ECONOMIC INDICATORS

Economic Indicators

Economic Indicators

Environment indicators are a set of measurements or statistics that indicate the overall condition of the environment and provide evidence of the effectiveness of environmental management programs and business sustainability practices. Often environmental indicators are aggregated or grouped into a single weighted index. Indicators may show the improvement or worsening conditions of the environment as a trend line, starting from a current baseline to a projected state; thus, a judgment could be made regarding the relative impact and magnitude of a business practice to the environment. The number and type of indicators utilized are dependent on the company size, consumer base, company policy, governmental enforcement, and potential financial and reputation impact. Environmental indicators may incorporate information on resource management, energy usage, pollution emissions (e.g., air quality, transportation, soil, water), and waste production. The information provided from various environmental parameters raises awareness among the public, policy makers, and corporations regarding the health status of the planet, which then guides initiatives for environmental protection and improving sustainable business operations(Gallego, 2006).

Xander Oltshoorn and others note that environmental data used for standardized indicators in the business sector generally correspond to one of five types: economic based, physical impact, linear programming methods, economic valuation methods, or business management review processes. Economic-based indicators scale environmental data according to the financial cost or market impact, such as the cost involved in switching from fossil fuel to renewable energy sources. Other indicators demonstrate the direct effects to the physical system, such as the global warming impact potential, pollution toxicity, or habitat loss. Linear programming methods determine the most efficient methods for conducting business with minimal adverse environmental impacts, with efficiency incorporating information on production, financial costs, and pollution, among others. Economic valuation centers around indicators that provide information on environmental quality in relation to societal benefits, often using a “net value added” approach. Management-related indicators demonstrate the ability (or inability) of companies to supervise matters that can have an effect on environmental performance, such as resource distribution, environmental policies, and regulation compliance (Länsiluoto, 2008).

Regardless of the standardization procedure used, environmental indicators are often reported as a value, showing the percent change, the total or mean amount used per unit time, volume, or person, or other quantitative data summary. Businesses focusing on minimizing environmental impacts from energy consumption may use environmental indicators that report information on ratio of the amount of renewable energy resources (e.g., solar, wind) used for production to fossil fuels (e.g., oil, coal). The effectiveness of waste management practices could be indicated by the amount of materials recycled or donated, landfill production waste, and money spent on waste removal. A business may also want to examine reducing the environmental impact of their employees with reference to pollution from waste production, commuting, and resource usage. For instance, companies may focus on increases in the percentage of employees walking or bicycling to work as opposed to driving as an indicator of reducing the environmental impacts of transportation pollution. Numerous state, federal, international, professional, university-based, corporate, and ...