SCEM2022 第 26 屆營建工程與管理學術研討會 The 26th Symposium on Construction Engineering and Management
Relationships between Environmental Initiatives and Performance for Construction Companies Cindy Angelina1*, Andrew S. Chang2 1*
Master’s Student, Department of Civil Engineering, National Cheng Kung University, Tainan, Taiwan. 2 Professor, Department of Civil Engineering, National Cheng Kung University, Tainan, Taiwan. *cindyaaangelina@gmail.com
1. INTRODUCTION Environmental initiatives (EI) implementation would reduce environmental impact. Less environmental impact indicates better environmental performance (EP) for a company. Moreover, various stakeholders argue that companies with poor EP are less competitive (Yu & Ramanathan, 2015). Therefore, companies are more motivated to improve EP by adopting EIs that are shown in their corporate social responsibility (CSR) reports. Previous studies have discussed the bias in environmental reporting because it does not reflect the actual EI and performance (Sutantoputra et al., 2012). There is a weak and negative relationship between environmental disclosure and EP (Doan & Sassen, 2020). But other studies show a significant positive relationship between the level of discretionary disclosure and EP (Omran et al., 2021). This issue raises the question of what might influence the relationship between the initiative and performance. The contents in initiatives would influence the relationship between initiatives and impacts (Chang et al., 2021). Therefore, the contents of initiatives and performance disclosed by companies in CSR reports can be reviewed to verify the hypothesis. This study analyzes the relationships between EI and EP disclosed in the CSR reports of construction companies and finds a positive and medium correlation 0.472 between them. This result will be useful for a company to take EIs in reducing environmental impact and contributes to advancing sustainability reporting. 2. RESEARCH METHODOLOGY The methods used in this research are literature review, content analysis, and case study. Initiatives were taken from 2019 CSR reports of five construction companies from different countries based on Engineering News-Record’s 2019 Top 250 International Contractors with English CSR reports. From the CSR reports, 38 initiatives were reviewed and examined. However, some of them were eliminated if they were not deliberately planned and developed in a program by an organization although the activity was related to a certain environmental topic. After removing eight noninitiatives, the remaining 30 initiatives were included to be further analyzed. The content of an initiative is the basis to distinguish the levels of initiatives (LI). LIs are used to determine the content depth of initiatives. LIs are established based on three references: GRI (2016), Montabon et al. (2007), and Epstein & Roy (2001). The score for LI is from 1 to 3 with the following criteria: Manage impact; Technologies, monitoring & controlling; Programs & plans metrics & goals expenditures. Table 1 shows the 30 EIs with corresponding indicators (material, energy, water, biodiversity, emission, effluent & waste) and the implementation methods including material, technology, and management, as well as LIs of 1, 2 or 3.
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SCEM2022 第 26 屆營建工程與管理學術研討會 The 26th Symposium on Construction Engineering and Management
Table 1 LI with corresponding indicators and methods GRI M En W B Em EW
Initiatives A. Hochtief 1.Developing cradle to cradle® approach 2.Transformed waste ground into a vegetable garden 3.Planted a “bee lawn” 4.Created extensive new natural habitats 5.Protecting wild salmon & its habitat 6.Implement concrete climate-protection measures 7.Intensified green building projects & accredited auditors 8.Nationwide stadtradeln (urban cycling) campaign 9.Developing waste disposal concepts B. Vinci 10.Developing high-recycling rate process 11.Using IVMS 12.Developing aqua-eco 13.Developing noxer C. Skanska 14.Using 100% recycled concrete 15.Piloting a low-carbon office building 16.Developing Skanska color pallete 17.Launched green concrete 18.Using third-party environmental certification system 19.Decarbonize all construction phases and value chain 20.Piloting a digital climate modelling tool D. Fluor 21.Transportation-related green initiatives 22.Conservations program 23.Engage with environmental specialists to protect wildlife 24.Using energy efficient equipment E. Hyundai Engineering 25.Building integrated photovoltaic (BIPV) system 26.Energy recovery ventilation 27.Smart building energy management system 28.Implementing wastewater reuse management system 29.Developing ecosystem protection 30.Practicing eco-friendly transportation Total
301-2 ü 304-1 304-1 304-2 304-1 305-1 305-1 305-1 306-2
Method Mat Tech Mgmt ü
ü ü ü ü
ü ü ü ü ü ü ü
ü ü ü ü
ü
ü
301-2 302-4 303-1 305-5
ü
ü ü ü
ü ü
302-4 302-4 302-4 305-5 305-1 305-3 304-3
ü ü ü
302-4 303-1 304-3 305-2
ü
302-4 302-4 302-4 303-1 304-3 305-5
ü ü ü
ü ü ü ü ü ü
ü ü ü
ü
ü ü ü
ü ü
ü ü
ü ü ü ü ü
ü ü 2
8
3
7
ü ü 9
1
ü 16
4
LI 2 1 1 2 1 2 3 1 3 3 2 2 2 2 2 3 2 2 1 2 2 2 1 2 2 2 2 2 1 2
10
EP is a “measure of an organization’s impact on living and non-living natural systems, including land, air, water, ecosystems” (GRI, 2016). EP value (PV) is scored based on a company's EP change between 2019 and 2020. The better EP change, the higher the score is given. The 2020 EP is resulted from the initiatives implemented in 2019. Each initiative has one PV. Table 2 PV for each initiative EI
GRI Environmental Indicators
1. 301-2 Recycled input materials used 2. 304-1 Biodiversity areas protected 3. 304-1 Biodiversity areas protected 4. 304-2 Significant impacts on biodiversity 5. 304-1 Biodiversity areas protected 6. 305-1 Scope 1 GHG emissions 7. 305-1 Scope 1 GHG emissions 8. 305-1 Scope 1 GHG emissions 9. 306-2 Waste (landfill/disposed) 10. 301-2 Recycled input materials used 11. 302-4 Reduction of energy consumption 12. 303-1 Water withdrawal by source 13. 305-5 Reduction of GHG Emissions 14. 302-4 Reduction of energy consumption 15. 302-4 Reduction of energy consumption 16. 302-4 Reduction of energy consumption 17. 305-5 Reduction of GHG Emissions 18. 305-1 Scope 1 GHG emissions 19. 305-3 Scope 3 GHG emissions 20. 304-3 Habitats protected or restored
Unit
2019
2020
1,000 ton 1,000 t/CO2 1,000 t/CO2 1,000 t/CO2 1,000 ton ton 1,000 MWh 1,000 m3 1,000 tCO2e 1,000 MWh 1,000 MWh 1,000 MWh 1,000 tCO2e 1,000 tCO2e 1,000 tCO2e -
7,870 2,821 2,821 2,821 2,125 7,722 167 13,141 2,325 976 976 976 213 213 720 -
9,113 2,504 2,504 2,504 977 8,460 142 11,414 2,232 904 904 904 193 193 1,036 -
2
∆ value 1,243 -317 -317 -317 -1,148 738 25 -1,727 93 72 72 72 20 -20 316 -
% 16 -11 -11 -11 -54 9 15 -13 4 7 7 7 9 -9 44 -
5% 3 1 1 1 1 3 3 3 3 3 3 3 2 3 3 3 3 3 1 1
PV 10% 12% 3 3 1 1 1 1 1 1 1 1 3 2 3 2 3 2 3 3 2 2 3 3 3 3 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1
SCEM2022 第 26 屆營建工程與管理學術研討會 The 26th Symposium on Construction Engineering and Management
21. 302-4 Reduction of energy consumption 22. 303-1 Water withdrawal by source 23. 304-3 Habitats protected or restored 24. 305-2 Scope 2 GHG emissions 25. 302-4 Reduction of energy consumption 26. 302-4 Reduction of energy consumption 27. 302-4 Reduction of energy consumption 28. 303-1 Water withdrawal by source 29. 304-3 Habitats protected or restored 30. 305-5 Reduction of GHG Emissions
1,000 MWh 126 1,000 gallons 60,630 1,000 tCO2e 45 1,000 GJ 7,767 1,000 GJ 7,767 1,000 GJ 7,767 1.000 tons 802 1,000 tCO2e 975
109 37,607 34 4,065 4,065 4,065 1,278 751
17 -23,023 -12 3,703 3,703 3,703 476 224
13 -38 -25 48 48 48 59 23
3 3 1 3 3 3 3 1 1 3
3 3 1 3 3 3 3 1 1 3
3 3 1 3 3 3 3 1 1 3
PV has three ranges with 5%, 10% or 12% as thresholds. For 10% threshold in Table 2, PVs are rated from 1 to 3 for EP changes in a year with thresholds: below 0; between 0-10%; above 10%. PVs are only for quantitative results because they can be compared using units. The six indicators of GRI 301-2, 302-4, 304-1, 304-2, 304-3, and 305-5 are expected to have an increasing amount to have better EP. For the other indicators 3031, 305-1, 305-2, 305-3, 306-2 an EP value decrease indicates better performance. The same method was carried out for the 5% and 12% thresholds. After EIs and PVs were assessed and analyzed, the relationship can be drawn. Figure 1 represents the relationship between LI and PV with each level of rating 1 to 3. For the 30 EIs, each EI will result in one set of LI and PV. The relationship between LI and PV shows whether an EI expressed in an appropriate level will result in better performance improvement and whether the initiatives reported in CSR reports reflect appropriately the EP. Level of Initiatives (LI)
Environmental Performance Value (PV)
Level 1: Manage impact Level 2: Technologies, monitoring & controls Level 3: Programs, goals & expenditures
1: < 0 2: 0-10% 3: > 10%
Figure 1. The relationship framework between LI and PV 3. RESULTS For the 30 initiatives in Table 1, EI 2, 8, 3, 7, 9, and 1 are related with material, energy, water, biodiversity, emissions, and waste, respectively. Initiatives 1 and 10 are related to material aspect; eight initiatives (11, 14, 15, 16, 21, 25, 26, and 27) are related to energy, etc. 305 Emissions is addressed the most by nine initiatives and 306 Effluent and waste is the least addressed. For the initiative method, 16 out of 30 initiatives were implemented through technology. There are 10 initiatives related to management. In contrast to technology and management, initiatives related to materials are the least (4). In Table 2, EIs related to biodiversity (304) got score 1 since they are mostly qualitative. EI 28 shows water consumption increased from 802,000 to 1,278,000 (gallons) although wastewater reuse system was implemented in 2019. LI from Table 1 and PV from Table 2 were used to calculate the correlation between LI and PV using Spearman rank correlation. The value of di is the score difference between LI and PV. The number of observations is 30 for 30 EIs. The example of the correlation calculation is shown below: 𝜌 =1−
6 ∑ 𝑑! " 6{(2 − 3)" + (1 − 1)" + (1 − 1)" + … + (2 − 3)}" = 1 − = 0.472 𝑛(𝑛" − 1) 30(30" − 1)
The result shows a positive and medium correlation between LI and PV (0.472). This reveals that companies with better EPs are more active in disclosing EIs. Integrated CSR report disclosure was found to be positively related to the EP (Omran et al., 2021). Furthermore, this result indicates that contents of initiatives would influence the relationship between initiatives and impacts (Chang et al., 2021). 3
SCEM2022 第 26 屆營建工程與管理學術研討會 The 26th Symposium on Construction Engineering and Management
LI
5% : 0.622 10% : 0.472 12% : 0.500
PV
Figure 2 Correlations between LI and PV Figure 2 shows that changes in PV thresholds (to 5% and 12%) will affect the correlation strengths. If 5% is used, the correlation between LI and PV is 0.622. In Table 2, PV with a threshold of 5% is highly dispersed with 9, 1, and 20 EIs for scores of 1, 2, and 3. In contrast, PVs with a threshold of 12% are evenly distributed with 9, 10, and 11 EIs. Even though it is evenly distributed, it does not mean that the 12% threshold is the most appropriate. Insights from statistical approaches provide limited and misleading guidance for optimal threshold design (Gao, 2015). The strategic approach considers the evidence that influences the selection of thresholds and preferred to use. 4. CONCLUSION This research finds a positive and medium correlation between LI and PV (0.472). The three different thresholds for PV assessment provide insight that the strength of the relationship between initiative and performance is affected by the measurement. Given the positive correlation, it reveals that initiatives disclosed at a higher level with deep content are associated with better performance. This result encourages organizations to gain the effectiveness of initiatives through adopting the initiatives seriously. References [1] Chang, A. S., Canelas, C., & Chen, Y. L. (2021). Relationships between Environmental Initiatives and Impact Reductions for Construction Companies. Sustainability, 13(14), https://doi.org/10.3390/su13148061. [2] Doan, M. H., & Sassen, R. (2020). The relationship between environmental performance and environmental disclosure: A meta‐analysis. Journal of Industrial Ecology, 24(5), https://doi.org/10.1111/jiec.13002. [3] Epstein, M. J., & Roy, M. J. (2001). Sustainability in action: Identifying and measuring the key performance drivers. Long range planning, 34(5), 585-604. [4] Gao, P. (2015). Optimal thresholds in accounting recognition standards. Chicago Booth Research Paper, http://dx.doi.org/10.2139/ssrn.2702496. [5] Initiative, G. R. (2016). Global reporting initiative. Online at: https://www. globalreporting. org/Pages/default. aspx. [6] Montabon, F., Sroufe, R., & Narasimhan, R. (2007). An examination of corporate reporting, environmental management practices and firm performance. Journal of operations management, 25(5), http://dx.doi.org/10.1016/j.jom.2006.10.003. [7] Omran, M. S., Zaid, M. A., & Dwekat, A. (2021). The relationship between integrated reporting and corporate environmental performance: A green trial. Corporate Social Responsibility and Environmental Management, 28(1), https://doi.org/10.1002/csr.2059. [8] Sutantoputra, A. W., Lindorff, M., & Johnson, E. P. (2012). The relationship between environmental performance and environmental disclosure. Australasian Journal of Environmental Management, 19(1), https://doi.org/10.1080/14486563.2011.646752. [9] Yu, W., & Ramanathan, R. (2015). An empirical examination of stakeholder pressures, green operations practices and environmental performance. International Journal of Production Research, 53(21), https://doi.org/10.1080/00207543.2014.931608.
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X The 26th Symposium on Construction Engineering and Management / International Conference
CERTIFICATE OF PRESENTATION This is to certify that
Cindy Angelina and Andrew S. Chang has made a presentation and fully participated in SCEM 2022. Topic：Relationships between Environmental Initiatives and Performance for Construction Companies
Prof. Prof.Nie-Jia Nie-JiaYau Yau Chairman Chairman
Prof. Prof.Han-Hsiang Han-HsiangWang Wang Chairman Chairman
JULY 22, 2022