KPIs and measuring environmental performance

That sounds simple doesn’t it? Naturally, it is complex because of the biases that emanate from setting your own focus areas, the differing opinions and missions of regulators, authorities and shareholders, as well as expectations of customers, partners and stakeholders.

If you get it right, the benefits of smartly thought out KPIs include being able to identify improvement areas and successes, learn lessons in data collection, highlight the effects of a new investment in technology and ultimately provide evidence to demonstrate improved performance.

Outside of legal requirements (eg to achieve water quality standards set by national or regional regulations), port companies are most likely to select a number of parameters to measure and test themselves against. These have been identified via analyses of baseline data and experiences over time. They might simply be oriented towards issues that are raised by complainants (eg noise events disturbing local residents), or perhaps associated with the history of the site (dust emissions and nuisance from the transport and handling of dry bulks). Traditional environmental Key Performance Indicators (KPIs) are likely to be derived for the following topics.

Complexity is added to the equation where qualitative aspects are included, such as on how to measure biodiversity or in measuring the success of an ecological enhancement initiative. Stakeholders such as financiers and an internet-educated public are increasingly challenging port companies to demonstrate their performance in the realm of sustainability and climate change readiness. These levels of scrutiny force port companies to spend more time than ever getting their own house in order and investing time in collating the right, and accurate date and governance information (eg explanation of mission and methodology for each KPI).

Types of KPI

Key Performance Indicators (KPIs) can either be ‘lag’, ie, measured retrospectively or reactively to record a unit of say, volume (litre), noise (dB) or energy (kWh) against a preset threshold, or ‘lead’, ie, proactive or stretch target to challenge the company to prepare and deliver an initiative where it currently has a gap. An example of the latter would be starting to quantify voluntary indirect Scope 3 emissions (eg business travel, the activities of subcontractors) as part of a GHG Footprint exercise.

Lag KPIs

A port company might choose to monitor and document significant spills of substances, such as diesel fuel (eg from the refuelling of straddle carriers from a mobile refuelling vehicle) in formal incident reports, which ought to include the recording of date, volume, type of spill, cause, clean-up method, destination of the wastes/number and weight or volume of clean-up materials (eg contaminated sand, absorbent cloths). This would allow the collation of quantified data on spills on a monthly or quarterly basis and allow comparison against a target. Trends can then be mapped and reviewed over time, resulting in a plan to take action to improve performance. A terminal operator might decide that a relevant KPI would be to measure significant spills per annum, defining this as more than ten litres of a non-hazardous substance. A percentage or volume reduction target should be introduced where the base year comparison requires improvement.

Lead KPIs

Lead KPIs take a more proactive approach to monitoring in that they set out to tackle and challenge port teams to seek new initiatives or take environmental performance to the next level. Examples of lead KPIs with their reasoning, targets and measurement parameters are to:

• Fully investigate the potential for renewable energy technology (eg solar energy generation) to better balance energy portfolio by carrying out a technical feasibility study (measureable by reviewing final report)
• Produce an up-to-date 1:10,000 scale map showing all nearby sensitive receptors (eg nature conservation designations, nearest residences, schools, hospitals and businesses) to be able to inform a good neighbour campaign
• Test and promote uptake of alternative materials and fuels (with established lower impacts)
• Initiate two new environmental sustainability projects that provide a benefit “beyond-the-gate”, for instance, educating school children, safely cleaning up an area suffering from damage, providing new community facilities in areas where workers live.

Ensuring Success in KPIs

What is clear is that KPIs must be realistic, relevant and have a positive outcome in mind. The originator or team responsible needs to provide guidance notes to explain the purpose of the KPI, when it needs to be measured (eg monthly, weekly and annually), who will analyse the data and where it is reported. In order to cooperate in data collection, operators, stevedores, engineers and maintenance crew will need to understand why a parameter is being measured and what the benefits (eg cleaner site, lower cost and enhanced water quality) are.

There is no reason why a programme of KPIs cannot be integrated into a port’s Environmental Management System (EMS), such as those certified to ISO 14001 or the more relevant EcoPorts’ Performance Environmental Review System (PERS).

Waste management is a very popular topic for ports to monitor, which might be a function of the fact that this, in principle, is easy, ports are not renowned for generating huge volumes of waste from everyday activities. The most commonly held KPIs for solid wastes (eg non-hazardous and hazardous) are ‘lag’ and based on targeted percentage reductions, year-upon-year, in metric tonnes or m³. A better KPI would be a more challenging target of percentage reduction when compared against an established base year volume, and/or normalised against cargo handled, for instance, total weight of general cargo and out-of-gauge items.

A smarter ‘lead’ KPI still would be to instigate recycling initiatives for certain waste streams and/or work towards a policy of “zero-waste-to-landfill” in line with several of the forward thinking retailers who have achieved milestones in radically improving their waste performance. This will require an investment of time, for example in seeking partner waste companies that can fulfil this, but also potentially offer a new income stream.

The question a savvy auditor might ask is whether waste management is as significant an issue for the port facility as other environmental topics. Companies are carrying out detailed “materiality assessments” to determine their highest priority environmental and indeed sustainability aspects, including GHG emissions, supply chain, social and community factors.

The future

At present, it is recognised that air quality is a top three issue for many port authorities around Europe. This is evident from EcoPorts’ Port Environmental Reviews and the interest shown during Q&A at conferences such as the GreenPort Congress (Barcelona, October 2014). Air quality and the difficulty in, and expense of, measuring emissions might explain the lack of attention this area receives in KPIs.

In 2007, The Port of Rotterdam was bold enough to include long-term KPIs in its terms of reference for concessions on Maasvlakte II. By including KPIs and targets for air quality, GHG emissions, noise and modal split, (eg to encourage reduction in congestion on highways and reduced emissions from truck exhausts) the environmental performance credentials of the project was clear. Operators would be duty bound to monitor their performance under contract. We will continue to see more of this – contracts for new build ports and terminals and even extensions and expansions of berths embracing environmental KPIs as a legal requirement. The rhetoric from funding institutions is that there will be increased attention paid to this in loan agreements.

Perhaps the next level of KPIs in ports will focus on the often overlooked but more challenging aspects of sustainability and climate change adaptation, resilience and mitigation in construction and civil works. In order to demonstrate a leadership stance, a developer might need to build-into its programme KPIs to ensure energy efficiencies, lower natural resource consumption and wastage as well as reduced embodied GHG emissions embodied in concrete and steel.

Furthermore, KPIs could also be employed to ascertain if a project can meet the longer-term challenges of climate related risks through the provision of adapted features (eg in quay wall design, flood protection measures), resilient buildings (to cope with increased heat stress, increased incidence of storm events) and the provision of lower emission solutions like cold ironing and renewable energy generation. In combination, these types of aspects are the likely constituents of a sustainability platform against which performance can be measured.

KPIs need to be adaptable over time and reflect the fact that cargo portfolios change. Port companies should not be afraid to pilot test a variety of KPIs from project, to business unit/facility and corporate level where multiple entities are owned.

To be truly effective, the environmental and sustainability KPIs of a company need to become part of the overall risk profile and business monitoring programme. When KPIs become ingrained in all parts of a port’s day-to-day activities, (eg procurement and purchasing, engineering, legal, human resources, executive board) tangible improvements will ensue.

The shipping sector is forging ahead with many studies addressing KPIs in environmental performance, many of which are on fuel consumption and emissions. The ports’ industry is more complex because the locations are at the interface of both sea and land and therefore embrace marine and terrestrial interactions. Port companies would benefit from guidance on a consistent methodology for preparing KPIs and how to measure effectively and fairly against them.

This would allow benchmarking, as has been the case with the advancement of knowledge in safety (eg Lost Time Incident Frequency is a universally adopted metric) and GHG emissions (through the EEEG Guidance document for footprinting in terminals).