Industrial Environmental Performance Metrics

Challenges and Opportunities

Committee on Industrial Environmental Performance Metrics

NATIONAL ACADEMY OF ENGINEERING

NATIONAL RESEARCH COUNCIL

NATIONAL ACADEMY PRESS
Washington, D.C.



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--> Industrial Environmental Performance Metrics Challenges and Opportunities Committee on Industrial Environmental Performance Metrics NATIONAL ACADEMY OF ENGINEERING NATIONAL RESEARCH COUNCIL NATIONAL ACADEMY PRESS Washington, D.C.

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--> NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, D.C. 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their unique expertise and with regard for appropriate balance. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility of advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognized the superior achievements of engineers. Wm. A. Wulf is the president of the National Academy of Engineering. Support for this project was provided by the United States-Asia Environmental Partnership, a program of the Agency for International Development (under grant no. AEP-A-00-97-00014-00). The views presented in this report are those of the Committee on Industrial Environmental Performance Metrics and are not necessarily those of the funding organization. Library of Congress Cataloging-in-Publication Data Industrial environmental performance metrics : challenges and  opportunities / Committee on Industrial Environmental Performance  Metrics, National Academy of Engineering, National Research Council. p. cm. Includes bibliographical references and index.  ISBN 0-309-06242-X (pbk. : alk. paper)  1. Production management—Environmental aspects. 2. Industrial ecology—United States—Measurement. 3. Environmental policy—United States. I. National Research Council (U.S.). Committee on Industrial Environmental Performance Metrics. TS155.7 .I5 1999  658.4'08—dc21 99-6298 CIP ISBN 0-309-06242-X Cover art: Like Wild Horses (detail), courtesy of the artist, Kay Jackson, Washington, D.C. Copyright 1999 by the National Academy of Sciences. All rights reserved. This book is printed on recycled paper. Printed in the United States of America

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--> COMMITTEE ON INDUSTRIAL ENVIRONMENTAL PERFORMANCE METRICS ROBERT A. FROSCH (Chair), Senior Research Fellow, Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University DAVID C. BONNER, Director of Technology, Performance Polymers Division, Rohm and Haas JOHN B. CARBERRY, Director, Environmental Technology, E.I. DuPont LESLIE CAROTHERS, Vice President, Environment, Health, and Safety, United Technologies Corporation DARYL DITZ, Director, Environmental Management Program, Environmental Law Institute THOMAS N. GLADWIN, Max McGraw Professor of Sustainable Enterprise and Director, Corporate Environmental Management Program, University of Michigan THOMAS E. GRAEDEL, Professor of Industrial Ecology, Professor of Chemical Engineering, and Professor of Geology and Geophysics, School of Forestry and Environmental Studies, Yale University CHRISTOPHER (KIT) GREEN, Executive Director, Materials Research and Technology Business Development Directorate and Chief Technology Officer, China, General Motors RICHARD R. GUSTAFSON, Denman Professor of Paper Science and Engineering and Chair, Management and Engineering Department, University of Washington College of Forest Resources MICHAEL J. LEAKE, Director, Environment, Health, and Safety, Raytheon/Texas Instruments Systems DAVID W. MAYER, Director, Pollution Prevention and Environmental Performance, Georgia-Pacific RICHARD D. MORGENSTERN, Senior Fellow, Resources for the Future WILLIAM F. POWERS, Vice President, Research, Ford Motor Company DARRYL K. WILLIAMS, Senior Vice President, Technology, Eastman Chemical Staff DEANNA J. RICHARDS, Study Director GREGORY W. CHARACKLIS, NAE Fellow GREG PEARSON, NAE Editor LONG T. NGUYEN, Project Assistant

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--> PREFACE It is often asserted that "what's measured gets managed." Although this principle is now widely accepted, relatively little attention has focused on examining the metrics that organizations use to measure environmental performance. Analysis of these metrics reveals much about which environmental parameters are being incorporated into decision making while also identifying those areas receiving less attention. Interest in industrial environmental performance metrics is increasing as companies find new internal uses for such information in applications such as marketing and product development. Interest is also on the rise among external stakeholder groups (e.g., customers, local communities, the financial sector), many of which are making greater use of publicly reported environmental information. External groups have integrated such information into product buying decisions, investment or lending decisions, and investigations into the environmental performance of corporations operating in their neighborhoods. The increasing environmental awareness of both industry and society at large will only increase demand for information on environmental performance. Studies of this kind serve to identify opportunities for improvement as well as challenges to be overcome along the way. In mid-1997 the U.S.-Asia Environmental Partnership, a program of the U.S. Agency for International Development (USAID), requested that the National Academy of Engineering (NAE) undertake a study of the use of industrial environmental performance metrics in several U.S. industries. The purpose was to identify a set of metrics that would find broad utility across industries and assist in the setting of both national and industrial environmental goals. The U.S.-focused study was to be the American contribution to a larger effort by the Asia

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--> Pacific Economic Cooperation on industrial environmental indicators and clean production. In response to the USAID request, the NAE, in concert with the National Research Council, established the Committee on Industrial Environmental Performance Metrics. The committee was chaired by Robert A. Frosch, former vice president for research at General Motors and now senior research fellow at the Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University. The committee was carefully assembled to ensure that its members, individually and collectively, had unique expertise with respect to environmental performance metrics in one of the chosen industrial sectors or in public policy applications. The committee launched a study to gather evidence and explore present efforts in the development and use of industrial environmental performance metrics. The study investigated such issues as the motivation for improved environmental performance, normalization of metrics, standards for reporting, aggregation of metrics, and weighting of metrics. Looking ahead at the changing needs in this area, the committee also delved into the role of metrics as a tool to both drive and measure aspects of sustainable development. This report represents the committee's collective wisdom and makes an important contribution to a complex and often confusing debate over what constitutes a measure of industrial environmental performance. On behalf of the National Academy of Engineering, I would like to thank the chair and members of the committee (p. iii) for their insights and efforts on this project. Over the course of a year, several committee meetings, one workshop, and innumerable faxes, e-mails, phone calls, and draft versions of the report, they remained actively engaged and unfailingly constructive. Critical to the success of this effort have been several uncompensated consultants: Wayne France, David Moore, Irving Salmeen, Angie Schurig, and Ronald L. Williams. Without their contributions this project would have taken twice as long and been half as productive. They all deserve special thanks. This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC's Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making the published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their participation in the review of this report: Hamid Aarastoopour, Illinois Institute of Technology; Henry M. Conger, Homestake Mining Company; Alexander H. Flax, Consultant; Harold Forsen, National Academy of Engineering; Stuart Hart, University of

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--> North Carolina Business School; Jeffrey S. Hsieh, Georgia Institute of Technology; William Howard, Consultant; Robert Pfahl, Motorola; Ross Stevens, Stevens Associates; and Thomas L. Theis; Clarkson University. While the individuals listed above have provided constructive comments and suggestions, it must be emphasized that responsibility for the final content of this report rests entirely with the authoring committee and the institution. I would also like to thank several members of the NAE Program Office. Deanna J. Richards, who directs the NAE's Technology and Sustainable Development program, served as study director. NAE Fellow Greg Characklis was deeply involved in the formulation and direction of the project from start to finish and played a critical role in managing the committee process. Long Nguyen provided critical research, administrative, logistical, and editorial assistance. Greg Pearson, the Academy's editor, contributed invaluable and steadfast editing and publishing oversight of this document. Finally, I would like to thank the USAID, sponsor of this effort, which was generous with help and advice throughout the project. WM. A. WULF PRESIDENT NATIONAL ACADEMY OF ENGINEERING

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--> CONTENTS Executive Summary   1 Part I Why and What     1   Why Study Environmental Metrics?   19 2   What Are Industrial Environmental Performance Metrics?   29 Part II The Industry Studies     3   Guide to the Industry Studies   49 4   The Automotive Industry   53 5   The Chemical Industry   85 6   The Electronics Industry   107 7   The Pulp and Paper Industry   129 8   Summary of Metrics Used by the Four Industry Sectors   147 Part III Current Status and Future Directions     9   Observations, Trends, and Challenges   153 10   A Hypothetical Model for Improving Aggregation and Presentation of Environmental Performance Metrics   169 11   The Sustainable Enterprise Paradigm Shift   183 Part IV Conclusions and Recommendations     12   A Framework for Action   201

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--> Appendixes     Appendix A:   Current Reporting and Use of Industrial Environmental Performance Metrics: Global Scale   219 Appendix B:   Current Reporting of Industrial Environmental Performance Metrics by U.S. Semiconductor Companies   227 Appendix C:   Current Reporting and Use of Industrial Environmental Performance Metrics: Company Scale   233 Biographical Data   237 Index   243

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