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Re: Measuring pollution prevention performance: ABC-oriented metrics



Warren Weaver:

For an interesting attempt to meld Activity-based Costing and environmental 
performance measurement, see "Activity-based CostingEnvironmental Inventory 
Allocation" by Julie Ann Stuart, Laura Turbini and Jane Ammons in the 
Journal of Industrial Ecology, v2, #2, p. 95-108.


Reid Lifset

At 08:30 PM 3/19/2000 -0500, you wrote:
>Ralph:
>
>Your comments below got me wondering about the value of Activity Based
>Costing in determining environmental performance. I'm working on a team
>that is in the process of helping a food manufacturer lower its operating
>costs by minimizing the amount of wastes it generated. The client has
>agreed to implement an ABC accounting system with help from team members to
>1) develop a baseline for future comparison and 2) to better understand
>what quantity of raw materials are used to make what sized batches of
>vegetables. The study team plans to use the ABC system to gather data to
>evaluate opportunities for improvement, environmental performance and,
>after we've worked with them to improve, to determine the improvements that
>were made with our help. Are we looking for "precisely right" or
>"approximately right"? And if the latter, how do we know we're "close
>enough".
>
>wjw/
>
> >I have some trouble with the one about tracking the full true costs --
> >sometimes one can get close without spending inordinate resources on
> >accounting.  It is my complaint with much of the EPA approach to waste
> >minimization and pollution prevention.  A company that is committed to
> >finding better ways and reducing pollution will sometimes make investments
> >that are not otherwise cost effective -- they do it because it is the right
> >thing to do.  That company should score better than one that spends a lot of
> >effort on and waits for the results of an extensive pollution accounting
> >program!
> >
> >Ralph
> >Ralph E. Cooper, Ph.D., J.D.
> >14139 Woodstream
> >San Antonio, TX 78231
> >210-479-5490
> >----- Original Message -----
> >From: "Burt Hamner" <bhamner@cleanerproduction.com>
> >To: <p2tech@great-lakes.net>
> >Sent: Friday, March 17, 2000 9:20 AM
> >Subject: Re: Measuring pollution prevention performance: metrics
> >
> >
> >> Over a year ago I asked a similar question re comparative metrics, and the
> >> result was similar to what I am reading on P2Tech so far:  There are
> >metrics
> >> for process-level P2 performance, and some tools for compaing between
> >> comanies in the same industry, but not for comparing across industries.
> >> After a lot of interesting discussion, I proposed that a "de minimis"
> >> approach to metrics be taken;  What is the simplest set of indicators we
> >> could use that would tell us if one organization is doing better on P2
> >> progress than another?  This would at least help us focus TA and also
> >> identify firms that can be benchmarks for the laggards in their groups.
> >>
> >> The criteria I came up with - and no one on P2TECH seemed to disagree -
> >were
> >> as follows:
> >>
> >> 1.  Firm has some kind of organized EMS that the middle managers and
> >> employees can describe, ie. they are organized about their efforts to
> >> improve;
> >> 2.  They practice toxics reduction as a formal priority; ie. they really
> >> understand that prevention is better than cure
> >> 3.  They understand and track the true full costs of environmental
> >> management and waste; ie. they are capable of making informed investments
> >in
> >> P2
> >> 4.  They participate in the P2 network of TA, training etc; ie. they know
> >> enough to look around for best practices and free help.
> >>
> >> In my opinion, those 4 simple metrics can be used to quickly compare
> >> progress of firms.  Many firms in states with mandatory P2 planning will
> >do
> >> ok on most of these criteria, perhaps with exception of 3. Costs - many
> >> firms still don't understand how much money they lose to waste, and that
> >is
> >> probably because P2 planning laws generally don't require such analysis
> >> beyond "describe your environmenatl accounting methods".
> >>
> >> If your objective is to target TA, to rank facilities on a relative scale
> >of
> >> P2 competence or potential for sustainability, or to figure out which of
> >the
> >> criteria need the most program support, the four simple metrics would work
> >> fine.  If your objective is to determine whether P2 has made one facility
> >> pollute less than another, that's very hard.  If you want to prove to
> >> legislatures that the P2 program is really reducing total pollution
> >> generated, then the best you can do is normalized waste generation in the
> >> target groups.  So the question back atcha is,  what do you want metrics
> >> FOR?  What is the minimum amount and type of data needed to choose between
> >> alternatives in support of your goals?  Unless you are doing basic
> >research,
> >> the only reason to do an evaluation of P2 progress is to decide between
> >> alternative future courses of action.  If metrics don't enable you to make
> >a
> >> decision about what to do, then they are the wrong metrics.
> >> ************************************************************
> >> Burton Hamner
> >> Hamner & Associates LLC/ CleanerProduction.Com
> >> 5534 30th Avenue NE
> >> Seattle, WA USA 98105
> >> tel:  206-526-5308
> >> fax: 208-279-4991
> >> email: bhamner@cleanerproduction.com
> >> ----- Original Message -----
> >> From: "Kirsten Sinclair Rosselot" <rosselot@ix.netcom.com>
> >> To: "Jenna Latt" <LATTJ@state.mi.us>; <p2tech@great-lakes.net>
> >> Sent: Thursday, March 16, 2000 5:33 PM
> >> Subject: Re: Measuring pollution prevention performance: metrics
> >>
> >>
> >> > There's a big difference between measuring environmental performance and
> >> > measuring environmental progress.
> >> >
> >> > I've compared the environmental performance of chemical plants that have
> >> > similar product slates by looking at potency-weighted releases on a per
> >> unit
> >> > of production basis.  What we saw was that there are vast differences
> >from
> >> > one facility to the next not only in how much waste was generated on a
> >> > per-unit-of-production basis but in how the wastes were managed.  Some
> >> > facilities were clearly ahead of others on the pollution prevention
> >curve.
> >> > This is very useful and interesting information, and comparing a
> >facility
> >> to
> >> > other like facilities in this manner is an excellent way to evaluate
> >> > environmental *performance*.  As time goes on, it's becoming clear that
> >> > environmental performance is linked to shareholder value and I expect
> >more
> >> > of these types of studies to be done.  However, this is a really
> >> complicated
> >> > and expensive type of analysis, requiring a knowledge of what compounds
> >> are
> >> > emitted during the production of each product, what production
> >quantities
> >> > are, etc.
> >> >
> >> > Even within the chemical industry, it would be misleading to adopt any
> >one
> >> > indicator of production (sales, man-hours, cost-of-production,
> >> > pounds-of-production, etc.) across the board and measure environmental
> >> > performance using that single metric.  Using a single metric across many
> >> > industries would be even less meaningful.
> >> >
> >> > Evaluating environmental *progress* for a facility is simpler.  For
> >> example,
> >> > potency-weighted releases, summed by facility over time and adjusted for
> >> > production, give a quantitative measure of environmental progress and
> >are
> >> > fairly easy to develop.  However, a facility can make a tremendous
> >amount
> >> of
> >> > environmental progress and still not have good environmental
> >performance,
> >> > and that distinction must be made.
> >> >
> >> > ===============================
> >> > Kirsten Sinclair Rosselot, P.E.
> >> > Process Profiles
> >> > P.O. Box 8264
> >> > Calabasas, CA 91372-8264
> >> >
> >> > rosselot@ix.netcom.com
> >> > http://home.netcom.com/~rosselot
> >> >
> >> > (818) 878-0454
> >> > ===============================
> >> >
> >> > ----- Original Message -----
> >> > From: Jenna Latt <LATTJ@state.mi.us>
> >> > To: <p2tech@great-lakes.net>
> >> > Sent: Wednesday, March 15, 2000 8:35 AM
> >> > Subject: Measuring pollution prevention performance: metrics
> >> >
> >> >
> >> > > I was wondering whether anyone have information on corporate or state
> >> > programs that are measuring pollution prevention progress or
> >performance.
> >> > Usually this is referred to as environmental performance indicators or
> >> > metrics and goes beyond the traditional SARA TRI data reporting, "pounds
> >> > released" or emissions reporting. For example, measurements used can be
> >> > "amount of constituent reduced per amount of product produced," or some
> >> > other similar metrics. I am particularly interested in what state
> >programs
> >> > are doing in this area.
> >> > >
> >> > > Are there any websites or reports (specifically report names) I can be
> >> > referred to? I have already checked www.epa.gov and the EPA P2 site but
> >I
> >> > may have missed a particular report.
> >> > >
> >> > > Thanks,
> >> > >
> >> > > Jenna Latt
> >> > > Pollution Prevention Section
> >> > > Environmental Assistance Division
> >> > > Michigan Dept. of Environmental Quality
> >> > >
> >> >
> >> >
> >>
> >>
>
>wjw5@psu.edu
>
>Warren J. Weaver
>PENNTAP
>227 W. Market St.
>York, PA 17401
>
>ph: (717) 848-6669
>
>fax: (717) 854-0087
>
>website: www.penntap.psu.edu
>
>Recycle Electrons
>Use E-commerce

Reid Lifset
Editor, Journal of Industrial Ecology
School of Forestry & Environmental Studies
Yale University
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New Haven, CT  06511-2189  USA
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