Though NEBOSH now has its own stand-alone Environmental Diploma, there is also a section - Element C10 - of the National Diploma in Occupational Health and Safety, entitled Environmental Pollution and Waste Management.
NEBOSH's Element C10 aims to teach students:

• to identify potential sources and impacts of environmental pollution and appropriate monitoring strategies
• to describe the various types of waste and their categorisation, treatment, disposal and documentation
• to be able to outline the need for emergency response measures.

Up to standard

To identify potential sources of pollution and to evaluate their subsequent impact on the environment, it's vital to have some common measures to monitor the overall performance of environmental management systems.
Defra (the Department for Environment, Food and Rural Affairs) produced an excellent set of reporting guidelines in June 2005 to enable UK businesses to develop environmental key performance indicators (EKPIs).

These guidelines, available to download from www.defra.gov.uk/environment/business/envrp/pdf/envkpi-guidelines.pdf, are most useful as there is an increasing demand for sharper and more focused reporting from businesses on their environmental impacts. The use of EKPIs should help to improve the linkages between environmental and financial management and encourage the reporting and communication of environmental performance - both good and bad - to interested stakeholders.

Businesses that monitor, manage and communicate their environmental performance are well thought of in the market. They demonstrate an understanding of how to turn this asset into commercial advantage through cost reduction, regulatory compliance, process improvements and well managed public relations.

This is probably why 180 of the top 250 UK companies regularly report on their environmental performance. It is hoped that the other 70 will adopt the Defra guidelines and rapidly join the environmental reporting club, especially as the guidelines clarify the reporting frameworks and best practice in the UK.

Take five

Defra's guidelines help organisations wishing to start the process of environmental-performance reporting by setting out 25 EKPIs, and also by outlining how to handle environmental impacts in their products and in the supply chain.

They stress that no one organisation is expected to report on all 25; they expect 80% of organisations to have five significant EKPIs or fewer.
The main objective of the guidelines is to help as many organisations as possible reach a level where they understand their environmental performance, know how to measure it and know how to keep improving it.
The guidelines say they aim to:

• give clear guidance to companies on how to report on their environmental performance using EKPIs
• define which EKPIs are most relevant to which sectors
• set out the rationale for managing environmental performance using EKPIs.

The policy background fits in with various UK and EU initiatives, such as Securing the Future, the UK Government sustainable development strategy of March 2005, and the EU's Accounts Modernisation Directive, which applies to more than 12,000 large UK businesses and requires them to report "where appropriate" on environmental issues.

The government has sought to encourage organisations to report on their environmental impacts over a number of years, especially when such disclosures on impacts, policies and performance benefit business, shareholders, stakeholders and society as a whole.

Worth the trouble

The benefits of managing and reporting environmental performance can lead to significant business benefits through:

• cost savings and productivity gains - the Environment Agency (EA) estimates that British manufacturing would save £2 billion to £3 billion each year (equivalent to 7% of total profits) through waste minimisation techniques, often with little or no investment
• improved sales - 74% of the British population say that more information on a company's social and ethical behaviour would influence their purchasing decisions, according to a study by the polling firm MORI
• preferred supplier status - in Spring 2005 the government appointed a business-led Sustainable Procurement Task Force to develop a national action plan for sustainable procurement across the public sector by
  April 2006
• increased attractiveness to the investment community - investors, financial analysts and brokers are increasingly asking questions about the links between the environment, sustainability and financial performance; hence reporting on environmental matters provides a good indication of what measures an organisation is taking to reduce risks, develop opportunities and improve investment potential
• product and service innovation - the government-funded Carbon Trust
  estimates there has been over £1 billion of investment in UK clean technology companies since 2000
• improved recruitment - three in five people want to work for a company whose values are consistent with their own, according to a survey of 1200 undergraduates across the 20 largest economies in the world (the Environics' 2003 Global Campus Monitor survey)
• licence to operate - managing environmental impacts and minimising an organisation's impact on the environment can reduce exposure to prosecutions and fines by the EA; it can also improve relations with regulators and help ensure the organisation maintains its licence to operate by providing regular assurances on its compliance with environmental legislation.

EKPIs provide businesses with a tool for measurement. They are quantifiable metrics that reflect the performance of a business in achieving its wider goals, targets and objectives. They help businesses to implement environmental strategies by linking the various components and levels of an organisation - business units, locations, departments and individuals - with clearly defined targets and benchmarks.

The impact of environmental matters on business performance is rapidly increasing and will continue to do so. Poor management of energy, natural resources, raw materials or waste can adversely affect performance. Failure to plan for a sustainable future in which environmental factors are likely to be increasingly significant may risk the medium to long-term value of the business and threaten its existence.

Going metric

Research into environmental reporting demonstrates an increasing trend for organisations to report on their environmental impacts. A study by corporateregister.com in 2004 noted that more than 1500 companies now produce separate corporate social responsibility (CSR) reports annually, compared with fewer than 100 back in 1993.

With the onset of extra reporting regulations mentioned above, it is highly likely that requirements to report environmental impacts will increase, as markets seek greater transparency and accountability.

But according to the EA, there is still a lack of quantification in most environmental reports. Its 2004 study of the annual reports and accounts of the FTSE All-Share companies noted that the majority of the reports lacked depth, rigour or quantification. The report concluded that environmental disclosure levels were low. Only 10% of FTSE All-Share companies reported quantitatively on climate change, water usage and waste management.

The EA estimates that SMEs generate approximately 60% of commercial waste and are responsible for as much as 80% of reported pollution incidents in England and Wales. Very few of the 3.7 million UK businesses in the SME category do any environmental impact monitoring or reporting.

Current guidelines and frameworks have evolved to fulfil the ever-increasing demand for transparency and disclosure by businesses on environmental and other corporate responsibility issues. The government believes that there is an emerging consensus on what should be included in a set of EKPIs and has sought to ensure that the Defra guidelines are broadly compatible with other reporting frameworks and standards. These include:

• the Global Reporting Initiative (GRI) - www.globalreporting.org
• the Operating and Financial Review (OFR) Accounting Standards Board's OFR Standard: guidance on implementation (www.asb.org.uk) - currently under review
• the former Department of Trade and Industry's guidance for directors and auditors
• the British Standards Institution's BS EN ISO 14001: 1996 Environmental Management Systems - Specification with Guidance for Use (BSI, London), since superseded by BS EN ISO 14001: 2004, though both are
  in use.

First principles

Environmental impact performance reports vary in style and format. Some organisations include this information in their annual reports; others provide stand-alone environmental or corporate responsibility reports.

The government says it does not believe that one type of report is necessarily better than another. What is considered important is that organisations reduce the harmful environmental and social impacts of their activities, products and services and are transparent and consistent in their efforts.

The principles of reporting follow some common practices used by numerous organisations in their reporting and target-setting. These involve setting EKPIs that are:

• planned and transparent, with clearly assigned responsibilities, clear timeframes and full communication
• inclusive - set in consultation with the business, shareholders, neighbours and regulators
• based on relevant and comparable information - benchmarking, best practice models, process descriptions, methods of calculation
• broad in scope - reports should cover all of the business operations
• consistent - the reporting process used should be applied in the same way across the business from year to year
• subject to review - the process should be reviewed both internally and externally; use of a third-party verifier will provide assurance for the business and its stakeholders
• quantitative - indicators should be measurable to enable targets to be set and achieved; in this way, the effectiveness and efficiency of environmental policies and management systems can be demonstrated and substantiated
• comparable - indicators should be expressed in absolute terms that cover the entire business for each (annual) period of reporting, possibly related to turnover or to country or region of operation
• based on standard methods of calculation - there are many ways of estimating environmental impacts so it is important that businesses report clearly the estimation methods they use
• clearly referenced - making data sources clear and readily available and clearly referenced, to help ensure reporting transparency.

Boiled down

Defra examined more than 700 different types of environmental data/impacts and mapped them to 56 business sectors. They then identified the most significant impacts of each business sector by analysing the costs to society associated with resource use and polluting emissions.
Placing a financial value on environmental impacts allows organisations, shareholders and regulatory authorities to determine the relevance of their interactions with the environment in a clear and transparent way.

This form of analysis assesses which environmental impacts are significant to a given business sector by comparing the social or damage costs of an impact with the total economic value (turnover) of the sector.

From this analysis, they arrived at the list of 25 EKPIs that are significant to UK businesses, grouped into five areas of concern (see box below).

These EKPIs have been designed with company reporting in mind. Where possible, they make use of information that is routinely collected by most companies. So many of the EKPIs can be calculated from information such as quantity of fuel consumed per annum, business mileage and how much electricity has been bought.

All businesses are advised to consider reporting on the two financial EKPIs, environmental fines and environmental expenditures, and also on how they seek to influence the environmental performance of their supply chain and their products.

The Defra report provides a useful section on how to use its guidelines and supplies detailed commentary on all 25 indicators.

Chain reaction

There is no single, quantifiable measure that organisations can use as an EKPI for the effect of their upstream supply chain on the environment. But there is a strategic process that companies can use to determine the impacts of their supply chains:

• list which companies your business spends money with
• categorise expenditure into sector groupings (56 types)
• assess each supplier's typical environmental impacts and risks
• determine where to focus your efforts - prioritise based on impact and expenditure
• engage with your suppliers to encourage them to report on their EKPIs
• influence purchasing decisions based on information gathered.

Improvements in your suppliers' environmental performance will be much more likely if they are aware that it is a factor in your organisation's buying decisions.

Product placement

The environmental impacts of some organisations' products after sale may be much greater than the impacts from the raw materials and the production processes used in their creation. This is particularly true of products that consume energy in their use phase or that pose problems because of their volume or toxicity when they enter the waste disposal stream after use.

The process for reducing the downstream impacts of products falls into two distinct parts:

• assessing the environmental impact of a particular product throughout its life cycle and priority areas for impact reduction
• strengthening the regulatory frameworks and market incentives to stimulate and support improvements.

Individual sectors or businesses can identify the EKPIs for their downstream impacts by:

• assessing the relevant impacts by examining the key phases of the product's downstream life, with the estimate of impacts per unit being multiplied up by the number of units sold
• looking at each of the three downstream phases: distribution, use and disposal
• developing performance measures and setting goals for future product design.

Defra says KPIs should be related to a normalising factor such as turnover or production output, or floor space in the case of an office-based operation. This allows stakeholders to know how much environmental impact companies have relative to a given amount of goods and/or services produced. Indicators expressed in this way can be useful in showing environmental improvements in a growing business.

Overall, environmental reporting based on performance indicators can seem to be about proving an organisation's green credentials to the wider world, but the focus it brings to resource use and business efficiency can have a galvanising effect on the organisation itself.

Environmental key performace indicators

Emissions to air
1. Greenhouse gases
2. Acid rain, eutrophication and smog precursors
3. Dust and particles
4. Ozone depleting substances
5. Volatile organic compounds
6. Metal emissions to air

Emissions to water
7. Nutrients and organic pollutants
8. Acid emissions to water
9. Metal emissions to water

Emissions to land
10. Pesticides and fertilisers
11. Metal emissions to land
12. Acids and organic pollutants
13. Waste (landfill, incineration and recycling)
14. Nuclear/radioactive waste

Resource use
15. Water use and abstraction
16. Natural gas
17. Oil
18. Metals
19. Coal
20. Minerals
21. Aggregates
22. Forestry
23. Agriculture

Financial
24. Environmental fines
25. Environmental expenditure