Developing Environmental Sustainability Performance Measurement in a Manufacturing Company : Case: Metal Industry

Abstract

Companies are increasingly interested in environmental sustainability. Regulation, external pressure, business benefits, and internal motivation are the key drivers for green manufacturing. Sustainability reporting requirements will be tightened in the following years. Companies must measure their environmental performance to meet the new requirements, but performance measurement is also needed from a development perspective. There are several frameworks for sustainability reporting, but GRI is the most used. Based on the framework, environmental sustainability can be divided into seven categories: materials, energy, water and effluents, biodiversity, emissions, waste, and supplier environmental assessment. The maturity stage of green manufacturing also affects the measurement needs. This study aims to form an understanding of environmental sustainability performance measurement in the metal industry and find out how it can be utilized when developing manufacturing processes. In addition, an environmental sustainability dashboard is designed for the case company, and environmental sustainability performance measures for mast manufacturing are defined. This research was conducted mostly as a mixed method case study, but there are also features of multiple-case study since the benchmarked case companies’ and competitors’ environmental sustainability were studied. The data was gathered from interviews and secondary data sources. Internal interviews were held, and internal documentation was analyzed to form an understanding of the current practices in the case company. The benchmarked case companies’ and competitors’ sustainability reports were analyzed, and benchmark interviews were held to understand environmental sustainability performance measurement practices in the metal industry. In addition, a metal waste following period was arranged, and observations were done from the metal waste generation. The data was gathered from the existing dashboard and Excel sheets to develop the dashboard for the case company. The theory was developed abductively since the collected qualitative data were categorized based on literature and the findings were compared to previous research. The findings show that it is common practice to measure environmental sustainability performance rather comprehensively in the metal industry. The regulation sets the minimum requirements for performance measurement, but the companies have additional performance measures that enable them to monitor goals. It is noticed that companies’ environmental sustainability strategies and goals affect performance measures. The companies measure environmental sustainability performance because of certificates and ratings too. There are a lot of similarities in the performance measurement in the companies, but there are also some differences because the ambition of goals differs between companies. The companies measure energy, emissions, and waste rather comprehensively. In addition, they measure water usage and some aspects of material usage. However, biodiversity-related performance measures are missing from the companies’ performance measurement systems. The findings show that environmental sustainability performance measurement is utilized when developing green manufacturing. Performance measurement is essential to understand the current state, notice and quantify development possibilities, and analyze the outcomes of improvements. In the future, environmental sustainability could be studied in other operations than manufacturing. It is especially worth studying environmental sustainability performance measurement in product design because product design significantly affects the product's environmental impact during its life cycle.