemporaries. As to environmental performance this cann be operationalized as the requirement that "organisational activitiess leave the environment no worse off at the end of each accountingg period than it was at the beginning" (Bebbington et aL, 1997:: in Atkinson, 2000), complemented with environmental restorationn or remediation when long lasting environmental damage iss also detrimental to contemporaries. Restoration of the ozone layer andd remediation of heavily polluted soils are examples of the latter.
Linkingg performance evaluation
too strategic objectives
Thee process of performance evaluation should check how the organisationn stands with respect to the strategic objectives outlined inn Table 1: compliance with the law, pollution-prevention, eco-efficiency,, eco-innovation, eco-ethics or sustainability.
Twoo of the types of performance evaluation referred to are evidently muchh broader than environmental. They include social and economicc aspects of organisational activities. In compliance, not onlyy compliance with the environmental regulation is implied but alsoo with social and economic legislation. In the context of sustainability,, it is usual to refer to the triple bottom line including sociall and economic aspects. The other four strategic objectives (pollutionn prevention, eco-efficiency, eco-in novation and eco-ethics) thee emphasis is on types of environmental improvement beyond compliance.. The relevant performance evaluations in organisations willl however always include evaluation of economic/financial aspects.. For pollution prevention this is made explicit in Table 1. In eco-efficiency,, cost reduction and value creation will probably be majorr drivers of organisational activity evaluation. Moreover, when eco-ethicss and/or eco-innovation are the strategic objective financial evaluationn is necessary if only to ascertain that the organisation remainss economically viable. In case of all environmental strategic objectivess moreover, there will be social considerations such as preventionn of workplace accidents and whether the organisation will bee attractive enough, e.g. to attract an adequate labour force. However,, these extensions of performance evaluation, to other than environmentall aspects, will not be fully developed for these primarily environmentallyy oriented strategic objectives.
Performancee goals for performance evaluation
Eachh of the strategic objectives outlined in Table 1 is linked with performancee goals. As Thoresen (1999: 369) indicates "the degree of environmentall ambition decides the subsequent setting of individual environmentall performance indicators goals". In part, the criteria shouldd reflect the environmental improvement to be achieved. They needd to be defined before performance evaluation.
Forr this purpose it is chosen here to concentrate on the environmentall burden and its reduction by a factor X (Berke! van, 2000;; Reijnders, 1998), leaving aside the intricacies of measuring the valuee of X (cf. Reijnders, 1998). The reference value for the factor X mayy be the environmental burden reduction value obtained by an
averagee company that is in compliance. The value of X actually achievablee may be strongly sector dependent (Reijnders, 1998). Substantiall work in the field of environmental improvement has been donee pertinent to the industrial sector. In this context a factor of 1,5 hass been mentioned to be achievable when pollution prevention is thee strategic objective (Berkel van, 2000). Several authors propose a factorr of 4 as being a realistic near term goal for eco-efficiency (Berkell van, 2000; Von Weizsacker et al., 1997). As to the radical improvementss following from eco-innovation reductions of environmentall burdens in excess of a factor 4 seem appropriate. For attainingg sustainability reductions in environmental burden going up too a factor 50 have been mentioned (Reijnders, 1998). The actual valuess to be reached on a global level are strongly dependent on assumptionss as to population size and size and nature of production andd consumption. In Table 2, we propose performance criteria linked too the different types of performance evaluation. These are derived fromm the work of Atkinson, 2000; Karl-Henrick, 2000; Reijnders, 2000; Upham,, 2000; Wackernagel and Rees, 1996; Weterings and Opschoor,, 1992.
Eachh of the specific performance evaluations needs core indicators thatt are central to evaluate specific performance. So, for instance, thee compliance oriented performance evaluation will have core indicatorss that reflect the existence or absence of violations of regulations.. In case of pollution prevention, efficiency and eco-innovationn core indicators should relate to the level of reduction of environmentall burden of the organisation and the adequacy of procedurall arrangements. Hence, these core indicators would reflect thee evolution of performance status in terms of the distances of actuall performance to the performance goals that are outlined in Tablee 2.
