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1999 Report of the Commissioner of the Environment and Sustainable Development

Main Points

8.1 Departments are modifying their management systems to measure and report on the environmental and financial performance of their internal operations. While the key objective of greening operations is to reduce environmental impacts, departments may obtain large potential financial and environmental benefits from collecting, combining and using such information. Based on only one aspect of departmental operations, energy use in buildings, the net present value of the net savings is likely to exceed $300 million over 20 years.

8.2 We are concerned that most departments are not yet in a position to collect the necessary information to track their environmental performance and realize the potential benefits. We are also concerned that there is no basis for reporting progress to Parliament in a consistent and comparable form across departments. In addition, we have no assurance of central leadership to ensure that comparable measurements are made. As a result, Parliament does not possess sufficient information to exercise its oversight role. The capacity of individual departments, and the government as a whole, to effectively manage the environmental effects of their operations is at risk.

Background and other observations
8.3 We examined the experiences of two departments, Agriculture and Agri-Food Canada and Public Works and Government Services Canada, with implementing environmental performance measurement. These two departments have made significant progress. They are now facing the continuing challenges presented by incomplete data, and the need to implement new information systems and to sustain management support. Public sector organizations in other jurisdictions are also making progress in breaking down the barriers to effective measurement of their environmental performance.

8.4 We found that measuring environmental performance is practical and feasible for government departments. Collecting baseline information demands a flexible approach and strong and sustained commitment by senior management. Better measurement promotes due diligence, helps manage costs and supports progress on government-wide environmental objectives. Departments have several options for integrating financial and environmental information to identify and capture the potential financial savings.

8.5 Next year, in the third phase of this five-year project on accounting for sustainable development, we will provide Parliament with a status report for all departments, describing progress toward better environmental performance information.

The two departments we worked most closely with this year, Public Works and Government Services Canada and Agriculture and Agri-Food Canada, provided responses to this study. Public Works and Government Services Canada made a commitment to evaluate and report on its environmental performance annually. In addition, it stated that it will continue to support interdepartmental efforts to develop common environmental performance measures for operations. Agriculture and Agri-Food Canada will continue to develop an approach to managing its environmental information. The Treasury Board Secretariat also responded to the study, indicating that it will continue to participate in interdepartmental efforts to develop common environmental performance measures.

Introduction

Departments need to measure their contribution to sustainable development
8.6 How do Canada's federal departments and agencies contribute to sustainable development? Some contribute by rethinking how they operate their buildings, run their vehicles and manage the land they occupy. This chapter is about the efforts of some departments to measure, and then reduce, the environmental impacts from their operations.

8.7 As departments go through the process of organizational change, shifting toward sustainable development, they need good information. They need to know the broad policy directions they are taking - the goals and objectives - as well as the more detailed targets. And they need information to measure their progress against their goals, objectives and targets. For example, the government has set targets for the use of alternative fuels in its motor vehicles, and needs accurate information to assess its progress against the targets.

8.8 There are three different audiences for information on progress toward sustainable development. For departmental managers, tracking progress and delivering good results is part of their job. At a broader level, the Canadian public wants to know whether the federal government is meeting its commitments, both domestically and internationally. For example, has the government met its target for reducing solid waste? Between these two is Parliament, with its essential oversight role for government activity. Parliament needs useful reports to hold the government to account on its promise to implement sustainable development throughout its extensive physical operations.

This study is part of a long-term project
8.9 The Commissioner of the Environment and Sustainable Development is committed to a long-term effort to improve the information available for departmental decision makers, to help them make better decisions. Last year, we began a five-year project on accounting for sustainable development (see Appendix A - Glossary) . The main emphasis of the project is on building the capacity of departments and agencies to implement some key elements of sustainable development. The two project objectives relevant to the work reported in this chapter are:
  • to help departments with custodial responsibilities to build the tools necessary to integrate considerations of environmental and social effects into capital and operating decisions; and
  • to help departments create the baseline reference information necessary for credible, relevant and consistent measures of their sustainable development performance.
8.10 The first chapter for this project was tabled in the House of Commons in May 1998 as part of the Report of the Commissioner of the Environment and Sustainable Development (Chapter 7 - Counting the Environment In). Chapter 9 of this year's Report (Greening Policies and Programs: Supporting Sustainable Development Decisions) is a companion to this chapter and reports on our work during the past year on integrated decision making for policies and programs.
Focus of the study
8.11 Building on the successful approach we took in the first year of the project with Agriculture and Agri-Food Canada, we have emphasized the internal operations of departments and agencies. We have also focussed on the environmental and financial aspects of their performance. The social dimension will receive more attention in future chapters.

8.12 We undertook two detailed case studies in co-operation with two departments. Public Works and Government Services Canada, the major custodian of federal buildings, was implementing an environmental management system. While each branch of the Department is expected to develop its own environmental management system, Real Property Services Branch has the primary custodial responsibilities. Thus it is a key player in improving the federal government's overall environmental performance and is the subject of our first case study.

8.13 The second case study continued our collaboration with Agriculture and Agri-Food Canada. Our work centred on the implementation of its environmental management system. The first step in the implementation process, as identified in last year's Commissioner's Report, was to gather and consolidate baseline environmental information across the Department's decentralized operations.

8.14 We believe that the two departments involved in the case studies have had relevant experiences that other departments could use to advantage. We have therefore identified some of the practical lessons, for Parliament and for other departments. To put the experience of Canadian departments in perspective, we interviewed five public sector organizations from other jurisdictions that have been working on environmental performance measures.

8.15 We continued our work with several other Canadian custodial departments, in particular through a workshop held in the spring of 1998 to address the issues of common performance measures for operations. We also maintained our involvement with the interdepartmental Committee on Performance Measurement for Sustainable Government Operations and with the Federal Committee on Environmental Management Systems.

8.16 For more information on the overall project and this study, see About the Study at the end of the chapter.

Observations

The Stakes Are High

The government could obtain significant benefits
8.17 Current direct costs. A recent study prepared for Environment Canada estimated the federal government's annual expenditures in several aspects of their operations - aspects with potentially adverse effects on the environment. These include:

  • procurement - $11.6 billion spent on goods and services;
  • building energy consumption - 64,000 buildings and facilities spending $800 million on energy;
  • water - $100 million spent on water supply and disposal;
  • fleet - 25,000 vehicles using $21 million in fuel; and
  • waste - 95,000 tons of office waste costing $6.5 million for disposal.
These crude estimates cover only ongoing operations; they do not include capital costs (associated with, for example, purchase of new vehicles or construction of new facilities). The Treasury Board Secretariat has since estimated fuel costs to be double the earlier figure.

8.18 Potential direct financial benefits. There are significant opportunities for both cost savings and reduced environmental impacts. In our 1998 Report, we cited an estimate that net savings from implementing energy conservation measures across the government could be $29 million per year by 2005. We concluded that the magnitude of those expenditures was sufficient to warrant further study of the potential for cost reduction opportunities.

8.19 This year, we developed an estimate for one aspect of departmental performance - energy use in buildings. Savings could result from such measures as lighting retrofits and changes to heating and cooling systems. Based on updated information, we estimate that, for building energy costs, the potential savings are likely to be substantially higher - between $60 million and $120 million per year. We estimate a net present value for the net savings of between $300 million and $600 million (1999 dollars) over the next 20 years. Appendix B provides further details of this rough estimate. Without good environmental performance information, it is not possible to develop accurate estimates of the potential cost reductions or to track progress toward them.

8.20 Potential environmental benefits. Environmental stewardship or compliance with regulations that lead to improved environmental quality may result in higher expenditures for the federal government. Such expenditures may, however, reduce the total costs inside and outside government. For example, federal contaminated sites require money for clean-up (some estimates put the figure at $2.8 billion). If the problems are not addressed, people using adjacent land, or future generations may bear potentially large costs, in the form of financial, health or environmental impacts. In our opinion, federal departments, unlike private sector organizations, have a higher stewardship responsibility to the Canadian public, and ought to include the costs of inaction when they evaluate their activities.

8.21 Need for better information. The fact that we had to prepare our own estimate of potential savings, and the considerable uncertainty in the estimates summarized above, highlights the need for good and consistent measurements by departments. Measurements are needed for better estimates of the baseline situation, for setting achievable targets and for monitoring progress on both the environmental and financial dimensions.

Accounting for sustainable development can provide crucial information
8.22 Departments need mechanisms to track information on the effects of their operations. In the first year of this project, we concluded that accounts for sustainable development could be built on a base of traditional financial information systems and environmental management systems ( Exhibit 8.1 ). Such accounting systems may be linked to, but go beyond, the usual scope for environmental management systems. Environment Canada, among others, has documented the advantages to organizations of environmental accounting. These include promoting sound management, reducing environmental costs, and fostering greater awareness and accountability among managers. Accounting for sustainable development goes further; it will include the social impacts of departmental activities.

Better Environmental Management of Operations

Public Works and Government Services Canada is building a performance measurement system
8.23 Extensive operational responsibilities. Through Real Property Services Branch, Public Works and Government Services Canada provides working environments for 160,000 public servants in approximately 2,500 locations on behalf of the Government of Canada. As custodian of $6.8 billion worth of real property holdings and administrator of 2,000 leases with annual rents exceeding $500 million, Real Property Services manages a diverse portfolio of office and other general-purpose space, ranging from water-testing laboratories to the Parliament Buildings.

8.24 Development of an environmental management system. Since 1996, Real Property Services Branch has been developing and implementing its environmental management system ( Exhibit 8.2 ).

8.25 In 1997, Real Property Services compared its existing environmental management system with the requirements of the ISO 14004 management principles: commitment and policy; planning; implementation; measurement and evaluation; and review and improvement. It observed that several elements of the ISO 14004 requirements were in place, but some gaps remained in the areas of accountability, data availability, funding and environmental policy coverage.

8.26 The status review and analysis of gaps provided the basis for the current Real Property Services' Environmental Management System Framework and Action Plan. With the new environmental management system, the Branch is tackling these gaps. The new framework includes Real Property Services' key environmental roles, responsibilities and accountabilities, as well as performance indicators and sustainable development targets.

8.27 To address performance measurement issues, targets and indicators for 17 operational issues were developed and approved by the end of 1997. In 1998, the Branch collected and reported environmental baseline data against its commitments related to environmental management, environmental leadership, and greening operations for fiscal year 1997-98. Real Property Services laid the foundation for a system to measure its progress in meeting its sustainable development commitments.

Agriculture and Agri-Food Canada has focussed on baseline information
8.28 In Chapter 7 of our 1998 Report, we documented the progress that Agriculture and Agri-Food Canada had made on implementing its environmental management system. We noted senior management's commitment to establishing an environmental management system. The Department had also achieved some early successes in managing its environmental agenda. In that chapter, we also described how the co-generation facility at Vineland Research Station will reduce energy costs as well as emissions of atmospheric pollutants.

8.29 In the April 1998 Action Plan for its environmental management system, Agriculture and Agri-Food Canada commented on the importance of a system: "Because [Agriculture and Agri-Food Canada] lacks a systematic approach to environmental management, results-oriented reporting will not be possible until an [environmental management system] is in place." The Department's intent was "...to have a strong and effective [environmental management system] by December 1998 and to complete a full management review process by November 1999."

8.30 Agriculture and Agri-Food Canada planned to collect baseline data as part of its Environmental Management Review of all its facilities. The Review process was designed to collect information on diverse aspects of the Department's environmental performance: water consumption, effluent, energy use, storage tanks, ozone-depleting substances, solid waste, hazardous waste, emergency response systems, fleet management and procurement. The Review was intended to:

  • identify environmental liabilities and risks;
  • assess departmental health and safety and environmental performance and identify gaps;
  • facilitate the establishment of concrete action plans for improvement;
  • monitor the implementation of corrective action already taken; and
  • report on the Department's environmental performance compared with original targets.
8.31 To reflect the highly decentralized nature of the Department, senior managers adopted a "bottom-up" approach to implementation by allowing facility managers to set their own environmental agendas for improvement, tailored to the needs and available resources of each facility. From the Environmental Management Review, the Department would have a snapshot of its facilities to help it assess compliance with applicable federal, provincial and municipal environmental regulations. We describe the progress on this Review in the next section.

Lessons for Other Departments

8.32 Drawing on the efforts by Public Works and Government Services Canada and Agriculture and Agri-Food Canada over this last year, we have identified several lessons that may be applicable to other federal departments. To complement the perspective from the two case study departments, we documented the experience of public sector organizations in other jurisdictions.

Environmental performance measures are feasible and practical for government operations
8.33 Last year we described how both public and private sector organizations are tracking their environmental performance. This year we observed that both case study departments are developing indicators to help them do the same thing. Through its Environmental Performance Management Framework, Real Property Services in Public Works and Government Services Canada is collecting and reporting information for many aspects of its environmental performance. Its first detailed internal performance report is being used as a base for decisions and, in the spirit of continuous improvement, for re-evaluating its environmental targets. Agriculture and Agri-Food Canada has identified possible performance measures and is collecting the necessary baseline information. Several sites are using the resulting data to improve the management of the environmental aspects of their operations.

8.34 As a basis for comparison, we observed that the five public sector organizations with mandates comparable to those of federal departments are also using performance measures to track progress on environmental issues. Every environmental aspect we considered was being measured by at least one of the organizations. This was true despite the variety of management approaches and reporting requirements in the different jurisdictions.

Collecting baseline information requires a flexible approach
8.35 Once measures have been selected, the next step is collecting baseline information. For this step, Public Works and Government Services Canada faced tight time constraints and problems with data availability. In some cases, where only partial information was available, Real Property Services was able to use averages and extrapolation of the available data to estimate the performance of the entire inventory. For example, estimates for office solid waste for each building were generated from the 59 buildings for which waste audits had been completed.

8.36 For some of the operational issues, Real Property Services was able to use the environmental building reviews for performance information. This meant that baseline information was founded on a subset of approximately 70 percent of its 407 Crown-owned buildings. It also means that continued effort will be needed for data collection in future years. Such data are essential to identify opportunities for savings, to recognize problem areas and to ensure that managers are directly accountable for their operations.

8.37 Real Property Services expects that, as the information and reporting systems improve over time, the gaps will be filled in and more of the performance indicators will be reported. During this early stage, information systems, such as databases and spreadsheets, need to be easily modified and need to allow a "hands on" approach to the data and estimates. Despite these constraints, the Departmental Performance Report for the period ended 31 March 1998 submitted by Public Works and Government Services Canada offered the most detailed quantitative review of the environmental aspects of operations of any department.

Management commitment is necessary to obtain department-level reports
8.38 Data collection is still under way. Agriculture and Agri-Food Canada intended to have the full Environmental Management Review process finished and summarized at the branch level by December 1998. Of the approximately 22 major facilities across the country, 14 had completed the process by this date. The two branches with the greatest potential environmental impacts from operations - Research Branch and the Prairie Farm Rehabilitation Administration - were still working to complete their Reviews.

8.39 To understand where measurement difficulties were encountered, we examined 12 Environmental Management Reviews from sites that had supplied early responses to headquarters ( Exhibit 8.3 ). From these early responses, there were gaps in their information on the actual annual quantities. Energy management and water consumption were relatively well documented; for other aspects, such as effluent management, waste management and procurement, fewer baseline data were reported. The Department recognizes the need for complete baseline information for all aspects of departmental operations to set appropriate priorities for action and to ensure accountability.

8.40 Some leading sites. Some of the sites are leading the way in implementing an environmental management system. As one example, staff at the Swift Current Research Station completed their Environmental Management Review for all aspects by December 1998, and also identified action plans. They acknowledge that resources are a significant constraint, but are integrating environmental issues into their plans and priorities for 1999.

8.41 The uneven progress highlights the need for sustained commitment in the Department at three levels: at corporate headquarters, in the branches, and at the individual sites. Each level must be able to get the kind of information it needs to do its job effectively. The experience of Agriculture and Agri-Food Canada suggests that, especially for a decentralized department, strong and sustained management commitment at all levels is crucial to successful implementation. This is especially true in the face of competing management demands, such as preparing the Department's information systems for the year 2000, extensively revising its employee classification framework, as well as carrying out its ongoing research, policy development and program delivery.

Environmental agendas are driven by three main concerns
8.42 Due diligence. Once initial baseline data are available, departments can start to take specific actions. Through consolidation of the Environmental Management Reviews, Agriculture and Agri-Food Canada planned to prepare a department-wide assessment of its environmental risks and liabilities by the end of 1998. This assessment would, in turn, provide an overview of the Department's success in implementing a regime of "due diligence". To provide evidence of due diligence, senior management recognizes it will need to address any issues arising from the completed Reviews and ensure that the environmental management system is delivered consistently across the Department.

8.43 Public Works and Government Services Canada also manages environmental issues for which there are due diligence concerns. When Real Property Services conducted its environmental reviews, the Branch was able to highlight several situations where it was not yet in compliance with current regulations and take corrective action. In its view, this illustrates a key benefit of effective performance measurement.

8.44 The other public sector organizations we interviewed are also recognizing regulatory compliance issues for aspects that pose risks to the environment, and to the organization in terms of liability exposure (for example, contaminated sites, hazardous materials and wastes, ozone-depleting substances, storage tanks and spills). These aspects generally have a single performance measure associated with them and are tracked according to a longer-term risk mitigation plan in compliance with applicable regulations.

8.45 Cost management. Last year, we documented some of the environmental cost savings that Agriculture and Agri-Food Canada had achieved. We identified additional examples this year. For example, Lethbridge Research Centre is completing a retrofit of lighting that is expected to generate net savings within three years. This project, after careful initial study, was approved in the annual budget of the Centre last year.

8.46 Property managers in the two Crown corporations from the other jurisdictions also focussed on environmental aspects that significantly affect overhead costs, such as energy use, water use, and waste management. These aspects tend to have multiple performance measures associated with them and are measured frequently.

8.47 Policy priorities. As an additional motivation, federal departments have set environmental performance goals through laws and regulations in several areas. Individual departments are identifying and acting on their own targets established through their sustainable development strategies. The Government of Canada has also set national targets in some areas covered by the ``greening" of government operations. The Alternative Fuels Act established government-wide targets for conversion to vehicles fuelled by alternatives to gasoline. In 1995, the federal government made a commitment to reduce greenhouse gas emissions from federal facilities by 20 percent below 1990 levels by the year 2005. For solid waste, the federal government has committed itself to a 50 percent reduction by the year 2000, using 1988 as the base year.

8.48 Data collection and environmental management systems need to reflect the different reasons for tracking environmental performance. The prototype accounts described in Chapter 7 of our 1998 Report recognize the information requirements associated with these three different motivations for departmental action. Thus the accounts are a useful overall framework for monitoring environmental performance.

Accountability needs to be clearly specified for implementation
8.49 At Public Works and Government Services Canada, statements of environmental roles, responsibilities and accountabilities have been developed for numerous positions within Real Property Services Branch, ranging from the Assistant Deputy Minister of Real Property Services to asset managers, regional managers and employees. These statements will help define accountability for due diligence and responsibilities for reporting.

8.50 At Agriculture and Agri-Food Canada, the Environmental Management Review process revealed that there are challenges to overcome in assigning responsibilities for specific tasks, estimating costs and estimating completion dates for actions. Corporate Services Branch has overall responsibility for implementation of the environmental management system, but has no authority to control the rate of implementation. Environmental management must be "sold" to individual managers. This gap between responsibility and authority acts as a constraint that needs to be managed to ensure consistent progress of sites relative to target dates.

8.51 The leading sites in Agriculture and Agri-Food Canada have been proactive and are already integrating environmental considerations into their planning and decision-making structures. For example, St. Hyacinthe Research Centre has integrated responsibility for environmental considerations into its organizational structure. The Centre reports that it has reduced overlap and duplication by having the health and safety officer be responsible for similar areas under its environmental management system. Thus Agriculture and Agri-Food Canada has found that one way to clarify and strengthen accountability for environmental performance is to make environmental performance part of the job requirements for facilities managers. In other cases, the responsibilities for environmental management have not been assigned. Without these assignments, departments are not able to ensure that their objectives will be achieved.

8.52 Role of audit and review. Neither of the two case study departments is yet at the stage of formally evaluating its experience with mechanisms for accounting for sustainable development. At Agriculture and Agri-Food Canada, Review Branch was involved in the development and implementation of the Environmental Management Review. The Department has clearly identified the role for internal audit as part of the monitoring and correction process, especially once environmental performance targets are set.

Financial and environmental systems can be integrated at several points
8.53 Public Works and Government Services Canada has concluded that for annual performance reporting to be "sustainable", environmental information should be built into existing information systems. These systems are fully integrated into the daily operations of Real Property Services, and could therefore also be used to collect and maintain relevant environmental data. Much of the environmental information aligns with the type of information that is gathered during the annual Building Performance Review and Building Management Plan processes. Over the long term, Real Property Services plans to move to more direct indicators of the Branch's environmental impacts (for example, tonnes of carbon dioxide produced as a result of energy used in the facilities).

8.54 From its baseline data, Agriculture and Agri-Food Canada is assembling cost information for many environmental aspects; however, it is not presently integrating environmental and financial information. Corporate Services Branch, with overall responsibility for environmental management system implementation, has plans for an approach to information management that will allow it to analyze all the information collected as part of the Environmental Management Review and assist in monitoring departmental progress.

8.55 Departments could link their environmental information to their financial systems in two basic ways. First, they could integrate the environmental information to the budgeting system and use it as a basis for making project and capital decisions, such as investments in water efficiency. Second, they could make a link to the record keeping of actual expenses and thus be able to record environmental results in relation to observed costs (for example, by tracking solid waste disposal costs).

8.56 Recognizing and capturing potential savings. We asked the five other public sector organizations about their savings as a result of their measurement and management efforts. Some examples are highlighted in Exhibit 8.4 . None of the government departments in this sample is currently monitoring cost savings. Both Crown corporations are in the early stages of integrating the non-financial information associated with energy use and waste management into their accounting systems. For example, to process an invoice for energy or waste services in one organization, the accounts payable officer must now enter the non-financial data on energy consumption or waste generated for the period. Recording data on consumption and cost in the same system will, they believe, improve the accuracy and accessibility of performance information and help to clarify the impact of management efforts.

8.57 Representatives of the five organizations identified several factors that contribute to successful performance measurement. For example, the resources allocated to environmental management should be invested where they will yield the highest return on investment. One organization told us that it applies most of its environmental management efforts to the 10 percent of its buildings that represent 80 percent of total floor area. In addition, we were told that highlighting the financial contribution of "greening" operations helped secure sustained support from senior managers.

Progress Is Being Made

8.58 Both case study departments have made progress on assembling environmental performance information. Public Works and Government Services Canada has built an environmental information system drawing on data from earlier environmental audits, financial systems and waste audits and from other newly collected information. Agriculture and Agri-Food Canada has begun to build the processes and the infrastructure to monitor the environmental aspects of its operations. Relatively little attention has been paid so far to integrating the environmental and financial information; some important cost savings and liability reduction opportunities have probably not yet been identified.

8.59 Based on the experiences of the two case study departments and public sector organizations from the other jurisdictions, some of the steps to integrated decision making for operations are increasingly clear. Exhibit 8.5 summarizes the progress of the case study departments in a common framework of steps. Other departments may take different routes through these steps, depending on specific factors, such as how centralized their operations and decision making are.

8.60 Putting Canada in context. The Organisation for Economic Co-operation and Development recently summarized the progress being made by member countries on ``greening" their internal operations. Other countries are struggling with similar difficulties to those faced by federal departments in Canada: improving the capacity to measure environmental performance at the departmental level; aggregating information at a national level by central agencies; collecting baseline information in a consistent format; and allocating the resources (time and money) required to establish performance measurement systems. Thus Canadian federal departments may benefit from exchanging lessons and experiences with other countries in a similar situation. There may be additional lessons to be learned from the experience of the approximately 45 public sector organizations, ranging from national departments to municipalities, that are implementing environmental management systems.

Common Measures Could Support Better Reporting

Several departments have worked toward common measures
8.61 As we noted in Chapter 7 of our 1998 Report, several major custodial departments formed an ad hoc working group in 1997 that focussed on how to build environmental performance reporting systems. Over this past year, the group continued to meet, named itself the Committee on Performance Measurement for Sustainable Government Operations, and worked to establish, define and promote the use of common measures for environmental aspects of government operations.

8.62 Current members of the Committee include most major custodial departments: Agriculture and Agri-Food Canada, Correctional Service Canada, Department of Foreign Affairs and International Trade, Environment Canada, Fisheries and Oceans, Health Canada, Indian and Northern Affairs Canada, National Defence, Natural Resources Canada, Public Works and Government Services Canada, Revenue Canada, Royal Canadian Mounted Police and Transport Canada. The Treasury Board Secretariat also serves on the Committee.

Common measures make sense for similar operations
8.63 Benefits of common performance measures. A common set of environmental performance indicators across the federal system would facilitate government-wide reporting (for example, for greenhouse gas emissions) and the oversight by Parliament of the government's progress toward sustainable development. We believe that meaningful performance comparisons can and should be made among departments for comparable activities and assets, using both financial and environmental measures. For specialized assets such as agricultural laboratories, comparisons over time could be used to identify improved environmental performance and year-to-year differences due, for example, to changes in program activities or weather patterns.

8.64 By moving toward agreed upon measures, departments could build on each other's experience and information. There may also be opportunities for significant economies of scale in developing common information systems. We believe that departments would find it cost-effective to establish common indicators for common activities now, while departments are in the early stages of developing and implementing their environmental performance measurement systems.

8.65 Inconsistent measures among departments. To assess the value of common environmental performance measures for operations, we reviewed how departments reported their environmental performance in the Departmental Performance Reports for the period ended 31 March 1998. Only 13 of 28 departments reported on the environmental performance of their internal operations in quantitative terms. Of all the measures that were reported by departments on all environmental aspects of their operations, we found that only two were comparable among any of the departments: the use of ethanol in vehicles and the percentage of diversion of office waste. In general, departments did not provide comparable information. The absence of information and the use of different indicators will make it difficult for Parliament and Canadians to formulate a coherent view of the performance of the government as a whole. (More details on the Departmental Performance Reports are provided in Chapter 1 of this Commissioner's Report. )

8.66 Progress toward shared measures. As we reported last year, the Committee on Performance Measurement for Sustainable Government Operations proposed draft common measures for water consumption, energy consumption, petroleum product and allied petroleum product storage tanks, non-hazardous solid waste, ozone-depleting substances and spills. The Committee organized a workshop in May 1998 to develop a more complete set of indicators ( Exhibit 8.6 ).

8.67 These consultations resulted in a revised list of proposed environmental performance indicators for federal departments ( Exhibit 8.7 ). The Federal Committee on Environmental Management Systems has recommended that its members consider the list of indicators when looking at the measurement and evaluation component of their environmental management systems.

Obtaining the benefits of common measures requires leadership
8.68 Unclear responsibility for leadership. The advantages of common measures will not be achieved without clear leadership to define, select and refine them. Interdepartmental committees do not believe they have the authority to establish standards for common indicators for the federal government as a whole. By January 1999, no central agency or department had acknowledged formally that it had the mandate, authority or resources to provide the leadership required to ensure that common indicators will be developed and implemented. No external standard-setting body has taken on this task. As a result, the federal government will have difficulty reporting on progress against government-wide targets for aspects such as greenhouse gas emissions, the use of alternative fuels, solid waste, or the management of real property.

Next Steps

8.69 Next year, we expect to help the government clarify the accountability for establishing and promoting common performance measures for the custodial side of departmental activities. Rather than focussing on a few case study departments, we plan to prepare a government-wide status report for Parliament in May 2000. We believe that Parliament needs a better picture of departmental progress in implementing and reaping the benefits that should accompany an effective environmental performance management system. This report will also help departments assess their own progress and clarify the areas for improvement.

8.70 In our work so far, we have focussed on the measurement and integration of environmental and financial aspects of departmental performance. The definition of accounting for sustainable development also includes the social impacts of departmental activities. Many organizations are making progress in developing and reporting on indicators of their performance on this dimension (for example, through social accountability reports); relatively few have developed indicators that combine all three aspects. In the future, we will be increasing the emphasis on the social dimension of sustainable development.

8.71 Finally, over the coming years we plan to do a detailed assessment of how federal departments are implementing "green" procurement. The amounts of money are very large (more than $11 billion each year). The preliminary evidence leads to several questions. Are departments considering the environmental and financial aspects of their decisions together? Do they have clear guidance for making procurement decisions (for example, when is paying a premium for an "environmentally friendly" option acceptable)? Are departments realizing the large potential savings from better information and hence better decisions? Are they recognizing the links between procurement and some of the other aspects of their environmental performance, such as fleet management and waste disposal?

Conclusion

8.72 Agriculture and Agri-Food Canada and Public Works and Government Services Canada are moving toward better measurement of their environmental performance - an important first step to assessing progress on their sustainable development objectives for custodial operations. They are putting the information and management systems in place to track the environmental and financial dimensions of their operations. Both departments recognize that it will be a long road, requiring sustained commitment.

8.73 On a government-wide basis, some of the key opportunities to use integrated information have not yet been seized. We estimate that there are potentially large benefits, including direct cost savings; however, departments do not yet have the necessary capacity to quantify and exploit these opportunities.

8.74 Based on our discussions with custodial departments and our review of the Departmental Performance Reports, departments do not yet have a shared basis for measuring their performance. As a result, they are not able to report consistently and accurately to Parliament on their progress against some long-standing commitments. This, in our view, is a critical gap.

8.75 We believe that Parliament now has a clearer picture of what the major signposts on the journey are, and where some of the deeper potholes lie. As the information base improves, departments (and Parliament) will develop a better understanding of some of the areas where progress may be faster, where money may be saved, and where resources may be required to meet some of the commitments departments have made. We will be providing a more complete status report next year, cutting across all departments.

8.76 One option is for Parliament to indicate to departments what its expectations are with respect to reporting on environmental performance. There is a need for the government to assign specific responsibilities for ensuring that suitable reports are prepared. Without this direction, there is a risk of stalling on the journey toward sustainable government operations.

Public Works and Government Services Canada's response:

Public Works and Government Services Canada strongly supports the importance and value of environmental performance reporting and is committed to continuing to evaluate and report environmental performance annually. It is a critical step toward minimizing the environmental impact of our activities and toward maximizing the financial benefits that can be associated with good environmental management. As a common service agency, the Department would be pleased to assist other custodians in developing and implementing environmental management processes.

Public Works and Government Services Canada will continue to support the activities of the Committee on Performance Measurement for Sustainable Government Operations and its goal of developing common approaches to be used for environmental performance measurement by all federal custodians. This approach should result in improved reporting and in efficiencies for the government as a whole.

Agriculture and Agri-Food Canada's response: Agriculture and Agri-Food Canada has benefited considerably through participation in this project over the past two years. The second phase of this study has identified important issues and concerns related to the gathering of information and establishment of baseline data for setting achievable targets and monitoring progress.

The Department acknowledges the importance of maintaining an information management system to monitor and report on the information acquired to date and will continue its efforts to develop an approach to an information management system that will help to fulfil this requirement.

Agriculture and Agri-Food Canada looks forward to continuing this opportunity to work in partnership with the Office of the Commissioner of the Environment and Sustainable Development.

Treasury Board Secretariat's response: Treasury Board Secretariat notes the early progress made in the Commissioner's five-year project on accounting for sustainable development. The Secretariat is supportive of the work being done by the interdepartmental Committee on Performance Measurement for Sustainable Government Operations. We are pleased to see departments working co-operatively to share lessons learned and to reach consensus on indicators for achieving comparable results in measuring environmental performance for the greening of government operations.

Treasury Board Secretariat will continue to participate as a member of the Committee and supports its ongoing work to develop a set of performance indicators from which departments can select those that are relevant and applicable to them for sustainable development reporting.


About the Study

Objectives

This chapter is part of the second phase of a five-year project to assist government departments in developing decision support tools for integrating environmental, social and economic information. The three overall objectives for this project are:

1. to help departments with custodial responsibilities to build the tools necessary to integrate considerations of environmental and social effects into capital and operating decisions;

2. to help departments create the baseline reference information necessary for credible, relevant and consistent measures of their sustainable development performance; and

3. to help departments with policy responsibilities to build practical, cost-effective tools to integrate information from diverse databases into decisions on policies with significant environmental, social and economic effects.

This chapter addressed the first two objectives. A companion chapter, Chapter 9 in this Report , documents our work on the third objective. With respect to the first and second overall objectives, our four sub-objectives for this second phase of the project were:

  • to report case studies describing the development and use of integrated measures and accounting procedures by departments with significant custodial responsibilities;
  • to identify lessons, benefits and costs of implementing environmental accounts;
  • to report on the status of implementation of environmental performance measures; and
  • to document how large public sector organizations select environmental performance measures, implement these measures and "roll-up" information on their environmental performance in summary reports.

Scope and Approach

Our investigation of implementation of performance measurement systems was built on four separate foundations. We began work with Public Works and Government Services Canada. We conducted a series of interviews with the managers and staff in Real Property Services Branch who had responsibility for designing and implementing the environmental performance management system. We reviewed the steps they went through in assembling their summary performance reports.

Our work with Agriculture and Agri-Food Canada was primarily a follow-up to the more detailed work we carried out last year. We focussed on regional baseline information submissions to headquarters in Ottawa, supplemented by interviews with managers in the regions, and a visit to two research centres in the Maritimes.

As a second continuing thread, we met several times with the interdepartmental Committee on Performance Measurement for Sustainable Government Operations. We wanted to ensure that the information received through the detailed case studies was relevant to other departments. In particular, we worked with the Committee to facilitate a workshop in May 1998 to discuss common performance measures for operations.

As a basis for comparison with Canadian federal departments, we identified five public sector organizations that were measuring at least some aspects of their environmental performance. We questioned staff in each organization about their approach to measuring environmental performance in their operations. Two organizations are provincial Crown corporations whose mandates focus on property management services. The other three are government departments or agencies in other countries where property management is incidental to their core mandates. The five organizations share several characteristics. They are all multi-divisional public sector organizations that manage many facilities with a mix of operations. For each of these organizations, the number of occupants in facilities under management is at least 60,000.

Study Team

Office of the Auditor General of Canada
Principals: Wayne Cluskey and Dan Rubenstein
Director: Peter Morrison

Andrew Ferguson
Gordon Stock
Mary Louise Sutherland
Chris Weber

Agriculture and Agri-Food Canada: Pierre Corriveau, Pierre Laplante and Colleen Todd

Public Works and Government Services Canada: Janet Clark, Bob Davidge, Barbara Francis-Swayze and Laurent Lavergne

For information, please contact Wayne Cluskey or Dan Rubenstein.