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The Construction of Environmental Indicators for Determination of Performance of Esg Indicators to Support Decision-Making of Investors

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This contribution deals with the construction of environmental indicators, serving investors for the assessment of complex performance of companies in accordance with social and corporate governance indicators, the so-called ESG performance indicators. The research project “Construction of Methods for Multifactor Assessment of Company Complex Performance in Selected Sectors”, solved by the team of authors has been introduced. In recent years, investment managers have preferred the importance of ESG indicators showing long-term sustainable performance of those companies in which they have invested their financial resources. The objective of presented contribution is the proposal of environmental indicators, i.e. key ESG performance indicators. Environmental indicators are used not only for decision-making, but also for determination of sustainable value. A number of successive steps have been taken to construct environmental indicators and a combination of various statistical methods has been employed. An empirical analysis of environmental performance indicators for the companies operating in the processing industry according to CZ-NACE has been carried out on the basis of the analysis of sources, suggested by international organisations and voluntary environmental instruments. Environmental performance indicators, facilitating investors to decide on their investment activities and forming the part of key ESG-performance indicators, represent expected results of the empirical research.
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THE CONSTRUCTION OF ENVIRONMENTAL INDICATORS FOR DETERMINATION
OF PERFORMANCE OF ESG INDICATORS TO SUPPORT
DECISION-MAKING OF INVESTORS
Alena Kocmanová1, Zdeněk Karpíšek2, Markéta Klímková3
Faculty of Business and Management, Brno University of Technology, Kolejní 4, 612 00 Brno, Czech Republic
E-mails: 1kocmanova@m.vutbr.cz (corresponding author); 2karpisek@fme.vutbr.cz; 3klimkova@m.vutbr.cz
Received 29 June 2012; accepted 19 September 2012
Abstract. is contribution deals with the construction of environmental indicators, serving investors for the assessment of com-
plex performance of companies in accordance with social and corporate governance indicators, the so-called ESG performance
indicators. e research project “Construction of Methods for Multifactor Assessment of Company Complex Performance in
Selected Sectors”, solved by the team of authors has been introduced. In recent years, investment managers have preferred the
importance of ESG indicators showing long-term sustainable performance of those companies in which they have invested their
nancial resources. e objective of presented contribution is the proposal of environmental indicators, i.e. key ESG performance
indicators. Environmental indicators are used not only for decision-making, but also for determination of sustainable value.
A number of successive steps have been taken to construct environmental indicators and a combination of various statistical
methods has been employed. An empirical analysis of environmental performance indicators for the companies operating in
the processing industry according to CZ-NACE has been carried out on the basis of the analysis of sources, suggested by inter-
national organisations and voluntary environmental instruments. Environmental performance indicators, facilitating investors
to decide on their investment activities and forming the part of key ESG-performance indicators, represent expected results of
the empirical research.
Keywords: environmental indicators, performance, manufacturing industry according to Classication of Economic Activities
Czech Republic, empirical research, T-test, regression function, key performance indicators, decision-making, measurement.
JEL Classication: Q50, Q56.
APLINKOSAUGOS RODIKLIŲ NUSTATYMAS VEIKLAI VERTINTI PAGAL ASV
VEIKLOS KRITERIJUS IR INVESTUOTOJŲ SPRENDIMAMSPAREMTI
Alena Kocmanová1, Zdeněk Karpíšek2, Markéta Klímková3
Brno technologijos universitetas, Kolejní 4, 612 00 Brno, Čekijos Respublika
El. paštas: 1kocmanova@m.vutbr.cz; 2karpisek@fme.vutbr.cz; 3klimkova@m.vutbr.cz
Įteikta 2012-06-29; priimta 2012-09-19
Santrauka. Straipsnyje nagrinėjami aplinkosaugos rodikliai, kuriuos taikydami investuotojai gali įvertinti kompleksinę
organizacijų veiklą, atsižvelgdami į socialinius ir bendrovės valdymo rodiklius, angliškai vadinamus ESG veiklos kriterijais.
Šiuo tyrimu pradėtas tiriamasis projektas „Tam tikro sektoriaus bendrovės kompleksinės veiklos daugiakriterinio vertinimo
VERSLAS: TEORIJA IR PRAKTIKA
BUSINESS: THEORY AND PRACTICE
ISSN 1648-0627 print / ISSN 1822-4202 online
2012 13(4): 333–342
doi:10.3846/btp.2012.35
http://www.btp.vgtu.lt/en
334 A. Kocmanová et al. e construction of environmental indicators for determination of performance...
metodų kūrimas“. Pastaraisiais metais investicijų valdytojai teikia pirmenybęESG veiklos rodikliams, kuriuos taikant galima
įvertinti darnią bendrovių, į kurias investuota, veiklą. Tyrimo tikslas – pasiūlyti aplinkosaugos rodiklius, t.y. vienus pagrindinių
ESG veiklos kriterijų. Šie rodikliai naudojami ne tik priimant sprendimus, bet ir nustatant darnią vertę. Nuosekliai parinkti ap-
linkosaugos rodikliai ir pritaikytas įvairių statistinių metodų rinkinys rodiklių reikšmėms nustatyti. Atliktas įmonių, veikiančių
apdirbamojoje pramonėje pagal CZ-NACE, aplinkosaugos veiklos rodiklių empirinis tyrimas. Aplinkosaugos veiklos rodikliai,
leidžiantys investuotojams spręsti apie investicinę veiklą ir sudarantys ESG veiklos rodiklių dalį, išreiškia tikėtinus empirinio
tyrimo rezultatus.
Reikšminiai žodžiai: aplinkosaugos rodikliai, veikla, apdirbamoji pramonė pagal CZ-NACE, aplinkosaugos aspektai, empirinis
tyrimas, regresijos funkcija, pagrindiniai veiklos rodikliai, sprendimų priėmimas, matavimas.
1. Introduction
In recent years, investment managers have preferred the
importance of ESG indicators showing long-term perfor-
mance of those companies in which they have invested
their nancial resources. Surveys indicate that investors
are more and more convinced that ESG integration into
their investment decisions maximizes their long-term inte-
rest and that good corporate governance and sustainability
contribute to creation of long-term value for shareholders.
e project holder – Faculty of Business and
Management, Brno University of Technology (FBM BUT)
- is involved in ESG indicators in the processing sector in
the Czech Republic within the framework of the Project No.
P403/11/2085 “Construction of Methods for Multifactor
Assessment of Company C omplex Performance in Selected
Sectors” funded by the Grant Agency of the Czech Republic
(GACR).
e objective of presented contribution is to propose a
method of selection of environmental performance indi-
cators at the corporate level, supporting decision-making
of investors and being the part of ESG indicators and
Integrated Reporting. Application of proposed methodo-
logy is clearly illustrated with an example of environmental
indicators for performance. Reaching the objective is divi-
ded into successive steps. Individual stages of selection of
indicators, including description of applied methods, have
been dened in the methodology.
Development of research in the area of corporate per-
formance evaluation and corporate sustainability repor-
ting in the Czech Republic has been described by authors
(Hřebíček, Soukupová 2009; Kocmanová, Dočekalová 2011;
Ritschelova et al. 2010
e most commonly known environmental, econo-
mic and social corporate data and information are being
monitored, codied, registered and aggregated into Key
Performance Indicators (KPIs) (Bassen, Kovacs 2009;
DVFA 2009; IFAC 2012).
e sustainability performance is, however, oen unders-
tood as performance in environmental, social and economic/
nancial terms, thus excluding governance performance
(Schaltegger, Wagner 2006). However, we shall also consider
corporate governance (Bhojraj, Sengupta 2003).
erefore, a conclusion can be drawn that ESG integra-
tion is currently becoming the investment strategy, where-
by ESG indicators focus on the economic consequences of
long-term risks and opportunities, associated with strate-
gies of companies in which investments are being made.
ESG performance indicators are becoming a tool for future
cash ows. Primarily, investors want to achieve excellent
nancial returns under predetermined risk levels (Bartes
2010; Kocmanová, Němeček 2009.
Even with the growth of socially responsible investment
(SRI) such ESG indicators are being incorporated into the
investment assessment. Current nancial crisis has shied
a stronger focus of the investors on the social and environ-
mental conditions existing in the companies to be covered
in their investment analyses. Many companies have also
begun to ask themselves how to improve their commu-
nication skills on environmental, social and governance
factors aiming at these mainstream investors (BSR 2011)
Corporate sustainability, that is the capacity of a compa-
ny to continue operating over a long period of time, depends
on the sustainability of its stakeholder relationships (Perrini,
Tencati 2006).
2. Environmental Performance
An environmental performance indicator of a particular
company (indicator of impact of company activity on its
environment) is understood as a specic statement, fa-
cilitating the measurement of company’s environmental
performance. Development of environmental indicators
has passed through a long evolution. Consumers more and
more demand green products and services; on the other
hand, businesses and industries are now much more res-
ponsive to green issues (Yildiz, Yercan 2011).
ČSN EN ISO 14000, mainly represented by generic
standard ČSN EN ISO 14001, is applied in the ecologically
oriented management system in the Czech Republic. e
standards accompanying the establishment of systems of
environmental management and their auditing shall be
governed by the series of standards ČSN EN ISO 14000.
e underlying philosophy of these international standards
is to assist companies with all areas towards active and inde-
pendent behaviour in environmental matters.
Environmental performance indicators in the context of
the Environmental Management Systems (EMS and EMAS)
of the company should address primarily those company
environmental impacts that are most signicant and those
which the company can inuence by its operations, mana-
gement, activities, products and services on environment
and sustainable growth. ey should full dual purpose of
assisting the management of the company and providing
information to stakeholders (Hřebíček, Soukupová 2009).
Key Performance Indicators (KPIs) provide companies
with a tool for measurement. KPIs help companies to imple-
ment strategies by linking various levels of such companies
(organization units, departments as well as individuals) with
clearly dened targets and benchmarks.
Corporate environmental (sustainable) reporting forms
the part of company environmental communication that
is directed from such a company to various target groups.
Nowadays corporate environmental reporting has evolved
to sustainability reporting, which covers a wider area of the
company performance, also including economic and social
aspects (Hřebíček, Soukupová, Kutová 2009; Schaltegger,
Wagner 2012).
3. Empirical research
A number of successive steps have been taken to construct
environmental indicators within the framework of the re-
search. ese relate to objective and subjective methods of
selection of indicators/performance indicators and use of
combination of various statistical methods.
Objective methods, e.g. on the basis of statistical analy-
ses, represent the most appropriate method of the selection
of indicators. ey provide results based on clear algorithms,
coming out only from actual values of such indicators
Subjective indicators are based mainly on statements made
by the respondents and their reection of the investigated
issue. Nevertheless, rational-logical point of view on monito-
red indicators is eliminated during the selection procedure.
us, they are clearly subject to the person and investigated
personality (Kuprová, Kamenický 2004). e instrument
of eciency’s measurement is metrics i.e. strict nancial or
non-nancial indicators or evaluative criteria which use e-
ciency’s levels in specic area of enterprise. To analyse and
control complex processes and phenomena, the knowledge
of their inherent structure is needed (Ginevičius 2010).
e measurement of the contribution of an economic
entity (company, etc.) to the sustainability poses a problem
today and is subject to several debates. Based on the infor-
mation provided by the organizational entities themselves
and the information made public, the approach of sustaina-
ble value constitutes today the approach most accomplished
to assess the sustainable performance (Rhouma 2010).
e impact of environmental matters on business per-
formance is increasing and will continue to do so. For exam-
ple, poor management of energy, natural resources or waste
can aect current performance; failure to plan for a future in
which environmental factors are likely to be signicant may
risk the long-term value and future of a business. erefore,
it is expected that company shall need to use environmental
KPIs to adequately capture the link between more and more
environmental, social and economic performance.
As it is clear from the analyses of international organi-
zations (GRI, UNCTAD, IFAC, UN PRI, UNEP FI, OECD,
IFRS, EFFAS-DVFA, CFA, etc.), which are dealing with the
development of environmental, social and also corpora-
te governance and economic indicators, there are coming
to the front the ESG performance indicators, which they
recommend to the investors to incorporate into their inves-
tment analyses and decision-making processes (CA 2012;
CFA 2012; DVFA 2008; IFAC 2012; Nardo et al. 2005.
On the basis of such processed resources the ques-
tionnaire “PERFORMANCE OF THE COMPANY:
ENVIRONMENTAL, SOCIAL, ECONOMIC ASPECTS
AND GOVERNANCE” has been designed. Such proposed
questionnaire has been compiled on the basis of achieved
theoretical knowledge, dened areas of solved problem and
specic objectives, so that the obtained results may contri-
bute to the setup of key performance indicators (KPI) for
the companies in the manufacturing industry according to
CZ-NACE in the year 2012. Partial objective of the empiri-
cal research has been represented by the identication of key
environmental performance indicators. Companies classi-
ed according to the legal forms of their businesses have
been selected from the compiled database of companies and
personally visited: 42 joint stock companies, 35 limited lia-
bility companies, 1 association and 1 state-owned enterprise
classied in CZ-NACE in the processing industry, i.e. 79
companies with the number of employees over 250 accor-
ding to the EU-criterion. From the ownership perspective,
out of participating 79 companies 44 companies (55.7%)
are in the exclusively domestic ownership, 35 companies
(44.3%) are both subsidiaries of multinational corporations
and companies with foreign investor.
Empirical research has focused primarily on the manu-
facturing companies: i.e. manufacture of electrical engi-
neering, engineering, medical products- 31 companies
(38.5%), electricity, gas, water and waste processing – 12
companies (15.4%), foundry production – 11 companies
(14.1%), manufacture of textiles and leather – 9 companies
(11.5%), manufacture of chemicals – 8 companies (10.3%),
and manufacture of food products – 8 companies (10.3%).
Manufacturing companies have been deliberately selected
for the reason of comparability of data; moreover, these are
companies with strong eld of action not only in the social
and economic dimension, but also in the environmental
eld as regards the relationship to voluntary management
instruments (see Table 1).
Verslas: teorija ir praktika, 2012, 13(4): 333–342 335
336 A. Kocmanová et al. e construction of environmental indicators for determination of performance...
Method of selection of the investigated objects, i.e. com-
panies, we can characterize as for a specic purpose and,
moreover, based on a voluntary basis. But, as Reichel states,
this is not considered insucient in the qualitative research,
because the ambition here “is not the representativeness,
so ... the implementers consider such selection procedure
reasonably as appropriate” (Reichel 2009).
From the voluntary management instruments in the
companies of processing industry, the standard ISO 9000 is
used with 89.9% of the companies, followed by the standard
ISO 14000 with 55.7%, although from the total number of
companies it has been introduced only in half, the same
also applies to the OHSAS 18000 48.1% and MRP 48.1%.
e companies consider the other voluntary instruments
for management less signicant.
4. Research methodology
Methodology of determination of the environmental indi-
cators took place in several stages.
e initial determination of the environmental indica-
tors was based on the resources from the Global Reporting
Initiative, EMAS III, and the International Federation of
Accountants (GRI 3.1 2011; CZO 2012). Furthermore, the
research dealt with environmental indicators which were
published in the Statistical Environmental Yearbook of the
Czech Republic (CZO 2012).
e selection of environmental indicators and related
analyses was preceded by calculation of descriptors for each
input variable.
To identify relevant indicators, selected sample of com-
panies in the processing sector was asked: “Which environ-
mental aspects, associated with the protection of environment,
are signicant and insignicant for the performance?” and
“Which environmental aspects, associated with the use of
natural resources and raw materials (including energy), signi-
cantly aect performance?”. Respondents could express the
fact of monitoring of the indicator in a range from “Yes”
(4) to “No” (1). e questionnaires showed that for the
companies the monitoring of the generation of waste was
signicant in 91.1%, including hazardous waste in 70.9%,
emissions to air in 64.6%, discharging of waste water in
59.5%, smell, noise and vibration in 53.2%. Insignicant
were the inuence on landscape in 58.2% and eects on soil
in 60.8%; however, some companies claimed monitoring
of these aspects. Following the question, related to the use
of resources and raw materials, the response indicated that
the companies monitored the consumption of raw materials
and consumables in 78.5%, power consumption in 69.6%.
e response to the indicator relating to water consumption
(36.7%) and gas consumption (35.4%) and consumption of
heat (24.1%) was most varied.
To the question “Which environmental indicators are
monitored?” the respondents stated indicators used as
environmental performance standards. e answers to
this question conrmed the relevance of these indicators:
energy eciency: energy consumption (primary sour-
ces) 93.7%,
eectiveness of the material consumption: consump-
tion of raw materials and consumables 91.1%,
waste management: total quantity of waste 82.1%,
hazardous waste 76.3%,
water management: water (total water consumption)
75.9%, total quantity of discharged water 52.7%.
A surprising result was the indicator of emissions to
air, the respondents monitored emissions only in 37.5%
for NOx, SOx and other signicant emissions, 39.7% made
the total emissions of greenhouse gases; that did not mat-
ch with the previous question on environmental aspects.
e companies did not care about biodiversity indicator
in 69.1%. Other relevant indicators of the impact of the
company activities on environment were the compliance
with laws and regulations, the companies considered that as
the most important indicator in 93.7%, nes and penalties
78.2% and trac 68.8%.
e empirical research further tested the statistical
signicance (T-test) of the legal forms of companies or
industry in relation to the environmental aspects of the
performance; nevertheless, the testing did not provide any
statistically signicant results, in fact, there was no factual
relationship between these factors (Field 2009; Meloun,
Militky 2002). Identically, whether an owner of compa-
ny was a foreign or domestic body did not indicate any
inuence on the relationship of the companies with their
environment (see Table 2).
Table 1. Voluntary management tools in the companies of the processing industry according to CZ-NACE
Use ISO
9000 MRP ISO
14000 EMAS
ČSN
OHSAS
18000
EMA CSR
Accounting
for
sustainable
development
Cleaner
produc-
tion
LCA
Environ-mental
labelling of
products
No 10.1 51.9 44.3 84.8 51.9 91.1 74.7 88.6 69.6 78.5 69.6
Yes 89.9 48.1 55.7 15.2 48.1 8.9 25.3 11.4 30.4 21.5 30.4
Testing the signicance of the relationship between
the owner of the company and position on the environ-
ment indicated an indirect transmission through voluntary
management tools. Companies with foreign owners more
often established standard ISO 14000 than companies with
domestic owners (statistically signicant, t(75) = –2.1,
P < 0.05, the strength of the effect, r = 0.24). Still more
often, companies with foreign owners introduced a mana-
gement system for production planning and inventory (sta-
tistically signicant, t(77) = –2.9, P< 0.05, the strength of
the effect, r = 0.31). With other management instruments
there were no dierences between companies with domestic
and foreign owners.
e perception of the signicance of the environmental
aspects (reduction of environmental impact, sum of the
environmental indicators) in reference to the performance
of the company was not aected by whether the company
introduced ISO 14000 or not (see Table 3).
Application of ISO 14000, however, has a consequence
for a particular conduct in the company concerning the
relation to environment, i.e. that the company with ISO
14000 (compared with company without this standard) is
trying more hard to reduce its impact on environment and,
consequently, also to monitor more indicators relating to
environmental performance. Using regression analysis, we
are interested in how many more indicators the company
will track if it has ISO 14000. For the formulation of depen-
dencies we choose the simplest linear regression function
12
yx
=β +β for Model 1 and Model 2.
Signicance of the correlation coecient R from Table
4, the estimates of regression coecients (β) with P-values
from Table 5, and the standard error (Std. error) from Table
4 indicate by how much -according to the regression model-
the monitoring of the environmental indicators would be
increased in the company with implemented ISO 14000.
Signicance of the correlation coecient R from Table 6,
estimates of the regression coecients (β) with P-values from
Table 7, and the standard error (Std. error) from Table 6 indi-
cate by how much -according to the regression model- the
monitoring of the environmental indicators would be incre-
ased in case of the ISO 14000 introduction to the company.
e results of regression analysis indicate that in case
of the standard ISO 14000 introduction the company will
seek to reduce the impact on environment in one more
additional area and will also monitor, moreover, about two
more environmental indicators.
Results of testing the signicance (T-test) of the
relationship between by ISO 14000 and whether the envi-
ronmental aspects increased or improved performance are
presented (see Table 8).
Table 2. Relationship between the owner of company and the environmental aspect
Characte-
ristics
∑ of environmental
aspects related to
environmental
protection
∑ of environmental
aspects associated with the
use of natural resources
∑ of monitored
environmental indicators
∑ reducing the impact
on the environment
Domestic Foreign Domestic Foreign Domestic Foreign Domestic Foreign
N44 35 44 35 44 35 44 35
Mean 4.1818 4.2286 3.4091 3.6 7.14 7.69 11.16 11.16
Std. dev. 2.3355 2.0013 1.4030 1.4184 2.237 2.04 3.18 2.62
Vari able s
T-test for Equality of Means
tdf P-value
(2-tail.)
Mean die-
rence
Std. error
of die-
rence
95% condence interval
of the dierence
Lower Upper
∑ of environmental
aspects related to
environmental
protection
EQVA* –0.094 77 0.925 –0.046 0.496 –1.036 0.942
EQVNA** 0.096 76.5 0.924 0.046 0.488 –1.019 0.925
∑ of environmental
aspects associated
with the use of
natural resources
EQVA* –0.598 77 0.552 –0.190 0.319 –0.826 0.444
EQVNA** 0.597 72.6 0.552 –0.190 0.319 –0.828 0.446
∑ of monitored
environmental
indicators
EQVA* –1.132 77 0.261 0.755 0.667 –2 .084 0.574
EQVNA** –1.157 76.9 0.251 0.755 0.653 –2.055 0.544
∑ Reducing the
impact on the
environment
EQVA* –1.127 77 0.263 0.549 0.487 –1.520 0.421
EQVNA** –1.139 75.5 0.258 –0.549 0.482 –1.510 0.411
Verslas: teorija ir praktika, 2012, 13(4): 333–342 337
338 A. Kocmanová et al. e construction of environmental indicators for determination of performance...
Table 3. Relationship between ISO 14000 and the environmental aspects
Vari able s
T-test for equality of means
tdf P-value
(2-tail.)
Mean
die-
rence
Std. Error of
dierence
95% condence interval of
dierence
Lower Upper
∑ of monitored
environmental
indicators
EQVA* 2.297 77 0.024 1.092 0.475 0.145 2.039
EQVNA** 2.218 60.5 0.030 1.092 0.492 0.108 2.077
∑ Reducing the
impact on the
environment
EQVA* 2.825 77 0.006 1.810 0.641 0.534 3.085
EQVNA** 2.807 71.2 0.006 1.810 0.645 0.524 3.095
Characteristics
∑ of monitored environmental
indicators
∑ reducing the impact
on environment
ISO 14000
applied
ISO 14000
not applied
ISO 14000
applied
ISO 14000
not applied
N44 35 44 35
Mean 7. 8 6 6.77 12.30 10.49
Std. dev. 1.786 2.438 2.758 2 .914
Table 4. Testing of Model 1
Model 1 R R square Adjusted R
square
Std. error of the
estimate
0.253 0.064 0.052 2.099
Table 5. ∑ Reducing the impact on the environment by the introduction of ISO 14000
Model 1 Coecients t P-value
βStd. error
Constant 6.771 0.355 19.082 0.000
ISO 14 000 1.092 0.475 2.297 0.024
Table 6. Testing of Model 2
Model 2 R R Square Adjusted R
square
Std. error of
estimate
0.306 0.094 0.082 2.828
Table 8. Relationship between ISO 14000 and the environmental performance
Characteristics
ey saved nancial means ey have improved
competitiveness
ey improved company image
ISO 14000
applied
ISO 14000
not applied
ISO 14000
applied
ISO 14000
not applied
ISO 14000
applied
ISO 14000
not applied
N42 35 40 34 41 35
Mean 3.36 3.29 2.65 2.12 3.07 2.71
Std. dev. 0.906 0.893 1.122 0.977 0.787 0.987
Table 7. ∑ of monitored environmental indicators by the introduction of ISO 14000
Model 2 Coecients t P-value
βStd. Error
Constant 10.486 0.478 21.934 0.000
ISO 14000 1.810 0.641 2.825 0.006
Vari able s
T-test for equality of means
tdf P-value
(2-tail.)
Mean
dierence
Std. error of
dierence
95% condence interval of
dierence
Lower Upper
Saved nancial means EQVA* 0.347 75 0.730 0.071 0.206 0.339 0.482
EQVNA** 0.347 72.9 0.730 0.071 0.206 –0.339 0.482
Improved
competitiveness
EQVA* 2.157 72 0.034 0.532 0.247 0.040 1.024
EQVNA** 2.181 71.9 0.032 0.532 0.244 0.046 1.019
Improved company
image
EQVA* 1.763 74 0.082 0.359 0.204 –0.047 0.765
EQVNA** 1.731 64.7 0.088 0.359 0.207 0.055 0.773
8 lentelės tęsinys
Table 9. Key indicators of environmental performance
Indicator KPI Measurement
EN1-Energy
Energy use
Total annual energy consumption
[MW h/CZK]
(indicator EN3 in GRI)
Total direct (produced internally) and indirect (delivered)
energy consumption in megawatt divided by net sales.
(Total direct energy consumption = Electricity/heat
produced by the company)
Renewable energy use
Total consumption of renewable energy
[%](indicator EN3)
Total of renewable energy sources in MWh x 100 divided by
total energy sources.
EN2-Materials
Material use
Annual mass ow of dierent used
materials (in addition to the carriers of
energy and water)
[t/CZK] (indicator EN1)
Total consumption of materials in tons divided by total
operation costs.
Recycled materials use
Proportion of the recycled input
materials [%] (indicator EN2)
Percentage content of used recycled materials out of total
consumption materials.
EN3 - Waste
Production of waste
Total annual production of waste
[t/CZK] (indicator EN22)
Total waste use in tons divided by net sales.
Production of hazardous waste
Total annual production of hazardous
waste [t/CZK]
Total hazardous waste use in tons divided by net sales
EN4- Water
Water Use
Total annual consumption of water
[m3/CZK](indicator EN8)
Total water use in cubic meters divided by net sales.
EN5-Emissions Total annual emissions
[t/CZK](indicator EN20)
Total emissions (solid particulate matter, SO2, NOx, NH3,
PM without CO) in tonnes divided by net sales.
EN6-Investment Environmental protection investment
[t/CZK] (indicator EN30)
Total investments in environmental protection in CZK
divided by net sales.
Additional indicators
EN7- Compliance
with the rules on
the protection of
environment
Environmental laws and regulations
[number] (indicator EN28) Number of voluntary agreements.
Fines and penalties
[CZK] (indicator EN28)
Monetary value of signicant nes and total number
of non-monetary sanctions for non-compliance with
environmental legislation and regulations. e total
monetary value of signicant nes; number of non-
monetary sanctions.
Verslas: teorija ir praktika, 2012, 13(4): 333–342 339
340 A. Kocmanová et al. e construction of environmental indicators for determination of performance...
Companies with established ISO 14000 stated that envi-
ronmental aspects established in their companies increased
competitiveness, e.g. possibility to participate in selective
proceedings of government contracts, in the remaining
questions the inuence of ISO 14000 was not identied
(statistically insignicant).
5. Results and discussion
Key Performance Indicators (KPIs) are the essential as-
sumptions of measuring environmental performance. e
environmental performance indicators provide quantitative
forms of a feedback reecting the results in the framework
of the corporate strategy. Environmental indicators, which
particular company develops and informs about them in
internal or external reports, always depend on the company
strategic priorities, mirroring the unique character of every
company. Key environmental indicators for the companies
in the processing industry to measure performance are
proposed (see Table 9).
Key performance indicators can help companies to plan
and manage their environmental priorities, in particular,
when the indicators are focused on the core business stra-
tegy, by means of operational plans, which include perfor-
mance targets. e most important is to recognize what is
measured, what is controlled, and important fact is that the
measures create value for the company and its stakeholders.
Environmental indicators should be chosen by the
company itself on the basis of their relevance and in terms
of its strategy, these performance indicators should help
companies to demonstrate progress towards the objectives
of sustainability and ensure that they cover their environ-
mental, social and economic impacts. Use of key perfor-
mance indicators can be challenging in a particular orga-
nisational context. Prior to company decision as regards
the establishment of scales of key performance indicators,
it is necessary to understand how they can be best used and
integrated into internal management and how they can help
and support sustainable reporting. Managers must consi-
der how to present the key performance indicators in their
internal and external reporting. Identication and selection
of key performance indicators depend on the context within
the company and industry.
In the event that the company is of the opinion that
some of selected environmental indicators are not relevant
for evaluation of the performance, then it does not have
to include such indicator in the overall evaluation of the
performance.
6. Conclusions
Key performance indicators (KPIs) may help the companies
to plan and control their priorities. e proposed environ-
mental indicators should serve for the evaluation of ESG
performance and they should meet some basic requirements:
clarity, simplicity, real verication of data for their deter-
mination, taking into account the comprehensive problem
and representativeness. e indicators should include the
essential and characteristic features of ESG performance.
Environmental indicators have been selected from a
wide range of performance indicators on the basis of the
above available international sources. e proposal of envi-
ronmental indicators and analysis were preceded by the
calculation of descriptive characteristics of the individual
variables. Descriptive statistics of all initial input indicators
have been carried out, because certain specic variables
have impact on the outcome of the methods in the follow-up
phase and they can be revealed already in the descriptive
statistics of the indicators.
ese modications have been preceded by one-dimen-
sional analysis of all the variables with use of statistical
methods and two-dimensional analysis; furthermore, the
interrelations with T-test have been tested and correlation
analysis has been employed.
e objective of the contribution is the construction of
key environmental performance indicators. Empirical rese-
arch deals with the selection of environmental performance
indicators for CZ-NACE sector-manufacturing industry.
ESG indicators quoted in an integrated reporting can pro-
vide relevant information, and even over time.
Indicator KPI Measurement
EN8- Signicant
environmental
impacts
Transport [t/km]
(Indicator EN29 in GRI)
Greenhouse gas emissions
Total direct (produced internally) emissions of CO2
equivalents in tonnes divided by number of covered
kilometres in company.
EN9- Biodiversity
Land use [%]
of built-up surface
(partial indicator EN11)
Total amount of land owned, leased, or managed for
production activities or extractive use in square meters x
100 divided by the area of SCIs in hectare (according to
Natura 2000 Sites).
Continued Table 9
e result of empirical research is the formulation of
environmental indicators, which shall form the part of ESG
performance indicators. Key Performance Indicators are
formulated for companies involved in the manufacturing
industry, according to CZ-NACE, with the use of statis-
tical methods. Measurement of environmental indicators
involves quantitative indicators requiring the information
linked with company performance. Environmental per-
formance indicators include: EN1-Energy, EN2-Materials,
EN3-Waste, EN4-Water, EN5-Emissions, EN6-Investment.
Additional indicators: EN-Compliance, EN8- Signicant
environmental impacts, EN9- Biodiversity.
e primary and crucial basis of the conception is the
reporting of real-life conditions, their good knowledge,
gathering of empirical data, when mainly the values of the
mentioned ESG factors come to the fore, for the individual
phases of the economic, environmental, social and corpo-
rate governance performances, while not only their values,
but also their roles and priorities, content and functions
and mutual interaction are monitored, and based on them
formulation of proposals and methodical procedures as
benets to help boost company performance. Identication
of measurable and relevant objectives for sustainability and
appropriate metrics are a matter of the utmost importance.
Acknowledgment
is paper is supported by the project No. P403/11/2085
“Construction of Methods for Multifactor Assessment
of Company Complex Performance in Selected Sectors
of the Czech Science Foundation and the research pro-
ject “Management Support of Firms Using Quantitative
Methods” of the Academy Sting, Business College in Brno
in 2012.
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A le n a K OC M A NO VÁ . Associate Professor at Depa rtment of Economics, the Faculty of Busi ness and Ma nagement, Brno University
of Technology. Research interests: corporate economic s and environmental ma nagement. She takes par t in resolving gr ant projects,
research plans at the state and faculty level, Grant project of Czech Science Foundation and international projects. At the present
time she is the co-researcher of the international projects in Latvia, Riga Technica l University, Institute of Engineering Economics.
Zdeněk KARPÍŠEK. Associate Professor at Department of Economics, the Faculty of Business and Management and Faculty of
Mechanical Engineering, Brno University of Technology. Research interests: fuzzy sets, stochastic modeling and applications in
dealing with technical, scientic, medical and economic problems in the basic and applied research.
Markéta KLÍMKOVÁ. PhD Student, Faculty of Business and Management, Brno University of Technology, Research interests:
lean production, environment management, dierent methods of operational and environmental management in manufacturing
companies.
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This article presents the partial results of the most extensive analysis focused at environmental fees ever made in the Czech Republic performed by Jan Evangelista Purkyne University in Usti nad Labem in collaboration with the Czech Statistical Office. The current paper is focused at describing the impact of both current and newly proposed waste deposition fee rates on the set of enterprise economic performance indicators. The first part of the paper provides a description of history as well as the current situation in the field of waste deposition fees in the country. The second part of the paper shortly describes the applied methodology of data collection and analysis. Such indicators as a) share of waste deposition fee in total revenues of an enterprise; b) share of waste deposition fee in consumption from operation; c) share of waste deposition fee in value added were calculated. The analysis consisted of the two consequent steps. The first was focused at quantifying the share of fees in selected economic indicators of enterprises in the year 2006. The second step consisted in quantification of the potential impact of the fee rates newly proposed by the Ministry of the Environment on economic agents in 2010 given an assumption that neither productivity nor economic performance of the companies would change. The final part of the paper presents the general conclusions about the stimulative potential of current and updated fees used as economic tools of environmental policy.
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The concept of sustainable development has been developed during the last twenty years mainly on a macro-economic level. The objective of this concept is to increase or at least to stabilize the well-being per capita of the planet over time while preserving the interests of present and future generations. The measurement of the contribution of an economic entity (State, Institution, Enterprise, etc.) to the sustainability poses a problem today and is subject to several debates. The mass of information to treat and to integrate in the political strategies private and public is such that it is impossible in the reality of all days. It is that a series of actors are beginning to identify tools and scoreboards which, through a series of indicators, allow guide them in their daily work. Based on the information provided by the organizational entities themselves and the information made public, the approach of sustainable value constitutes today the approach most accomplished to assess the sustainable performance. The aim of this research is to adapt this methodology to the assessment of sustainability of countries. The sustainability performance of the fifteen European countries (EU-15) will be analyzed based in the sustainable value approach. The case of a country of the Eastern Europe (The Czech Republic) is also analyzed. The study period is five years (2002-2006) in order to see the evolution of the integration of sustainable development in Europe since the last Summit in Johannesburg. Sustainable value is a monetary measure of the actual value created by the country's use of a bundle of economic, environmental and social resources. A country creates positive (or negative) Sustainable value if it earns a higher (or lower) return than the average (EU-15) with its available economic, environmental and social resources. The analysis of country's sustainability performance based on the Sustainable value approach looks at the use of nineteen different economic, environmental and social resources. The results reveal a mixed pattern when it comes to the sustainability performance of each country. Germany and Netherlands are the countries leaders respectively in terms of the absolute Sustainable value and the Sustainable value margin. Both countries create extremely positive Sustainable value over the entire reviewed period. Germany use the majority of economic, environmental and social resources considered in a value creating way. The Czech Republic is the country that improved the efficiency of the use of its economic, environmental and social resources most.
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Corporate sustainability, that is the capacity of a firm to continue operating over a long period of time, depends on the sustainability of its stakeholder relationships. This new stakeholder view of the firm goes beyond previous work on the triple bottom line and balanced scorecard. Companies need appropriate systems to measure and control their own behaviour in order to assess whether they are responding to stakeholder concerns in an effective way and to communicate the results achieved. These sustainability accounting systems should have the purpose of broadening and integrating the traditional financial approaches to corporate performance measurement, taking stakeholder needs into due account. This article presents the sustainability evaluation and reporting system (SERS), an integrated methodology aimed at monitoring and tracking from a qualitative and quantitative viewpoint the overall corporate performance according to a stakeholder framework, in line with small and medium-sized enterprises' managerial requirements. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.