Planetary boundaries as a way of assessing environmental performance: a methodological approach proposal
DOI:
https://doi.org/10.5902/1983465986895Keywords:
Sustainable development, Planetary boundaries, Environmental performance assessment, Oil and gas sectorAbstract
Objective: This study aims to demonstrate how planetary boundaries can serve as a method for evaluating the environmental performance of organizations.
Methodology: The study is based on different methods of data collection and analyses, based on the literature on planetary boundaries and their measurement, secondary data collection and the use of two illustrative examples with two companies operating in the oil and gas sector in the upstream segment.
Results: It was initially necessary to validate the downscaling of planetary boundaries to the business analysis level to apply the proposed conceptual model to two cases of companies operating in the oil and gas sector in the upstream segment. The proposed downscaling method proved to be adequate, effective, and plausible, as did the use of planetary boundaries as a method for evaluating the environmental performance of organizations.
Implications: This study established contributions of methodological and practical natures, which allows companies in the sector to evaluate and be evaluated based on the need to respect the biophysical limits of the Earth system.
Originality/Relevance: The concept of planetary boundaries provides a starting point for understanding the compatibility between the search for sustainable development and the current economic model, since the natural capital consumed is physically finite. In addition, a critical factor in this search is the role played by companies since the increased pressure on the consumption of natural resources directly impacts business operations.
Downloads
References
Abrams, R., Han, S., & Hossain, M. T. (2021). Environmental performance, environmental management and company valuation. Journal of Global Responsibility. DOI: https://doi.org/10.1108/JGR-10-2020-0092
Algunaibet, I. M., Pozo, C., Galán-Martín, Á., Huijbregts, M. A., Mac Dowell, N., & Guillén-Gosálbez, G. (2019). Powering sustainable development within planetary boundaries. Energy & Environmental Science,12(6), 1890-1900. DOI: https://doi.org/10.1039/C8EE03423K
Aouadi, A., & Marsat, S. (2018). Do ESG controversies matter for firm value? Evidence from international data. Journal of Business Ethics, 151(4), 1027-1047. DOI: https://doi.org/10.1007/s10551-016-3213-8
Bansal, S., Garg, I., & Yadav, A. (2020). Do firms with environmental concerns give better performance? A systematic literature review. Journal of Public Affairs, e2322. DOI: https://doi.org/10.1002/pa.2322
Bhattacharyya, A. (2019). Corporate environmental performance evaluation: A cross-country appraisal. Journal of Cleaner Production, 237, 117607. DOI: https://doi.org/10.1016/j.jclepro.2019.117607
Bhattacharyya, A., & Cummings, L. (2015). Measuring corporate environmental performance–stakeholder engagement evaluation. Business Strategy and the Environment, 24(5), 309-325. DOI: https://doi.org/10.1002/bse.1819
Biermann, F. (2012). Planetary boundaries and earth system governance: Exploring the links. Ecological Economics, 81, 4-9. DOI: https://doi.org/10.1016/j.ecolecon.2012.02.016
Bisbe, J., Batista-Foguet, J. M., & Chenhall, R. (2007). Defining management accounting constructs: A methodological note on the risks of conceptual misspecification. Accounting, Organizations and Society, 32(7-8), 789-820. DOI: https://doi.org/10.1016/j.aos.2006.09.010
Brown, K. (2017). Global environmental change II: Planetary boundaries–A safe operating space for human geographers? Progress in Human Geography, 41(1), 118-130. DOI: https://doi.org/10.1177/0309132515604429
Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1-23. DOI: https://doi.org/10.1002/smj.2131
Choi, H., Han, I., & Lee, J. (2020). Value Relevance of Corporate Environmental Performance: A Comprehensive Analysis of Performance Indicators Using Korean Data. Sustainability, 12(17), 7209. DOI: https://doi.org/10.3390/su12177209
Clift, R., Sim, S., King, H., Chenoweth, J. L., Christie, I., Clavreul, J., ... & Murphy, R. (2017). The challenges of applying planetary boundaries as a basis for strategic decision-making in companies with global supply chains. Sustainability, 9(2), 279. DOI:
https://doi.org/10.3390/su9020279
Czech, B., & Daly, H. (2004). The Steady-State Economy – What It Is, Entails and Connote. Wildlife Society Bulletin, 32(2), 598-605. DOI: https://doi.org/10.2193/0091- 7648(2004)32[598:IMOTSS]2.0.CO;2
Czech, B. (2000). Economic growth as the limiting factor for wildlife conservation. Wildlife Society Bulletin, 28(1), 4-15. Retrieved from: https://mpra.ub.uni-muenchen.de/9038/1/MPRA_paper_9038.pdf.
Daly, H. & Farley, J. (2004). Ecological economics: Principles and applications. Washington, DC: Island Press.
Daly, H. (1972). In Defense of a Steady-State Economy. American Journal of Agricultural Economics, 54(5). DOI: https://doi.org/1239248
Dao, H., Peduzzi, P., & Friot, D. (2018). National environmental limits and footprints based on the Planetary Boundaries framework: The case of Switzerland. Global Environmental Change, 52, 49-57. DOI: https://doi.org/10.1016/j.gloenvcha.2018.06.005
Dragomir, V. D. (2018). How do we measure corporate environmental performance? A critical review. Journal of Cleaner Production, 196, 1124-1157. DOI: https://doi.org/10.1016/j.jclepro.2018.06.014
Escrig‐Olmedo, E., Muñoz‐Torres, M. J., Fernández‐Izquierdo, M. Á., & Rivera‐Lirio, J. M. (2017). Measuring corporate environmental performance: A methodology for sustainable development. Business Strategy and the Environment, 26(2), 142-162. DOI: https://doi.org/10.1002/bse.1904
ExxonMobil. (2018, September 05). Understanding the relationship between energy and water. Retrieved from:https://corporate.exxonmobil.com/Sustainability/Environmental- protection/Sustainable-water-and-energy/Understanding-the-relationship-between- energy-and-water#Waterfundamentals.
Fanning, A. L., & O'Neill, D. W. (2016). Tracking resource use relative to planetary boundaries in a steady-state framework: A case study of Canada and Spain. Ecological Indicators, 69, 836-849. DOI: https://doi.org/10.1016/j.ecolind.2016.04.034
Galán-Martín, Á., Tulus, V., Díaz, I., Pozo, C., Pérez-Ramírez, J., & Guillén- Gosálbez, G. (2021). Sustainability footprints of a renewable
carbon transition for the petrochemical sector within planetary boundaries. One Earth, 4(4), 565-583. DOI: https://doi.org/10.1016/j.oneear.2021.04.001
Galaz, V., Biermann, F., Folke, C., Nilsson, M., & Olsson, P. (2012). Global environmental governance and planetary boundaries: an introduction. Ecological Economics, 81, 1-3. DOI: https://doi.org/10.1016/j.ecolecon.2012.02.023
Gallego‐Álvarez, I. (2012). Indicators for sustainable development: Relationship between indicators related to climate change and explanatory factors. Sustainable Development, 20(4), 276-292. DOI: https://doi.org/10.1002/sd.483
Garcia, A. S., & Orsato, R. J. (2020). Testing the institutional difference hypothesis: A study about environmental, social, governance, and financial performance. Business Strategy and the Environment, 29(8), 3261-3272. DOI: https://doi.org/10.1002/bse.2570
Garcia, A. S., Mendes-Da-Silva, W., & Orsato, R. J. (2017). Sensitive industries produce better ESG performance: Evidence from emerging markets. Journal of Cleaner Production, 150, 135-147. DOI: https://doi.org/10.1016/j.jclepro.2017.02.180
García-Olivares, A., & Ballabrera-Poy, J. (2015). Energy and mineral peaks, and a future steady state economy. Technological Forecasting and Social Change, 90, 587-598. DOI: https://doi.org/10.1016/j.techfore.2014.02.013
Globe Newswire. (2021). "Global $7425.02 Billion Oil and Gas Markets, 2015-2020, 2020-2025F, 2030F". Retrieved from: https://www.globenewswire.com/news- release/2021/03/04/2187025/0/en/Global-7425-02-Billion-Oil-and-Gas-Markets-2015- 2020-
-2025F-2030F.html.
Goldstein, D., Hilliard, R., & Parker, V. (2011). Environmental performance and practice across sectors: Methodology and preliminary
results. Journal of Cleaner Production, 19(9-10), 946-957. DOI: https://doi.org/10.1016/j.jclepro.2010.12.012
Hardcopf, R., Shah, R., & Mukherjee, U. (2019). Explaining heterogeneity in environmental management practice adoption across firms. Production and Operations Management, 28(11), 2898-2918. DOI: https://doi.org/10.1111/poms.13083
Hartmann, J., & Uhlenbruck, K. (2015). National institutional antecedents to corporate environmental performance. Journal of World Business, 50(4), 729-741. DOI: https://doi.org/10.1016/j.jwb.2015.02.001
Hatfield-Dodds, S., Schandl, H., Newth, D., Obersteiner, M., Cai, Y., Baynes, T., ... & Havlik, P. (2017). Assessing global resource use and
greenhouse emissions to 2050, with ambitious resource efficiency and climate mitigation policies. Journal of Cleaner Production, 144,
-414. DOI: https://doi.org/10.1016/j.jclepro.2016.12.170
Häyhä, T., Lucas, P. L., van Vuuren, D. P., Cornell, S. E., & Hoff, H. (2016). From Planetary Boundaries to national fair shares of the global safe operating space—How can the scales be bridged? Global Environmental Change, 40, 60-72. DOI:
https://doi.org/10.1016/j.gloenvcha.2016.06.008
Helle, I., Jolma, A., & Venesjärvi, R. (2016). Species and habitats in danger: estimating the relative risk posed by oil spills in the northern
Baltic Sea. Ecosphere, 7(5). DOI: https://doi.org/10.1002/ecs2.1344
Hourneaux Junior, F., Hrdlicka, H. A., Gomes, C. M., & Kruglianskas, I. (2014). The use of environmental performance indicators and size effect: A study of industrial companies. Ecological Indicators, 36, 205-212. DOI: https://doi.org/10.1016/j.ecolind.2013.07.009
Hussey, D. M., & Eagan, P. D. (2007). Using structural equation modeling to test environmental performance in small and medium-sized manufacturers: Can SEM help SMEs? Journal of Cleaner Production, 15(4), 303-312. DOI: https://doi.org/10.1016/j.jclepro.2005.12.002
IBISWorld. (2022). Global Oil & Gas Exploration & Production Market Size 2005– 2025. Retrieved from: https://www.ibisworld.com/global/market-size/global-oil-gas- exploration-production/.
International Organization for Standardization (ISO). (1999). ISO Environmental management environmental performance evaluation guidelines. Geneva (Switerzland): ISO.
IPIECA. (2021). Accelerating action: An SDG Roadmap for the oil and gas sector. Retrieved from:
https://www.wbcsd.org/contentwbc/download/11900/178800/1.
Khanna, M., & Speir, C. (2013). Motivations for proactive environmental management. Sustainability, 5(6), 2664-2692. DOI:
https://doi.org/10.3390/su5062664
KPMG. (2012). Expect the Unexpected-Building Business Value in a Changing World. International Cooperative (KPMG International).
Retrieved from: https://assets.kpmg/content/dam/kpmg/pdf/2012/02/building-business-value-exec- summary.pdf.
Lenssen, G., Van Wassenhove, L., Pickard, S., Lenssen, J. J., & Fernando, R. (2012). Sustainable globalization and implications for strategic
corporate and national sustainability. Corporate Governance: The International Journal of Business in Society. DOI:
https://doi.org/10.1108/14720701211267883
Lewis, D., & Sauzier, J. (2020). Cleaning up after Mauritius oil spill. Nature, 585(7824), 172-172. Retrieved from:
https://www.nature.com/articles/d41586-020-02446-7.
Lucas, M. T. (2010). Understanding environmental management practices: Integrating views from strategic management and ecological economics. Business Strategy and the Environment, 19(8), 543-556. DOI: https://doi.org/10.1002/bse.662
Lucas, P. L., Wilting, H. C., Hof, A. F., & van Vuuren, D. P. (2020). Allocating planetary boundaries to large economies: Distributional consequences of alternative perspectives on distributive fairness. Global Environmental Change, 60, 102017. DOI:
https://doi.org/10.1016/j.gloenvcha.2019.102017
Masnadi, M. S., El-Houjeiri, H. M., Schunack, D., Li, Y., Englander, J. G., Badahdah, A., ... & Brandt, A. R. (2018). Global carbon intensity of
crude oil production. Science, 361(6405), 851-853. DOI: https://doi.org/10.1126/science.aar6859
Meadows, D. H. (1998). Indicators and information systems for sustainable development: A report to the Balaton Group. Hartland (VE):
The Sustainability Institute.
Muspratt, A. (2019). Introduction to Oil and Gas Industry. Oil & Gas IQ. Retrieved from: https://www.oilandgasiq.com/strategy-
management-and-information/articles/oil- gas-industry-an-introduction.
Nykvist, B., Persson, Å., Moberg, F., Persson, L., Cornell, S., & Rockström, J. (2013). National Environmental Performance on Planetary
Boundaries: A study for the Swedish Environmental Protection Agency (Stockholm Environment Institute). Retrieved from:
https://mediamanager.sei.org/documents/Publications/SEI-Report-Naturvardsverket- NationalEnvironmentalPerformance-2013.pdf.
O'Neill, D. W. (2015). What Should Be Held Steady in a Steady-State Economy? Journal of Industrial Ecology, 19 (4), 552-563. DOI: https://doi.org/10.1111/jiec.12224
Parsonsova, A., & Machar, I. (2021). National Limits of Sustainability: The Czech Republic's CO2 Emissions in the Perspective of Planetary
Boundaries. Sustainability, 13(4), 2164. DOI: https://doi.org/10.3390/su13042164
Pinto, G. M. C., Pedroso, B., Moraes, J., Pilatti, L. A., & Picinin, C. T. (2018). Environmental management practices in industries of Brazil,
Russia, India, China and South Africa (BRICS) from 2011 to 2015. Journal of Cleaner Production, 198, 1251-1261. DOI:
https://doi.org/10.1016/j.jclepro.2018.07.046
Raworth, K. (2012). A safe and just space for humanity: Can we live within the doughnut? Oxfam.
Refinitiv DataStream ASSET4 ESG. (2019).
Richardson, K., Steffen, W., Lucht, W., Bendtsen, J., Cornell, S. E., Donges, J. F., ... & Rockström, J. (2023). Earth beyond six of nine
planetary boundaries. Science Advances, 9(37), eadh2458. DOI: https://doi.org/10.1126/sciadv.adh2458
Ritchie, H. (2017). Fossil Fuels. Retrieved from: https://ourworldindata.org/fossil.
Robèrt, K. H., Broman, G. I., & Basile, G. (2013). Analyzing the concept of planetary boundaries from a strategic sustainability perspective: How does humanity avoid tipping the planet? Ecology and Society, 18(2). DOI: http://dx.doi.org/10.5751/ES- 05336-180205
Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin III, F. S., Lambin, E., ... & Foley, J. (2009a). Planetary boundaries: Exploring the safe operating space for humanity. Ecology and Society, 14(2). Retrieved from: http://www.jstor.org/stable/26268316.
Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin, F. S., Lambin, E. F., ... & Foley, J. A. (2009b). A safe operating space for humanity. Nature, 461(7263), 472-475. DOI: https://doi.org/10.1038/461472a
Sabag-Muñoz, O., & Gladek, E. (2017). One Planet Approaches–Methodology Mapping and Pathways Forward. Retrieved from:
https://www.metabolic.nl/publications/one-planet-approaches-methodology-mapping- and-pathways-forward/.
Sassen, R., Hinze, A. K., & Hardeck, I. (2016). Impact of ESG factors on firm risk in Europe. Journal of Business Economics, 86(8), 867-904. DOI: https://doi.org/10.1007/s11573-016-0819-3
Schultze, W., & Trommer, R. (2012). The concept of environmental performance and its measurement in empirical studies. Journal of Management Control, 22(4), 375-412. DOI: https://doi.org/10.1007/s00187-011-0146-3
Semenova, N. (2010, June). Corporate environmental performance: Consistency of metrics and identification of drivers. In Proceedings
of the PRI Academic Conference. Retrieved from: https://www.researchgate.net/profile/Natalia-Semenova-
/publication/46466194_On_the_Validity_of_Environmental_Performance_Metrics/lin ks/0046352bb2f57c8d79000000/On-the-Validity-of-
Environmental-Performance- Metrics.pdf.
Severo, E. A., de Guimarães, J. C. F., & Dorion, E. C. H. (2017). Cleaner production and environmental management as sustainable
product innovation antecedents: A survey in Brazilian industries. Journal of Cleaner Production, 142, 87-97. DOI: https://doi.org/10.1016/j.jclepro.2016.06.090
Singh, N., Jain, S., & Sharma, P. (2014). Determinants of proactive environmental management practices in Indian firms: An empirical study. Journal of Cleaner Production, 66, 469-478. DOI: https://doi.org/10.1016/j.jclepro.2013.11.055
Sönnichsen, N. (2021). Global oil production in barrels 1998-2020. In Statista - The Statistics Portal. Retrieved from: https://www.statista.com/statistics/265203/global- oil-production-since-in-barrels-per-day/#statisticContainer.
Steffen, W., & Smith, M. S. (2013). Planetary boundaries, equity and global sustainability: Why wealthy countries could benefit from
more equity. Current Opinion in Environmental Sustainability, 5(3-4), 403-408. DOI: https://doi.org/10.1016/j.cosust.2013.04.007
Steffen, W., Richardson, K., Rockström, J., Cornell, S. E., Fetzer, I., Bennett, E. M., ... & Sörlin, S. (2015). Planetary boundaries: Guiding
human development on a changing planet. Science, 347(6223). DOI: https://doi.org/10.1126/science.1259855
Szennay, Á., Szigeti, C., Beke, J., & Radácsi, L. (2021). Ecological Footprint as an Indicator of Corporate Environmental Performance: Empirical Evidence from Hungarian SMEs. Sustainability, 13(2), 1000. DOI: https://doi.org/10.3390/su13021000
Trumpp, C., Endrikat, J., Zopf, C., & Guenther, E. (2015). Definition, conceptualization, and measurement of corporate environmental performance: A critical examination of a multidimensional construct. Journal of Business Ethics, 126(2), 185-204. DOI:
https://doi.org/10.1007/s10551-013-1931-8
Tyteca, D. (1997). Linear programming models for the measurement of environmental performance of firms—Concepts and empirical results. Journal of Productivity Analysis, 8(2), 183-197. DOI: https://doi.org/10.1023/A:1013296909029
Tyteca, D., Carlens, J., Berkhout, F., Hertin, J., Wehrmeyer, W., Wagner, M. (2002). Corporate environmental performance evaluation: evidence from the MEPI project. Business Strategy and the Environment, 11, 1e13. DOI: https://doi.org/10.1002/bse.312
Uhlaner, L. M., Berent-Braun, M. M., Jeurissen, R. J., & de Wit, G. (2012). Beyond size: Predicting engagement in environmental management practices of Dutch SMEs. Journal of Business Ethics, 109(4), 411-429. DOI: https://doi.org/10.1007/s10551-011-1137-x
United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects 2019, Online Edition. Rev. 1. Retrieved from: https://population.un.org/wpp/Download/Standard/Population/.
Whiteman, G., Walker, B., & Perego, P. (2013). Planetary boundaries: Ecological foundations for corporate sustainability. Journal of Management Studies, 50(2), 307-336. DOI: https://doi.org/10.1111/j.1467-6486.2012.01073.x
Xie, S., & Hayase, K. (2007). Corporate environmental performance evaluation: A measurement model and a new concept. Business Strategy and the Environment, 16(2), 148-168. DOI: https://doi.org/10.1002/bse.493
Zheng, S., He, C., Hsu, S. C., Sarkis, J., & Chen, J. H. (2020). Corporate environmental performance prediction in China: An empirical study of energy service companies. Journal of Cleaner Production, 266, 121395. DOI: https://doi.org/10.1016/j.jclepro.2020.121395
Ziegler, A., Busch, T., & Hoffmann, V. H. (2011). Disclosed corporate responses to climate change and stock performance: An international empirical analysis. Energy Economics, 33(6), 1283-1294. DOI: https://doi.org/10.1016/j.eneco.2011.03.007
Zipper, S. C., Jaramillo, F., Wang‐Erlandsson, L., Cornell, S. E., Gleeson, T., Porkka, M., ... & Gordon, L. (2020). Integrating the water
planetary boundary with water management from local to global scales. Earth's Future, 8(2). DOI: https://doi.org/10.1029/2019EF001377
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Patricia Fernanda Dionizio Leite, Flavio Hourneaux Junior
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors of articles published by ReA/UFSM retain the copyright of their works, licensing them under the Creative Commons (CC-BY 4.0), which allows articles to be reused and distributed without restriction, provided that the original work is properly cited.
