Is it possible to find the elusive environmental metric – an indicator that aligns environmental and business management performance? I’ve seen many companies try and fall short with systems that are either too complex or so simplified they become useless. Metrics are important because they not only measure success, they also drive behavior. They create incentives – some you intend, and some you don’t. In short, you get what you measure.
A good illustration of this adage is the case of a manufacturer who sought my advice while launching a new initiative to measure environmental performance. The client had begun tracking tons of scrap metal recycled, out of concern for the large amount of scrap being produced at their plants. When the plant managers learned they would be rewarded by recycling more scrap, scrap recycling quickly increased, and company managers thought they had a success on their hands. As the tons of scrap recycled continued to grow, however, it eventually became clear that plant managers were paying too much attention to recycling scrap, and too little attention to minimizing scrap production in the first place.
I approached the problem from another angle, reflected in this simple principle: “If you don’t use it, you can’t spill it.” My advice to management was to look at the total resource inputs (in tons) required by their manufacturing and delivery processes in relation to their output, or the product delivered to their customers.
If my client could reduce the mass of resources at the front end without compromising the value they delivered, they would not only reduce scrap use and improve overall environmental performance (due to fewer spills and emissions),but also reduce their purchasing, production and warehousing costs; the fuels used in manufacturing, transport and throughout the entire supply chain; the potential for fines related to environmental impacts and their carbon footprint, while enhancing brand value.
Any company grappling with measuring sustainability performance needs to measure inputs and outputs and then manage the relationship between these critical factors. You can measure input in terms of total tons of fuels and materials required to source, produce and ship a product. You need to think of output as value delivered – not units produced or revenue generated, but value delivered to customers.
The process of reducing the total mass required by your organization and your products while actually increasing the value of what you deliver is the key to creating business value in the 21st century. Improving the relationship between resources used and value delivered is a simple way to align environmental performance and business performance. In an increasingly crowded, unpredictable and polluted world with a diminishing resource base, this is the future of business and the future of environmental management.
What do you think? How can you improve a product or process to deliver the most benefits to people with fewest tons of resources?