Looking for Pitfalls of Eco-efficiency Indicators Promulgated by UNCTAD

Abstract

In 2004 the United Nations Conference on Trade and Development (UNCTAD) released version 1.1 of its manual for the preparers and users of eco-efficiency indicators. At present, the financial community is concerned about how environmental performance affects the financial results of an enterprise. The manual presents a method by which environmental and financial performance indicators can be used to measure an enterprise’s progress in attaining eco-efficiency or sustainability. The method enables preparers of eco-efficiency indicators to generate internally consistent environmental and financial information, thus improving the quality of environmental reporting. — As per definition eco-efficiency indicators are ratios composed of an environmental item divided by a financial item like turnover or profit. The paper uses ‘dynamic modelling’ as a tool to emphasize inconsistencies of results generated by different eco-efficiency indicators under unique and extreme conditions. However, the study does not intend to neglect the usefulness of these indicators, but rather stimulate the preparer and user to be on lookout when he or she feels inclined to leave a company’s or even a nation’s fate to this type of eco-efficiency measurement.