P.a.M Sustainabillity
P.a.M Sustainabillity
P.a.M Sustainabillity
a r t i c l e i n f o a b s t r a c t
Article history: This paper describes a method for assessing the degree of sustainability of a business operation, in terms
Received 14 January 2010 of indicators related to the sustainability impacts of its particular activities. The Process Analysis Method
Received in revised form considers the impact on the capital residing in the three domains: the environment, the economy and the
29 June 2010
domain of human/social capital. It is found, using the Brundtland definition of sustainability, that these
Accepted 13 July 2010
impacts can be related to two business perspectives: (1) Resource efficiency, which measures the
Available online 21 July 2010
effectiveness of conversion of natural, financial, human and social capital; (2) Fairness in benefit which
describes how fairly the benefits and disbenefits of changes in the three domains are distributed amongst
Keywords:
Sustainability
stakeholders.
Indicator The method requires a complete review of the activities of the business within an appropriately
Metric defined system boundary, in order to make an inventory of activities which affect the capital stores of
Performance monitoring value; those effects are found to relate to the business perspectives. The effects of these activities on
Business operation stakeholders are identified, and those which are deemed to be significant are characterised by issues:
Oil palm these determine the selection of indicators whose values are given by metrics. The methodology thus
enables the development of a comprehensive set of sustainability indicators and metrics for the
particular business operation. The set of indicators will be similar for businesses with similar activities, so
the methodology facilitates comparison and benchmarking. Further, the value of a particular indicator
can be traced back through the analysis to a particular business process, which is especially helpful in
guiding remedial action, since cause is linked to effect by the method.
Ó 2010 Elsevier Ltd. All rights reserved.
1. Introduction chains or even business units. Part of the difficulty may be the
problem identified by Steinbuka and Wolff (2007) in describing the
The aim of sustainable development is to improve the quality work on indicators done by Eurostat1; they comment that
life of the present population in a way that will not have a negative Brundtland’s phrase about meeting the needs of the present
impact on future generations. Since this idea gained currency without compromising the needs of future generations is notori-
following the publication of the influential “Brundtland Report” ously difficult to turn into an operational definition. Thus each
(Brundtland, 1987), businesses have been examining ways to assess attempt to draw up a set of indicators has to start with deriving
how sustainable their operations are (GRI Reports List, 2010). One a working definition of what sustainable development actually is,
common technique is to measure performance with an appropriate and what purpose the indicators must serve. In the case of Eurostat,
set of indicators (Pinter et al., 2005; Bell and Morse, 2008). These the approach taken was pragmatic, and directed at aligning the set
act as a guide to the direction of travel, so the choice of which of indicators to priorities of public policy which were already
indicators to use is critical in monitoring and directing progress established (Steinbuka and Wolff, 2007). Indeed the same approach
towards sustainability. is taken by many governmental and inter-governmental organisa-
In a review of the role of sustainable development indicators in tions, which, as remarked by Pinter et al., 2005 has given rise to
corporate decision-making, Searcy (2009) pointed out that there a proliferation of not only indicator sets but also conceptual
were few published examples of indicators being used either in frameworks and methodologies.
Board-level and strategic decision-making, or in managing supply In a critique of indicator frameworks for assessing sustainable
development strategies Dalal-Clayton and Bass (2002) suggest the
* Corresponding author. Tel.: þ44 1865 273117; fax: þ44 1865 283273.
1
E-mail address: [email protected] (R.C. Darton). Eurostat, the Statistical Office of the European Union.
0959-6526/$ e see front matter Ó 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2010.07.012
A. Chee Tahir, R.C. Darton / Journal of Cleaner Production 18 (2010) 1598e1607 1599
need for such frameworks to be systemic, hierarchical, logical and performance against goals for the organisation. The indicators are
communicable. They point out that indicator sets derived from generic in nature, and for an assessment that is more focussed
frameworks lacking these characteristics suffer from various flaws either on business sector related concerns or local conditions, the
such as inability to produce clear pictures of socio-economic GRI is developing respectively Sector-specific Supplements and
conditions and the state of the environment, omission of essential National Annexes. The Institution of Chemical Engineers (2002) has
aspects of sustainability, overlapping components and consequent published indicators intended for use by chemical manufacturing
double-counting, confusion about what is being measured and industry, and which are consistent with the GRI approach but
why, unmeasurable indicators, and distortion of assessments specifically focussed on industrial (chemical manufacturing)
through an emphasis on documenting procedures rather than operations.
achieving results (Dalal-Clayton and Bass, 2002). However, use of these conceptual frameworks or generalised
Amongst the methodologies for deriving indicator sets which sets of indicators presents a fundamental practical problem when
do use a formalistic approach as recommended by Dalal-Clayton applied to a specific business operation, because they are designed
and Bass, are those based on the Pressure-State-Response (PSR) for application to large organisations, geographical areas and so
analysis developed by the OECD for environmental performance on. So in specific cases care is required to ensure that issues which
reviews (OECD, 1993). In this method of analysis, an environ- are not covered in the general framework or methodology, are
mental Pressure due to human activity is envisaged to cause taken into account. Thus, interpretation and adaptation are
a change in the State of the environment, eliciting a Response from needed in order to select a specific set of indicators, which is
society, and each of these is characterised by indicators. The particularly onerous when the methodology is defined in abstract
element of “cause and effect” in this methodology has been and high level terminology. Further, interpretation and adaptation
developed by Eurostat into its DPSIR framework (D ¼ Driving are not well-defined processes e the resulting set of indicators
force, P¼Pressure, S¼State, I¼Impact, R ¼ Response), though the may not be comprehensive in coverage of all relevant issues, or
idea of simple causal relationships has been criticised, for may not relate to an acceptable definition of sustainability, or may
example by Smeets and Weterings (1999) who point out that it be inadequate in some other way. If different companies take
cannot always capture the complexity of the real world. different approaches, the results will lack comparability.
Responses and Impacts may not result from single Driving forces The purpose of the research described in this paper is to develop
and Pressures, so that indicators may in fact be interrelated. For a method for selecting indicator sets, with the following criteria
this reason, Maxim et al., 2009 argue that the DPSIR framework is
satisfactory for structuring communication between scientists (a) The method should start from an analysis of the specific busi-
and end-users of environmental information, but is not appro- ness operation according to a particular protocol, to ensure that
priate as an analytical tool. These authors proposed a reframing of the resulting indicator set gives a comprehensive assessment of
the DPSIR method using the three “spheres of organisation” e its sustainability.
economic, social and environmental, complemented by a fourth, (b) The method should be as objective as possible. Although
the political sphere which may also produce Driving forces and choices may be required, these should be transparent, so that
Responses (Maxim et al., 2009). In its work to identify indicators arguments can be presented for the choices, and any bias can
for a Sustainable Urban Environment, the EU TISSUE project be identified.
group acknowledged that because of the complexity of the (c) The method should identify indicators in such a way that
material under review, it was not feasible to use the DPSIR subsequently, particular weighting factors can be imposed, or
approach which would require great effort to determine the huge particular subsets chosen, for particular purposes.
number of relationships between Drivers and Impacts and (d) The resulting set of indicators should represent a definition of
Responses. They chose instead a modified PSR methodology sustainable development, the clear statement of which is part
(TISSUE Trends and Indicators for monitoring the EU Thematic of the method.
Strategy on Sustainable Development of Urban Environment,
2005), in which five key aspects of the urban environment2 We call our approach the “Process Analysis Method” (PAM),
were considered, and expert analysis used to identify a series of because it is based on an analysis of the processes that comprise the
trends, issues or problems relevant to the formation and execu- business operation that we are assessing (Chee Tahir and Darton,
tion of EU policy for each aspect; these were then characterised 2006). As will be seen, this approach exposes the “cause and
by appropriate indicators. The complexity of these methodolo- effect” relationships within the business processes in a way that is
gies, and the significant amount of work needed to apply them in helpful when action for improvement is planned.
a specific case, are perhaps a reason why they have had little
impact on business and commerce.
To help business respond to the challenge of sustainability, GRI, 2. The Process Analysis Method
the Global Reporting Initiative has developed a framework to
facilitate the reporting of sustainability performance of organisa- The Process Analysis Method has five major steps as shown in
tions, particularly companies. It is intended that reports produced Fig. 1.
in accordance with its Guidelines (Global Reporting Initiative,
2006) will adhere to appropriate protocols and thus provide
essential information in a way that is both proper, and relatively 2.1. Step I: overview of business
uniform between different organisations. This should mean that
such reports gain similar credibility to the financial reports that The method starts with an in-depth review of the business
have long been standard practice in the world of audited accounts. operation. The resulting overview includes an inventory of the
The GRI guidelines include a set of indicators having broad major processes, together with the associated process inputs and
coverage, which are designed to demonstrate the results of outputs, and stakeholder interests or concerns. Stakeholders are
taken to be a person or group of people who can affect, or who are
affected by, the activities of the operation, as defined by Edward
2
Transport, Design, Construction, Management, Environment. Freeman and his group (Freeman, 1984; Jones et al., 2002).
1600 A. Chee Tahir, R.C. Darton / Journal of Cleaner Production 18 (2010) 1598e1607
They provide the link between the priorities arising from the
definition, and the business processes, as described in 2.4.1 below.
2. Internal Impact Generators
V. Verification / Modification
2.4. Step IV: sustainability framework
The first perspective incorporates the judgement that enhancing capital, when these activities are measured against the two busi-
the quality and preserving or increasing the extent of the stores of ness perspectives. These activities form specific groups of tasks,
value (capital) is beneficial for sustainable development. Enhancing which are mainly the responsibility of management, termed
and preserving the capital for example, will mean that more is Internal Impact Generators (IIG). All these internal impact generators
available for future generations to enjoy (inter-generational relate to activities within control of the business e hence “internal”.
equity). The second perspective incorporates a second judgement, The effects on the stores of value are experienced by the owners or
which is that sustainable development is advanced by a fairer guardians of the capital.
distribution of benefits which in turn promotes wider economic
and social development, as required by the Brundtland definition 2.4.3. External impact receivers and issues
that we are using. “Fairness” also applies to the distribution of The owners or guardians of the capital whose status or states
undesirable outcomes or disbenefits (e.g. pollution) requiring that change due to the effects of the internal impact generators on the
benefits should not accrue to one group of stakeholders, at the capital, are termed External Impact Receivers (EIR). Taking sustain-
expense of disbenefits accruing to a different group e this being an ability in its broadest context, the owners of the capital could even
arrangement that damages economic and social development. extend to include all the current and future generations of the
These stakeholders could include future generations, whose inter- world. However, in the context of assessing the sustainability of
ests will typically be important when considering issues of envi- a business operation, the owners and guardians of the relevant
ronmental protection. capital can be defined as the stakeholders of the business identified
The stores of value identified in this paper are (1) natural capital, in Step I.
(2) financial capital, (3) human and social capital as described for The effects are now characterised in terms of one or more
example by Dyllick and Hockerts (2002). Our definitions are “issues” which are meaningful in terms of the business processes.
influenced by those of “development capital” used by the World An issue is a concern that a stakeholder has regarding a particular
Bank (World Bank Focus on Sustainability, 2005). impact. It is essential that the issues, which will be described by the
The natural capital, which has been broadened from the defi- indicators, do in fact cover the extent and nature of the impact of
nition of the World Bank (World Bank Focus on Sustainability, the internal impact generator. This will generally require both
2005), is the store of value contained in the natural world that consultation of experts, and stakeholder analysis (Dalal-Clayton
includes all natural resources. It also includes aspects of the natural and Bass, 2002).
world that are valued by mankind, for whatever reason, such as the
diversity of ecosystems, the aesthetic value of natural landscapes, 2.4.4. Indicators and metrics
and so on. Indicators are used to describe the issues. Help with identifying
Financial capital is defined here as funds available to purchase possible indicators can be obtained from various published lists
physical objects such as equipment and machinery, buildings and (Bell and Morse, 2008; Global Reporting Initiative, 2006; Institution
other physical infrastructure and the finance tied up in such of Chemical Engineers, 2002; United Nations, 1999; Azapagic and
tangible assets. It also includes the cash available from products or Perdan, 2000; Azapagic, 2004), though of course, they can also be
services which can be viewed as a livelihood asset as indicated by developed for issues not discussed in these references. The link
Messer and Townsley (2003). Intangible assets include intellectual between “issue” and “indicator” should be as simple and direct as
property, brand and company reputation and commercial assets possible.
such as customer databases. In short, financial capital is taken to The final element in the sustainability framework is the choice
include tangible assets and intangible assets that could be realised of metrics which give a value to each indicator in terms of the
for cash. specific local condition of the business. The metrics measure the
Human capital is defined as the asset associated with human magnitude of the impact caused by the internal impact generators;
competence such as knowledge and skills, and is enhanced by they should be backed by scientific or other quantifiable data, and
investment in education, training and experience (Becker, 1975; must be relevant and specific to the defined purposes. Schwarz
Organisation for Economic Co-operation and Development, 2001). et al., 2002 have noted that it will often be useful if the metrics
Social capital has been interpreted differently by various authors are comprehensible to both technical and non-technical audiences.
(Dyllick and Hockerts, 2002; Organisation for Economic Co- They also point out the desirability of cheapness and ease of data-
operation and Development, 2001). One such interpretation is collection, though this must be balanced with the need for proper
that social capital is an informal norm that promotes co-operation reliable data.
between individuals within a group or among groups (Fukuyama,
1999). In this paper, human capital is defined as the intrinsic 2.5. Step V: verification and modification
value of a person, possessed by reason of his/her individual attri-
butes, knowledge and skills, resourcefulness, imagination, crea- To ensure that the indicators and metrics developed are appli-
tivity, health and physical strength. Social capital is defined as the cable to the operations of the business it is necessary to verify and
extra value that people acquire by reason of their being part of revise the indicators and metrics through fieldwork reviews and
a group with interpersonal interactions and organisation, rather consultation with experts and stakeholders. This series of verifi-
than just a collection of individuals. This value is found in group cation/modification processes is repeated until a refined set of
attributes such as: mutual support and trust, organisational effi- indicators and metrics is obtained that is both necessary and
ciency, collaboration in eliminating social ills, altruistic behaviour, sufficient to monitor the sustainability performance of the
positive feedback encouraging beneficial behaviour and achieve- business.
ment, benefits from pooling knowledge or skills. For this paper,
human and social capital is regarded as one store of value e the 3. Application of the Process Analysis Method: an example
value residing in human beings, individually and collectively.
In order to show how the Process Analysis Method works in
2.4.2. Internal impact generators practice, and to illustrate its value, we report briefly a case study in
The second element of the sustainability framework is an which it was applied to the oil palm fruit production business. This
assessment of the effects of the business activities on each type of is an agricultural business involving the production of oil palm
1602 A. Chee Tahir, R.C. Darton / Journal of Cleaner Production 18 (2010) 1598e1607
fruits from matured oil palm trees in a plantation, known as an included, with one exception, as follows: certain transport, supplier
estate. This business is a major source of edible oil, but the oil is also and contractor activities directly involved in production and
a candidate for conversion to biodiesel fuel. Annual world transport of the fruit bunches, which occur across the boundary,
production is currently somewhat in excess of 40 million tonnes were included where these were considered to be integral to the
(Oil World, 2009). operation of the estate. This is an important inclusion, to allow
a more comprehensive assessment of the sustainability of the
3.1. Overview of the oil palm fruit production business estate.
For the temporal scale, the inter-generational time period was
The major process in the oil palm fruit production business is taken.
the cultivation of oil palm trees in estates to supply oil palm fresh
fruit bunches for delivery to the palm oil mills. The cultivation of oil
palm trees requires many types of input such as agrochemicals and 3.4. Internal impact generators, indicators and metrics for the oil
water, and also uses land. Beside these inputs, energy is needed in palm estate
the form of fuel for the machinery, equipment and transportation
used for cultivation of the trees and maintenance of the estates, and 3.4.1. Environmental domain
for transporting agrochemicals and fresh fruit bunches. Trans- The oil palm fruit production process requires various types of
portation is also needed for other logistical purposes. The produc- input from the environmental domain, and generates various
tion process produces solid, liquid and gaseous wastes which cause types of output to the environmental domain. When any of these
environmental impacts on natural resources such as land, rivers, input and output processes, judged against the two business
lakes and sea. The planting and cultivation of the estate have an perspectives, causes positive or negative impacts on the natural
effect on biodiversity. capital, they are classified as internal impact generators for the
Significant land use, agrochemicals, water and energy use, and environmental domain. There are a total of nine internal impact
impacts to the environment can affect the stakeholders who are generators identified for the environmental domain as shown in
identified as employees including executives, non-executives and Table 1, and we have selected one of these to demonstrate how the
workers; local communities including the employees’ families, sequence:
local indigenous people and others who live near the estates;
suppliers and contractors; capital providers including individuals, (Internal impact generator / external impact receivers /
business shareholders and financial organisations that have some issues / indicators / metrics) is developed in practice.
ownership of the operations of the estates; and government
agencies including local authorities. Customers, who in this case
are the palm oil mills which take product from the estates, and An example: Environmental Product Management
non-government organisations, are two other major stakeholders. Palm fruits are oil base in nature, and are a rich source of food.
Thus there are a total of seven major groups of stakeholders Events associated with the handling of this product such as
identified for the oil palm fruit production business. Trade unions uncontrolled spillages, improper disposal of rejected low grade
in this example have been considered to be part of the employee fruits, or harvested fruits left unattended for long periods in the
stakeholder. estates could lead to the occurrence of nuisance such as the
presence of pests, though precautions are taken to keep these
3.2. Selected definition of sustainability incidences to a minimum. All these could give rise to environ-
mental problems leading to degradation of natural capital. This
The Brundtland definition and the two business perspectives would not only (a) affect the efficient utilisation of natural
formulated in Step II of the method were used in this case study. capital, raising concerns for some stakeholders, but could also
(b) reduce the ability of future generations to access the benefits
3.3. System boundary of the oil palm fruit production business of the natural capital e which relates to the fairness perspective.
The external impact receivers (Table 2) were identified by
In this case study, we only considered processes of the oil palm screening all the stakeholders to see how they were affected by
fruit production business encountered in a matured estate. The the environmental product management of the business. A
spatial system boundary was chosen by the gate-to-gate approach. damaged environment could affect the business operations of
That is, only activities within the perimeter of the estate were the capital providers, suppliers and contractors due to the loss of
Table 1
Internal impact generators for environmental, economic and social domain for the oil palm case study.
Table 2
Indicators and metrics for the three Internal Impact Generators: environmental, economic and social product management.
RM ¼ Ringgit Malaysia.
natural resources; local communities would lose the ability to the activities associated with product sales will affect the
enjoy the resources of an undamaged environment. These financial status of the business. Thus the capital providers are
stakeholders were concerned with the issue of prevention of concerned with the sales, earnings and costs of the product.
environmental pollution. An appropriate indicator for this issue Adding value to a product can generate additional earnings for
is “Environmental incidents concerning products”. Suitable a business. For the estate, one way to add value to its output is to
metrics are the proportion of harvested fruit left unprocessed, adopt the cultivation of organic oil palm. The benefit of organic
spilt or disposed of to the environment, number of incidences of oil palm is that organic materials such as palm oil mill effluent
nuisance and cases of non-compliance (see Table 2). and palm empty fruit bunches are used as substitutes for
chemical fertilisers during the cultivation process. The oil palm
fruits produced, which are free from any form of man-made
3.4.2. Economic domain chemicals are able to fetch a higher price as there is a growing
Analysing the information obtained from the overview from an demand from customers for organic agricultural products.
economic view point we identified two types of inputeoutput flow Another way of increasing profitability is to produce oil palm
representing the economic aspects of the business. One type could fruits with higher oil yield.
be described as value flow: inputs of material, human resource, The survival of a business is highly dependent on its profits and
utility and service, and outputs of product, waste and environ- how well it avoids loss. One way to measure profitability is to
mental impacts. The other type of economic flow was money flow. record the return on average capital employed (ROACE), which
On the input side we have flows of money from capital providers, measures how well a company has employed its capital to make
customers and government agencies (through any subsidies profit and not just how much profit has been made (Wood and
provided); on the output side we have flows of money to employees Sangster, 2008).
in the form of salary, to suppliers and contractors, to capital The two metrics (see Table 2) for this Internal Impact Generator
providers in the form of dividends or interest, and to government are thus (a) added value of palm fresh fruits, and (b) the return
agencies in the form of taxes and fees. We note that money output on average capital employed.
to the suppliers and contractors often results in a benefit to the
local communities through paid employment provided by these
3.4.3. Social domain
suppliers and contractors. This is an example of benefits flowing
The presence of an oil palm fruit production business could give
further than the immediate recipient.
rise to many social impacts especially on the communities living
Assessing the activities associated with the two types of
within the operating areas of the business. For example, the influx
economic inputeoutput flow against the two business perspec-
of migrant workers could affect the job prospects for the local
tives, a total of eleven internal impact generators were identified
community. In addition, oil palm fruit production can involve
for the economic domain (Table 1). The money input activities of
workers working in remote locations and under unpleasant
the economic contributors were not included in the set of internal
working conditions. Various types of chemicals are used in the
impact generators as they were considered to be not internal to the
production process that could give rise to contamination of the
business. Again we have selected one economic internal impact
product and chemical exposure affecting workers, customers or
generator to demonstrate how the approach is used to develop
local communities, though naturally precautions are taken to
indicators and metrics for this domain.
minimise this.
An Example: Economic Product Management Hence, the oil palm fruit production business was viewed from
Oil palm fruit production is predominantly a product-orientated the social perspective as comprising value flows where the inputs
business, where the majority of the revenue is generated from were social expectations defined by the customers, employees
the sales of the oil palm fruits. Hence, if not managed properly, represented by their unions, government agencies, local
1604 A. Chee Tahir, R.C. Darton / Journal of Cleaner Production 18 (2010) 1598e1607
communities and non-governmental organisations; the outputs 4. Uses of the developed indicators and metrics
were social effects experienced by the employees, customers and
local communities. Judging the activities associated with this social The set of indicators and metrics found by the Process Analysis
inputeoutput flow against the two business perspectives a total of Method can be used to judge the overall sustainability performance
three internal impact generators were identified (Table 1). Activi- of the business. If analyses can be made for similar businesses, this
ties associated with the social expectations of the stakeholders will facilitate benchmarking. Since each indicator can be traced
were not considered as part of the analysis as they were not back to an Internal Impact Generator, the method provides clues for
internal to the business. Below we show one example of an internal management on how to act in order to improve sustainability
impact generator in this domain. performance.
The selected indicators and metrics are specific to a particular
An example: Social Product Management
business, so that local conditions can be taken into consideration
Palm oil becomes a consumer product when eventually incor-
without losing the holistic nature of the sustainability assessment.
porated into food products or non-edible products such as
This also facilitates the use of current operational data or company
cosmetics and pharmaceuticals. These may be sold and
records in assigning values to metrics, which is a useful practical
consumed by customers anywhere in the world. The significance
advantage.
of social product management is that a poorly managed product
To illustrate the uses of the metrics, we discuss the metrics
could adversely affect health and well-being of people in many
developed for the three example internal impact generators of
countries, whereas a well-managed product brings health and
Table 2.
welfare benefits.
This selected sub-set of metrics (Table 2) can be used to track the
To address the concern of community well-being, the quality of
environmental, economic and social performance of the oil palm
the product must be controlled with respect to food and health
estate with a view to improving the estate product management.
safety. To ensure this quality, implementing relevant certifica-
Table 3 shows the indexed numerical metric data obtained for four
tion systems and monitoring contamination from dirt, pesticide
matured oil palm estates for the particular example of Product
residue and toxic chemicals are important.
Management. The data of the three estates, B, C and D were indexed
Traceability of products to allow informed consumer choice
against the data of estate A, and show the comparative perfor-
and to enable a business to trace a particular product back to
mance of each estate for each of the Product Management metrics.3
its origins is also important. In the case of the oil palm fruit
To obtain a simple view of the overall difference between estate
production business, with proper recording and transparency,
performance, the indexed numerical metric data of each estate was
oil palm fruits can be tracked back to the producing estate and
ranked as shown in Table 3, with 1 being the best and 4 the worst.
the mother palm. Full traceability also requires detailed
For all the environmental product management metrics, the higher
records of the suppliers and contractors who provided the
the score of a rank, the poorer is the performance of the estate
necessary materials and services to be available for any
concerned, as these metrics measure the negative impacts on the
product batch.
natural capital due to the internal impact generator. However, the
Besides this, the need for credibility of branding, labelling and
two economic product management metrics measure positive
marketing information is also important in order to have social
impacts. Therefore, the higher the score, the better is the perfor-
acceptability of the product. For this purpose, the estate should
mance of that particular estate. For the case of social product
conduct frequent random checks on its processing and research
management, two of the metrics (number of cases of health and
centres to ensure that there are no inaccuracies in the claims
food violations; number of reported cases of information
made for the product, and no lapses in quality control
infringement) measure negative impacts while the remaining three
procedures.
metrics record positive impacts. From this analysis, the estates can
Conducting inspections on suppliers and contractors of the oil
identify areas that they need to improve.
palm estate along the supply chain to ensure their compliance
with the product claims made by the estate through its quality
labels and marketing information are important. These inspec- 5. Discussion
tions are known as “supply chain inspections and quality audits”
(see Table 2). The Process Analysis Method aims to produce a set of sustain-
ability indicators which are objective, comprehensive and relevant
for the target business operation. The extent to which the indicator
set satisfies these requirements depends on the thoroughness of
3.5. Data collection and field work the analysis. It is important that the list of internal impact gener-
ators and issues is as complete as possible. Clearly there is an
Initial analysis of the oil palm production case was based on element of judgement in selecting these, since some impacts can be
the authors’ own knowledge, supplemented by information from justifiably considered negligible compared to others, and thus
literature and other publications. Subsequently field work was neglected. Consultation and stakeholder involvement (Dalal-
undertaken at several oil palm estates, to gather data and hold Clayton and Bass, 2002) are ways to widen the basis on which
discussions with experts and stakeholders, to verify and refine selections are made, but an element of judgement will always
the analysis and ensure that impacts and issues have been remain.
correctly identified. Table 2 shows some typical results, in this The methodology allows the analyst to expand or reduce the
case for aspects of product management. The table lists the spatial and the temporal scale of the system boundary as demon-
indicators and metrics together with the internal impact gener- strated by the oil palm case study. By appropriate selection of the
ators (the three aspects of product management), the external system boundary, we can focus on the sustainability performance
impact receivers and issues. Using similar approaches, indicators of a particular part of the business, such as a supply chain,
and metrics are developed for the remaining internal impact
generators listed in Table 1. The whole analysis for the oil palm
estate will be reported separately e in this paper we concentrate 3
Indexing protects the propriety information belonging to the estates, which is
on the methodology. of course available to the analyst and management.
A. Chee Tahir, R.C. Darton / Journal of Cleaner Production 18 (2010) 1598e1607 1605
Table 3
An example of indexed numerical metric data for four oil palm estates.
Internal impact Metrics for estate Data indexed against data of Estate A with Rank
generators data of Estate A indexed ¼ 1a
a manufacturing or agricultural unit, or a product life cycle. Foran whose interests include considerations of inter-generational equity.
et al., 2005 and Wiedman et al., 2009 have pointed out the In our method these interests are represented by proxy stake-
advantages of incorporating complete supply chains when assess- holders such as non-governmental organisations or government
ing the sustainability of a business, to ensure that off-site, upstream agencies, but this may not always be satisfactory.
and embodied impacts are included. It is well-known that inap- The sustainability concept used in this paper is that of the
propriate setting of the system boundary, which also controls the Brundtland definition. The method allows other forms of sustain-
span of information and data gathering, can result in a misleading ability concept or definition but we would expect that this might
conclusion (Bell and Morse, 2008; Azapagic and Perdan, 2000; change the business perspectives. For example, the Sustainable
Global Reporting Initiative, 2005). A similar difficulty arises in Packaging Coalition defines sustainability in the corporate sector as
Life-cycle Analysis. To avoid this outcome transparency and encompassing “.strategies and practices that aim to meet the
objectivity in the selection of the system boundary are required. needs of stakeholders today while seeking to protect, support and
It is a strength of the method that the internal impact genera- enhance the human and natural resources that will be needed in
tors, which in practice are rather generic in type, emerge from an the future” (Sustainable Packaging Coalition, 2009). This is a choice
analysis of the business. As a consequence, these will be similar for of wording based on that of Brundtland as later modified (Deloitte
similar business operations, such as manufacturing, which should et al., 1992) to make a definition specific and appropriate to busi-
facilitate the analysis. The indicators follow from the internal ness operations. The subsequent interpretation used to derive
impact generators, so that it is difficult to manipulate the process to indicators for the packaging industry (Sustainable Packaging
ensure omission of inconvenient indicators. For the choice of metric Coalition, 2009), understandably in view of the nature of the
however, there remains the possibility that choice may be affected business, puts great emphasis on renewability, both of material
or manipulated by the desire to avoid a particular outcome. resources and energy. In such a case, we suggest that it would be
Transparency and objectivity again are required. useful to identify Renewability as a useful business perspective to
A limitation of the method is that sustainability problems or help screen impacts on the stores of value.
issues that arise indirectly from the activities of the business We have deduced the business perspectives by focussing on the
through the action of an External Impact Generator may be left priorities implicit in the selected definition of sustainability (i.e.
out. That is, interactions may be neglected if their direct causation Brundtland) and screening the activities of the business to identify
is chiefly due to external factors. For example, government policy the characteristics of those activities that affect the stores of value.
on the distribution of taxation receipts may have a significant We would expect these characteristics e what we term the busi-
effect on the way societal stakeholders experience the benefits or ness perspectives e to be fundamental elements underpinning the
disbenefits of the business operation. The extent to which our Corporate Social Responsibility (CSR) policy of the business. The
analysis should, or can, include such indirect effects is a complex need for a company’s CSR policy to specify the values that will be
issue. Partly this is a question of being clear about the definition used to guide the sustainability assessment of business operations
of the system boundary. Whilst this should normally be drawn so has been emphasised by Labuschagne et al., 2005 and others.
as to exclude operations of others which are outside the control of In assessing how the operation of a business is impacting the
the business, there may be areas where the transition from three stores of value, we are repeating some of the tasks that
control / influence / affect will make the boundary hard to management will carry out anyway in the normal course of busi-
determine. ness, for example, in monitoring how effectively capital is being
The external impact receivers are selected from the list of deployed. A variety of methods is available to assist managements
stakeholders of the business but there may be some guardians of in this role, from simple cost accounting to the use of a “balanced
capital who could have been affected by the activities of the busi- scorecard”. The latter is a performance measurement system
ness process but are not easily recognised as stakeholders. An developed by Kaplan and Norton (1996) to help managements
example would be “remote” guardians such as future generations, implement their business strategy. This methodology clearly has
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