1.1 This guide covers techniques for evaluating manufacturing investments from the perspective of environmentally sustainable manufacturing by pairing economic methods of investment analysis with environmental aspect of manufacturing, including manufacturing processes. 1.2 The economic techniques discussed include net present value, internal rate of return, payback period, and hurdle rate. These four techniques are deterministic, meaning that they deal with known values that are certain. Probabilistic considerations play no role in determining how these four techniques are deployed. The guide will also move beyond standard deterministic techniques to look at probabilistic methods like the concept of sensitivity analyses with a focus on Monte Carlo analyses. 1.3 The techniques can be used by manufacturers, regardless of size or complexity, to make environmentally sustainable decisions, including but not limited to whether to embark on an investment, discontinue a manufacturing line, invest or re-invest in a new project or factory. To outline all possible decision types would constitute a guide in itself. 1.4 This guide does not assume specific knowledge of financial techniques on the part of the user, besides some knowledge of discounting. The interested reader is encouraged to follow up and consult outside readings to cover financial techniques beyond the scope of this guide. 1.5 This guide uses US dollars, percent change in environmental aspects of manufacturing, and unit change in environmental aspects of manufacturing as its primary units. 1.6 This guide does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety and health practices and determine the applicability of regulatory limitations prior to use.
KeywordsManufacturing; sustainability; economics; net present value; internal rate of return; payback period; hurdle rate; environmental aspects of manufacturing; key performance indicator; net present value per percent change in environmental aspects of manufacturing; environmental hurdle rate; maximum environmental expenditure rate; net present value elasticity; sensitivity analysis; Monte Carlo analysis
Firms that aim to reduce their environmental impact must do so in a manner that maintains competitiveness among other firms. Although there are accepted practices and economic standards oriented towards economic decision making for buildings, which are used to evaluate the sustainability of buildings, currently, there are no economic standards for manufacturing oriented investments, much less one that incorporates environmental aspects of manufacturing. The proposed standard can be used by manufacturers to make economic decisions regarding investments in sustainable manufacturing.
The title and scope are in draft form and are under development within this ASTM Committee.Back to Top
Draft Under Development