At the beginning of 2004, Limon Company, an international telecommunications company, embarked on an environmental improvement program. The company set a goal to have all its facilities ISO 14001 registered by 2007. (There are 30 facilities worldwide.)

It also adopted the Balanced Scorecard with an environmental perspective added as a fifth perspective. To communicate the environmental progress made, management decided to issue, on a voluntary basis, an annual environmental progress report. Internally, the accounting department issued monthly progress reports and developed a number of measures that could be reported even more frequently to assess progress. Limon also asked an international CPA firm to prepare an auditor’s report that would comment on the reasonableness and fairness of Limon’s approach to assessing and measuring environmental performance.

At the end of 2007, the controller had gathered data that would be used in preparing the environmental progress report. A sample of the data collected is as follows:

Required:
1. What is the justification for adding an environmental perspective to the Balanced Scorecard?
2. Limon Company decided to do the following: obtain ISO 14001 registration, prepare an annual environmental progress report, prepare internal environmental progress reports, and request an audit of the external report. How do these decisions fit within the Balanced Scorecard framework? To what environmental cost categories do these activities belong?
3. Using the data, prepare a bar graph for each of the three environmental variables provided (registrations, energy, and greenhouse gases). Comment on the progress made on these three dimensions. To which core objectives do each of the three measures relate?

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Year Number of ISO 14001 Registrations Energy Consumption (BTUs)" Greenhouse Gases 2004 3 3,000 40,000 2005 9 2,950 39,000 2006 15 2,900 38,000 2007 24 2,850 36,000 "In billions (measures electricity, natural gas, and heating oil usage). "In tons.