Matrix sustainability : applying input-output analysis to environmental and economic sustainability indicators : case: Finnish Forest Sector

Pre-requisite for all sustainability actions in business is accurate measurement of economic, environmental and social performance. Sustainability indicators, or indicator sets, are then the tools, which simplify the complex sustainability information applicable for management processes, decision-making and communication. Measuring business sustainability is not an easy task, especially while simultaneously considering macro-level sustainability. Indicators should somehow capture the corporate/ industry contributions to sustainability and increase the understanding on the link between business performance and macro-level concerns. Hence, traditional macro-level tools from the field of economics may be borrowed in order to illuminate sustainability issues in the broader context. The purpose of this study is to describe how input-output analysis can be used in industry-level and site-level sustainability indicator design. The research methods applied are secondary data analysis (theoretic-conceptual approach) and a case study (empirical approach), which consists of 1995 input-output tables of the Finnish economy with disaggregated forest sector (27 industrial branches). Conceptual/ methodological development of sustainability indicators is demonstrated with empirical data. Environmental and economic sustainability aspects considered are global warming potential, acidification potential, value added, operating surplus, number of employees and working hours. Input-output tables and input-output analysis are used in calculating and presenting industry-level absolute and integrated sustainability indicators related to these aspects. Eco-efficiency and labour productivity of three industrial branches are compared. Hybrid indicators are presented as an example of combination of site-specific data and average input-output-based data. The study suggests that sustainability indicators based on input-output analysis can provide deeper understanding on the upstream supply chain system related to an industry or a site. Empirical study also shows that indirect impacts within the upstream supply chain system are often more significant than the direct contribution of business entity.