Environmental Metrics: A New Way to Drive Enterprise Value

Environmental Metrics: A New Way to Drive Enterprise Value

Ian Cohen, Product Marketing Manager, Cority

Rick Mock, Principal, E2ManageTech

August 2, 2017

Agenda

• The Rise of Non-Financial Metrics

• Overview: Environmental Metrics

• Overview: Operational Metrics

• Overview: Management Metrics

• Overview: Condition Metrics

• Metric Design & Construction

• Systems

• Case studies

• Summary

Cority Software Inc.2


The Rise of Non-Financial Metrics

For decades, investors were only concerned with financial metrics and performance.

Interest in non-financial metrics and performance relative to industry peers has grown considerably since the late 1990s or early 2000s.



Environmental is one of three pillars of sustainable development

Primary consumers of this data• Investors

• Sustainability ratings and rankings organizations

• Stakeholders

Cority Software Inc.5 Source Link: http://www.robecosam.com/images/Alpha_from_Sustainability_06_2014.pdf

http://www.robecosam.com/images/Alpha_from_Sustainability_06_2014.pdf


• There are hundreds of sustainability organizations

• Mission, vision and value vary by organization

• Goals:• Drive transparency

• Help companies measure performance

• Drive change the corporate and community level



Task Force on Climate Related Financial Disclosures, created by G20 nations

Offers a voluntary framework to help businesses disclose the financial impact of climate-related risks

Supported by 100 companies worth a combined $11T

Cority Software Inc.7 Source Link: https://innovation-forum.co.uk/analysis.php?s=investors-demand-better-social-impact-data

https://innovation-forum.co.uk/analysis.php?s=investors-demand-better-social-impact-data

Poll Question #1

Does management at your company consider non-financial metrics when making decisions or when they are doing short and long-term planning?

All of the time

Most of the time

Some of the time

Rarely/Never

I don’t know


Overview: Environmental MetricsEnvironmental metrics are generally divided into 3 categories


Decision-Useful Information

Condition

Management

Operational

Overview: Operational MetricsDesigned to measure performance, which can then be used to determine the potential environmental burden of a company’s business lines


• The amount, type, and composition of materials used by a business

Material Usage

• The quantities, types, compositions, and destinations of all non-product related output

Waste Generation

• The quantities, types, and toxicity of pollutants released into different environmental media (air, water, land)

Pollutants

• The quantities, types, and compositions of any resource type (energy, freshwater, etc.)

Resource Consumption

Overview: Management Metrics

Designed to support the decision-making process. Leading

• Number of employees trained versus the number that need training

• Number of levels of management with specific environmental responsibilities

• Number of employees whose job descriptions include environmental responsibilities

Lagging

• Environmental liabilities that may have a material impact on the financial status of the organization

• Number of resolved and unresolved corrective actions

• Number of or costs attributable to fines and penalties


Supports decision making on the expenditure of:

Time

Money

Labor

Overview: Condition Metrics

• Environmental condition metrics seek to provide information on: • Health of the environment

• How it is changing

• Potential effects on operations

• Condition metrics should link specific industrial activities to environmental impacts

• There is a lack of robust condition metrics

• Largely derived from regulations or guidelinesdesigned to protect the human health and the environment


Poll Question #2

In your experience, which type of metric is the most useful to management for decision making purposes?

Operational metrics

Management metrics

Conditional metrics


Metric Design & Construction

• Ensure that the metrics being developed are SMART

• Design metrics that are quantifiableand add value

• Understand the end goals for measuring and tracking environmental data and performance


• Measures should be well defined and clear to anyone with basic knowledge of the goals

Specific

• Measures should be quantifiable and/or qualifiable with a defined method of gathering the data and presenting them

Measurable

• Stakeholders should agree on the goal(s) of the metrics

Agreed Upon

• The metrics should be measurable while taking into consideration the availability of resources, knowledge and time

Realistic

• There should be enough time to achieve the goal of the metrics

Time-based/Time-bound

Poll Question #3

We have a software system in place to help us easily capture environmental metrics to help us with short and long-term planning.

Agree

Somewhat agree

Somewhat disagree

Disagree

I don’t know/too new


System Implementation Considerations

Process and data readiness

How much of the iceberg?

Organizational change management

Prepare to Evolve


Case Study >$25B Oil and Gas Company

>300 sites globally

10% YOY reduction in hazardous waste

Successes Single repository of monthly haz waste usage

Aid in achieving stated goal

Introduction to an Enterprise EMIS

Challenges Global categorization

Normalizing diverse operations

Timely input


Takeaways and Lessons Learned

Progress not perfection

Proper metric program can facilitate cultural change

Strong leadership/management support essential

Establish strong governance

Don’t underestimate people and process



Summary

Value of metrics Provides executives with more information for short and long-

term planning

Informs stakeholders, such as investors, customers, and NGO’s

A solid data management system is the foundation for delivering value to the company

Metrics need to be SMART

What gets measured gets managed


Thank You!

Environmental Metrics: A New Way to Drive Enterprise Value

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