1. Improving Measurements of Companies Environmental Performance Development of an evaluation framework for the automobile sector Sofia Poulikidou 1, Ulrika Lundqvist 1, Anders Biel 2, Joakim Sandberg 2, Martin Hedesström 2 1 Chalmers University of Technology, Sweden 2 Gothenburg University, Sweden Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

2. Outline Introduction Aim and objectives Methodology and Results Discussion Conclusions and future work Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

3. Introduction Sustainable Investment Research Sustainable companies and ratings Measuring the environmental performance of companies Results from evaluation Investment Evaluation Institutional investors Sustainability analysts Companies Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

4. Problem formulation Lack of methodological transparency Low validity Lack of theoretical and empirical justification of evaluation criteria Sector specific criteria Long questionnaires - many rating agencies ! Risk for the sustainable transition of industries *Reference: Hedesstrom, M.; Lundqvist, Ulrika; Biel, A.: Investigating Consistency of Judgement Across Sustainability Analyst Organizations. Sustainable Development, 19 (2) pp. 119-134. Current evaluation processes: Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

5. Aim and Objectives Overcome the identified limitations and develop a new evaluation framework Applicable framework to all business sectors → Increase methodological transparency → More reliable results Suggest a limited number of relevant evaluation criteria → Reduce work load of companies Divide into present and future oriented evaluation criteria → Preparedness of industries Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

6. Case study and assumptions Automobile sector (companies producing passenger cars) Average European and US conditions – Mid size car weighting 1300 kg – Internal combustion engine - Gasoline and diesel as fuels – Emissions regulation – ELV regulation Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

7. Method Sustainable development Principles for sustainabilityLife cycle perspective Assessment and ranking of the life cycle impacts for the automobile sector Present and future oriented measurements Normalized measurements Limited set of indicators Aggregated score for a company ! Focus only on environmental issues and physical flows (emissions and resource use) Social performance or environmental management systems are not considered Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

8. Backcasting & Principles for a sustainable society Principle 1: Substances extracted from lithosphere must not systematically accumulate in the ecosphere (emission of substances ) Principle 2: Substances produced in society must not systematically accumulate in the ecosphere (emission of substances) Principle 3: Physical conditions for production and diversity must not be deteriorated (land use and biodiversity) Principle 4: The use of resources must be efficient and with respect to meeting the human needs (efficient use of resources) *Reference: Holmberg, J. 1995. Socio-ecological principles and indicators for sustainability. Unpublished PhD thesis, Chalmers University of Technology, Gothenburg, Sweden. Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

9. Life cycle approach Purchaser (materials production) Communicator Resource converter (manufacturing and assembly) Supplier (operation, ELV, fuel) Costumer/ Market Supplier Nature Society *Reference: Holmberg, J. 1998. Backcasting: A natural step when making sustainable development operational for companies. Greener Management International 23: 30-51 Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

10. Results Environmental concerns for the sector 1&2. Emissions of substances 4. Resources (minerals and fossil fuels) Steel, aluminium, copper, zinc etc. Waste Water 3. Land use and biodiversity Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

11. Eco- Indicator 99EPS 2000Environmental Themes ImpactsRate %ImpactsRate %ImpactsRate % Oil (r)61.3Oil (r)44Oil (r)30.5 NOx (e)9.8CO 2 (e)27.8CO 2 (e)18.0 CO 2 (e)9.3Natural gas (r)12.5NOx (e)13.4 Natural gas (r)8.3Copper (r)3.8HC (e)12.5 Particles (e)6.0Particles (e)3.3Heavy metals (w)10.1 SOx (e)3.7HC (e)1.6SOx (e)5.6 N 2 O (e)0.4N 2 O (e)1.3Natural gas (r)3.0 Coal (r)0.3SOx (e)1.2VOC1.4 Metals (e)0.2NOx (e)1.1Oils (w)0.8 CH 4 (e)0.1Lead (r)0.8Total N (w)0.8 Other0.14Other2.5Other3.5 Results Environmental concerns for the sector Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

12. Results Environmental concerns for the sector *(r)= resources, (e) = emissions to air, (w) = releases to water Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

13. Development of measurements Necessary information Most significant life cycle stage Most significant processes and activities Influence – what can compensate the negative impact? Measurement – conventional and technology oriented (present and future) Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

14. Impact & Principle Life cycle stageActivitiesInfluenceMeasurement Oil (principle 4) Supplier (96%) Purchaser (3%) Resource converter (0.5%) Operation (92%) Fossils used for the production of the materials /energy 1.Fuel efficiency of vehicles running on fossil fuels 2.Vehicles running on non- fossil fuels 1. Fossil fuel energy /distance 2. Share of vehicle models running on non-fossil fuels Carbon dioxide emissions (principle 1 &2) Supplier (90%) Purchaser (6.8%) Resource converter (3.6%) Operation (84%) Combustion of fossil fuels for energy in various processes 1. Fuel efficiency of vehicles running on fossil fuels 2. Vehicles running on non- fossil fuels 1.Fossil fuel energy /distance 2. Emission rate / distance 3. Share of vehicle models running on non-fossil fuels Energy efficiency of vehicle manufacturing processes Energy mix - share of renewables Particles (principles 1& 2) Supplier (49%) Purchaser (46%) Resource converter (5%) Materials production processes and electricity Materials selection Recycling Weight of the car % of recycled material/car Hydrocarbons (principle 1 & 2) Supplier (49%) Purchaser (46%) Resource converter (5%) Production of the fuelsVehicles running on non-fossil fuels Share of vehicle models running on non-fossil fuels Emission rate/ distance Volatile organic compounds (principle 1 & 2) Supplier (45%) Purchaser (43%) Resource converter (12%) Painting processes- electricity Change of technology (water based paints) Energy sources Emission rate / product Emission rate / surface

15. Indicators Ideas for relevant measurements IMPACTS/ CRITERIALIFE CYCLE STAGE MEASUREMENTS Produced vehicles: Fuel efficiency Produced vehicles: Alternative fuels Produced vehicles: Alternative technologies Produced vehicles: Weight Produced vehicles: Recyclability Manufacturing processes: Energy use CO2 emissions NOx emissions OIL CONSUMPTION Purchaser XXX Resource converter XX Supplier XXX X CO2 EMISSIONS Purchaser X X X Resource converter XX Supplier XXX X NOx EMISSIONS Purchaser XXX Resource converter X X Supplier X X X … (rest of impacts) Purchaser Resource converter Supplier SUM WEIGHT Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

16. Discussion 1/2 Method – Overall picture of the sector – Sustainability perspective – Transparent – Weakness of weighting methods – Relevance among the weighting methods and the principles of sustainability Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

17. Discussion 2/2 Results – Expected to some extend – Depend on the weighting system – Indicators should be measurable by the sector Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

18. Conclusions and future work Conclusions – Use of resources (oil and natural gas) and emissions (carbon dioxide) – Biodiversity is less affected – A way to suggest relevant indicators – Weighting system and ranking is essential – Method can be applied for other sectors Future work – Continue towards the development of indicators – Publications Poster presentation to the Conference of the ISIE, June 2011 Submission of two articles to scientific journals Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011

19. Thank you! Sofia Poulikidou, Mistra Workshop Bilbao, 12.05.2011