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What is it?

Environmental impact analytics is the process of assessing the impact your business has on the environment. From where you source your raw materials to your production process and delivery, environmental impact analytics are essential so that you know what is happening right along your supply chain.

This type of analytics is going to become increasingly important as legislation is brought in to combat climate change and minimise our environmental damage.

Why does it matter?

Environmental impact analytics matter because more and more customers want to know this data. They want to know where they are buying their products and services from and that those companies have acted responsibly towards the planet.

Sooner or later, business will be forced to comply through legislation and be made accountable for their impact on the environment. It is far better to know your current impact and implement improvements now before you are made to change via legislation. Right now, companies that embrace their environmental responsibilities and actively seek to minimise their negative impact can gain a competitive advantage. Once governments push through legislation, that competitive advantage will not exist because everyone will have to get on board or be penalised.

When do I use it?

Environmental impact analytics should be done annually. The initial analysis will always be the most rigorous and time-consuming, but once it has been analysed completely once, keeping tabs on your environmental impact will be much easier and quicker.

You should also use this type of analysis whenever you are looking to change parts of your supply chain or your production process to make sure that the changes will not adversely impact the environment.

What business questions is it helping me to answer?

Environmental impact analytics helps you answer business questions such as:

• What is our carbon footprint?
  
• What is our water footprint?
  
• What is our energy consumption?
  
• How environmentally responsible are we?
  
• How environmentally responsible are our suppliers?
  
• Are we doing more than our competitors and, if so, can we promote our environmental focus to gain a competitive advantage?
  

How do I use it?

There are a number of key performance indicators (KPIs) that you can use to measure your historical environmental impact. These include your carbon footprint, water footprint, energy consumption, supply chain miles, waste and product recycling rate.

Environmental impact analytics can be extremely complex and it’s certainly an area that is going to be increasingly important in the future. Being able to measure and demonstrate environmental credentials can still offer a competitive advantage but the day is coming where legislation will demand it.

If this is not something you do at all right now then consider using some of the KPIs above or using specialist tools such as carbon analytics. Carbon analytics, for example, is pretty easy to apply because the approach uses information your company already has such as purchase records, supply chain data and basics like your annual turnover and industry statistics. This can then give you a ‘big picture’ measurement of your environmental impact. Plus, over time this tool will tailor its analysis to your company’s unique profile.

Practical example

As a manufacturer you may be concerned about the resources you use in your production process. There are a variety of different ‘footprints’ that you can analyse to assess your impact. Ideally these assessments will give you an opportunity to reduce your footprint and use the insights to publicise your environmental efforts and credentials for better PR and potentially improved sales.

There are a variety of different ‘footprints’ to explore:

• Ecological footprint – measures how much land/ocean is required to make a certain product or provide a certain service while also measuring the damage to that land or ocean in creating that end product.
  
• Materials footprint – measures the total materials used and waste generated in creating your product or service.
  
• Carbon footprint – measures the direct and indirect greenhouse gas emissions caused by the creation of your product or service. This is one of the most developed footprint tools.
  
• Nitrogen footprint – measures the reactive nitrogen created in the production of your product or service.
  
• Water footprint – measures how much freshwater is directly or indirectly used in the production of your product or service.
  

Tips and traps

Taking action now when you can determine your timeline and implement incremental changes to the way you do business to ensure you are more environmentally responsible is always going to be preferable to waiting until you are forced to take action. Environmental impact analytics can help you to predict your future so you can make manageable incremental shifts.

Don’t assume the world will stay the same forever – always look for ways to improve your production process to reduce waste and minimise energy and water use. Not only will this be better for the environment, it will also be better for your bottom line.

Further reading and references

For more on environmental impact analytics see for example:

• http://www.lic.wisc.edu/shapingdane/facilitation/all_resources/impacts/analysis_environmental.htm
  
• http://enviroliteracy.org/article.php/1286.html
  
• http://www.epa.gov/sustainability/analytics/life-cycle.htm
  
• http://www.co2analytics.com/how-it-works
  
• http://www.epa.gov/sustainability/analytics/environmental-footprint.htm