Identifying, Classifying and Evaluating Inputs and Outputs
Any business can be looked at as a process with inputs and outputs. Inputs and outputs can be identified as having a positive, negative or neutral impact on society. For example electricity is a typical input for virtually all businesses. It is generally accepted that generating electricity has a negative impact on air quality or on fish habitat etc. Electricity can therefore be considered a negative input which should be minimized however it is a necessary input for virtually all businesses. Without it few businesses would be able to generate positive outputs.
Minimizing many of these "negative" inputs and outputs also makes very good business sense from the conventional business perspective. In fact most companies find that these activities improve their bottom line performance.
One of the difficulties for a business trying to operate sustainably is knowing how to judge whether their overall net impact on society is positive or negative. Any evaluation must take into account indirect as well as direct impacts. Most of these indirect impacts do not show up in normal business accounting.
The Natural step makes it much easier to evaluate if a business is moving toward sustainable operation. All activities, strategies etc are evaluated for conformance with the Four Conditions. Obviously it is not practical for all activities etc to fully conform with the four conditions immediately. The important thing is that there is movement toward conforming.
- Identifying Inputs
The first step is to list all inputs, these should include:-
Purchased items - everything the company pays for such as:-Materials used in production, supplies, freight, utilities, local taxes, labor, contributions etc, etc.
Non-purchased Inputs - Natural lighting, heating, cooling, water,clean air, natural resources, waste from other sources etc.
- Identifying Outputs
- Everything that is generated as a result of the company being in business such as:- Products,waste,contaminated air or water,heat,economic wealth to the employees, community, shareholders etc, etc.
- Classifying Inputs and Outputs
- One of the main objectives of classifying inputs and outputs is to identify those inputs
and outputs that, if modified, can make significant improvements toward operating more
sustainably and improving economic performance.
Each input or output is rated on a scale from 1-5 for it´s potential to improve economic performance if it is increased or decreased as appropriate. It is also rated very good(VG), good(G), neutral(N), bad(B) to very bad(VB) for it´s perceived value to a sustainable society.
Any item rated (VB) or (B) would indicate a need to reduce it to move toward operating more sustainably, while (VG) or (G) would indicate a need to increase it.
For example, if one of the main cost inputs to a business was electricity, this could be rated 4B. This indicates reducing electricity use has significant potential to improve economic performance and at the same time help move toward more sustainable operation by reducing the use of an input that causes pollution.
- Labor cost -is an interesting input. It is often a high cost input and therefore would be rated high for it´s potential to improve economic performance. However it would be rated (G) or (VG) for it´s contribution to society. This is because labor costs are also outputs. Payments made to employees distributes wealth to individuals, families and communities.
- Evaluating Inputs and Outputs
- Inputs and outputs identified as having the best potential to offer significant benefits
are first evaluated for conformance to the four Natural Step conditions for a sustainable
society. This provides a consistent "validity" check.
The next step is to review the selected inputs or outputs for ease of improvement.
Please note that this page is in the early stage of development and will be expanded and updated frequently. If you have any comments or would like to be advised when this page is updated please contact SusOpS