Environmental Engineering Reference
In-Depth Information
Table 6. Metrics for Financial Perspective
the long-term and short-term costs and benefits
of adopting alternative environmental strate-
gies (Epstein and Roy, 1998). By doing so, the
explicit costs of environmental management are
minimized and can generate other management
benefits, including higher morale and increased
productivity, thereby resulting in revenue growth
(McGuire
et al
. 1988).
Another argument holds that the financial
performance of a firm is influenced by strong
environmental performance via both market and
cost pathways. From the marketing perspective,
customers tend to prefer environmentally oriented
companies. On the cost side, firms that invest heav-
ily in environmental management systems and
safeguards may potentially avoid environmental
spills, crises, and liabilities in the future. Costs
due to material waste and inefficient process are
also minimized (Klassen and McLaughlin, 1996).
More comprehensive approaches to environmental
management that take into account the environ-
mental impacts of firms' operations throughout
the entire life-cycle of the firm's products can also
contribute to these cost advantages. Moreover,
such innovations (e.g. potential liability costs,
legal fees, and potential product take-back costs)
can also mitigate the environmental costs to some
degree. Environmental management practices
such as pollution prevention technologies and
environmental technological innovations may
reduce cycle time, and cut emissions well below
the required levels, thereby resulting in compliance
and liability costs (Christmann, 2000).
This perspective is represented by some five
objectives (see table 6): (1) increase the revenue
growth via Green IT implementation (measured
through actual cost versus budgeted expenses
and cost recovery versus expense); (2) reduce
the environmental risk cost (measured through
the average of risk costs); (3) determine the
business value of Green IT Project (computed
through financial traditional measurement (e.g.
ROI (Return on Investment), ROE (Return on
Equity), ROA (Return on Assets)), (New) Infor-
Financial Perspective
Perspective
Key Ques-
tion
What are the contributions of the Green IT
implementation from financial perspective?
Objectives
Increase the revenue growth through Green IT
implementation
Measures
• Actual cost versus budgeted expenses
• Cost recovery versus expense
Reduce environmental risk costs
Measures
• Average of risk costs
Business value of Green IT Project2
4
Measures
• Financial traditional measurement (e.g. ROI,
ROE, ROA)
• (New) Information Economics
• Costs/Benefits Analysis
Management of Green IT investment
Measures
• Capital investment rate
Reduce the e-waste cost
Measures
• Average of recycle and take-back costs
mation Economics, or cost/benefit analyses); (4)
management of Green IT investment (measured
via capital investment rate); and (5) reduce the
e-waste costs (evaluated through the average of
recycle and take-back costs).
Future Orientation
Future orientation involves the resources and
capabilities required by IT to sustainably deliver
its services. As we previously asserted, businesses
can increase the productivity of their resources
via green innovations (eco-innovations). Innova-
tions can be viewed as repurposing, improving,
or renewing existing ideas and practices that need
to be understood, particularly the correspondence
between new technology ideas and correspond-
ing new practices (Hines and Marin, 2004). In
accordance with this concept, eco-innovation has
been broadly defined as the process of developing
new ideas, behaviors, products, and processes
that contribute to a reduction in environmental
