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There are a number of key reasons why your business should measure its environmental performance.

Cost savings and improved productivity

Areas of your business such as raw material use, waste production and energy use can all be looked at closely to identify savings.

Higher sales

Reporting environmental performance can have a positive impact on sales. Customers and potential customers can see evidence of how your business minimises its impact on the environment.

Supplier status

Reporting key environmental performance indicators (KEPIs) can make your business more attractive to others in your supply chain.

Greater investment opportunities

With environmental issues high on the agenda of consumers and organisations, investors are increasingly looking at the environmental performance of businesses when they make investment decisions.

Service and product innovations

Measuring your business' environmental impact can reveal areas where you could develop new services or products.

Employee recruitment

With increased environmental awareness among the public, if your business has measured and clearly reported KEPIs, this gives potential new employees a way of differentiating your business from others.

Legal compliance

Listed companies must include relevant environmental information in their business review. KEPIs provide evidence that you are measuring and managing your environmental performance.

If you have an environmental management system (EMS), or you plan to set one up, you'll need to be able to measure and monitor your environmental performance. KEPIs provide the information needed for the targets and objectives in your EMS - see environmental management systems (EMS) - the basics.

As well as carrying out an initial environmental review, you should also gather data about the environmental performance of your business.

For your key environmental performance indicators (KEPIs) to be useful, the data they are based on must be accurate. One way of doing this is to use a technique called process mapping.

What is process mapping?

You can use process mapping to track and then measure any process your business carries out. This data-gathering technique is particularly useful when developing KEPIs that will track how much energy and waste your business is producing.

To create a process map you need to identify your business' main inputs (for example raw materials, energy, water and packaging) and outputs (for example emissions and waste) at each stage of the process. You then need to present these in a visual format such as a flow chart or block diagram.

Once you have drawn your process map, you need to populate it with data. This data could come from a variety of sources including meters, invoices and purchasing records.

Taking direct measurements

Depending on the type of business you operate, you may want to take samples of emissions, raw materials, packaging, waste levels and overall stock levels to determine what impact these are having on the environment. You can use this data to create the KEPI that you want to report.

If you are unable to get data by taking measurements, you should make the best estimate possible. For example, you could use samples from large quantities of data, carry out simple trials or use mass balance calculations to fill gaps in your data.

Once your business begins to collect significant quantities of environmental data about its impact, you can easily become overwhelmed by the raw data itself.

Make sure you accurately record all the data you have collected, for example using a spreadsheet.

How to present your environmental analysis

When you need to present your data - for example in an annual report or when discussing key environmental performance indicators (KEPIs) - you may want to use a number of methods including:

• Bar charts - this type of graphical analysis is ideal if the data you have gathered has a baseline or mean that you can measure against. Bar charts are useful as they can give the reader a simple snapshot of a time period. The reader can also see instantly how the KEPI is operating in relation to the baseline.
• Trends - if your business is tracking a large amount of data that has a high degree of variation, showing the overall trend is more meaningful as it illustrates how your business is moving towards its goal. For example, you could use a line graph showing a moving three-month average. This involves plotting the mean of the three months before and including the present one - ie three, two, one; four, three, two; five, four, three; etc.
• Scatter graphs and linear regression - this is ideal if you want to show the relationship between two components of your business. With this type of graph, the various time periods of data collected are scattered about rather than ordered chronologically.

When you are choosing how to display your data, think carefully about how the end reader will interpret the results. Using a bar chart to show trends isn't usually helpful as this could show wild variations within your KEPIs from month to month, when in fact the reality is that your environmental reporting is showing a positive trend that is not properly displayed.

Once you have collected and analysed your data you need to choose appropriate key environmental performance indicators (KEPIs) so that you can track your performance.

Your choice of KEPI will depend on the activities and processes that your business carries out, what data is available, what you can measure and the priorities for your business and its stakeholders.

Types of environmental indicators

Your environmental indicators may cover a number of areas including:

• resource use - eg water, oil, gas, metals and minerals
• emissions to air - eg greenhouse gases, dust and particles, and solvent emissions
• emissions to water - eg metals and organic pollutants
• emissions to land - eg pesticides, waste and metals

There are three types of KEPI that your business can use.

Absolute environmental indicators

This type of KEPI is a stand-alone indicator that does not reference any other component of your business or process. Examples include:

• litres of water used per year
• tonnes of waste produced per year
• staff salary costs

Relative environmental indicators

In most businesses, the use of relative indicators will form the vast majority of their KEPIs. These are sometimes referred to as 'specific measures'. Examples include:

• kilograms of waste disposed of per item manufactured
• amount of energy used per piece of machinery run
• litres of water used per member of staff

These indicators can also be expressed as a percentage. If you intend to do this, the production throughput then becomes relevant. Examples include:

• percentage of raw material (input in tonnes) that becomes product (output in tonnes) - ie a measure of raw material yield
• percentage of waste produced that is recyclable
• percentage of effluent reused

Weighted environmental indicators

If you produce a wide range of products via a correspondingly wide range of processes, you may need to use a more sophisticated method of KEPI. In these circumstances, you should apply factors to give a weighted indicator.

For example, in a surface coating line there are variations in water consumption between batches of different products. Batch A requires treatment in three tanks, with rinsing after each stage, and uses 30 litres per item. Batch B requires treatment in five tanks, with rinsing after each stage, and uses 75 litres per item. To compare performance on days when different products are being made, you would need to apply a weighting factor based on the number of batch A and B products - number of A + number of B x 30/75 litres.

Once you have established your key environmental performance indicators (KEPIs) you should use the information to set environmental targets and objectives.

If you have an environmental management system (EMS), the KEPIs will enable you to monitor whether you are improving your environmental performance.

Start an environmental improvement programme

If you don't have an EMS, you should still take a structured approach to using your KEPIs by implementing an environmental improvement programme. This may involve:

• setting up an environmental team or choosing an environmental champion
• brainstorming ideas for improvement
• deciding priorities
• setting targets and objectives
• developing an action plan
• reviewing progress

Environmental action plan

Your action plan should form the basis of your environmental improvement programme. It could contain:

• the major problem areas and causes identified by the KEPIs
• clear targets and objectives so that your business can reduce its environmental impact
• proposed priority improvement measures so that the targets and objectives can be met
• key implementation steps for each measure
• what equipment and materials are needed
• roles and responsibilities of people involved with the action plan
• timescales for the actions to be completed
• the date when the action plan and KEPIs will next be reviewed