Page 119 - Design for Environment A Guide to Sustainable Product Development

98 Cha pte r Se v e n

which specify performance measurement as a required element. The
emergence of the Global Reporting Initiative (GRI) and other sus -
tainability reporting schemes has placed renewed emphasis on the
selection, monitoring, and verification of environmental performance
indicators and metrics. As time passes, the only way for companies
to demonstrate continuing progress in environmental performance
is through innovation—quantum improvements in the design and
delivery of products, processes, or services. Hence DFE has become a
necessary competency for environmental performance improvement.
As illustrated throughout this book, environmental performance
is just one aspect of enterprise value creation. Instead of viewing
environmental management as an unavoidable cost of doing busi-
ness and treating it as an overhead expense, leading companies are
beginning to view environmental management as an important busi-
ness function, and to allocate funds to this function based on its con-
tribution to corporate value. This new perspective implies two major
changes in the business processes of an enterprise:

1. Environmental performance metrics and assessment methods
need to be integrated into engineering practices, and
2. Accounting systems need to be developed that explicitly rec-
ognize and track environmental costs and benefits.

This chapter describes environmental performance measurement
frameworks, indicators and metrics, particularly as they relate to the
practice of DFE. One of the key challenges in this field is to incorpo-
rate a life-cycle view of environmental performance into metrics that
can be easily computed and tracked. The methodologies of life-cycle
assessment and life-cycle cost accounting, discussed in Chapter 9, are
essential for this purpose.

Why Measure Environmental Performance?
Corporations, especially those that are publicly held, are accountable
for financial performance, as measured by earnings per share, return
on net assets, or other indicators. Shareholders and analysts have
become acutely aware of small changes in performance and may
often overreact to unexpected slippages. As a consequence, manag-
ing the productivity of existing resources—human, technological,
and physical—has become an important priority. During mergers or
economic downturns, many companies go through a period of “re-
engineering” or “rightsizing” that involves consolidation of resources
in order to improve performance.
However, as shown in Chapter 4, there are nonfinancial or intan-
gible considerations that may be just as important as the financial
indicators of performance. Businesses large and small are motivated