Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.

Chapter 6
Sustainability Indicators, Metrics,
and Assessment Tools
Table of Contents

Chapter 6. Sustainability Indicators, Metrics, and Assessment Tools

6.1 Introduction
6.2 Sustainability indicators
6.3 Sustainability metrics
6.4 Sustainability assessment tools

Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.
Sustainability Indicators

A sustainability indicator should have the following attributes

defined by the “SMART” acronym:

• Specific
• Measurable
• Actionable/achievable
• Relevant
• Timely

Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.
UN Sustainability Indicators

Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.
Sustainability Metrics
TRACI - Tool for the Reduction and Assessment of Chemical and
Other Environmental Impacts
• Global Climate Change impact category – reported as carbon dioxide (CO2) equivalents
• Acidification impact category – reported as sulfur dioxide (SO2) equivalents
• Eutrophication impact category – reported as nitrogen (N) equivalents
• Ozone Depletion impact category – reported as trichlorofluoromethane (CFC-11) equivalents
• Photochemical Smog Formation impact category – reported as ozone (O3) equivalents
• Human Health Particulate Matter (PM) impact category – reported as fine particulate matter (PM2.5) equivalents
• Human Health Cancer impact category – reported as comparative toxicity unit cancer (CTUcancer) equivalents
• Human Health Non-cancer impact category – reported as comparative toxicity unit non-cancer (CTUnon-cancer)
equivalents
• Eco-toxicity impact category – reported as comparative toxicity unit eco-toxicity (CTUeco) equivalents.

Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.
Environmental sustainability
performance indicators
• Global warming potential
• Acidification potential
• Ozone depletion potential
• Aerosol optical depth
• Eutrophication potential
• Ionization radiation potential
• Photochemical ozone potential
• Air Pollution
• Chemical pollution
• Waste treatment
• Freshwater use
• Energy resources use
• Land system change
• Marine system change
• Fossil and mineral resources
• Food and agricultural resources
• Forest resources
• Fish resources
https://ecochain.com/knowledge/impact-categories-lca/
https://www.epa.gov/chemical-research/tool-reduction-and-assessment-chemicals-and-other-environmental-impacts-traci
https://www.sciencedirect.com/science/article/pii/S0959652606001569
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69281/pb11321-envkpi-guidelines-060121.pdf
https://ecochain.com/knowledge/impact-categories-lca/
https://www.epa.gov/chemical-research/tool-reduction-and-assessment-chemicals-and-other-environmental-impacts-traci
https://www.sciencedirect.com/science/article/pii/S0959652606001569
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69281/pb11321-envkpi-guidelines-060121.pdf
 https://www.un.org/esa/sustdev/natlinfo/indicators/guidelines.pdf
https://www.universiteitleiden.nl/en/research/research-projects/science/cml-new-dutch-lca-guide
Environmental sustainability Social sustainability
performance indicators Economic sustainability
• Global warming potential indicators indicators
• Acidification potential • Governmental level • Employment generated
• Ozone depletion potential • Gross domestic product • Equity
• Aerosol optical depth • Trade balance • Health and safety
• Eutrophication potential • Local government income • Education
• Ionization radiation potential • Company or government-level • Housing/living conditions
• Photochemical ozone (smog) potential • Profit, value and tax • Community cohesion
• Air Pollution • Investments
• Social security
• Chemical pollution https://doi.org/10.1016%2Fj.jclepro.2003.10.007

• Waste treatment
• Freshwater use
• Energy resources use
• Land system change
• Marine system change
• Fossil and mineral resources
• Food and agricultural resources https://doi.org/10.1016%2F0167-8809%2896%2901017-1
https://doi.org/10.1016%2Fj.jclepro.2003.10.007
• Forest resources Key Performance Indicators for Sustainable Management by Krause and Arora

• Fish resources
https://ecochain.com/knowledge/impact-categories-lca/
https://www.epa.gov/chemical-research/tool-reduction-and-assessment-chemicals-and-other-environmental-impacts-traci
https://www.sciencedirect.com/science/article/pii/S0959652606001569
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69281/pb11321-envkpi-guidelines-060121.pdf
Additional overlapping category:
Technology indicators
• Two main categories
• Indicators for technology  natural system
• Eco-efficiency indicators
• Environmental quality indicators
• Indicators for technology  social system
• Social aspects (creation of employment, human rights, quality,
justice)
• Degree of decentralization of technology
• Complexity of technology and education needed to use it
• Investment required for accessing the technology
Environmental Performance
Indicators
• For many environmental indicators:
1. First estimate risk for each pollutant using inherent impact
potential (IIP) and exposure potential (EP)
𝐸𝑃 𝐼𝐼𝑃 𝑖
𝐷𝑖𝑚𝑒𝑛𝑠𝑖𝑜𝑛𝑙𝑒𝑠𝑠 𝑟𝑖𝑠𝑘 𝑖𝑛𝑑𝑒𝑥 𝑖 = ;
𝐸𝑃 𝐼𝐼𝑃 𝐵
• B is benchmark chemical and ‘i’ is the chemical of interest in the same
impact category
1. Indicator due to all chemicals in an impact category
• 𝐼 = σ𝑖 𝐷𝑖𝑚𝑒𝑛𝑠𝑖𝑜𝑛𝑙𝑒𝑠𝑠 𝑟𝑖𝑠𝑘 𝑖𝑛𝑑𝑒𝑥 × 𝑚𝑖
3. Sustainability Index: Integrate all indicators
• EPA definition: “An index is a quantitative aggregation of many indicators and can provide a
simplified, coherent, multidimensional view of a system”
• e.g., Environmental Quality Index, Genuine progress, the Yale Environmental Performance Index, Fisher 6
information, Ecological Footprint, Emergy, and Genuine Savings Index (Redefining Progress, 1995; The World Bank,
1997; The World Economic Forum, 2001; USEPA, 2010)(Redefining Progress 1995),
• https://epi.yale.edu/
• https://www.resolve.ngo/docs/djsi-world-guidebook_tcm1071-337244.pdf
• https://www.msci.com/eqb/methodology/meth_docs/MSCI_Global%20Sustainability_Indexes_Methodology_June2016.pdf
• https://www.researchgate.net/publication/222798134_Quantifying_Sustainability_Methodology_for_and_Determinants_of_
an_Environmental_Sustainability_Index
• https://www.epa.gov/sites/default/files/2014-10/documents/framework-for-sustainability-indicators-at-epa.pdf
 Global warming indicator
• Global warming potential (GWP)
• Time-integrated climate forcing from the release of 1 kg of GHG
relative to that from 1 kg of CO2
𝑇𝐻
‫׬‬0 𝑎𝑖 𝑐𝑖 𝑑𝑡
• 𝐺𝑊𝑃𝑖 = 𝑇𝐻
‫׬‬0 𝑎𝐶𝑂2 𝑐𝐶𝑂2 𝑑𝑡

• 𝑎𝑖 - predicted radiative forcing of gas ‘𝑖’ (W/m2)

• 𝑎𝑖 is function of chemical’s infrared absorbance properties
• 𝑐𝑖 is its predicted concentration in the atmosphere (parts per billion),
• TH is the number of years over which the integration is performed (time
horizon), which is chosen to be 20, 100, or 500 years to model short-term or
long-term warming potentials.
• Indicator?
• 𝐼𝐺𝑊 = σ𝑖 𝐺𝑊𝑃𝑖 × 𝑚𝑖 ; where 𝑚𝑖 is rate of emission of ‘𝑖’
• Indirect effect due to short-lived organics of climate
change
𝑀𝑊𝐶𝑂2
• 𝐺𝑊𝑃 𝑖𝑛𝑑𝑖𝑟𝑒𝑐𝑡 = 𝑁𝑐 ×
𝑀𝑊𝑖
• 𝑁𝑐 − 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑎𝑟𝑏𝑜𝑛 𝑎𝑡𝑜𝑚𝑠 𝑖𝑛 𝑖,
• 𝑀𝑊 − 𝑚𝑜𝑙𝑒𝑐𝑢𝑙𝑎𝑟 𝑤𝑒𝑖𝑔ℎ𝑡 (𝑡𝑜 𝑐𝑜𝑛𝑣𝑒𝑟𝑡 𝑓𝑟𝑜𝑚 𝑚𝑜𝑙𝑎𝑟 𝑡𝑜 𝑚𝑎𝑠𝑠 𝑏𝑎𝑠𝑖𝑠)
Example 5-2 Global warming indicator for air emissions of 1,1,1-
trichloroethane from a production process
1,1,1-Trichloroethane (1,1,1-TCA) is used as an industrial solvent
This example will estimate the global warming impact of the air emissions
from this process. Include direct impacts (from 1,1,1-TCA) and indirect
impacts from energy usage (CO2 and N2O release) in your analysis.
Determine the global warming index for the process and the percentage
contribution for each chemical.
𝑇𝐻
‫׬‬0 𝑎𝑖 𝑐𝑖 𝑑𝑡
𝐺𝑊𝑃𝑖 = 𝑇𝐻
‫׬‬0 𝑎𝐶𝑂2 𝑐𝐶𝑂2 𝑑𝑡

𝐼𝐺𝑊 = σ𝑖 𝐺𝑊𝑃𝑖 × 𝑚𝑖

𝑘𝑔 𝑘𝑔 𝑘𝑔
= 10 × 100 + 7760 × 1 + 0.14 × 298
ℎ𝑟 ℎ𝑟 ℎ𝑟
= 1000 + 7760 + 41.7

𝑘𝑔
= 8801.7
ℎ𝑟
Ozone depletion
• Ozone depletion potential (OPD)
𝛿 𝑂3 𝑖
• 𝑂𝑃𝐷 = ;
𝛿 𝑂3 𝐶𝐹𝐶−11

• where 𝛿 𝑂3 𝑖 is predicted time-and height-integrated

change of O3 due to a chemical ‘i’

• 𝐼𝑂𝐷 = σ𝑖 𝑂𝐷𝑃𝑖 × 𝑚𝑖
 Example - OPD
• For a new natural gas process, 1 kg of the following
compounds are emitted per year. Estimate their indicator for
ozone depletion per year
Compound OPD
10 y 30 y 100 y Steady
CFC-113 (CF2ClCFCl2) 0.56 0.62 0.78 1.1
CCl4 1.25 1.22 1.14 1.08
CH3CCl3 0.75 0.32 0.15 0.12
HCFC-22 (CHF2Cl) 0.17 0.12 0.07 0.05
Halon-1301 (CF3Br) 10.4 10.7 11.5 12.5

• 𝐼𝑂𝑃𝐷 = 1 𝑘𝑔 × 1.1 + 1 𝑘𝑔 × 1.08 + 1 𝑘𝑔 × 0.12 +

1 𝑘𝑔 × 0.05 + 1 𝑘𝑔 × 12.5 = 14.85
https://www.epa.gov/ozone-layer-protection/ozone-depleting-substances
 Acid rain
• In gas phase, 𝑁𝑂2 + 𝑂𝐻 → 𝐻𝑁𝑂3
• In water: 𝐻𝑁𝑂3 → 𝐻 + + 𝑁𝑂3−
• Adding: 𝑁𝑂2 + 𝑂𝐻 → 𝐻 + + 𝑁𝑂3−
• Generally,
acid
• 𝑋 + ⋯ → 𝛼𝐻 + + ⋯
• Acidification, 𝜂𝑖 = 𝐻+ 𝑐𝑟𝑒𝑎𝑡𝑒𝑑 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 𝑚𝑎𝑠𝑠 𝑜𝑓 𝑠𝑢𝑏𝑠𝑡𝑎𝑛𝑐𝑒 𝑒𝑚𝑖𝑡𝑡𝑒𝑑
𝛼 𝑚𝑜𝑙𝑒𝑠 𝑜𝑓 𝐻 + ×1 𝛼
• 𝜂𝑖 = 1 𝑚𝑜𝑙𝑒𝑖𝑜𝑓 𝑝𝑟𝑒𝑐𝑢𝑟𝑠𝑜𝑟 𝑖×𝑀𝑊 = 𝑀𝑊𝑖 ;
𝑖 𝑖
• how much mass of proton released per unit mass of acid creating precursor
𝜂𝑖
• Acid rain potential, 𝐴𝑅𝑃 =
𝜂𝑆𝑂2

• 𝐼𝐴𝑅 = σ𝑖 𝐴𝑅𝑃𝑖 × 𝑚𝑖
 Smog formation
• What is smog?
• nitrogen oxides, volatile organic compounds and dust as well as
ozone
• Photochemical degradation of these compounds lead to ground-
level or lower atmosphere formation of O3
• Maximum incremental reactivity (MIR): ‘the change in grams
of ozone formed as a result of emission into an air shed of 1 g
of the VOC’
• ROG – reactive organic gas mixture
• Depends on NOx/VOC ratio
• The smog formation potential (SFP) is based on the maximum
incremental reactivity scale of Carter
Example 5-3. Comparing electricity generation by fuel type
In this example, a list of pollutant emissions to air will be listed for different electricity fuel
types. The emissions will be classified into different impact categories and their impact
potentials characterized. Finally, environmental indicators will be calculated from the
emission and impact potential data.
Output per kWh electricity Unit Hard Coal Oil Natural gas Nuclear Hydro Wind PV
N2O mg 29.01 43.06 11.88 0.54 0.06 0.42 1.68
Non-methane volatile organic carbon mg 126.14 270.75 184.21 7.44 2.26 5.5 50.32
Methane g 1.47 0.48 3.41 0.02 0.05 0.03 0.11
NOx g 2.55 2.75 0.37 0.04 0.01 0.02 0.1
SOx g 5.27 6.6 5.79 0.05 0.01 0.03 0.15
CO2 g 1143.99 860.03 595.07 11.32 3.79 10.4 41.1

Global warming impact

Impact = global warming potential (GWP) x mi Unit Hard Coal Oil Natural gas Nuclear Hydro Wind PV
N2O (GWP=298) g 8.64498 12.83188 3.54024 0.16092 0.01788 0.12516 0.50064
Methane (GWP=25) g 36.75 12 85.25 0.5 1.25 0.75 2.75
CO2 (GWP=1) g 1143.99 860.03 595.07 11.32 3.79 10.4 41.1
Total CO2 equiv g 1189.385 884.8619 683.86024 11.98092 5.05788 11.27516 44.35064

Sustainable engineering by Allen and Shonnard

 Eutrophication potential
• Eutrophication potential, (EP)
• 𝐸𝑃 = Σ𝑖 𝐸𝑃𝑖 × 𝑚𝑖
• EPi = kg of equivalent nitrogen per kg of material under
consideration
• mi = total mass of the material under consideration emitted.

Material under EPi

(kg N-eq)
consideration (1 kg)
Ammonia dissolved in water 0.78
Nitrate (to water) 0.237
BOD 0.05
COD 0.05
Phosphorus to water 7.29 Eutrophication potential - Designing Buildings

Biological oxygen demand

chemical oxygen demand

 Quantifying land use
• Possible impact categories to use
• Land cover
• Land use
• Land occupation
• Land transformation
• Direct land use change (dLUC)
• Indirect land use change (iLUC)
• Natural restoration
• Carbon stocks of terrestrial ecosystems

https://core.ac.uk/download/pdf/14925706.pdf
 Quantifying water use
• Water footprinting
• ISO standard 14046 or
• UNEP SETAC Life Cycle Initiative – WaterUseLCA (WULCA)
• http://www.wulca-waterlca.org/aware.html
 Mineral resources indicator
• abiotic depletion potential (ADP)
𝐷𝑅𝑖
2
𝑅𝑖
• 𝐴𝐷𝑃𝑖 = 𝐷𝑅𝑟𝑒𝑓
𝑅2𝑟𝑒𝑓

• 𝑎𝑏𝑖𝑜𝑡𝑖𝑐 𝑑𝑒𝑝𝑙𝑒𝑡𝑖𝑜𝑛 = Σ𝑖 𝐴𝐷𝑃𝑖 × 𝑚𝑖

• ADPi: abiotic depletion potential of mineral i (kg antimony

equivalents/kg of mineral i);
• mi: quantity of mineral i extracted (kg);
• Ri: ultimate reserve of mineral i (kg);
• DRi: extraction rate of mineral i (kg·yr−1) https://www.mdpi.com/2079-9276/5/1/16/htm
• Rref: ultimate reserve of antimony (kg);
• DRref: extraction rate of antimony, Rref (kg·yr
https://www.sciencedirect.com/science/article/pii/B9780128195567000061#s0070
−1)
Using TRACI for quantifying Impact
Categories
• Different “Impact Categories” with their potential
and equivalences for different materials are
available in excel sheet from EPA
• EXCEL: https://www.epa.gov/sites/production/files/2015-12/traci_2_1_2014_dec_10_0.xlsx

• Manual: http://nepis.epa.gov/Adobe/PDF/P100HN53.pdf

• https://www.epa.gov/chemical-research/tool-reduction-and-assessment-chemicals-and-other-environmental-impacts-traci
 TRACI_2_1

EXCEL: https://www.epa.gov/sites/production/files/2015-12/traci_2_1_2014_dec_10_0.xlsx
Manual: http://nepis.epa.gov/Adobe/PDF/P100HN53.pdf
https://www.epa.gov/chemical-research/tool-reduction-and-assessment-chemicals-and-other-environmental-impacts-traci
Group Discussion:

• Discuss on how the current cost accounting in

industry is not fully suited in taking care of issues
regarding sustainability (think about some
examples)?
• Discuss on possible solution
 Economic performance indicators
• Need to add costs associated with environmental and
societal performance
• Environmental: Waste and emissions
• Monetizing societal cost and factoring into economic
performance – more difficult
• Definitions:
• Internal costs (private costs)
• External costs (societal costs)
Accounting methods for
sustainability?
• Environmental costs are considered overhead
• Environmental costs and benefits are overlooked
• Return on environment-related investment is long-
term and difficult to quantify
• An integrated accounting framework for
ecosystem-economic system
• UN’s Framework for Environmental-Economic accounting (2012)
• https://unstats.un.org/unsd/envaccounting/seeaRev/SEEA_CF_Final_en.pdf
• https://seea.un.org/sites/seea.un.org/files/seea_eea_final_en_1.pdf
• Triple bottom line framework (people, planet, profit)
• https://en.wikipedia.org/wiki/Triple_bottom_line
• http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html
• Internal costs?
• Materials and labor, manufacturing overhead, sales, general and
administrative overhead, and research and development
• Environmental costs?
• Typically hidden in overhead
• Full-cost accounting
• Assign all possible costs associated with a product (product line,
service etc..,) to the cost of making it.
• Activity-based costing
• Same as full-cost accounting except measured per unit of
product produced or service rendered,
Framework for Evaluating Environmental
Costs
• Total Cost Assessment Methodology - the American
Institute of Chemical Engineers’ Center for Waste
Reduction Technologies
• Tier I: Costs normally captured by engineering economic
evaluations
• Tier II: Administrative and regulatory environmental costs not
normally assigned to individual projects
• Tier III: Liability costs
• Tier IV: Costs and benefits, internal to a company, associated
with improved environmental and societal performance
• Tier V: Costs and benefits, external to a company, associated
with improved environmental and societal performance
Costs Traditionally Evaluated in Financial Analyses
• Capital equipment, Materials, Labor, Supplies, Utilities, Structures,
Salvage value
• Fails to capture many environmental/societal costs
• Environmental Costs Often Charged to Overhead
• Off-site waste management charges,
• Filing for permits, Taking samples, Filling out sample reporting forms,
Conducting waste and emission inventories, Filling out hazardous
waste manifests, Inspecting hazardous waste storage areas and
keeping logs
• Waste treatment equipment, Waste treatment operating expenses,
• Making and updating emergency response plans, Sampling storm
water, Making chemical usage reports (some states), Reporting on
pollution prevention plans and activities (some states)
Tier III: liability costs: “probable future sacrifice of
economic benefits arising from present obligations to
transfer assets or provide services in the future”
• Compliance obligations; Remediation obligations; Fines and
penalties;
• Obligations to compensate private parties for personal injury,
property damage, and economic loss; Punitive damages;
• Natural resource damages
• Tier IV and V include societal costs
 Estimates of environmental costs
• Easiest of environmental costs to track?
• Costs associated with emission and disposing of wastes

Allen & Shonnard

Example 5-1. Potential pollution
control costs for greenhouse gases
• Estimate control costs for greenhouse gases for an electricity-generating unit (EGU or power plant) as a percentage of
sales revenues. Assume that (1) the EGU uses coal as a fuel and converts the heat of combustion of coal into electricity
with 35% efficiency, (2) the heating value of coal is 10,000 BTU/lb, (3) coal is 85% carbon, (4) carbon costs $20 per ton to
capture and sequester, and (5) electricity can be sold for $0.10 per kilowatt-hour. (2000 lb/ton) (1 kWh/3412 BTU)

Solution: Assume one ton of carbon burnt

Electricity generated per ton of carbon:

1 𝑡𝑜𝑛 𝑐𝑜𝑎𝑙 𝑙𝑏 𝐵𝑇𝑈 1 𝑘𝑊ℎ
1 𝑡𝑜𝑛 𝐶 × × 2000 × 10,000 ∗ × 0.35
0.85 𝑡𝑜𝑛 𝐶 𝑡𝑜𝑛 𝑙𝑏 𝑐𝑜𝑎𝑙 3412 𝐵𝑇𝑈
𝑘𝑊ℎ
= 2415
𝑡𝑜𝑛 𝐶
The capture costs are $20 for 2415 kWhr of generation.
This much generation leads to $241 in electricity sales, so the control costs are
about 8% of sales.
Economic indicators
• Basic indicators
1. Efficiency
𝑂𝑢𝑡𝑝𝑢𝑡 𝑣𝑎𝑙𝑢𝑒 (𝑚𝑜𝑛𝑒𝑡𝑎𝑟𝑦 𝑢𝑛𝑖𝑡𝑠)
•
𝑖𝑛𝑝𝑢𝑡 𝑣𝑎𝑙𝑢𝑒 (𝑚𝑜𝑛𝑒𝑡𝑎𝑟𝑦 𝑢𝑛𝑖𝑡𝑠)
2. Economic efficiency
𝑅𝑒𝑣𝑒𝑛𝑢𝑒
•
𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠
𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠
•
𝐶𝑜𝑠𝑡𝑠
𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝐶𝑜𝑠𝑡𝑠
•
𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑜𝑠𝑡𝑠
3. Profitability 4. Turnover Rate
𝑃𝑟𝑜𝑓𝑖𝑡 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑎𝑙𝑒𝑠, 𝑁𝑒𝑒𝑑 𝑜𝑟 𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛
•
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝑃𝑟𝑜𝑓𝑖𝑡
•
𝑆𝑎𝑙𝑒𝑠
𝑁𝑒𝑡 𝐶𝑎𝑠ℎ 𝐹𝑙𝑜𝑤
•
𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑁𝑒𝑡 𝐶𝑎𝑠ℎ 𝐹𝑙𝑜𝑤
•
𝑆𝑎𝑙𝑒𝑠
Key Performance Indicators for Sustainable Management by Krause and Arora
Profit economic indicators
1. Earnings before tax
• 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑜𝑟 𝐿𝑜𝑠𝑠 + 𝑇𝑎𝑥 𝑜𝑛 𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑛𝑑 𝑃𝑟𝑜𝑓𝑖𝑡𝑠
2. Earnings before interest and tax (EBIT)
• 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑜𝑟 𝐿𝑜𝑠𝑠 + 𝑇𝑎𝑥 𝑜𝑛 𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑛𝑑 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 + Interest expense
3. Earnings before Interest, Taxes and Amortization
(EBITA)
• 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑜𝑟 𝐿𝑜𝑠𝑠 + 𝑇𝑎𝑥 𝑜𝑛 𝐼𝑛𝑐𝑜𝑚𝑒 𝑎𝑛𝑑 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 +
Amortization of Intangible Assests

4. Net Operating Profit After Taxes (NOPAT)

• 𝐸𝐵𝐼𝑇 – 𝑇𝑎𝑥𝑒𝑠 𝑜𝑛 𝑖𝑛𝑐𝑜𝑚𝑒 𝑎𝑛𝑑 𝑝𝑟𝑜𝑓𝑖𝑡

Key Performance Indicators for Sustainable Management by Krause and Arora

Profitability indicators
• EBIT-Turnover-Yield
𝐸𝐵𝐼𝑇.100
• 𝑆𝑎𝑙𝑒𝑠

• Return On Sales (ROS)

𝐴𝑛𝑦 𝑃𝑟𝑜𝑓𝑖𝑡 𝐼𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟 ⋅ 100
• 𝑆𝑎𝑙𝑒𝑠
• 𝐴𝑛𝑦 𝑃𝑟𝑜𝑓𝑖𝑡 𝐼𝑛𝑑𝑖𝑐𝑎𝑡𝑜𝑟
• = after tax (net income or net income + Interest on debt)
• = before tax (operating income or EBIT)

• Return On investment (ROI)

(𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒) ⋅ 100
• 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑜𝑟𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙

• Return On Assets (ROA)

(𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒) ⋅ 100
• 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

• Earnings Per Share (EPS)

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
•
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑆ℎ𝑎𝑟𝑒𝑠

• Return On Invested Capital (ROIC)

𝑁𝑂𝑃𝐴𝑇 ⋅100
• 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
• Net Operating Profit after Taxes and before Interest (NOPAT)

Key Performance Indicators for Sustainable Management by Krause and Arora

Social performance indicators
• Nutrition, sanitation, health, education,
arts, security/crime, corruption, social
justice …,
• Main issue is what impact category to
consider?
• How to incorporate in a formal way so as
to not miss out important categories?

http://www.unmillenniumproject.org/goals/
Social performance indicators
• Nutrition, sanitation, health, education,
arts, security/crime, corruption, social
justice …,
• Main issue is what impact category to
consider?
• How to incorporate in a formal way so as
to not miss out important categories?

http://www.unmillenniumproject.org/goals/
Social performance indicators – more tractable version
Sustainability Assessment Tools

• Material flow and budget analysis

• GHG inventory
• Life cycle assessment (LCA)
• Streamlined life-cycle assessment (SLCA)
• Economic input-output (EIO) analysis
• Quantitative environmental health risk assessment

Reddy, K. R., Cameselle, C., & Adams, J. A. (2019).

Sustainable Engineering: Drivers, Metrics, Tools, and Applications. Wiley.