Shades of Green: HOPF for Standardized Environmental Performance Indicators

Abstract

Sustainability reporting has become the mainstream, yet transparency in corporate sustainability performance is still lacking. With the vast amount of sustainability reports and the rampant inconsistencies in performance metrics, the field first and foremost needs standardization. Research on the environmental-economic intersection of corporate sustainability is facing a similar challenge, with a variety of environmental performance measures being used in this stream of study. As for sustainability performance measurement, scholars have been calling for a holistic conceptual framework to integrate the fragmented research areas and bring closer academic studies and practices. In view of the practical challenges and the research gaps, this project applies design thinking to develop a system of generic environmental performance indicators and a holistic organizational performance framework (HOPF). The conceptual premises underlying the design are that 1). Sustainability performance measurement is a multi-dimensional (environmental, social, economic) multi-phased (design, implementation, reporting) decision support information system, and that 2). Environmental performance indicators organized in HOPF can serve as a solid foundation for social and economic indicators to build upon and they can together create a systematic structure to enable the implementation and reporting of sustainability performance measurement. Practitioners may use the proposed solutions to improve transparency and credibility in sustainability reporting by identifying greenwashing and discrepancies in reports and ratings. Academics may refer to them to operationalize the construct of environmental performance and collect data directly from primary archival sources instead of secondary databases. Future research may extend HOPF by incorporating the social dimension or develop context-specific normalization and weighting schemes for environmental performance measurement standardization.

Keywords: Sustainability; Sustainability Reporting; ESG Ratings; Performance Measurement; Environmental Performance Measurement; Environmental Performance Indicators; Standardization