Draft Submitted to Confederation of Indian Industry for publication in their Journal.

September 2002

ISO 14031: Environmental Performance Evaluation

By David Putnam, P.Eng., CEA, Altech Environmental Consulting Ltd.

Introduction Environmental Performance Evaluation (EPE) is based on the adage, what gets measured, gets managed. It has been used globally by organizations in the manufacturing, health services, transportation, electrical utility and municipal sectors to improve environmental performance, provide a basis for performance benchmarking, demonstrate compliance to regulations and increase operational efficiency. This article describes the EPE methodology as set out in the ISO 14031 standard together with its benefits and objectives, implementation steps, and the results from a recent case study. What is EPE? EPE is a relatively new term used to describe a formal process of measuring, analyzing, reporting, and communicating an organizations environmental performance against criteria set by its management. The process involves collecting information and measuring how effectively an organization manages its environmental aspects on an ongoing basis. Certain concepts and components of EPE have been applied for more than a decade. ISO 14031 now provides a structured approach for organizations to follow independent of location, size, complexity and type of activity. Objectives and Benefits The objectives of implementing an EPE program include: Better understanding of an organizations impacts on the environment; Providing a basis for benchmarking management, operational and environmental performance; Identifying opportunities for improving efficiency of energy and resource usage; Determining whether environmental objectives and targets are being met; Demonstrating compliance with regulations; Determining proper allocation of resources; Increasing the awareness of employees; and Improving community and customer relations.

Once achieved these objectives are realized as benefits. One of the first steps in applying EPE involves identifying environmental aspects and impacts and establishing performance indicators to monitor. The ISO14031 Standard ISO 14031 is an international standard that describes a process for measuring environmental performance. It is not a standard for certification, as is ISO 14001. The EPE tool is designed to provide management with reliable and verifiable information on

2 an ongoing basis to determine whether or not its organizations environmental performance is meeting criteria it has set for itself. It fits into the ISO 14000 series of standards, and is intended to assist organizations obtain ISO 14001 certification. ISO 14031 is also being used by organizations of all sizes, types, locations and complexity, and provides benefits to organizations with and without environmental management systems in place. In applying the standard, an organization with an environmental management system in place should evaluate its performance against its environmental policy, objectives, targets and other criteria set established within the management system. Organizations without an environmental management system may use EPE to: identify its environmental aspects; determine which aspects it will consider significant; establish environmental performance criteria; and assess its performance against these criteria. The process described in the standard is based on the Plan-Do-Check-Act (PCDA) business process improvement model (see Figure 1). Figure 1 Plan-Do-Check-Act Model
PLAN Select environmental performance indicators

DO Collecting data
Data

Analysing & converting data

Information

Assessing information
Results

Reporting & communicating

CHECK & ACT Reviewing & improving environmental performance evaluation

3 Planning (Plan) The focus of planning efforts is on the selection of indicators, which should be based on: significant environmental aspects; environmental performance criteria, including internal criteria as well as regulatory standards; and the views of interested parties. A review of environmental aspects should be undertaken whether the organization has an environmental management system in place or not. Another important element of planning is to obtain management input so that the scope and focus of the EPE program fits into the organizations overall business plan. Scope considerations may include answers to the following questions: What information is needed to support the overall environmental policy and goals? How can the data requirements be integrated with existing measuring and monitoring systems? Should the program address the entire organization or be phased-in starting with selected activities or business units? Which activities, products or services represent the largest cost saving and performance improvement opportunities? How many performance indicators can be monitoring with the resources allocated to the program?

Whenever possible, the EPE program should be structured to be consistent with existing environmental management systems and data collection systems. Care should be exercised to establish the right type and number of indicators that provide adequate information to management on whether or not the objectives of the program are being met. Too many, too few or the wrong type of indicator can result in misleading information and the waste of resources. The focus of ISO 14031 is the definition and detailed discussion of three basic types of indicator that may be used to support environmental management. The standard distinguishes between environmental condition indicators (ECI) and environmental performance indicators (EPI), and subdivides the latter into management performance indicators (MPI) and operational performance indicators (OPI). Examples of indicators are provided in Table 1. Assessing Performance (Do) Assessing performance involves collecting data, converting the data into information, evaluating the information, and communicating the results. To calculate values for the selected performance indicators it is necessary for an organization to collect data on a routine basis. Much of the information required to support an EPE program can be obtained from existing data sources. These include: regulations; operating permits; EMS procedures and records; reports to

Table 1: Examples of Performance Indicators and Metrics

Operating Performance Indicator (OPI) Raw material used per unit of product (kg/unit) Energy used annually per unit of product (MJ/1000 L product) Energy conserved (MJ) Number of emergency events or unplanned shutdowns (#/year) Hours of preventive maintenance (hours/year) Average fuel consumption of vehicle fleet (L/100 km) Percentage of product content that can be recycled (%) Hazardous waste generated per unit of product (kg/unit) Emissions of specific pollutants to air (tonnes CO2/year) Noise measured at specific receptor (dB) Wastewater discharged per unit of product (1000 L/unit) Hazardous waste eliminated by pollution prevention (kg/year) Number of days air emissions limits were exceeded (days/year) Management Performance Indicator (MPI) Environmental costs or budget ($/year) Percentage of environmental targets achieved (%) Number employees trained (% #trained/to be trained) Number of audit findings (#) Number of audit findings addressed (#) Time spent to correct audit findings (person-hours) Number of environmental incidents (#/year) Time spent responding to environmental incidents (personhours per year) Number of complaints from public or employees (#/year) Number of fines or violation notices (#/year) Number of suppliers contacted about environmental management (#/year) Cost of pollution prevention projects ($/year) Management levels with specific environmental responsibilities (#) Environmental Condition Indicator (ECI) Contaminant concentrations in ambient air (g/m3) Frequency of photochemical smog events (#/year) Contaminant concentration in ground- or surface water (mg/L) Change in groundwater level (m) Number of coliform bacteria per liter of potable water Contaminant concentration in surface soil (mg/kg) Area of contaminated land rehabilitated (hectares/year) Concentration of a contaminant in the tissue of a specific local species (g/kg) Population of an specific animal species within a defined area (#/m2) Increase in algae blooms (%) Number of hospital admissions for asthma during smog season (#/year) Number of fish deaths in a specific watercourse (#/year) Employee blood lead levels (g/100 mL)

government agencies; permits; production data; process monitoring data air and water quality); hazardous waste manifests; interviews with employees and neighbors; operational system documents and drawings; environmental budgets; chemical inventories; storage tank records; and spill records. Data quality is an important consideration and all data should be collected and handled in a structured and systematic way. This will ensure that interpretations based on the data will be reliable, verifiable and complete. All data should be reviewed and rated based on criteria for: accuracy, bias, age, verifiability, and completeness. The first step in converting the data into information is to screen the data for outliers, bimodal distributions, censored data, and to perform any unit conversions. For example, normalizing contaminant loadings per unit of production (kg contaminant/units of product produced) provides more information than contaminant concentrations. Often using basic descriptive statistics or analysing the data graphically aids in extracting

5 information from the raw data. Useful data analysis tools include: histograms, scatter plots, control charts and process capability analysis. The final step in analysing the data is comparing the information to performance criteria and targets established for the organization. Performance criteria can be derived from specifications found in regulations, operating permits, or benchmarking data. There is increasing interest amongst industry in benchmarking performance to define best industry practices and cost-effective ways of improving performance. These are seen as complementary approaches to existing risk-based regulatory approaches. The final task in completing the EPE assessment or do step of the PDCA cycle is to communicate the results to both internal and external stakeholders. This is a critical step if environmental improvements are to be realized. This will create awareness, demonstrate commitment and put information in the hands of those who will be responsible for making improvements. Important points that should be addressed by the report include: A description of the organizations activities, products and services; A statement of the organizations commitment to EPE as a tool for environmental management; A statement of its significant environmental aspects and related performance indicators; A comparison of performance indicators to established criteria and targets; Trends in the organizations environmental performance; Legislative and regulatory compliance; Cost savings and financial results; Opportunities or recommendations to improve environmental performance; and Actions arising from EPE.

The results may be communicated as reports or statements published on a regular basis. In preparing reports, consideration should be given to the target audience, as different readers need varying types of information. One approach is to prepare a comprehensive report and provide specific sections of the report to stakeholders based on their needs, such as those presented in Table 2.

Table 2: Targeting EPE Report to Different Audiences

Section Introduction Facility & Product Information Assessor Qualifications Objectives, Scope, Criteria Methodology Raw Data Discussion & Conclusions Recommendations Summary References
Adapted from Reference 3

Management

Relevant Departments

All Employees

Government Agencies

Public

Reviewing and Improving Performance (Check & Act) EPE results should be reviewed periodically to identify opportunities for improving environmental performance. Organizations with EMS programs certified to ISO 14001 are interested in identifying improvements to the EMS that will demonstrate continuous improvement, and pollution prevention opportunities. Both are requirements for maintaining certification. Whether the organization is certified to ISO 14001 or not, the review of the EPE results should address: The costs and benefits of the program; Progress towards meeting environmental performance targets; How appropriate are the environmental performance criteria; How appropriate are the selected environmental performance indicators; and Data quality and data collection methods.

In reviewing these factors, improvement efforts may focus on improving data quality, enhancing analytical and evaluation capabilities, developing new or more useful performance indicators, changing the scope of the program, and providing additional, or reallocating resources.

7 Case Study A case study application of EPE was undertaken at a dairy owned by Mother Dairy Fruit and Vegetable Ltd. of New Delhi, India in December 2001. The dairy had implemented an environmental management system and obtained certification to ISO 14001. Facility management was interested in enhancing their existing management system by establishing an environmental performance evaluation and improvement program, and benchmarking its performance. The implementation of EPE at Mother Diary was initiated by consulting with facility management about their objectives, and a comprehensive review of the facilitys management systems and operations. During the review it was found the dairy was already monitoring liquid fuel and electrical power consumption together with the volume of wastewater processed in the effluent treatment system. All parameters were normalized using the volume of milk processed. Since performance monitoring began five years ago, the dairy has realized significant increases in the amount of milk processed per unit of electrical power (23%) and diesel fuel (38%) consumed, and reductions in the amount of wastewater generated (20%). In addition to these indicators, the following environmental aspects were identified as priorities for performance measurement: Groundwater conservation and reliability of well water supply; Water use conservation; Cost and efficiency of wastewater treatment; Employee training and awareness; and Green horticulture activities (planting gardens and composting bio-sludge).

Table 3 summarizes the programs, performance indicators and monitoring implemented to support the above objectives. Table 3: Mother Dairys Environmental Performance Indicators
Objective Well water conservation Water use reduction Wastewater treatment efficiency Employee training & awareness Green horticulture Program Rain water harvesting Water audit Microbiological analysis of sludge Use of improved micro culture Environmental awareness training On- & off-site gardening Biosludge composting by vermiculture Performance Indicators Static well water level Well water analysis Well water used per volume of milk processed (litres water/litres milk) Volume of effluent processed (litres) Energy consumed (MJ/litre effluent) # Employees trained # Plantings Quantity of compost produced (kg) Indicator Type ECI ECI OPI OPI OPI MPI OPI OPI

8 Management at Mother Dairy consider environmental performance evaluation to be a core business activity that can be used as a basis for identifying opportunities for improving process efficiencies, improving relations with customers and the public, and strengthening the plants environmental management system. Follow-on work identified during the case study included identifying appropriate criteria from international dairy operations that may be used for benchmarking performance. The Future of EPE A First Step Towards EMS Implementation A technical report (ISO/TR 14032) was published to support the ISO 14031 standard that describes examples of EPE applications from around the world. Table 4 provides a summary of the case studies described in the report. These examples illustrate the wide range of application of the EPE methodology in terms of facility size, activity sector, and location. Interestingly, only four of the organizations had certified environmental management systems. Although intended as a tool to assist companies obtain certification to the ISO 14001 environmental management system standard, many companies are using EPE either as a first step towards EMS certification, or as a stand alone program. Using EPE as a stand-alone program is attractive to small and medium sized enterprises that want a means to quickly and efficiently start measuring performance and making improvements without getting bogged down with the certification process. Others are using EPE as a starting point and means of focusing the implementation of a certified EMS. Table 4: Examples of EPE Applications
Industry Furniture Brewing Industrial laundry Rubber glove mfg. Food processing Plastic packaging mfg. Chemical mfg. Hospital Petroleum refinery Food processing Chemical mfg. Railway agency Silicon metal mfg. Appliance mfg. Chemical mfg. Municipality
Source: Reference 2

Country Germany Germany Denmark Malaysia Japan Argentina Argentina Germany Argentina Germany Czech Republic Denmark Norway Sweden UK USA

# Employees 11 33 70 100 200 210 230 260 570 750 2000 3400 5300 112,300 67,500 10,000

ISO 14001 Yes

Yes Yes Yes

Link to Corporate Sustainability Measurement and Reporting Initiatives Companies, which are expanding globally, or those with diverse operations, are relying on an increasingly integrated body of data to meet specific corporate and government reporting requirements. This is the one of the drivers behind developing a balanced scorecard that covers significant environmental issues as well as financial and social (e.g., employment practices, employee health and safety, ethical sourcing, community relations) parameters. EPE is expected to have an increasingly important role to play as companies integrate environmental management activities into more broadly based corporate sustainability performance measurement and reporting initiatives. References 1. ISO/TC207/SC4/JWG. ISO 14031: 1999(E) - Environmental Performance Evaluation Guidelines. Canadian Standards Association. 2. ISO/TC207/SC4/JWG. ISO/TR 14032: 1999 - Examples of Environmental Performance Evaluation (EPE). Canadian Standards Association. 3. Kuhre, W. Lee. ISO 14031- Environmental Performance Evaluation (EPE): Practical Tools for Conducting an Environmental Performance Evaluation. Prentice Hall, Upper Saddler River, NJ. 1998.

10 About the Author Mr. Putnam, P.Eng., CEA is the Director, Engineering & Audit Services at Altech Environmental Consulting Ltd. He has conducted numerous project assignments involving the application of engineering and environmental, health and safety (EHS) management methods to industrial facilities in a wide variety of industrial sectors. The focus of these projects was to improve environmental performance, increase plant productivity, and to transfer knowledge and skills to industry representatives.