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DEVELOPING INDICATORS

The purpose of developing indicators and encouraging companies to collect and publish the information is to improve eco-efficiency. Yet, companies

should beware of producing excessive information. While in theory each value indicator could be used in combination with each indicator of environmental influence to produce an extensive list of eco-efficiency ratios, it is not necessar y

or desirable to use all possible combinations. Only the most

meaningful combinations should be used, with the aim of concentrating on measuring performance in the most relevant way and providing the most useful information for decision-making.

“We should follow the rule of ‘collect less and use it’, meaning that any data

collected must be used for something. That’s the best way for companies to help drive performance improvements.”

EXPERIENCE EXCHANGE MEETING IN CINCINNATI, JULY 27/28, 1999

The same applies to data collection, which can exclude minor quantities of data as long as the r emaining figures cover at least 90% of the total and provide sufficient understanding for good decision-making. This 90% rule is intended to avoid disproportionate effort and cost being expended in gathering data on the final few percentage points of usage. It should not be used to exclude even small quantities of especially significant material or other sources of environmental influence.

So far as product/service creation is concerned the definition of generally applicable indicators includes only those aspects under the direct control of the company. Influences outside a notional “fence” beyond the direct control, up-

stream or down-stream in the value

chain (i.e. controlled by suppliers or customers, such as emissions emerging from electricity generation by power utilities) need to be covered with business specific indicators if these aspects are relevant for a certain business. The fence should not be seen as a physical representation, however. Thus distribution businesses should account for their operations beyond physical corporate boundaries, just as

airlines should include flight operations.

GENERALLY APPLICABLE VALUE INDICATORS

Quantity of product/service1 produced or sold is a physical measure or count of product or service produced, delivered or sold to customers. It is most useful in pr oduct specific situations such as individual factories or service units. It can be measured in mass, volume or number. In most cases this information can be obtained from existing and readily available internal reports. Summing numbers for different products for an entire corporation should be done carefully, recognizing the limitations of the aggregated information. Corporate level information may be useful for tracking overall performance but product specific information is more useful to develop action plans to improve performance.

Net sales is the total recorded sales less sales discounts and sales returns and allowances. It is the most easily measurable and available value indicator for all businesses. Using sales as a value indicator for measuring factory performance is more problematic since production units are not generally linked

1 For simplicity in the rest of this chapter, output is described only as “product”. The term should be taken to mean either product or service, as appropriate to the business concerned.

gathering information

to sales figures. It must also be recognized that sales values can be influenced by a variety of factors which do not bear on eco-efficiency, such as commodity prices and currency exchange rates, which could distort performance figures.

pilot learning: the mining industry

Mining is a “price-taker” rather than a “price-maker” since most of its products are traded on central commodity exchanges. Revenue streams may fluctuate from one year to the next without any underlying changes in operating processes taking place. Using “Net sales” as a value indicator for eco-efficiency performance tracking for the mining industry has therefore limited meaning.

In the mining sector the environmental influence caused by extraction operations is primarily driven by the amount of material handled. “Total material moved” or “Tons of ore milled” might therefore be more useful business specific value indicators to relate to environmental influence indicators to track eco- efficiency performance of the extraction operations.

Since “Total material moved” and “Tons of ore milled” seem to work as value indicators for both, mining extraction operations, and aggregating different mining products, the “Quantity of goods produced” does not. Aggregating quantities of different mining products is not practical, since amounts of some products are measured in carats and ounces, while others are measured in kilotons.

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