Sustainability Monitoring Systems: Characteristics And Effective Indicators

Characteristics of Good Monitoring Systems

Businesses are known to cause damages consciously and unconsciously, and therefore there is always the need to continually monitor the operations of the company and ensure that the possible costs are appropriately managed. There has been increased concern regarding environment protection more particularly from the actions of the business. As such, there has been a consistent growth of sustainability reporting and different organizations are developing systems that can be useful in monitoring the impact of their activities on the environment, economy, and the community (Carayannis et al., 2014). The three major problems that need to be addressed include natural resource Depletion, accumulation of wastes, and the contemporary businesses. Active monitoring is attainable when there are specific sustainable indicators. Sustainability indicators, according to Sundin, Nässlander, and Lelah (2015), are basic units of measure that is considered essential for decision making in an environment that is complex. Through indicators, it is possible to give a more reliable and comprehensive representation of a trend and situation. However, sustainability has proved more challenging and therefore monitoring process is needed to understand the value of sustainability systems (Görgens & Kusek, 2010). Through monitoring systems, appropriate tools can be developed to help gauge how sustainability practices are related. Additionally, it demonstrates patterns and trends of sustainable systems when the system is understood correctly. Ones the system is realized, indicators are then used to provide valuable guidance in decision-making.

Characteristics of Good Monitoring Systems

As already mentioned, monitoring systems are meant to reveal some of the trends and patterns of the sustainable system (Görgens & Kusek, 2010). In that case, the system is expected to have specific characteristics to construct a good understanding of the sustainable systems effectively. Some of the attributes of the monitoring system include:

Accuracy: monitoring systems are expected to be as accurate as possible to be able to reveal the patterns and trends of a sustainable system. An accurate system is the one that has the lowest margins of error in measurements.

Comparable: The system is expected to remain consistent over a given period to provide room for comparisons, which eventually help arrive at the desired outcome.

Clear: Monitoring system will have no meaning when it cannot be readily understood by users (Hák, Janoušková, & Moldan, 2016).  Consequently, there is a serious the need to ensure that the system is as transparent as possible to all users and relevant stakeholders.

Transparent:  good monitoring system is the one that can give full disclosure of procedures and processes of sustainability system (Hák, Janoušková, & Moldan, 2016). Transparency ensures that the activities conducted are traceable and are variable.

Features that Contribute to Effective Indicators

Inclusive: It would be difficult to have a good monitoring system if not all the stakeholders are involved in the process. Every stakeholder that is essential to the monitoring process needs to be included in the planning and implementation process.

Features that Contribute to Effective Indicators

An indicator can be defined as a measurement unit that measures the value of any given change of a useful unit that is comparable to the past and future units. Features of a good indicator can be said to be:

Relevant: effective indicators are expected to show demonstrate something regarding the system that is needed (Choi, & Turk, 2011).   

Objective: Indicators are expected to give the same result when measured by two people using the same tool. It that case, indicator needs to be based on fact and not feelings or impressions.

Reliable: Effective indicators are those that are reliable, and the information provided by such indicators can be trusted.  

Specific: Measured changes have to be those that are attributable to the project and must be put in precise terms (Veleva, & Ellenbecker, 2001).

Accessible data: effective indicators are expected to have available information, or the data can be easily gathered.

Characteristics of Good Monitoring Systems	Features that Contribute to Effective Indicators
Inclusive	Accessible data
Transparent	Specific
Clear	Reliable
Comparable	Objective
Accuracy	Relevant

Description of Bank Australia

Bank Australia is a company that operates in the banking sector and has been in operation since 1957. The company currently prides of 140,000 people as well as community sector organizations that have decided on the bank with them (“Bank Australia – Customer grants,” n.d.). The bank has numerous ATMs that can be accessed freely by the customers and offer daily banking services like the mobile app as well as digital wallets such as Apple Pay. The company customers are always looking up to the bank for the competitive process and personal service. On the other hand, consumers have always put the bank to task to be genuinely responsible and progressive with quality service that meets their needs.

Bank Australia is one of the few banks in Australia that is known for is responsible services. A bank is a profit-making form of business, and its existence depends mainly on profit (Weichhart et al., 2016). However, it has remained consistent in providing responsible banking alternative. Some of the steps that the company has taken to promote sustainable and accountable banking are by not lending to the fossil fuel industry. The bank aims at helping its customers, people, and the communities to achieve economic, social, and environmental sustainability both in short and long-term.

Description of Bank Australia

Bank Australia is known to invest more than 9% of its net profit after tax in programs and partnership. Besides, the company gives employees two paid days every year to take part in voluntary activities within the community (“Bank Australia – Customer grants,” n.d.). The bank is the first to become Benefit Corporation, which is also known as B Corp certification. It is known to be a sustainable business just like Fair Trade certification is to coffee.

Sustainability Dimensions

Sustainability dimensions are majorly is majorly based on socio-cultural, economic, and environmental dimensions (Schmidt-Traub, De la Mothe Karoubi, & Espey, 2015). From Bank Australia perspective, the company has been able to take part in multiple activities that can be categorized into these three dimensions.

Socio-cultural

Social, cultural sustainability is about issues concerning the opportunities for people to realize their full potential. Most of the business work towards helping their customers and the community at large to meet their potential and protect their valuable cultures (Kleindorfer, Singhal, & Van Wassenhove, 2005). Bank Australia for instance, is working so hard to solve the problem educational disadvantage that has been a growing concern in Australia. Most of the students from indigenous and low socio-economic background are the ones who are most disadvantaged (“Bank Australia – Customer grants,” n.d.). Bank Australia has come up with multiple scholarship programs such as Intech Bank Scholarship, among many others and it has collaborated with groups such as State Schools Relief to give the disadvantaged students the opportunity to access basic schools items such as uniforms, pens, rulers, calculators and many others. This opportunity enables those who could not access school with the opportunity to learn and be an informed member of the society.

The other socio-cultural sustainability dimension is the financial inclusion, and the Bank Australia is known as one of the 12 organizations that have come up with Financial Inclusion Action Plan (FIAP) (“Bank Australia – Customer grants,” n.d.). This program is intended to reach out to over 3 million Australians who are unable to access mainstream financial services. Through this program, the bank offers financial literacy and supports various projects through the Impact Fund.

Economic Sustainability

From an economic perspective, Bank Australia is one of the banks that have significantly contributed towards Australian economy. So many people depend on the bank as an employer, and several suppliers of different items rely on it (“Bank Australia – Customer grants,” n.d.). The development activities witnessed across Australia have been made possible through loans borrowed from the bank at relatively cheaper costs. However, the company has remained consistent in ensuring that even with the pursuit of economic growth, sustainability remains essential (Weber, 2014). For instance, the bank does not finance fossil industries as one way of ensuring that it promotes consistent practice among the players.

Sustainability Dimensions

Through Bank Australia Impact Fund, only projects that have a positive effect on the world are the ones being supported. The bank is quite aware that a genuinely responsible bank is capable of making a better society. The company sets aside 4% of its yearly after-tax profit to the Impact Fund and asks consumers to makes suggestions on areas they would want to address (“Bank Australia – Customer grants,” n.d.). Consequently, Bank Australia has developed a good plan for economic sustainability.

Environmental Sustainable Dimensions

Bank Australia has elaborate environmental sustainable plans that have been highly effective over the years. For instance, the company has close to 927-hectare private nature reserve meant to house woodlands as well as wetlands habitat (“Bank Australia – Customer grants,” n.d.). The Company has set aside resources to protect 13 of the native animal species that are under threat. Ban Australia was able to plant 70,000 native seedlings working closely with more than 680 community volunteers. Besides, it has launched “Reimaging the Future’ which is focused on conserving threatened species by providing them with habitat, food, and biodiversity.

Bank Australia has many other environmental initiatives such as supporting projects that are intended to promote a healthy environment. Through Impact Fund Customer Grants (IFCG), the company invests 4% of profit after tax in projects such as renewable energy, environmental conservation, and such like programs.

List and Assessment of Indicators for Monitoring

Environmental Indicators

The sustainable area that has been selected is the environmental indicator. The sustainable indicator that exists in the monitoring system of Bank Australia is environmental. Through environmental indicator, it is possible to understand the impact of the company on natural entities such as people, land, air, water ecosystem.

The financial crisis across the world is expected to result in a loss of interest in environmental conservation programs (McDonald & Rundle-Thiele, 2008). The crisis makes environmental stewardship less affordable to financial institutions such as banks. For instance, most of the firms dealing in fossil fuel are majorly large and are capable of taking large loans, which is profitable to lending institutions such as Bank Australia (Ozment, 2009). It is most difficult to turn down such customers when there is a financial crisis.

Bank Australia, despite the threats of the financial crisis, has come up with lending policies that do not allow lending to fossil fuel industries. The company understands the need for a healthy environment and would always want to enable its customers to practice the same. This is a tough decision for a profit-making business as it limits its financial capabilities (Ozment, 2009). This environment indicator points out the measures that Bank Australia has put in place to promote healthy environment over profitability. The table below shows indicators, definition, measurement, limitations of the identified indicators.

Bank Australia is at the Compliance Stage

Based on the environmental sustainability dimension, Bank Australia is categorized under compliance phase in the Dunphy’s Phases model (Stace & Dunphy, 2001). The bank through its many environmental related programs demonstrates that it intends to comply with the environmental laws. It promotes activities that are friendly to the environment and less harmful to the community. At this stage, the bank can avoid losing money in non-compliance activities by creating an effective risk management system. The positive outcome that Bank Australia enjoys includes a positive reputation that results from its commitment to the environmental laws (Stace & Dunphy, 2001). It equally has enhanced relationships with regulators and significantly minimized risks.

Transforming to Efficiency Phase

Bank Australia needs to move from the current phase, which is compliance with a higher sustainability phase, which is efficiency. Besides just working on avoiding trouble with regulatory agencies, the bank needs to focus on having a progressive elimination of wastes and improve its materials efficiencies (Stace & Dunphy, 2001). Bank Australia can become more sustainable when it adopts strategies that will enhance its efficiency by reducing wastes and reorganization of the business. This calls for redesigning their products and services with the intention of making them cheaper and easier to recycle.

This calls for a monitoring system, which focuses on reducing the use of a resource such as energy, water, and materials. The system is to find out the effort put on promoting life-cycle stewardship where the activities of the business are supposed to be cleaner. For instance, the company comes up with the regulations and policies on ensuring that the actions of the bank meet the international Global Reporting Initiative (GRI) standards. The monitoring system can best work when the indicators of efficiency are identified and the ways in which the system will measure each indicator. Efficiency phase focuses on the material used in production, the energy consumption, and the effect of a firm’s activities such as transport to the environment. These are the most important indicators that the monitoring system designed by the company will be focusing on to ensure that Bank Australia maintains its sustainability effort in the efficiency phase.

Indicator Name	Definition	Measurement	Challenges/Limitation
Materials	This is the substances of concern the company uses	The measurements are done based on the materials found in the company	Determining materials of interest from others being used in the firm
Transport	This is the movement of different items and employees from different places	Identifying how company transport projects towards the environment	It will be challenging to come up with specific ways of determining transport projections to the environment
Energy	Energy is used in running activities that require power such as lighting, etc.	This is measured by checking on the energy consumption.	Tracking the total sum of energy used in the company may be a challenge.

Materials

The company is a financial institution dealing with various materials in carrying out its activities. Bank Australia focuses on substances of concern and only uses recyclable items and limit misuse of papers. Since the company encourages the use of recyclable flyers and promote electronic advertisement over plastic or plastic papers demonstrates concern over the sustainability issues (Jurigová & Lencsésová, 2015). By developing this indicator, Bank Australia helps in measuring sustainability impacts of how more environmentally friendly materials can be used in the company.

Energy

In a bank, like any other company, energy is essential to running daily activities. Bank Australia equally uses energy to run its machines such as computers, surveillance cameras, counting machines, making coffee, washrooms, and many other ways (Bilac, Zhang, & Terricciano, 2016). Consequently, this indicator provides a more effective way of measuring energy consumption and appropriate measures will be put in place to reduce energy consumption.

Transport

It is nearly impossible to avoid transport, as it is the means through which services, goods, and employees are moved from one point to another. Bank Australia may not have massive transport concern since not much of its services require massive transport system. However, activities such as marketing and many other programs that need the movement of employees from one destination to another cannot be avoided (Mumtas, 2016). Considering this indicator, the company will be able to figure out where its transport system can be of a threat to the environment.

References

Bank Australia – Customer grants. Retrieved from https://bankaust.com.au/responsible-banking/bank-australia-impact-fund/customer-grants/

Bilac, M., Zhang, B., & Terricciano, P. (2016). U.S. Patent No. 9,501,803. Washington, DC: U.S. Patent and Trademark Office.

Carayannis, E. G., Grigoroudis, E., Sindakis, S., & Walter, C. (2014). Business model innovation as an antecedent of sustainable enterprise excellence and resilience. Journal of the Knowledge Economy, 5(3), 440-463.

Choi, H. C., & Turk, E. S. (2011). Sustainability indicators for managing community tourism. In Quality-of-life community indicators for parks, recreation and tourism management (pp. 115-140). Springer, Dordrecht.

Görgens, M., & Kusek, J. Z. (2010). Making monitoring and evaluation systems work: A capacity development tool kit. The World Bank.

Hák, T., Janoušková, S., & Moldan, B. (2016). Sustainable Development Goals: A need for relevant indicators. Ecological Indicators, 60, 565-573.

Jurigová, Z., & Lencsésová, Z. (2015). Monitoring system of sustainable development in cultural and mountain tourism destinations. Journal of Competitiveness.

Kleindorfer, P. R., Singhal, K., & Van Wassenhove, L. N. (2005). Sustainable operations management. Production and operations management, 14(4), 482-492.

McDonald, L. M., & Rundle-Thiele, S. (2008). Corporate social responsibility and bank customer satisfaction: a research agenda. International Journal of Bank Marketing, 26(3), 170-182.

Mumtas, M. (2016). Sustainability Indicators for Assessing and Monitoring the Sustainable Land Management in the Commercial Rice Zone of the Lower Pak Phanang River Basin, Thailand. Agriculture and Agricultural Science Procedia, 11, 77-83.

Ozment, S. (2009). Global Environmental Crisis Changes How Banks Do Business | World Resources Institute. Retrieved from https://www.wri.org/blog/2009/02/global-environmental-crisis-changes-how-banks-do-business

Schmidt-Traub, G., De la Mothe Karoubi, E., & Espey, J. (2015). Indicators and a Monitoring Framework for the Sustainable Development Goals: Launching a Data Revolution for the SDGs. Sustainable Development Solutions Network.

Stace, D., & Dunphy, D. C. (2001). Beyond the boundaries: Leading and re-creating the successful enterprise. McGraw-Hill.

Sundin, E., Nässlander, E., & Lelah, A. (2015). Sustainability Indicators for small and medium-sized enterprises (SMEs) in the transition to provide product-service systems (PSS). Procedia CIRP, 30, 149-154.

Veleva, V., & Ellenbecker, M. (2001). Indicators of sustainable production: framework and methodology. Journal of cleaner production, 9(6), 519-549.

Weber, O. (2014). The financial sector’s impact on sustainable development. Journal of Sustainable Finance & Investment, 4(1), 1-8. doi: 10.1080/20430795.2014.887345

Weichhart, G., Molina, A., Chen, D., Whitman, L. E., & Vernadat, F. (2016). Challenges and current developments for sensing, smart and sustainable enterprise systems. Computers in Industry, 79, 34-46.