Environmental performance, as defined by the impending ISO 14031, is the company's achievement in managing any interaction between the company's activities, products or services and the environment (ISO 1997). Improvement of environmental performance thus implies that the company has minimised the relative environmental impact of its activities, products or services. Based on the use of performance measurement in traditional management accounting, environmental performance measures are (Horngren and Sundem 1993): * Attention-directing, as they point to problems and indicate which problems are to be given priority * Used in problem-solving, as they (should) enable environmental managers to choose between possible solutions and evaluate possible outcomes * Used in keeping track of activities and results--i.e, scorecard-keeping
The operations of the company include the production processes that generate the physical product or service offered by the company. In practice, this means performance measurement that focuses on the environmental efficiency and effectiveness of the production processes. The second dimension is the product(s) or service(s) itself. This includes the measurement of environmental aspects of the product itself (in most eco-balance methodologies called the `product balance' [Kunert AG 1996]) or the product life-cycle (in most product life-cycle assessment methodologies called the `inventory stage' [SETAC 1992]). The third performance dimension is how environmental issues are addressed by management. This often includes the results of implementing the environmental policy, the performance of the environmental management system as well as how well the environmental objectives of the company have been reached, including regulatory compliance objectives. The fourth, and perhaps the most difficult area to measure, covers the environmental impact of a company's operations as well as the use of its products. At a process level, this could be...
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