An Overview of Sustainability Assessment Methodologies
An Overview of Sustainability Assessment Methodologies
An Overview of Sustainability Assessment Methodologies
Ecological Indicators
journal homepage: www.elsevier.com/locate/ecolind
a r t i c l e
i n f o
Article history:
Received 3 January 2010
Received in revised form 12 January 2011
Accepted 16 January 2011
Keywords:
Sustainable development
Sustainability indicators
Index
Composite index
Ratings
a b s t r a c t
Sustainability indicators and composite index are gaining lot of importance and increasingly recognized
as a powerful tool for policy making and public communication in providing information on countries and
corporate performance in elds such as environment, economic, social, or technological improvement. By
conceptualizing phenomena and highlighting trends, sustainability indicators simplify, quantify, analyze
and communicate the complex and complicated information.
There are number of initiatives exist on indicators and frameworks for sustainable development. This
article provides an overview various sustainability indices applied in sustainability domain. The paper also
compiles the information related to sustainability indices formulation strategy, scaling, normalization,
weighting and aggregation methodology.
2011 Elsevier Ltd. All rights reserved.
1. Introduction
The concept of sustainable development (SD) has been an
important focal point for the decision makers in the industry.
As per the Brundtland report the sustainable development as
development that meets the needs of the present generation
without compromising the ability of future generations to meet
their own needs (WCED, 1987). There are number of sustainability assessment methodologies exist in practice for evaluating
the performance of companies (Ramachandran, 2000). The World
Business Council for Sustainable Development (WBCSD, 1997),
the Global Reporting Initiative (GRI, 2002a,b) and development of
standards (OECD, 2002) were the key driver for adoption of sustainability management in industries. Azapagic (2004) developed
a framework for sustainability indicators for the mining and minerals industry, which is also compatible to GRI. Krajnc and Glavic
(2005) collected and developed a standardized set of sustainability
indicators for companies covering all main aspects of sustainable
development.
According to KEI (2005), Indicators and composite indicators
are increasingly recognized as a useful tool for policy making
and public communication in conveying information on countries
performance in elds such as environment, economy, society, or
technological development.
Indicators arise from values (we measure what we care
about), and they create values (we care about what we measure)
(Meadows, 1998). The indicators are adopted by countries and corporate because of its their ability to summarize, focus and condense
the enormous complexity of our dynamic environment to a manageable amount of meaningful information (Godfrey and Todd,
2001). By conceptualizing phenomena and assessing the trends
and identifying the hot-spots, indicators simplify, quantify, analyze and communicate the complex and complicated information
(Warhurst, 2002).
As per Bebbington et al. (2007), There is a widely recognized
need for individuals, organizations and societies to nd models,
metrics and tools for articulating the extent to which, and the ways
in which, current activities are unsustainable.
Bebbington et al. (2007) identies two important questions
related to evaluating sustainability:
How can todays operational systems for monitoring and reporting on environmental and social conditions be integrated or
extended to provide more useful guidance for efforts to navigate
a transition towards sustainability?
How can todays relatively independent activities of research
planning, monitoring, assessment, and decision support be better integrated into systems for adaptive management and societal
learning?
According to Ness et al. (2007) The purpose of sustainability assessment is to provide decision-makers with an evaluation
of global to local integrated naturesociety systems in short and
long term perspectives in order to assist them to determine which
actions should or should not be taken in an attempt to make society
sustainable.
282
Information
Indirect pressure
Direct
Pressure
Pollutants
Human activities
Energy
Transport
Industry
Agriculture
Others
Information
State of the environment
and of natural resources
Resource
Air, water
Land, soil
Wildlife
Natural resources
Decision
Economic and
Environmental agents
Administration
Households
Enterprises
National
International
Action
Decision, Actions
Fig. 1. The pressure-state-response framework.
Source: OECD (1998).
The urgent requirement for a holistic approach to indicators definition and measurement is given more emphasis coupled with
development of robust methodologies which enables countries
and corporate to measure all important aspects of sustainability
(Bossel, 1999). It is worthwhile to dene the distinct policy goal
for achieving sustainability and then the appropriate indicators
are to be identied based on its materiality (Kates et al., 2001).
This apparently looks quite easy but leads to complicated situation once the process for selection and development of indicators
start. Alignment of goal with the identied indicators for reaching the sustainability is a challenging task and further it becomes
more difcult when it is being measured on various dimensions
and aggregated into single value (Kuik and Gilbert, 1999).
Response
Driving Forces
Impact
Pressure
State
283
Level 5:
Sustainable System Indicators
Level 4:
Supply Chain and Product
Life-cycle Indicators
Level 3:
Facility Effect Indicators
Level 2:
Facility Material Use and
Performance Indicators
Level 1:
Facility Compliance/
Conformance Indicators
Fig. 3. Lowell Center for sustainable production indicator framework.
Source: Spohn (2004).
sustainability indicators as per the sustainability context and coverage. The UN Commission on Sustainable Development (UNCSD) has
derived a list of 58 indicators from the overall list of 134 indicators
for all countries to use.
3. Classication and evaluation of Sustainability
Assessment methodologies
Dewan (2006) elaborated two key methodologies for Sustainability Assessment viz. monetary aggregation method and
physical indicators and further explained that Monetary aggregation method is primarily used by economist, whereas physical
indicators are used by scientists and researchers. The examples of economic approaches include natural resource accounting
and modeling, sustainable growth modeling, and dening weak
and strong sustainability conditions. Dewan (2006) also classied and discussed economic frameworks such as Lindahl and
SolowHartwick framework in detail.
According to Dewan (2006) The Hicks/Lindahl requirement
for sustainable income is non-declining value of the aggregate
capital stock (per capita produced capital and per capita natural
capital) over time. Weak sustainability condition assumes perfect
substitutability between produced and natural capital and strong
sustainability condition assumes no substitutability.
According to Dewan (2006) In the SolowHartwick framework,
sustainable growth path is different from the optimal growth path,
which means that sustainability can be achieved at the cost of efciency.
Ness et al. (2007) developed a holistic framework for sustainability assessment tool which is shown in Fig. 8. Bebbington et al.
(2007) categorized these in three areas viz. (1) indicators and
indices, which are further classied into non-integrated and integrated, (2) product-related assessment tools with the major focus
on the material and/or energy ows of a product or service from a
life cycle perspective, and (3) integrated assessment.
Bohringer and Jochem (2007) discussed about three key inadequacies about SD indices which are to be systematically addressed.
First issue is the selection of appropriate indicators where in one
should have focus that themes determine the thematic aggregation method and units determine the technical aggregation
method. Further, weighting and normalization should be done in
transparent manner with proper sensitive analysis. For achieving
commensurability of input variables is the third important concern.
284
Social
Environmental
Economic
Environmental
Human rights
Society
Product responsibility
Fig. 4. The hierarchical structure of the global reporting initiative (GRI) framework.
Source: GRI (2002a).
Core Indicators of
Sustainable
Development
Social
Environment
Economic
Institutional
Equity
Atmosphere
Economic structure
Health
Land
Consumption and
production patterns
Education
Housing
Fresh water
Security
Biodiversity
Institutional
Frame work
Population
Fig. 5. The United Nations Commission for Sustainable Development (UNCSD) theme indicator framework.
Source: Labuschagnea et al. (2005).
Institutional
Capacity
285
IchemE Sustainability
Metrics
Environmental Indicators
Economic Indicators
Social Indicators
Resources usage
Workplace
Investments
Society
Additional items
Additional items
Additional items
Environmental
indicators
instructive
Distribution of accosts to
Environmental recourses
Resource intensity of
Production, jobs, services
Companies, reports
Institutional
indicators ind.
Participation
Justice
Gender bias
Transport Intensity
286
Interval scale
Ratio scale
287
Table 2
Methods for calculating composite indicators (CIs). Source: OECD (2002).
Non-comparability
Full comparability
Method
Equation
Dictatorial ordering
Geometric mean
Arithmetic mean
Any homothetic function
CIct =
N
Rankkt
i=1
N
CIct =
3. Ratio or percentage
differences from the mean
CIct =
4. Percentage of annual
differences over consecutive
years
CIct
5. Standardized values
sgn
(1 + p)
EUi
i=1
N t
wt y
i=1N k ,
where ykt =
N t
wt y
k
i=1
=
,
N
where ykt =
i=1
i=1
wi
wi
N t
wt y
k
i=1
CIct =
,
N
where ykt =
N t
wt y
k
i=1
CIct =
,
N
where ykt =
i=1
6. Re-scaled values
xt
xt
i=1
wi
wi
xt
xt
EUi
xt xt1
k
xt
xt xt1
k
t
EUi
EUi
xt min(xt )
k
range(xt )
i
Notes: xkt is the value of indicator i fot country c at time t. wt is the weight given to
indicator i in the composite index. In Method 2, p = an arbitrarily chosen threshold
above and below the mean.
288
Hamilton (1999)
EEA (2001)
WBCSD (1999)
Atkinson et al. (1997)
WEF (2002a,b)
289
290
process data during the early stage of planning and data of natural concentrations of substances (not on their presumable impact
which is usually not known). The SPI evaluation comprises of calculation of the area needed to embed a process completely into the
biosphere. The SPI for the unit process is equivalent to the total area
required for production of raw material, process energy and provision of installations for process as well as the area required for
the staff and for the accommodation of products and by-products
(Lundin, 2003).
291
292
293
oriented impact assessment method. This tool aims to assist designers and product managers to improve products and processes in
life cycle perspective. The Eco-indicator 99 addresses three damage
categories based on end-points namely human health, ecosystem
quality and resources, minerals and fossil fuels. Specic models
have been designed to evaluate the respiratory and carcinogenic
effects, global warming potential, ozone layer depletion and ionising radiation. Impact on human are calculated as DALY (Disability
Adjusted Life Years). Impact on eco-systems is evaluated as the percentage of species that have disappeared in a certain area due to
the environmental load. Resource extraction is calculated based on
the quantity of the remaining mineral and fossil resources.
5.9.4. Environment assessment for cleaner production
technologies
Fizal (2007) developed an environmental assessment method
for cleaner production technologies enabling quantitative analysis
of environmental impact. The method is based on study of proles
related to material and energy ows, waste, product and packaging proles related to the technology under evaluation. This index
is used as a basis for determining an integrated index for overall environmental assessment of cleaner production technologies.
The presented method can be employed to evaluate environmental impact of implemented, modernized and modied technological
processes and products as well to perform comparative analyses of
alternative technologies.
5.9.5. COMPLIMENT environment performance index for
industries
Hermann et al. (2007) developed a tool known as COMPLIMENT
for providing comprehensive detailed information on the overall environmental impact of an industry. COMPLIMENT combines
various tools such as life cycle assessment, multi-criteria analysis and environmental performance indicators. The methodology
is based on identication environmental performance indicators
considering life cycle approach, providing weights to indicators and
aggregation of indicators. EPIs are calculated while considering the
goal and scope denition of an LCA, followed by inventory analysis
and conversion and subsequently the classication, characterization and normalization activities. The various impact categories are
global warming, acidication potential, eutrophication potential,
ozone precursors and human health. Three types of weights were
evaluated based on AHP techniques for local, regional and national
perspectives. Weights are multiplied to each impact category and it
is evaluated in terms of normalized potential impacts per category.
The resulting weighted impacts per category can then be added up
to form an index of the normalized total potential environmental
impact for each perspective.
5.10. Social and quality of life based indices
5.9.2. Eco-compass
Dow Chemical developed the simplied visual tool for representing the summary of Life Cycle Assessment data (Fussler and
James, 1996). It is based on the indicators of eco-efciency developed by the World Business Council for Sustainable Development
(WBCSD), with some minor amendments (DeSimone and Popoff,
1997). The eco-compass has six poles or dimensions namely
energy intensity, mass intensity, health and environmental potential risk, resource conservation, extent of re-valorization (re-use,
re-manufacturing and re-cycling) and service extension.
5.9.3. Eco-indicator 99
The Eco-indicator 99 has been developed by a team of experts
from 1997 to 1999 for evaluating the life cycle impacts of materials and processes (Pre Consultants, 2000). This is based on damage
294
Well-balanced Society (Good Governance, Unemployment, Population Growth, Income Distribution and Public Debt).
Sustainable Use of Resources (Waste Recycling, Use of Renewable Water Resources and Consumption of Renewable Energy).
Sustainable World (Forest Area, Preservation of Biodiversity,
Emission of Greenhouse Gases, Ecological Footprint and International Cooperation).
5.11. Energy based indices
5.11.1. Sustainability assessment tool for energy system
Begic and Afghan (2007) performed multi-criteria sustainability assessment of various options of the energy power system.
A 110 MW Thermal Power Unit is compared with other technologies of power generation viz. thermal power unit with a
coal-fueled boiler with combustion in uidized bed; combined
cycle gas turbine plants; hydropower plant, power plants based
on solar energy (photovoltaic [PV] systems); wind turbines; and
biomass power plants. The assessment methodology focuses on
stochastic models of uncertainty to assess the various systems.
Non-numeric (ordinal), non-exact (interval) and non-complete
information (NNNinformation) were used to obtain normalization
indexes. This tool enables decision maker to select the most optimal
options of power plant.
5.11.2. Energy indicators for tracking sustainability in developed
countries
The sustainability discussion is focused on environmental topics for developed countries and issues of poverty and equity for
developing countries. Consequently, for measuring sustainable
development in a developing country, the inclusion of a poverty
indicator in a set of lead indicators is essential. Moreover, human
activities and most sustainability issues are closely related to
energy use. The energy system is a sound framework for providing lead indicators for sustainable development (Fajik and Naim,
2007). Kemmler and Spreng (2007) developed energy-based indicators of poverty which is quite relevant for social issues. The three
energy measures that are used for the comparison are primary,
useful, and an access-adjusted useful energy (all per capita). The
indicators for poverty are measured through various parameters
namely total household expenditure, education level of the head of
the household, calorie intake, source of drinking water, sanitation,
house condition, dwelling area size, dwelling construction type and
land possession.
5.12. Ratings
5.12.1. Benchmarking US petroleum reneries, the Environmental
Defence Fund (EDF), US NGO
This benchmarking study on environmental performance carried out for ranking of 166 oil reneries based on publicly available
data on toxic waste generation and pollutant release. Data were
normalized based on the renery capacity to adjust for its size (Ditz
and Ranganathan, 1997).
5.12.2. ECCO-CHECK Index, Environmental Risk Rating Ltd,
Surrey, UK
Ecco-Check Index has been used as a fully commercial index of
corporate environmental performance in Europe. This index aims
to provide information about the companys liabilities evaluated
based on the various elements of UK legislation.
5.12.3. Investor Responsibility Research Centre (IRRC),
Washington DC, US (www.irrc.org)
Investor Responsibility Research Centre compiles corporate
environmental prole which comprises of 60 indicators of
emissions (total weight of corporate toxic release inventory emissions), volume of oil spill, volume of chemical spill, hazardous
waste (number of Superfund national priority list sites), compliance
(punitive nes for environmental non-compliance), environmental
litigation (number of disclosed environmental litigation incidents).
Indicators are normalized by considering environmental risk per
unit revenue, facilitates easy comparisons of companies of different sizes and capacities.
5.12.4. Council on Economic Priorities (CEP), New York, US
(www.cepnyc.org)
CEP compiles information of corporate environment performance of the companies and provides rating based on
their performance. There are thirteen indicators evaluated for
environmental performance namely releases, policy, packaging,
ofce recycling, raw materials/waste, toxic reduction, community
impact, energy conservation, natural resources, accidents, Superfund sites, compliance and environmental technologies. Some of
the social factors such as ethics, charitable giving, community outreach, family benets and workplace issues are also assessed.
5.12.5. Oeko Sar Fund, Bank Sarasin & Cie, Basel, Switzerland
(www.sarasin.ch)
This bank assesses environmental performance for its own
environmental fund. The assessment system was developed by
environmental consultant Ellipson Ltd in Basel which is in line
with the same system used by Norwegian UNI Storebrand designed
by Ellipson Ltd. The various components used for environmental and social ratings are: policy/strategy, production/provision
of service, products/services, environmental management systems, customers/suppliers, employee relations, public relations
and shareholders/investors.
The various companies are grouped into three categories based
on their potential environmental impact: high (e.g. steel industry), medium and low (service sector companies). For inclusion
in the fund, the company should achieve a desired level of rating
depending on the impact categories. Moreover, negative criteria
are used, avoiding any company that drives more than 5% from
the defence industry, nuclear power and nuclear power plant construction, gene technology, chlorine industry, agrochemical and
automobile industries. All the data and information are collected
from the company annual reports, environment reports and other
publications from the companies, management interviews, newspaper clippings, articles, information from environmental pressure
groups such as Greenpeace, and through lled in questionnaire.
5.12.6. Storebrand Scudder Environmental Value Fund, Oslo,
Norway (www.storebrand.no)
The Storebrand Scudder environmental investment fund was set
up in 1996 by the Norwegian insurers, UNI Storebrand. This index
is primarily used to evaluate the environmental performance of
the companies. The index is calculated from environmental indicators of: global warming, ozone depletion, material efciency,
toxic release, energy intensity, water use, environmental liabilities,
and environmental management quality. Storebrand also uses the
index to measure the environmental dividend which is calculated
by the difference between the funds environmental performance
and the market on average. Although this is termed as sustainability index but it only focuses on environmental performance, and
does not include social issues.
5.12.6.1. Innovest strategic value advisors (www.innovestgroup.
com). Innovest strategic value advisors developed a proprietary
investment model Eco Value 21 in US to evaluate both the environmental risk and opportunity proles of companies and determine
the related impacts for investors. This model also provides a fund
295
Environmental benchmarks
Analysis of the following information in relation to turnover,
output or number of employees:
296
Table 3
Summary table of the sustainability indices.
Name
Number of sub-indicators
Scaling/normalization
Weighting
Aggregation
17
[+10, 10]
Mean substraction
Equal weights
19
PCA
Percentage annual
differences
100 to 100
Investment in the
knowledge based economy
Performance in the
knowledge based economy
Relative intensity of
regional problems in the
Community
Economic Sentiment
Indicator
Composite Leading
Indicators
Information and
communication
technologies
Environmental
Sustainability Index
10
68
11
Human Development
Index
12
Technology Achievement
Index
8 (grouped in 4
sub-indices)
13
14
Two Synthetic
environmental indices
22
15
National innovation
capacity
16
General Indicator of
Science & Technology
Success of software process
improvement
European Labour Market
Performance
13
17
18
14
3
19
Eco-indicator 99
20
Concern about
environmental problems
11
21
Dividing the
month-to-month changes
with the average month to
month change
Mean subtraction and
division by the mean of the
absolute differences from
the mean
Country rankings for each
indicator
Mean subtraction and
division by the standard
deviation
[0, 1], using minimum and
maximum value for each
indicator as goal post
[0, 1] using minimum and
maximum value for each
indicator as goal post
[0, 100]
PCA & FA
Choice of weights is up to
the user
Choice of weights is up to
the user
Weighted average
Summation
Sum of rankings
Equal weights
Equal
Equal
Summation
Regression analysis
employed
PCA
PCA
Weight based on value
judgment
Weighting scheme is
selected by a panel of
experts
Weights derived from
public opinion polls
297
Table 3 (Continued)
Name
Number of sub-indicators
Scaling/normalization
Weighting
Aggregation
22
20
Sub-indicators are
expressed in monetary
terms
23
Index of Environmental
Friendliness
11
Normalization of problem
indices by dividing the
sectoral problem index by
the value of the national
problem index
24
Environmental Policy
Performance Indicator
6 theme indicators
(composed of several
simple indicators)
25
Equal weights
Geometric mean
26
27
28
Ecological footprint
City Development Index
Environment Performance
Index
Environment Vulnerability
Index
Well Being Index
Composite Sustainability
Performance Index
Division by the
corresponding a)
sustainability levels, and b)
policy targets
Ratio to current and
previous year
Area
Distance from mean
[0, 100]
Equal
PCA/experts
PCA/experts
Summation
Weighted average
Weighted average
50
Aim = 1, worst = 7
Equal
Average
87
Five categories; 59
indicators
Subjective
AHP
Weighted average
Weighted average
AHP
Weighted average
3 capitals
5
[0, 100]
Distance from mean
divided by standard
deviation
Distance from maximum
and minimum
Life cycle impact
assessment
Monetized
Area
Equal
Equal
Four categories of
indicators
40
[0, 100]
Normative judgment
[+10, 100]
Equal
Summation
Total area per unit product
divided by area per capita
Average
Company opinion
Summation
Based on multi-attribute
utility theory
4 categories; 21 indicators
AHP
Weighted sum
AHP
Geometric mean
Equal
Equal
Summation
Summation
29
30
31
38
Composite sustainable
development index
Ford of Europes Product
Sustainability Index
Genuine Savings Index
Sustainability Performance
Index
Compass Index of
Sustainability
ITT Flygt Sustainability
Index
Environment Quality Index
39
40
41
G Score
Index of Sustainable
Society
32
33
34
35
36
37
Three categories; 38
indicators
8
5 categories
5 categories; 22 indicators
5.12.8.1. FTSE Good Index. The FTSE4 Good Index Series aims to
evaluate the performance of companies that meet globally accepted
corporate responsibility standards and also facilitates investment
in those companies. The FTSE4Good selection criteria are based
on measures which ideally represent good corporate responsibility practice globally. It involves detailed stakeholder engagement
and market consultation process. The criteria are revised on regular
basis to ensure that they continue to reect standards of responsible business practice, and developments in socially responsible
investment as they evolve.
The details of various indexes viz. scaling, normalization,
weighting and aggregation are summarized in Table 3.
6. Conclusion
This paper covers an overview of various sustainability indices
which are practically implemented to measure sustainable development. Attempts have been made to compile the information
about how the index were formulated using the three central steps
viz. normalization, weighting, aggregation.
Indices and rating systems are subject to subjectivity despite
lot of objectivity used in assessing the sustainability. The major
advantages associated with indices are because of its multidimensionality, use of normalization and aggregation based on
scientic rules and robust statistical methods.
Weighted sum
298
inuence the policy goal and also ensures that the evaluation process involved could change through time according to the interests
of the particular stakeholders involved in the construction of the
indicator.
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