Management indicators- a perspective of responsible business

At first glance, the text sounds absurd, doesn’t it? But, by no means, it is not. The European Commission has adopted a package of legislative proposals, collectively known as the Green Deal, in which it describes Europe as the first continent to aspire to a climate-neutral economy. This package contains laws on climate, energy, transport and taxation policy. They are the tools with which the European Union wants to reduce net greenhouse gas emissions to at least 55% below 1990 levels in 2030 and to zero in 2050.

The mythical KPI

KPIs, or Key Performance Indicators, are a tool that allows managers to determine whether their company is on target and at what stage it is currently at. This is important because it shows the target and progress shown in a measurable way, either expressed as a percentage or numerically. Properly chosen indicators allow us to focus on obtaining the data that are necessary for the development of our company, instead of data that are easy to obtain but from which little results can be obtained.

When we apply for a project, whether privately financed or co-financed by public funds, we must take into account that we will somehow have to account for these funds and the effectiveness of their spending. This is where KPIs come in handy. Regardless of the industry in which we operate, the origin of the funds and the business objectives we are pursuing, there is a certain set of universal KPIs, among which we can distinguish indicators depending on the area of our business they describe. These include financial, sales and marketing, logistical (process), customer and employee value and corporate social responsibility indicators, which have recently gained in importance due to the introduction of EU directives.

Let’s start at the end, corporate social responsibility indicators

At CLARIN-PL, which I worked with for many years, we once faced the problem: how to determine the positive impact on the environment of a large server designed to count large language models? Fortunately, my colleagues in IT were able to deal with this issue successfully anyway. They defined.

With the introduction of European Union directives, the economies of the individual EU countries are faced with the need to comply with European climate policy and to account for their activities in this respect. In addition to the climate neutrality objective, the EU strategy describes areas related to:

• energy (decarbonisation, renewable energy, energy efficiency, affordable and secure energy supply, integrated digital energy market across the EU);
• environment and oceans (protection of biodiversity, improved waste management, closed-loop economy);
• agriculture and food (food security, reducing the environmental and climate footprint associated with the food system, transformation towards competitive ‘farm-to-table’ sustainability);
• transport (reducing GHG emissions associated with transport by 90% by 2050);
• industry (transformation towards low-carbon technologies, sustainable products and services);
• research and development (accelerating necessary change, reducing risks of solutions, involving citizens in social innovation);
• finance and regional development (the Fair Transition Mechanism, which aims for a fair transition towards a green economy; 30% of private and public funds are to be allocated to climate protection projects);
• New European Bauhaus (design inspired by culture and art, responding to needs beyond functionality, sustainable, in harmony with nature and the environment, encouraging dialogue).

What then are net GHG emissions?

Guidelines for organisations to reduce their carbon neutrality (net zero greenhouse gas emissions) by 2050 are contained in the ISO document ‘Net zero guidelines’. It regulates the principles directed to all organisations that need to comply with the recommendations and requirements of the Green Deal so that they can reduce the global temperature by 1.5 degrees Celsius as a result.

According to the ISO definition, net zero greenhouse gas emissions take place when the residual greenhouse gas emissions produced by human activities are offset by the removal of an equal amount of greenhouse gases. Residues are understood as those greenhouse gases that have not been removed during emission reduction activities.

The ISO document is in line with both European Union policy and the objectives of the United Nations Framework Convention on Climate Change (UNFCCC).

The condition where there has been an increase in carbon dioxide levels in the atmosphere due to human activity is the carbon footprint. This indicator shows the extent to which an organisation’s greenhouse gas emissions affect the environment.It is a measure of the amount of greenhouse gases produced by man, which is equivalent to pure carbon dioxide. Data for its calculation comes from a variety of sources, such as the carbon footprint of plants or the emissions associated with producing one unit of a product, as well as business travel records.

The second indicator that allows us to monitor greenhouse gas emissions is energy consumption. This is based on data on how much energy we have purchased over a given period. In some countries (e.g. the UK), it has been introduced for companies, using large amounts of electricity, to monitor how much they are helping to reduce carbon dioxide in the atmosphere.

It is also worth remembering that the ISO 14000 series of standards is related to environmental impacts. The standard related to carbon dioxide emissions is number 14064 and electricity consumption is 14001.

Other indicators of responsible business

In addition to the listed net greenhouse gas emissions, there are a number of other corporate social responsibility indicators that can be used to justify that the project we are implementing is in line with European Union policies.

These include:

• Water footprint – a measure of water consumption by a consumer or producer, including indirect (in the supply chain) or direct (in processing) consumption;
• Environmental savings – a measure of the savings generated as a result of environmental measures in a company or project; an indicator related to carbon and water footprint
• Material waste recycling rate – calculated as the ratio of recycled and total waste, reported as a percentage;
• product recycling rate – this is the ratio between the number of products recycled or reused and the total amount of products sold, given as a percentage.

Why is environmental impact assessment monitoring so important?

One factor in the selection of projects financed through national and European funding competitions is an organisation’s adherence to horizontal principles, by which we mean: respect for the environment, promotion of sustainable development principles according to the ‘do no harm’ principle, prevention of any discrimination, ensuring equality between women and men and adherence to the Charter of Fundamental Rights. In terms of the environment, it is the Green Deal that guides the assessment of funding applications. Projects are deemed not to harm the environment if they provide a significant contribution to one or more environmental objectives without causing harm to others among them. To conclude, therefore, it is worth mentioning that social impact factors are only one of the groups used to assess the effectiveness of projects. Despite their growing importance, however, it should not be forgotten that an enterprise, by definition, is a profit organisation. In order to monitor it, and therefore the effectiveness of the enterprise, we also have at our disposal a number of indicators that will allow us to balance the activity between the “do no serious harm” principle and the generation of income that ensures a positive financial balance.