ISO 14001 case study for an IT company – How to define and modify environmental KPIs

It stands to reason that organizations that operate in different business sectors will have different KPIs (key performance indicators) and methods of measuring environmental performance within an ISO 14001:2015 compliant EMS (Environmental Management System). Recently, I have been working with a very progressive technology company that put great store not only in its “local” environmental performance, but also in the positive impact that its environmentally positive product range can have on its customer base and the wider environment in the future. As a consultant, I had been used to working with organizations in mostly manufacturing and service sectors, and therefore, defining and constructing KPIs had been relatively straightforward. Measuring against legislation and assessing overall performance was generally required, showing some continual improvement on those measurements was needed to satisfy the terms of the standard, and most organizations don’t feel the need to look beyond that. Working with and for this organization, which I will call “Company A,” ensured that I had to rethink my outlook on environmental KPIs and consider how they could be turned from a reactive measuring tool into a proactive driver for positive environmental change.

KPIs and how they differ

In a previous article, The importance of management review in the ISO 14001:2015 process, we touched on KPIs normally being set at the management review, and obviously being defined or at least approved by the top management team. This was the case with Company A, and as per the standard compliance with legislation, had to be tackled. Identification and assessment of risk and action against environmental aspects and impacts also had to be clearly defined and subsequent measurements put in place. In the article How to identify environmental aspects in your office using ISO 14001, we spoke about how we could reduce the everyday environmental impact of a business, and we used the same formula when dealing with this organization. However, upon deeper discussion it was clear that Company A had a range of products that were environmentally groundbreaking, and had a clear plan and roadmap to build products that were even more industry leading in terms of power consumption, compatibility with other environmentally positive products, and general lifecycle positives that included recyclability. This seemed to me not only an attribute that needed quantified as a KPI somehow, but also a unique selling point – that elusive phrase that every organization hopes will propel its sales onto the next level. So, how did we go about trying to set some new KPIs that not only measured the factors outlined above, but also would prove aspirational in terms of the whole workforce’s goal of building industry-leading products that would benefit the wider environment?

KPIs – Not just a plain measure of performance

Company A had one range of storage products that had been designed to be 10 times more energy efficient than the competition’s, and consequently, used storage devices that had a much longer life cycle than those of the competition. All results had been independently verified and had led to awards being won and excellent publicity as a result. The plan was to develop on this success and use the formula of environmentally positive products as the basis of all new products. So, given that this aspect would always be open to scrutiny and detailed analysis, how could a meaningful set of KPIs be defined to not only measure this success, but provide an aspirational target for future product development?

  • As every product would be replaced by a more efficient counterpart in time, products less than two years old were classified as “new,” and only lost that status on the 2nd anniversary of their release date. The percentage of “new” versus “non-new” products sold was then measured as a KPI. This allowed several strategic decisions to be made: firstly, the sales team could identify what products were environmentally beneficial, attain full understanding of these attributes explained above, and proactively sell the products that gave full life-cycle benefit to the end user and had significantly less environmental impact. Secondly, the top management team could more easily identify which product lines required development and improvement, based on a simple life-cycle graph that showed the gaps between the more environmentally beneficial products on sale and those which were less efficient.
  • A reduced environmental impact KPI was defined and constructed. This consisted of the number of new storage systems sold across the world per quarter, which tied into a traditional sales KPI. A “heat map” was drawn to illustrate this, and the reduced environmental impact could be seen in a very visual sense by the organization, the buyer, and also the ISO 14001:2015 auditor – who was extremely impressed. Every “dot” on the heat map represented an organization that consumed 10 times less energy on its storage, and had devices inserted that had around six times greater life cycle than previously.

The KPIs above achieved several things. They allowed the organization to see the real environmental benefit achieved globally, and provided a driving factor for all to invent and construct new products that are equally, if not more efficient.

KPIs – What else can they achieve?

So, this project showed to me that KPIs don’t need to be just a pure measure, but can also be a driver of an organization’s aspirations. It is vital that performance, aspects, impacts, and risk are all measured in some way, but working with Company A also illustrated to me gradually that a well-thought-out KPI could also become part of your strategic planning, and the roadmap that sets out the vision for the future for your organizations and employees. Likewise, rather than keeping a KPI like this hidden away and sharing within your own organization only, it seemed to me that this was the kind of measure that would surely enhance your reputation if shared with your partners and customers. The same facets that make these products more attractive to buy surely should be the headline news for your sales team, and as new products are developed and sold with the same criteria, the business will only grow. When the business grows, the impact on the environment is lessened due to the product qualities. By defining and using such a KPI, a cycle of environmental positivity is established and the benefit spreads exponentially throughout the customer base. That means good news for everyone.

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Advisera John Nolan
John Nolan
John Nolan is a Fellow of the Institute of Leaders and Managers in the United Kingdom, and Prince 2 accredited with a background in Engineering and Electronics and Data Storage and Transfer. Having studied and qualified as both a Mechanical and Electronic Engineer, he has spent the last 15 years designing and delivering Quality Systems and projects across many sectors in the UK, including both national and local government.