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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Environment

Veda Textiles Ltd, a listed company, wants to disclose its energy use in a way that lets investors compare its performance with that of a peer of a different size. Which metric best serves this purpose?

Energy consumed per rupee of turnover is best, because an intensity ratio removes the effect of company size and enables comparison between firms. Absolute consumption, capital spend or audit counts do not normalise for scale and so do not give a like-for-like performance comparison.

  1. ATotal electricity consumed in the year, in gigajoules
  2. BEnergy consumed per rupee of turnoverCorrect
  3. CAmount spent on solar panels in the year
  4. DNumber of energy audits carried out

Explanation

An intensity ratio such as energy per rupee of turnover normalises for scale, so firms of different size can be compared. Absolute consumption does not adjust for size. Spend on solar panels and the count of audits are inputs or activities, not performance measures.

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