UNCTAD (United Nations Conference on Trade and Development) recently published a manual with the stated aim of improving the comparability of eco-efficiency indicators used in the environmental reports prepared by companies operating in various sectors and regions.
Environmental issues are very important. Investors counting on sustainable development therefore expect from companies, together with other essential aspects, the highest possible level of eco-efficiency.
Eco-efficiency means that the economic value (added value) of a company can be increased and, at the same time, its environmental impact must be reduced (conserving resources). However, without reliable and comparable indicators, it is impossible, for both businesses and investors, to evaluate the eco-efficiency of a business.
This is where the UNCTAD manual sets its starting point. Focusing on five environmental issues of worldwide relevance, UNCTAD has developed a system of environmental accounting. The system is based on the same rationale that underlies the presentation of financial accounts, that is to say it recognises the environmental problems, indicates how they should be measured and then discloses them. This approach is the only way to ensure the comparability of the indicators used in different sectors of activity and across different regions.
The UNCTAD manual covers five environmental issues: energy consumption, water consumption, contribution to global warming, contribution to the deterioration of the ozone layer and quantity of waste produced. These factors are measured and related to the creation of financial value.
In this context, it is important to note, first of all, that the creation of value and not turnover is used as the financial indicator. The second important point is that the UNCTAD manual deals, for the first time, with the consolidation of the eco-efficiency indicators. A reliable result cannot be obtained unless the same methods are used for the consolidation of both environmental indicators and financial indicators.
The UNCTAD guidelines have been received very positively. The company Ciba SC, for instance, has already applied the UNCTAD recommendations in its “Environmental, Health and Safety Report 2003”. According to Ciba, using the UNCTAD system, it is possible to demonstrate that its products increase the creation of financial value, while at the same time using less resources and, therefore, reducing environmental impact.
More information on the UNCTAD guidelines is available on the site Unctad.org.
