tag:theconversation.com,2011:/id/topics/sustainability-reporting-8297/articlessustainability reporting – The Conversation2023-09-20T15:34:31Ztag:theconversation.com,2011:article/2132822023-09-20T15:34:31Z2023-09-20T15:34:31ZBig businesses say they are helping to restore ecosystems – but proof remains elusive<figure><img src="https://images.theconversation.com/files/549283/original/file-20230920-29-9vtqg4.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4928%2C3253&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A coral restoration project in Indonesia.</span> <span class="attribution"><a class="source" href="https://www.theoceanagency.org/search-result?s=coral%20restoration">Martin Colognoli/Ocean Image Bank</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>We’re witnessing first-hand <a href="https://www.science.org/doi/full/10.1126/sciadv.abm9982">an alarming decline</a> of the world’s ecosystems, which is having a devastating impact on the people who rely on them. In many cases, it’s no longer enough to just protect what remains – degraded ecosystems must be restored.</p>
<p>Expanding restoration efforts at the rate required will only be possible with committed buy-in from local communities, regional and national governments, civil society and – crucially – the corporate sector. </p>
<p>Many businesses are starting to embrace this vision by launching ambitious restoration projects to replant trees, wetlands, coral reefs and mangroves that far exceed their legal responsibilities. </p>
<p>These endeavours are promising. In some cases, these projects are even <a href="https://www.sciencedirect.com/science/article/pii/S0960982220315992">delivering significant benefits</a>. But according to a <a href="https://www.science.org/doi/10.1126/science.adh2610">study</a>, which was carried out by myself and several colleagues, we can’t be sure whether large corporations are making good on these environmental promises.</p>
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Read more:
<a href="https://theconversation.com/four-reasons-why-restoring-nature-is-the-most-important-endeavour-of-our-time-147365">Four reasons why restoring nature is the most important endeavour of our time</a>
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<a href="https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Deforestation in the Brazilian Amazon." src="https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=219&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=219&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=219&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=276&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=276&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546751/original/file-20230906-19-vepgj5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=276&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Deforested area in the Santarem region of the Brazilian Amazon.</span>
<span class="attribution"><span class="source">Adam Ronan/ Rede Amazonia Sustentvel</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
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<h2>The hidden reality</h2>
<p>We delved into the publicly available sustainability reports of 100 of the world’s biggest businesses. Our aim was to summarise the extent of their restoration work and its impacts.</p>
<p>What we found was both eye-opening and disconcerting. Two-thirds of these corporations stated that they carry out restoration activities. But the devil lay in the detail — or, in this case, the lack thereof.</p>
<p>Many of the corporate sustainability reports gave very little evidence to back up their claims about ecosystem restoration. They lacked rigour in defining restoration, outlining methodologies and quantifying outcomes. </p>
<p>They also failed to clearly distinguish between projects designed to merely align with legal responsibilities and those that would genuinely contribute to global restoration goals. </p>
<p>The majority (80%) of the reports failed to disclose how much money they were spending on ecosystem restoration. And 90% didn’t report any of the ecological impacts that their work had. A third of the reports didn’t even say how big their projects were.</p>
<p>In essence, the evidence supporting many corporate-led ecosystem restoration projects is glaringly inadequate.</p>
<h2>The potential power of ‘Big Business’</h2>
<p>The world’s largest businesses are powerful entities. They possess the resources, wealth, logistics expertise and influence to play a pivotal role in the mission to restore the world’s ecosystems.</p>
<p>Imagine a world where corporations use their vast finances, labour forces, manufacturing capabilities and social influence help rebuild forests, wetlands, savannas and coral reefs around the globe. It’s a vision of corporate responsibility that goes beyond mere compliance with environmental regulations.</p>
<p>But ecosystem restoration is notoriously difficult to do well. It requires <a href="https://www.sciencedirect.com/science/article/pii/S0308597X22002469">careful and strategic consideration</a> of a range of environmental and social factors.</p>
<p>Genuine attempts to restore ecosystems can <a href="https://academic.oup.com/bioscience/article/73/2/134/6865284">sometimes do more harm than good</a>. They can, for example, accidentally cause environmental damage, disempower local people and landowners or destabilise local governance. Some corporations also oversell their efforts to gain an undeserved boost to their reputation (a practice known as “greenwashing”).</p>
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Read more:
<a href="https://theconversation.com/how-corporations-use-greenwashing-to-convince-you-they-are-battling-climate-change-204660">How corporations use greenwashing to convince you they are battling climate change</a>
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<a href="https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Two people restoring a coral reef." src="https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546753/original/file-20230906-34278-cuzb16.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Coral restoration in Indonesia.</span>
<span class="attribution"><a class="source" href="https://www.theoceanagency.org/search-result?s=coral%20restoration">Martin Colognoli/Ocean Image Bank</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
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<h2>Improving transparency and accountability</h2>
<p>Better reporting will be essential for big businesses to become genuine leaders of global ecosystem restoration. It will allow us to properly track the progress of corporate-led initiatives, hold businesses to account against the claims they make, and learn from those businesses that are leading the way.</p>
<p>In our paper, we suggest that the rigour of corporate reporting could be improved by implementing several key principles taken from <a href="https://www.ser-rrc.org/what-is-ecological-restoration/">restoration science</a>. </p>
<p>For example, corporate sustainability reports could better meet the principle of “proportionality” (understanding how much restoration activity has been carried out) by providing information about the spatial extent and number of organisms planted in each individual restoration project that a company carries out. It would then be possible to evaluate the likely scale of the project’s impact. </p>
<p>The principle of “permanence” (committing to long-term restoration commitments) could be better evidenced by companies reporting on the number of years they’ve committed to maintain, monitor and report on projects after they’ve been started. </p>
<p>By reporting in ways that adhere to scientific principles like these, companies will be able to demonstrate much more convincingly that their efforts in ecosystem restoration are delivering the environmental and social benefits that they claim.</p>
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<a href="https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A woman holding a bowl of urucum in a forest." src="https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/546754/original/file-20230906-31502-8q4djc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A smallholder shows urucum produced in the Santarem region of the Brazilian Amazon.</span>
<span class="attribution"><a class="source" href="https://drive.google.com/drive/folders/1NvOjia1ocBOGH-KJMrG5-_P5gPWk_2qU">Marizilda Cruppe Rede/Amazonia Sustentavel</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
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<p>Big business is showing an increasing interest in contributing to global sustainability. As part of this movement, corporate-led ecosystem restoration could become a valuable asset in the battle to protect our planet’s vulnerable ecosystems. But it will only work if we can ensure transparency, accountability and adherence to best practice. </p>
<p>The idea of big business helping to rebuild the planet is an alluring rhetoric. Now it’s time to back it up with evidence.</p>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Dr Tim Lamont is a research fellow at Lancaster University. He receives funding from the Royal Commission of the Exhibition of 1851, and the Fisheries Society of the British Isles.</span></em></p>The world’s ecosystems need to be restored – and fast. Large corporations are well-placed to do so.Tim Lamont, Research Fellow, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1787642022-03-15T16:22:48Z2022-03-15T16:22:48ZEveryone should have a say on the future of green accounting<figure><img src="https://images.theconversation.com/files/451990/original/file-20220314-21-2f44z7.jpg?ixlib=rb-1.1.0&rect=114%2C0%2C5234%2C3268&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canadians need to get more involved in how accounting practices consider sustainability.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Accounting is widely considered the language of business — its impact, however, <a href="https://doi.org/10.1016/0361-3682(88)90003-7">goes far beyond the world of business, reaching far into all of our lives</a>. </p>
<p>Accounting and corporate reports typically — and incorrectly — assume that value can best be expressed in financial terms. They also assume that value is determined through so-called “<a href="https://www.investopedia.com/terms/f/fairmarketvalue.asp">fair markets</a>” where goods and services are priced accurately and in good faith.</p>
<p>These ideological biases result in more of our lives being understood predominantly in money terms, with <a href="https://doi.org/10.1016/j.aos.2015.10.004">people and the environment being treated as commodities</a>. Increasingly, values cease to exist outside the financial realm. </p>
<p>Accounting and the mysterious language of accountants are important to all of us — citizens cannot leave the reporting to the accounting profession and <a href="https://doi.org/10.1016/S1045-2354(02)00207-1">their assumptions about who and what is important</a>. They assume profits are good, however created, but employee well being and environmental degradation are irrelevant.</p>
<p>It suits accountants to be seen as too technical to be understood by the average person — that way, they don’t have to justify their decisions. <a href="https://www.ircsscanada.ca/en/consultation-paper">Recent proposals on sustainability reporting</a> for all significant Canadian organizations reflects this, and should have us all concerned. </p>
<h2>Sustainability reporting</h2>
<p>Sustainability reporting — sometimes also referred to as environmental, social and governance (ESG) reporting — requires organizations to publicly report on a wide range of performance goals, not just profits. </p>
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Read more:
<a href="https://theconversation.com/what-is-sustainability-accounting-what-does-esg-mean-we-have-answers-150996">What is sustainability accounting? What does ESG mean? We have answers</a>
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<p>Sustainability reporting is useful to employees, customers, citizens and governments to assess the impact and sustainability of an organization’s activities. The most popular ESG reporting system, developed by the <a href="https://www.globalreporting.org/">Global Reporting Initiative (GRI)</a>, highlights environmental issues, employee well being and social contributions made by organizatons.</p>
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<img alt="A man walking in front of a giant wall of solar panels" src="https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=412&fit=crop&dpr=1 600w, https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=412&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=412&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=518&fit=crop&dpr=1 754w, https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=518&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/452012/original/file-20220314-21-j6r6kg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=518&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Sustainability reporting requires organizations to publicly report on a wide range of performance goals, not just profits.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
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<p>But over the last few years, the international accounting profession, led by the <a href="https://www.ifrs.org/groups/international-sustainability-standards-board/">International Sustainability Standards Board (ISSB)</a>, has created its own set of rules that focuses solely on the needs of investors.</p>
<p>This issue has recently come to a head in several countries, including Canada. The Canadian accounting profession supports the ISSB, and, dramatically, is proposing to extend this <a href="https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot">neoliberal approach to every significant organization</a>.</p>
<h2>Missing perspectives</h2>
<p>Last December, the Canadian accounting profession quietly released their <a href="https://www.ircsscanada.ca/en/consultation-paper">consultation paper on sustainability standard setting in Canada</a>. </p>
<p>There are clearly some positives: It makes some welcome gestures regarding diversity, equity and inclusion, suggests making the setting of standards independent from the accounting profession and it appeals to the public interest. </p>
<p>But the consultation paper does not define <em>who</em> that public is, nor does it offer substantive proposals in any of the above listed areas. It also ignores Indigenous and feminist perspectives, which <a href="https://www.theguardian.com/commentisfree/2017/mar/27/western-idea-private-property-flawed-indigenous-peoples-have-it-right">question the very core of accounting’s definitions of assets and liabilities</a>.</p>
<p>As public policy expert <a href="https://www.abebooks.com/women-counted-new-feminist-economics-Marilyn/31112417470/bd">Marilyn Waring pointed out decades ago</a>, if women really counted, then unpaid labour, clean water and air and beautiful landscapes would also count. <a href="https://www.cbc.ca/news/indigenous/canada-indigenous-languages-legislation-1.4285633">Canada increasingly recognizes</a> the need to reflect on, and publicly discuss, the important role of language as a tool of colonization and repression. </p>
<p>Language directs our thinking, and the language of business is no exception. Sustainability reporting is an invitation to start discussions about how accounting language <a href="https://doi.org/10.1016/j.cpa.2022.102430">structures society and renders important aspects of life invisible</a>.</p>
<p>The Canadian accounting profession has <a href="https://doi.org/10.1016/S0361-3682(99)00030-6">always prioritized male and colonial-settler views</a>, meaning that it prioritizes private ownership and market transactions. For all its talk, the consultation paper focuses on making sure the ISSB’s financial perspective is implemented in Canada. </p>
<p>The proposed sustainability standard board aims to mirror the ISSB, as shown in the <a href="https://www.ircsscanada.ca/en/consultation-paper">terms of reference section of the consultation paper</a>. It does not recognize its own financial, gendered, colonial biases and ignores multi-stakeholder approaches such as the GRI. Instead it paves the way for <a href="https://www.globalwitness.org/en/blog/what-greenwashing/">systematic greenwashing</a>. </p>
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<img alt="Four children pulling on the end of a rope" src="https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/452006/original/file-20220314-103117-1qn3s1j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The new proposed sustainability standard board neglects the public interest, ignores future generations and the planet’s capacity to meet the needs of our children.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>The Canadian standards will apply to all significant organizations, not just those listed on a stock exchange. Sustainability reporting, as defined by the ISSB, pressures governments, publicly owned organizations, not-for-profit enterprises and most corporations to focus on investors and bankers while ignoring the concerns of everyone else.</p>
<p>Canadian accountants’ woeful neglect of the public interest ignores the impact these standards will have on future generations and the planet’s capacity to meet the needs of our children. </p>
<h2>Now is the time to act</h2>
<p>The rules of the Canadian sustainability standards board will eventually make their way into laws and regulations. The most inclusive and sensible approach to encourage genuine sustainability and inclusion is a perspective that includes multiple stakeholders, including the general public. </p>
<p>But without public intervention and outcry — and without public demand that the accounting profession do something different — people in Canada will be left with ESG rules that <a href="https://doi.org/10.1080/00014788.2013.794411">focus on investors, not the public</a>. </p>
<p>It is important that people in Canada make their voice heard and let the accounting profession (and the government) know that inclusive sustainability rules are essential for Canada. The consultation process is open to anyone to respond until March 31. </p>
<p>The future of ESG reporting, and the future of sustainability in Canada, is at stake. Who makes the rules, and which stakeholders are considered when the rules are set, matter greatly. </p>
<p>The sustainability reporting rules will influence the required disclosures for organizations. This, in turn, will impact decisions and actions relating to sustainability affecting Canadians.</p><img src="https://counter.theconversation.com/content/178764/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Cooper has, in the past, received funding from the Social Sciences and Humanities Research Council and the former Certified General Accountants of Alberta. He is affiliated with the Alberta Liabilities Disclosure Project, active in the District Association of the Federal NDP and founder and former editor of the academic journal, Critical Perspectives on Accounting.. </span></em></p><p class="fine-print"><em><span>Daniela Senkl has, in the past, received Institutional Grants from the Social Sciences and Humanities Research Council and currently receives funding from the Canadian Academic Accounting Association. She is a member of Extinction Rebellion.</span></em></p><p class="fine-print"><em><span>Jeff Everett has, in the past, received funding from the Social Sciences and Humanities Research Council.</span></em></p>We cannot leave reporting to the accounting profession and their assumptions about who and what is important. Recent proposals by the Canadian accounting profession should concern us all.David Cooper, Emeritus Professor of Accounting, University of AlbertaDaniela Senkl, Assistant Professor in Accounting, University of GuelphJeff Everett, Professor of Accounting, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1665392021-10-12T12:08:08Z2021-10-12T12:08:08ZHow the climate crisis is transforming the meaning of ‘sustainability’ in business<figure><img src="https://images.theconversation.com/files/425776/original/file-20211011-15-uby0hp.jpg?ixlib=rb-1.1.0&rect=443%2C84%2C1645%2C1048&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Businesses tend to value profit over people and planet. Climate change is forcing them to evolve.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/illustration/business-profit-and-human-rights-royalty-free-illustration/1189915921">elenabs via Getty Images</a></span></figcaption></figure><p>In his <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter">2021 letter to CEOs</a>, Larry Fink, the CEO and chairman of BlackRock, the world’s largest investment manager, wrote: “No issue ranks higher than climate change on our clients’ lists of priorities.”</p>
<p>His comment reflected a growing unease with how the climate crisis is already disrupting businesses.</p>
<p>Companies’ concerns about climate change have typically been focused on their <a href="https://www2.deloitte.com/global/en/pages/risk/articles/2021-climate-check-business-views-on-environmental-sustainability.html">operational, financial and reputational risks</a>, the latter associated with the <a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/2021-deloitte-global-millennial-survey-report.pdf">growing importance of the issue among young people</a>. Now, climate change is calling into question the traditional paradigm of corporate sustainability and how companies address their impacts on society and the planet overall.</p>
<p>As a <a href="https://scholar.google.com/citations?user=sS3D_o0AAAAJ&hl=en">professor working in strategic design, innovation, business models and sustainability</a>, I’ve been tracking how climate change is transforming the meaning of “sustainability” in business, and I’m starting to see early signs of change.</p>
<h2>The sustainability gap</h2>
<p>Over the past few decades, many companies came to embrace sustainability. It became the corporate norm to seek ways to reduce a company’s negative impacts on society and the planet and operate more responsibly.</p>
<p>Sustainability reporting is probably the clearest evidence of this trend. In 2020, 96% of the world’s largest companies by revenue, known as the G250, <a href="https://assets.kpmg/content/dam/kpmg/uk/pdf/2020/12/the-time-has-come-kpmg-survey-of-sustainability-reporting-2020.pdf">released details about their sustainability efforts</a>. But that rise in sustainability reporting <a href="https://hbr.org/2021/05/overselling-sustainability-reporting">was not accompanied by actual improvement</a> in key environmental and social issues. Global greenhouse gas emissions <a href="https://www.co2.earth/">continued to grow</a>, as did the <a href="https://www.epi.org/publication/ceo-compensation-surged-14-in-2019-to-21-3-million-ceos-now-earn-320-times-as-much-as-a-typical-worker/">pay gap between CEOs and employees</a>, for example.</p>
<p>As I suggest in my 2021 book, “<a href="https://www.palgrave.com/us/book/9783030773175">Rethinking Corporate Sustainability in the Era of Climate Crisis – A Strategic Design Approach</a>,” this gap between companies’ growing attention to sustainability and the minimal change produced is driven by their approach, which I call “sustainability-as-usual.” </p>
<p>Sustainability-as-usual is the slow and voluntary adoption of sustainability in business, where companies commit to changes they feel comfortable making. It’s not necessarily the same as <a href="https://www.ipcc.ch/report/ar6/wg1/">what science shows is needed</a> to slow climate change, or what the <a href="https://sdgs.un.org/goals">United Nations recommends</a> for an equitable society. Businesses’ response to both will be drawing global attention in November when world leaders gather for the annual <a href="https://theconversation.com/what-is-cop26-heres-how-global-climate-negotiations-work-and-whats-expected-from-the-glasgow-summit-169434">U.N. climate conference</a>. </p>
<h2>The problem with sustainability-as-usual</h2>
<p>Companies have taken this incremental approach because while they have paid more attention to social and environmental issues, their <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3899421">first priority has remained maximizing profit for their shareholders</a>.</p>
<p>Take, for example, companies’ focus on improving <a href="https://news.pg.com/news-releases/news-details/2020/Crest-Oral-B-and-Blend-a-med-Announce-the-Launch-of-Their-First-Ever-Recyclable-HDPE-Toothpaste-Tubes-in-North-America-and-Europe/default.aspx">the recyclability of single-use products</a> instead of considering new business models that could have <a href="https://www.pbl.nl/sites/default/files/downloads/pbl-2016-circular-economy-measuring-innovation-in-product-chains-2544.pdf">greater positive impact</a>, such as shifting to <a href="https://zerowasteeurope.eu/wp-content/uploads/2020/12/zwe_reloop_report_reusable-vs-single-use-packaging-a-review-of-environmental-impact_en.pdf.pdf_v2.pdf">reusable packaging</a> or eliminating it altogether.</p>
<p>One notable example is <a href="https://ir.kraftheinzcompany.com/news-releases/news-release-details/heinz-tomato-ketchup-introduces-first-100-recyclable-cap">Heinz</a>. The ketchup maker announced a cap for its ketchup bottle that is 100% recyclable. It was the outcome of $1.2 million invested and 185,000 hours of work over eight years, according to the company.</p>
<h2>Climate change requires a new approach</h2>
<p>While companies appear to grasp the magnitude of the climate crisis, they have been trying to address it mainly in a sustainability-as-usual fashion – one ketchup bottle cap at a time.</p>
<p>Consider emissions reductions. Companies have been slow to commit to reducing their emissions to zero no later than mid-century, a target that the <a href="https://www.ipcc.ch/sr15/">Intergovernmental Panel on Climate Change</a> considers necessary to limit global warming to 1.5 degrees Celsius – roughly 2.7 degrees Fahrenheit – and avoid the worst effects of climate change. Only <a href="https://racetozero.unfccc.int/15-sectors-of-global-economy-shift-the-dial-on-climate/">about one-fifth</a> of the major companies have 2030 goals that are in line with reaching net-zero goals by 2050 at the latest.</p>
<p>The companies that do set <a href="https://theconversation.com/why-corporate-climate-pledges-of-net-zero-emissions-should-trigger-a-healthy-dose-of-skepticism-156386">net-zero targets</a> often do so in ways that <a href="https://ca1-eci.edcdn.com/reports/ECIU-Oxford_Taking_Stock.pdf">lack the necessary robustness</a> and allow them to <a href="https://www.climatechangenews.com/2021/05/18/shells-net-zero-plan-will-judged-science-not-spin/">continue emitting greenhouse gases</a>, as <a href="https://www.corporateaccountability.org/wp-content/uploads/2021/06/The-Big-Con_EN.pdf">recent reports</a> point out. One concern, for example, is their <a href="https://globalecoguy.org/the-world-needs-better-climate-pledges-4c3d969790d3">dependence on carbon offsets</a>, which allow them to pay for potential carbon reductions elsewhere without making any real changes in their own value chain. </p>
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Read more:
<a href="https://theconversation.com/why-corporate-climate-pledges-of-net-zero-emissions-should-trigger-a-healthy-dose-of-skepticism-156386">Why corporate climate pledges of ‘net-zero’ emissions should trigger a healthy dose of skepticism</a>
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<h2>How to transform business sustainability</h2>
<p>Companies have tried to rebrand their efforts in ways that sound more sophisticated, moving from terms like “corporate social responsibility (CSR)” to “environmental, social and governance (ESG),” “purposeful companies” and “carbon-neutral products.” </p>
<p>But when companies don’t put actions with their words, they increasingly meet resistance from <a href="https://www.sierraclub.org/sierra/many-banks-committing-climate-goals-are-engaging-greenwashing-banking-on-climate-chaos">activists</a>, <a href="https://www.climatechangenews.com/2021/05/18/shells-net-zero-plan-will-judged-science-not-spin/">investors</a> and <a href="https://gizmodo.com/netherlands-officials-tell-shell-to-stop-its-ads-greenw-1847613583">governmental</a> and <a href="https://www.bloomberg.com/news/articles/2021-09-01/regulatory-scrutiny-of-esg-greenwashing-is-intensifying">regulatory</a> bodies. One example is <a href="https://popular.info/p/six-corporations-that-talk-green">the growing scrutiny of companies</a> that promote themselves as climate leaders but at the same time donate money to politicians opposing climate policies. Public relations and advertising employees called out their own industry in <a href="https://cleancreatives.org/learn">a report exposing 90 agencies working with fossil fuel companies</a>.</p>
<p>Business is at a strategic inflection point, which <a href="https://www.penguinrandomhouse.com/books/72469/only-the-paranoid-survive-by-andrew-grove/">Andy Grove</a>, the former CEO of computer chip-maker Intel, described as “a time in the life of a business when its fundamentals are about to change.” </p>
<p>This transformation could evolve in different ways, but as I suggest in my book, fighting climate change effectively requires a new mindset that shifts the relationships between profit maximization and sustainability to prioritize sustainability over profit. </p>
<h2>Early signs of evolution</h2>
<p>There are early signs of evolution, both within companies and from the forces that shape the environment in which companies operate.</p>
<p>One example is how other industries are reassessing their relationship with fossil fuel companies. Some newspapers, including The Guardian, have <a href="https://www.theguardian.com/media/2020/jan/29/guardian-to-ban-advertising-from-fossil-fuel-firms-climate-crisis">banned advertising from fossil fuel companies</a>. A growing number of <a href="https://www.businessinsurance.com/article/20210312/NEWS06/912340421/Zurich-Insurance-stops-insuring-thermal-coal">insurance companies</a> and <a href="https://www.reuters.com/business/sustainable-business/bank-china-stop-financing-new-coal-mining-power-projects-overseas-q4-2021-09-24/">banks</a> have stopped financing coal projects. The French bank Crédit Mutuel said it saw the impact of climate change on its customers and <a href="https://www.cnbc.com/2021/04/22/which-banks-are-increasing-decreasing-fossil-fuel-financing-.html">was willing to lose money “in the short term”</a> to respond to the risk. </p>
<p>Another example is changes in companies’ relationships with suppliers – for example, the business software company Salesforce added <a href="https://www.salesforce.com/content/dam/web/en_us/www/documents/legal/sustainability-exhibit.pdf">a sustainability clause</a> to its contracts requiring suppliers to set carbon reduction goals. </p>
<p>And investors are moving for the first time from just <a href="https://www.greenbiz.com/article/investors-high-impact-companies-set-your-science-based-climate-goals">urging companies to take bolder action on climate change</a> to using sticks. Fidelity announced that it would <a href="https://www.ft.com/content/bef5cf2f-cee3-4380-b14c-47a06a621b6e">vote against corporate directors</a> whose companies don’t disclose their emissions or have a policy on climate change.</p>
<p>Add to these bright spots changes in regulation and policy worldwide that aim to put in place <a href="https://www.vice.com/en/article/z3vavw/half-the-country-is-now-considering-right-to-repair-laws">key sustainability principles</a> and push to <a href="https://apnews.com/article/europe-business-government-and-politics-climate-environment-and-nature-3df2a86ea7491cf2fdff98960cf30bb3">cut emissions at a faster pace</a>, plus the changing expectations of young job seekers when it comes to environmental and social issues, such as <a href="https://www.washingtonpost.com/business/2021/02/18/millennial-genz-workplace-diversity-equity-inclusion/">inclusion and diversity</a>, and you can start to see how the end of sustainability-as-usual may be closer than many people think. Due to climate change, the question is more “when” than “if” it will happen.</p><img src="https://counter.theconversation.com/content/166539/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Raz Godelnik does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Publicly, companies have been paying more attention to social and environmental issues, but their priority remains profit. Climate change is forcing an evolution, a business strategy expert writes.Raz Godelnik, Assistant Professor of Strategic Design & Management, The New SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1026412018-09-18T20:34:11Z2018-09-18T20:34:11ZBusiness as usual? The Sustainable Development Goals apply to Australian cities too<p>We are <a href="https://trove.nla.gov.au/work/32692064?q&versionId=43970540">still settling Australian cities</a> on unceded Aboriginal lands. With the global agreement on the <a href="https://www.un.org/sustainabledevelopment/">United Nations Sustainable Development Goals (SDGs)</a> in 2015, development has finally come home to the developed world. Yet in Australia we still often proceed as if development goals are about foreign aid, somehow separate from our own development activities and civic responsibilities.</p>
<p>The <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Foreign_Affairs_Defence_and_Trade/SDGs">Senate inquiry into the SDGs</a>, for example, has been referred to the Department of Foreign Affairs, Defence and Trade. Three of the seven <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Foreign_Affairs_Defence_and_Trade/SDGs/Terms_of_Reference">terms of reference</a> relate to Australia’s <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetReview201819/ODA">Official Development Assistance</a> program. </p>
<p><a href="https://www.sbs.com.au/news/trade-minister-exit-paris-accord-and-kiss-europe-trade-deal-goodbye">Reports</a> that trade with Europe might be in jeopardy because of Australia’s failure to act responsibly on climate change – a commitment enshrined not just in the Paris Agreement but also in <a href="https://www.un.org/sustainabledevelopment/climate-change-2/">SDG 13</a>: Climate Action – illustrate the naivety of thinking this country can carry on as usual while others tackle sustainable development. </p>
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Read more:
<a href="https://theconversation.com/australias-un-report-card-making-progress-could-do-better-on-inequality-and-climate-102630">Australia's UN report card: making progress, could do better on inequality and climate</a>
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<h2>Australia’s SDG indicator framework</h2>
<p>The National Sustainable Development Council’s focus on transforming Australia is an important starting point. The NCDC draws on the <a href="https://www.sdgtransformingaustralia.com/">SDG Progress Report</a> to “highlight key trends and emerging issues for policy and decision-makers and communities across Australia”. But it doesn’t go far enough.</p>
<p>The focus is on targets and indicators that are deemed relevant and important for Australia. This is complemented by a wheel-of-fortune-style dashboard set of aggregated results across four key benchmarks. </p>
<p>The result is a colourful, largely unintelligible – albeit very well-intentioned – national SDG assessment. </p>
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<a href="https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=594&fit=crop&dpr=1 600w, https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=594&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=594&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=747&fit=crop&dpr=1 754w, https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=747&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/235918/original/file-20180912-144479-1wv6wx2.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=747&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Australia’s SDG Indicator Scorecard.</span>
<span class="attribution"><a class="source" href="https://www.sdgtransformingaustralia.com/wp-content/uploads/Australias-Dashboard_SDGs_310818.pdf">NCDC</a></span>
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<p>Looks like we get a C grade. But what does this actually say about Australian settlements?</p>
<h2>Sanitised and complacent</h2>
<p>The real issues facing Australia are sanitised and out of sight with a 6.5 score. With 90% of Australians living in urban areas, how does this assessment inform and transform the state of sustainable development in our cities? </p>
<p>A core sustainable development challenge for Australia is the spatial unevenness of its development – between cities and non-city regions, between the dominant cities (Sydney and Melbourne) and the rest, or between different suburbs within cities.</p>
<p>Our patchwork economy generates serious social inequities. The answer is not just to stimulate greater economic activity or spread the boom to “lagging” areas. </p>
<p>We need to recognise that the apparent success of the “bright patches” is often based on their exploitation of “dull patches”. Some areas are set up to be sacrifice zones that suffer, for example, the ill effects of resource extraction, heavy industry and waste disposal. </p>
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Read more:
<a href="https://theconversation.com/an-environmentally-just-city-works-best-for-all-in-the-end-53803">An environmentally just city works best for all in the end</a>
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<p>And some regions struggle not simply because they are physically distant, but because uneven provision of infrastructure has made them functionally distant. Prioritisation of certain regions over others and an over-reliance on infrastructure provision as a proxy for development are two issues that the nation needs to tackle to deliver the SDG agenda. </p>
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<figcaption><span class="caption">Do you know all 17 Sustainable Development Goals?</span></figcaption>
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<h2>Beyond national silos</h2>
<p>Australian cities rely on and impact upon these spaces and others far beyond their boundaries. Thus tackling <a href="https://www.un.org/sustainabledevelopment/cities/">SDG 11</a> on cities cannot be separated from tackling the other SDGs, including sustainably managing life on land (<a href="https://www.un.org/sustainabledevelopment/biodiversity/">SDG 15</a>), clean water and sanitation (<a href="https://www.un.org/sustainabledevelopment/water-and-sanitation/">SDG 6</a>), affordable and clean energy (<a href="https://www.un.org/sustainabledevelopment/energy/">SDG 7</a>) and life below water (<a href="https://www.un.org/sustainabledevelopment/oceans/">SDG 14</a>). </p>
<p>This means thinking not just about where and how cities access resources, but where their outputs go. For example, when China halted a major waste flow to its recycling plants this exposed the reliance of Australian cities on often distant facilities.</p>
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Read more:
<a href="https://theconversation.com/chinas-recycling-ban-throws-australia-into-a-very-messy-waste-crisis-95522">China's recycling 'ban' throws Australia into a very messy waste crisis</a>
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<p>This demonstrates how cities are inextricably linked to spaces beyond their city limits, and the need for Australian cities to reduce and reuse as well as just recycle waste. It also illustrates the entwining of Australian settlement development with multiple spaces beyond our borders. Australia’s responsibility for sustainable development includes attention to the nation’s own urban heartlands as well as their impact on both neighbouring and distant countries.</p>
<h2>Putting the SDGs to work in Australian cities</h2>
<p>The SDGs can be mobilised to help achieve sustainable development, but we are not putting them to work in Australia. We stumble our way into the challenges of our climate of change, no more nationally self-aware it seems than before.</p>
<p>A new sustainable development approach is needed in Australia. An SDG ethic and compass must guide our direction so no one is left behind. </p>
<p>The SDGs are an invitation to take seriously the sustainable development challenges we face as a nation, and the implications of our actions for other nations. Rather than look for ways to reinforce our developed country privilege with a C grade report card, we could use the SDGs as a two-fold opportunity to: </p>
<p>1) ask the hard questions about the sustainability of our development</p>
<p>2) collectively explore transformative pathways, particularly within our cities. </p>
<p>Both suggest the importance of connecting more genuinely with Indigenous understandings of sustainability and living ethically on Country. And what do the SDG indicator frameworks and benchmarks tell us about our progress in our <a href="https://theconversation.com/how-can-we-meaningfully-recognise-cities-as-indigenous-places-65561">sovereign relationship with Indigenous people</a> on whose unceded land we live and work? </p>
<p>We are not arguing for a more parochial agenda, or that international development is not important. Indeed, Australia could usefully follow the UK in positioning national science and research priorities within broader “<a href="https://www.ukri.org/research/global-challenges-research-fund/">global challenges</a>”. </p>
<p>Rather, we are pointing to the risks of framing sustainable development issues as problems “over there”. This obscures both Australia’s own acute settlement problems and its role in creating problems “over there”. </p>
<p>What is needed is joined-up policy, planning and research that includes Australia within the frame as a sustainable development site, as well as a funding provider. </p>
<p>It could also include identifying Australia as a country in need: a nation that needs to better contribute to all the SDGs. In the case of <a href="https://www.un.org/sustainabledevelopment/climate-change-2/">SDG 13</a> on climate action, that need is glaring. </p>
<p>In Australia we need to make sure our identity does not include an implicit assumption that our home base is not in need of SDG attention – or only in certain areas. Many if not all aspects of development in Australia are <a href="https://en.wikipedia.org/wiki/Maldevelopment">maldevelopment</a>, which calls for strong critical evaluation and action as much as in any other space. As a nation we can do much better.</p><img src="https://counter.theconversation.com/content/102641/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Wendy Steele receives funding from the Australian Research Council (ARC).</span></em></p><p class="fine-print"><em><span>Libby Porter receives funding from the Australia Research Council (ARC).</span></em></p><p class="fine-print"><em><span>Lauren Rickards does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia has yet to properly acknowledge that the Sustainable Development Goals aren’t just an issue for other countries. The problems that demand our attention are much closer to home.Wendy Steele, Associate Professor of Sustainability and Urban Planning, RMIT UniversityLauren Rickards, Associate Professor, Sustainability and Urban Planning, School of Global Urban and Social Studies; Co-leader, Climate Change and Resilience Research Program, Centre for Urban Studies, RMIT UniversityLibby Porter, Vice-Chancellor's Principal Research Fellow, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/750062017-12-11T13:10:51Z2017-12-11T13:10:51ZLessons from Sweden in sustainable business<figure><img src="https://images.theconversation.com/files/183797/original/file-20170829-10421-1hg6v9k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>There is an increasing trend among companies across the globe to report on their sustainability. As well as information on the company’s economic performance, this includes information on how it is handling social, ethical and environmental concerns. It is a trend driven by customers, suppliers, employees and banks in recognition that these are just as important elements of any business.</p>
<p>Often, the level of information provided by companies is criticised for being inadequate. But my <a href="http://portal.research.lu.se/portal/en/publications/in-search-of-informational-quality-in-sustainability-reports(933b9e77-99cb-4f90-b107-433179bc68d4).html">recent research</a> into Swedish companies shows that the quality of information does appear to be increasing. It also shows what areas are in need of further improvements to make this practice worthwhile.</p>
<p>For years Swedish companies <a href="https://assets.kpmg.com/content/dam/kpmg/pdf/2015/11/kpmg-international-survey-of-corporate-responsibility-reporting-2015.pdf">have been regarded</a> as among the best in corporate communication – in general and in sustainability reporting in particular. Their excellence in disclosing information on their performance on the sustainability arena is confirmed in both <a href="http://www.tandfonline.com/doi/abs/10.1080/09638180.2015.1064009">academic research</a> and comprehensive reports <a href="https://home.kpmg.com/sg/en/home/insights/2016/05/kpmg-sustainability-report-2015.html">like major accountancy firm KPMG’s</a> on global sustainability trends.</p>
<p>Until recently, whether or not a company reported on its sustainability was voluntary in most countries. But from the financial year 2017, a new <a href="http://register.consilium.europa.eu/doc/srv?l=EN&f=PE%2047%202014%20INIT">EU directive</a> requires every so-called “public interest entity” to report on the social and environmental impact of its business model.</p>
<p>Having recently studied sustainability reports from the 30 largest listed Swedish companies over the period 2008-2015, there’s a lot to be learned from them. It includes household names like retailer H&M, telecomms company Ericsson and car maker Volvo. It makes clear that big and profitable companies can be more accountable when it comes to sustainability reporting.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/197961/original/file-20171206-894-16bsoin.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sustainability reports help hold companies to account.</span>
<span class="attribution"><span class="source">shutterstock.com</span></span>
</figcaption>
</figure>
<p>None of these companies is perfect. My research shows that they too are learning all the time when it comes to their sustainability reporting. Over the seven-year period that I looked at, the information goes from being quite brief and general to more elaborate and detailed. </p>
<p>This is an increasingly important part of demonstrating business ethics. In these sustainability reports companies communicate how they take responsibility for their impact on society. This is done by disclosing their efforts to integrate social, environmental and ethical concerns into their business practices.</p>
<p>Most importantly, my research shows that Sweden’s biggest companies have started to integrate sustainability into their business models. Volvo’s business model is built on three pillars: economic, social and environmental. This holds true for large companies that you may not have heard of too. Take Assa Abloy – it’s the world’s largest lock manufacturer and has a market cap of US$22.6 billion. In its <a href="https://www.assaabloy.com/en/com/sustainability/">business model</a>, sustainability is accentuated in all processes from innovation and product development to logistics and sales.</p>
<p>The more recent reports show that several companies have also started relating their sustainability goals to risk management. They increasingly see how things like climate change and environmental issues will impact on their bottom line. For example, Sandvik, SEB, and Volvo are good at relating their sustainability goals to risk management. They highlight risks throughout the value chain and sometimes also discuss how these are being managed. </p>
<h2>Room for improvement</h2>
<p>There is, of course, room for improvement in all the companies. In some, this integration of sustainability into their business models is more tentative. It is clear that this is a new process for them and they are still working on efficiently integrating sustainability at the heart of their business model.</p>
<p>In particular, I found there were many that failed to realise how engaging in various sustainability activities can help their bottom line. Instead, sustainability is seen as more of a corporate social responsibility exercise. But relating sustainability to the bottom line is critical for any company – not least because shareholders often use this against their company having a focus on sustainability goals.</p>
<p>Another area for improvement is what gets included in sustainability reports. It is evident that developing valid and reliable measures of sustainability is tricky. Often concrete targets and time frames for achieving a sustainable goal are simply left out, leaving vague statements such as an aim to decrease CO₂ emission and waste.</p>
<p>This also proves problematic when it comes to comparing the sustainability performance of different companies. Even where there is sophisticated reporting, the lack of a universal system of measures makes it difficult for investors to assess which companies are better. </p>
<p>Despite these shortcomings, the growth in sustainability reporting in recent years is significant. It shows that companies are thinking about and forcing themselves – as well as others – to act in a way that profits wider society as well as their financial earnings. And Swedish companies offer inspiration to others that there is a business case to put ethical concerns on the same plain as economic ones.</p><img src="https://counter.theconversation.com/content/75006/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susanne Arvidsson has received research grants from Jan Wallander and Tom Hedelius Foundation and the Tore Browaldhs Foundation, and Crafoord Foundation.</span></em></p>For years Swedish companies have been regarded as among the best in sustainability reporting.Susanne Arvidsson, Associate professor in Accounting and Finance, Lund UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/583072016-05-04T04:28:58Z2016-05-04T04:28:58ZSustainability reporting: why South African companies need to up their game<figure><img src="https://images.theconversation.com/files/121027/original/image-20160503-19860-v93l63.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South African companies aren't doing enough when it comes to sustainability reporting.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Sustainability reporting combines economic performance with social responsibility and environmental care. It aims to help businesses set goals. It also measures performance and manages change towards sustainability. </p>
<p>Many governments and stock exchanges require businesses to provide some level of sustainability reporting. This has become important because of growing social and environmental <a href="http://www.theguardian.com/environment/bp-oil-spill">injustices</a>, high-profile <a href="https://www.epa.gov/vw/learn-about-volkswagen-violations">corporate scandals</a> and the global financial crisis. </p>
<p>Sustainability reporting is important because poor disclosure can lead to a decline in investments for a country. Establishing a suitable sustainability reporting framework is therefore important. </p>
<p>South Africa is one of only a few emerging-market economies showing a significant increase in sustainability reporting. It is also the only one in Africa. Companies listed on the <a href="https://www.jse.co.za/">Johannesburg Stock Exchange</a> have to integrate sustainability reporting with financial reporting. If they don’t they have to explain why they’re not complying.</p>
<p>But more needs to be done if sustainability reporting is to maintain its integrity and value. It needs to be critically assessed against international standards.</p>
<p>We did research on the reporting of 100 companies listed on the Johannesburg Stock Exchange. We found that the use of standards and indicators was low in the real estate and consumer services industries. Other industries fared better. Companies with international status showed a stronger tendency to use international standards. They used local requirements to a lesser extent.</p>
<p>Based on the results we developed a framework that companies can use to improve their sustainability reporting. The results are expected to be published soon.</p>
<h2>Plethora of standards and indicators</h2>
<p>There are various sustainability reporting standards and indicators. There are 17 reporting standards internationally. In addition, there are 10 categories over and above the Global Reporting <a href="https://www.globalreporting.org">Initiative’s</a> general standard disclosure and indicators. South Africa has 12 initiatives. These are made up of mandatory requirements, voluntary guidance and initiatives put in place by the government, the local stock exchange and market regulators. </p>
<p>These 12 initiatives include:</p>
<ul>
<li><p>legislation such as the Black Economic Empowerment Act and the Mineral and Petroleum Resources Development Act;</p></li>
<li><p>voluntary guidance. This is covered by the King Code and the Johannesburg Stock Exchange’s Social Responsibility Investment Index; and</p></li>
<li><p>other initiatives such as state-owned enterprise shareholder compacts.</p></li>
</ul>
<p>Some international standards focus on policy. There are others that focus on management and others on reporting standards. The key ones include: </p>
<ul>
<li><p>the United Nations <a href="https://www.unglobalcompact.org/">Global Compact</a> and Organisation for Economic Cooperation and Development <a href="http://www.oecd.org/corporate/mne/">guidelines</a>;</p></li>
<li><p>the International <a href="http://www.ilo.org/global/about-the-ilo/lang--en/index.htm">Labour Organisation</a> and United Nations guiding <a href="https://www.unglobalcompact.org/library/2">principles</a> on business and human rights; and</p></li>
<li><p>the Global Reporting Initiative.</p></li>
</ul>
<p>The Global Reporting Initiative gives guidance on what and how to report. There are no binding requirements. It is meant to be used as a reporting standard alongside others.</p>
<p>The initiative groups indicators along the following lines:</p>
<ul>
<li><p>general standard disclosure. This includes governance, stakeholder engagement and ethics;</p></li>
<li><p>economic, environmental and societal indicators; and </p></li>
<li><p>interlinked issues that address tensions between the three pillars of traditional triple bottom line reporting. This covers planet, people and prosperity.</p></li>
</ul>
<h2>New framework</h2>
<p>Our framework used the South African initiatives. We incorporated these with the international standards and the Global Reporting Initiative guidelines. We also included 10 categories of integrated indicators. These aim to address tensions between the three pillars of the traditional triple bottom line approach. An integrated approach provides a more coherent picture of business sustainability.</p>
<p>Based on this framework our analysis of South Africa’s top 100 listed companies showed that they were using: </p>
<ul>
<li><p>Eleven of the 12 South African requirements and initiatives. The state-owned enterprise shareholder compact was the only local initiative not used.</p></li>
<li><p>Fourteen of the 17 international standards. The companies weren’t using the Core Labour Standard, Social Accountability 8000 standard and the Fair Labour Association standard. </p></li>
<li><p>Only three integrated indicators. </p></li>
</ul>
<p>Overall, our research showed that South African companies generally aren’t using the integrated indicators. Rather, their focus is on the triple bottom line concept. This means that the more challenging aspects of sustainability are neglected.</p>
<p>South African companies should move from adopting low-level compliance and conformance indicators to using more complex integrated indicators. In other words, they need to move from weak sustainability to strong sustainability.</p>
<p>Our proposed framework can provide business managers with a guide to comprehensive reporting on sustainability performance. It can also help strengthen a business’s commitment to sustainability.</p><img src="https://counter.theconversation.com/content/58307/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Research shows that South African companies are neglecting the more challenging aspects of sustainability reporting.Miemie Struwig, Professor, Department of Business Management, Nelson Mandela UniversityHeidi Janse Van Rensburg, Senior Lecturer, Nelson Mandela UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/501792015-11-04T19:04:03Z2015-11-04T19:04:03ZStudy: Australians can be sustainable without sacrificing lifestyle or economy<figure><img src="https://images.theconversation.com/files/100706/original/image-20151104-25343-16vb7i8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia can balance energy, water and food needs with the environment. </span> <span class="attribution"><span class="source">Wind turbine image from www.shutterstock.com</span></span></figcaption></figure><p>A sustainable Australia is possible – but we have to choose it. That’s the finding of a <a href="http://www.nature.com/articles/doi:10.1038/nature16065">paper</a> published today in Nature.</p>
<p>The paper is the result of a larger project to deliver the first Australian <a href="http://www.csiro.au/nationaloutlook">National Outlook report</a>, more than two years in the making, which CSIRO is also releasing today.</p>
<p>As part of this analysis we looked at whether achieving sustainability will require a shift in our values, such as rejecting consumerism. We also looked at the contributions of choices made by individuals (such as consuming less water or energy) and of choices made collectively by society (such as policies to reduce greenhouse gas emissions). </p>
<p>We found that collective policy choices are crucial, and that Australia could make great progress to sustainability without any changes in social values.</p>
<h2>Competing views</h2>
<p>Few topics generate more heat, and less light, than debates over economic growth and sustainability.</p>
<p>At one end of the <a href="https://theconversation.com/naomi-klein-or-al-gore-making-sense-of-contrasting-views-on-climate-change-32072">spectrum</a>, “<a href="https://theconversation.com/an-ecomodernists-manifesto-save-wildlife-by-embracing-new-tech-40239">technological optimists</a>” suggest that the marvellous invisible hand will take care of everything, with market-driven improvements in technology automatically protecting essential natural resources while also improving living standards.</p>
<p>Unfortunately, there is no real evidence to back this, particularly in protecting unpriced natural resources such as ocean fisheries, or the services provided by a stable climate. Instead the evidence suggests we are already crossing important <a href="http://www.stockholmresilience.org/21/research/research-news/1-15-2015-planetary-boundaries-2.0---new-and-improved.html">planetary boundaries</a>.</p>
<p>Other the other end of the spectrum, people argue that achieving sustainability will require a <a href="https://theconversation.com/life-in-a-degrowth-economy-and-why-you-might-actually-enjoy-it-32224">rejection of economic growth</a>, or a shift in values away from consumerism and towards a more ecologically attuned lifestyles. We refer to this group as advocating “communitarian limits”.</p>
<p>A third “institutional reform” approach argues that policy reform can reconcile economic and ecological goals – and is attacked from one side as anti-business alarmism, and from the other as indulging in pro-growth greenwash.</p>
<h2>Income up, environmental pressures down</h2>
<p>My colleagues and I have spent much of the past two years developing a new framework to explore how Australia can decouple economic growth from multiple environmental pressures – including greenhouse emissions, water stress, and the loss of native habitat.</p>
<p>We use nine linked models to assess interactions between energy, water and food (and links to ecosystem services) in the context of climate change. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=493&fit=crop&dpr=1 600w, https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=493&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=493&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=620&fit=crop&dpr=1 754w, https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=620&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/100705/original/image-20151104-25358-u46dqh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=620&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The National Outlook focuses on the intersection of water, energy and food.</span>
<span class="attribution"><span class="source">National Outlook Report, CSIRO</span></span>
</figcaption>
</figure>
<p>The project provides projections for more than 20 scenarios, exploring different potential trends for consumption and working hours; energy and resource efficiency; agricultural productivity; new land-sector markets for energy feedstocks and ecosystem services; national and global abatement efforts, climate, and global economic growth. </p>
<p>While our major focus is on Australia, at the national scale, we also model what might happen globally, and at more detailed state and local scales within Australia.</p>
<p>We find economic growth and environmental impacts can be decoupled − in the right circumstances. National income per person increases by 12-15% per decade from now to 2050, while the value of economic activity almost triples.</p>
<p>In stark contrast to income, which rises across all scenarios, environmental performance varies widely. Key environmental indicators such as greenhouse gas emissions, water stress, and native habitat and biodiversity are projected to more than double, stabilise, or fall across different scenarios to 2050. </p>
<p>As shown in the chart below, we find that energy rises in all scenarios, but that greenhouse emissions can fall at the same time – with the right choices and technologies. Water use can also rise without increasing extractions from already stressed catchments. Food output (here indicated by protein) can increase, while native habitat is restored.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=669&fit=crop&dpr=1 600w, https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=669&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=669&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=840&fit=crop&dpr=1 754w, https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=840&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/100674/original/image-20151103-16542-13t3shx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=840&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.nature.com/articles/doi:10.1038/nature16065">Hatfield-Dodds et al (2015)</a></span>
</figcaption>
</figure>
<p>Many of the 20 scenarios explored would represent substantial progress towards sustainable prosperity. </p>
<p>Indeed, we find that Australia could begin to repair past damage: restoring significant areas of native habitat and achieving negative emissions (net sequestration) of greenhouse gasses.</p>
<h2>Growth of what?</h2>
<p>We use the normal definition of economic growth as measured by increase in Gross Domestic Product (GDP) – the value of goods and services produced in an economy – consistent with the national accounts framework.</p>
<p>Some authors use a different definition, most notably <a href="http://www.resilience.org/stories/2011-10-09/dalys-steady-state-economics">Herman Daly</a> a leading advocate for a steady state economy. Daly defines growth as an increase in physical economic scale, such as resource extraction, and goes on to argue that indefinite (material) economic growth is not possible. </p>
<p>While this may be true, for his definition, it can be confusing for people that do not realise he is not referring to GDP growth. Indeed, Daly <a href="http://www.scientificamerican.com/article/economics-in-a-full-world/">recently acknowledged</a> that economic (GDP) growth is possible with finite resources and steady material throughput.</p>
<p>These definitions matter: we project growth (GDP - measured in real dollars, adjusted for inflation) increases by more than 160% in scenarios where domestic material extractions and throughput (measured in tonnes) decreases by around 40%. </p>
<h2>Choosing a sustainable future</h2>
<p>But here is the real crunch: we find these substantial steps toward sustainability could build on policy approaches that are already in place in Australia or other countries. This implies Australia could make enormous progress towards a more sustainable future without a major change in what we value.</p>
<p>We can be confident that a values shift is not required to achieve these outcomes – at least before 2050 – because none of the scenarios we modelled assume change in values or a new social or environmental ethic.</p>
<p>Instead, we show that people will make choices to change their behaviour to make the best of particular policy settings. These choices shape production and consumption.</p>
<p>For instance, we consider increasing Australia’s climate effort in line with other countries would be consistent with <a href="http://www.lowyinstitute.org/news-and-media/press-releases/2015-lowy-institute-poll-finds-rapidly-shifting-attitudes-climate-issues-and-strong-views-about">Australian public opinion</a> and assessments of Australia’s <a href="http://www.climatechangeauthority.gov.au/node/180/">national interest</a> in limiting the rise in average global temperature to 2°C. So we do not interpret this as implying a change in values.</p>
<p>But we find collective choices are crucial. For example, individual choices about whether to drive or catch a train to work are strongly shaped by prior collective choices about transport infrastructure. Collective choices are often, but not always implemented through changes in government policy, legislation, and programs.</p>
<p>We find collective choices explain around 50-90% of differences in environmental performance and resource use across the scenarios we model. Consistent with the institutional reform approach, we find top-down collective choices are particularly important in shaping “public good” outcomes – accounting for at least 83% of the difference between scenarios for greenhouse gas emissions. </p>
<p>Bottom-up individual choices play a greater role when private and public benefits are aligned. For instance individual choices account for up to half of the difference between scenarios for energy use (33–47%) and non-agricultural water consumption (16–53%).</p>
<p>While individual choices are important, we find decisions we make as a society are likely to shape Australia’s future sustainability more than the decisions we make as businesses and households.</p>
<p>Sustainable prosperity is possible, but not predestined. Australia is free to choose.</p>
<hr>
<p><em>Steve will be on hand for an Author Q&A between 9:30 and 10:30am AEDT on Friday, November 6, 2015. Post your questions in the comments section below.</em></p><img src="https://counter.theconversation.com/content/50179/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steve Hatfield-Dodds does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We have all the tools to achieve economic growth and environmental sustainability - we just have to choose to use them.Steve Hatfield-Dodds, Chief Scientist, Integration science and public policy, CSIROLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/458352015-08-31T20:07:49Z2015-08-31T20:07:49ZBank exposure to coal projects drowning in greenwash<figure><img src="https://images.theconversation.com/files/93397/original/image-20150831-13143-1lbc4b5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Good for humanity?</span> <span class="attribution"><span class="source">Image sourced from Shutterstock.com</span></span></figcaption></figure><p>The development of black coal mines in Australia continues to attract controversy, with <a href="https://theconversation.com/newcastles-divestment-is-a-chance-for-the-worlds-largest-coal-port-to-consider-its-future-46807">divestment campaigns</a> gaining momentum. The role of banks in financing such projects has come under scrutiny.</p>
<p>But to what extent are Australian banks lending to coal mine projects?</p>
<p>When asked about its support for the sector recently, a Commonwealth Bank spokesperson used rhetoric akin to that of a politician, <a href="http://www.afr.com/business/mining/coal/cba-still-supports-coal-with-26b-exposure-to-the-sector-despite-adani-setback-20150807-gity7e#ixzz3jKGdAdNI">saying:</a></p>
<blockquote>
<p>“CBA’s role is to support the Australian economy.” </p>
</blockquote>
<p>The bank provided <a href="https://www.commbank.com.au/content/dam/commbank/assets/about/who-we-are/sustainability/2015-02-05-group-energy-exposure-and-finance-emissions-energy-sector.pdf">finance to facilitate 940 kilotonnes</a> of coal extraction during the 2014 financial year.</p>
<p>How can it be in the interests of the Australian economy, not to mention the bank’s long term investors, to fund new development of carbon intensive energy sources with risky futures? At odds with such statements of economic benefits is the tendency of banks to downplay such “investments” and disclose the small percentage make up of emissions intensive energy financing to their total credit exposure.</p>
<h2>Soft approach</h2>
<p>Disclosure by banks on exposure to coal projects tend to be reactive, with bank websites and annual reports revealing very little hard information about their approach to investment in carbon intensive sectors. </p>
<p>Indeed a long standing criticism of the sustainability disclosures of the world’s big banks is that, while they report often quite detailed information on the environmental impact of their operations or their community work, they say little about the social and environmental impact of their lending portfolio. Financing the arts is nice, but a distraction from the main issue. The balance is all wrong and, arguably, deceptive.</p>
<p>Not much has changed and where disclosures exist they lack detail or a convincing commitment. For example, ANZ’s quantified <a href="http://www.anz.com/about-us/corporate-responsibility/environment/">environmental targets</a> relate to its own operations, not its lending practices. Targets concerning its energy consumption and greenhouse gas emissions of its operations and the environmental impact of paper consumed on behalf of its customers are trivial by comparison.</p>
<p>NAB’s <a href="http://www.nab.com.au/content/dam/nab/about-us/our-business/esg-risk-principles.pdf">ESG Risk Principles</a> involve looking “for opportunities to minimise both the direct and indirect negative environmental risk and impacts from our operations, products and services”. Without data on the environmental impacts of products and services, statements such as these are unconvincing. </p>
<p>Likewise, HSBC’s <a href="http://www.hsbc.com/citizenship/sustainability/finance">Energy Sector Policy</a> “adopts a cautious approach to activities which contribute significantly to climate change and which have a long asset life inconsistent with the transition to a low carbon economy” and “will increasingly support only new CFPPs which have lower carbon intensities”. Not really a commitment to addressing what is increasingly seen as a key business risk – climate risk.</p>
<p>In 2013 the RBS Group did <a href="http://www.rbs.com/content/dam/rbs/Documents/Sustainability/Energy_Financing_Report_2013.pdf">report</a> hard facts on its lending to the UK energy and power sectors. Since then its <a href="http://www.rbs.com/content/dam/rbs/Documents/Sustainability/2014%20docs/Equator_principles.pdf">reporting</a> against the <a href="http://www.equator-principles.com/index.php/ep3">Equator Principles</a> shows that in 2014 it was invested in one class A project defined as “Projects with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented”. Further details were not to be found.</p>
<h2>Customers vs investors</h2>
<p>Pressure on the big banks is coming from customers as well as environmental groups. The growth of <a href="http://drcaroladams.net/what-is-a-sustainable-bank-an-interview-with-david-korslund-global-alliance-for-banking-on-values/">sustainable banks</a> demonstrates the shift in society’s (and customers’) views on the matter. </p>
<p>Investors in the big banks should be more concerned. While the long term risk to the environment is a key concern, the loss of customers through wishy-washy commitments and lack of information is an immediate concern. Customers and investors are increasingly seeking information about exposure to carbon, for example, details of the emissions produced by power generators to which funding is provided. There is no doubt questions at AGMs will continue to put pressure on banks to increase disclosures on the emissions intensity of their energy lending.</p>
<p>In the meantime, banks seem more focused on setting targets for paper consumption and the carbon emissions of running their offices and branches, than the more important issue of carbon intensity of the projects they lend to. </p>
<p>The inevitable switch to focusing on the financial risk of lending to a challenged sector will be driven by pressure groups, employees and perhaps, most importantly, a new generation of customers.</p><img src="https://counter.theconversation.com/content/45835/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carol A Adams is a Professor of Accounting at Durham University and a member of the Climate Disclosure Standards Board's Technical Working Group. </span></em></p>Australia’s biggest banks seem more concerned with disclosing how much paper they recycle than their lending exposure to coal mines.Carol A Adams, Professor of Accounting, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/327482014-11-13T04:58:26Z2014-11-13T04:58:26ZGreen building scheme review adds yet more policy uncertainty<figure><img src="https://images.theconversation.com/files/64451/original/47vd33kb-1415853949.jpg?ixlib=rb-1.1.0&rect=26%2C26%2C1934%2C1083&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The scheme aims to make buildings with high energy-efficiency ratings, like this one in Canberra, attractive to potential buyers and renters.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File%3A25_Brindabella_Circuit.jpg">Bidgee/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Australia’s policies to cut greenhouse emissions have been shrouded in uncertainty over the past few months. The contentious <a href="https://theconversation.com/au/topics/renewable-energy-target-review">Renewable Energy Target review</a> and the swapping of the <a href="https://theconversation.com/search?q=carbon+tax+repeal">carbon price</a> for <a href="https://theconversation.com/au/topics/direct-action-plan">Direct Action</a> have garnered most of the headlines. But another policy, which has quietly been cutting emissions for the past four years, is now also under scrutiny.</p>
<p>The <a href="http://www.cbd.gov.au">Commercial Building Disclosure</a> (CBD) program is the latest federal environmental policy to be placed under review. The scheme encourages energy efficiency by requiring owners to detail whether their buildings are high or low energy users. It has strong support in both industry and <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2Fa275472e-b699-46e7-ac29-bcf2fb8ee942%2F0165%22">politics</a>. </p>
<p>The review creates uncertainty about the future of a proven program which has been effective in improving energy efficiency.</p>
<p>The introduction of the CBD program in 2010 radically improved the visibility of building energy consumption and operating costs to prospective owners and tenants. This has created an effective market-based incentive to improve energy efficiency, without significant regulatory involvement or administrative overheads. </p>
<p>Improving the energy efficiency of existing buildings is one of the quickest, easiest and cheapest ways to cut greenhouse emissions. Some 85% of Australia’s buildings were built before energy-efficiency regulations were introduced, and turnover is slow: just 1-3% of buildings are replaced each year. Commercial buildings account for about 10% of Australia’s greenhouse emissions. </p>
<p>Cutting emissions saves money as well. The Intergovernmental Panel on Climate Change <a href="http://report.mitigation2014.org/drafts/final-draft-postplenary/ipcc_wg3_ar5_final-draft_postplenary_chapter9.pdf">reports that</a> cutting emissions in the building sector by 30% would have net economic benefits. In Australia, commercial building retrofitting is <a href="http://www.climateworksaustralia.org/sites/default/files/documents/publications/climateworks_lcgp_australia_full_report_mar2010.pdf">among the most economically attractive ways</a> to reduce emissions. </p>
<h2>How does the CBD program work?</h2>
<p>The CBD program, also known as “mandatory disclosure”, encourages commercial building managers to drive emissions down. The scheme requires the disclosure of energy efficiency information on a building whenever a commercial office space larger than 2,000 square metres is offered for sale or lease. This includes giving the building a star rating (under a scheme called <a href="http://www.nabers.gov.au/public/WebPages/ContentStandard.aspx?module=10&template=3&id=5&include=HowNabersWorks.htm&side=factsheets.htm">NABERS</a>), detailing the efficiency of its lighting, and making recommendations for further improvements. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=477&fit=crop&dpr=1 600w, https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=477&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=477&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=600&fit=crop&dpr=1 754w, https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=600&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/64431/original/vpfdgmzy-1415838189.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=600&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Example of the signage required for compliance with CBD obligations.</span>
<span class="attribution"><span class="source">Australian Government Department of Industry</span></span>
</figcaption>
</figure>
<p>This empowers potential tenants or buyers to choose more efficient buildings, and thus creates market pressure for owners to improve their energy efficiency. Since the announcement of the program, the average star rating <a href="http://cbd.gov.au/files/files//IPD-Department%20Of%20Industry%20NABERS%20Energy%20Office%20Market%20Analysis%20Q4%202013.pdf">has jumped</a> from 3.3 to 4.1, while the amount of floor area covered by the NABERS rating scheme has almost doubled. </p>
<p>Individual buildings rated more than once whilst CBD has been in operation have <a href="http://www.nabers.gov.au/AnnualReport/2010-14-cbd-statistics.html">reduced their energy</a> use by an average of 8.6%. This would deliver an almost 1% reduction in Australia’s total greenhouse emissions if implemented across the entire commercial building stock.</p>
<p>The program has been particularly effective at targeting smaller, poorer-performing buildings, in contrast to flagship office buildings where being green is already a key consideration. Compared with <a href="http://www.nabers.gov.au/AnnualReport/index.html">other schemes</a> targeting this sector the market-based CBD program has been a huge success.</p>
<h2>So why review the scheme?</h2>
<p>The CBD program has <a href="http://www.thefifthestate.com.au/politics/government/cbd-program-up-for-review-and-axing/67608">strong support</a> from both the property and sustainability industries, including the companies that work to retrofit old buildings. The Green Building Council of Australia has <a href="http://www.gbca.org.au/uploads/180/35252/GBCA%20Pre-Budget%20submission%20to%202014-15%20Federal%20Budget%20FINAL%20310114.pdf">singled out the scheme</a> as playing an important role in raising awareness and setting minimum standards for energy efficiency.</p>
<p>The <a href="http://cbd.gov.au/overview-of-the-program/cbd-review-201415/terms-of-reference">review</a> will be carried out by ACIL Allen, the company that also provided modelling for the controversia<a href="https://theconversation.com/au/topics/renewable-energy-target">l Renewable Energy Target Review</a>. It will advise on whether the scheme should continue or be scrapped, but will also be free to make broader recommendations that it be broadened out to include smaller buildings or non-commercial properties. This wide remit has <a href="http://www.thefifthestate.com.au/business/trends/behind-the-lines-in-energy-efficiency-land/68141">already been blamed</a> for creating damaging uncertainty in the energy-efficiency industry.</p>
<p>Meanwhile, the federal government has outlined a method for <a href="http://www.environment.gov.au/system/files/pages/a6d1ee7d-2e4d-42b2-b9c8-43a5564c2302/files/commercial-buildings-determination.pdf">including commercial building emissions reductions in the Carbon Farming Initiative</a>, as part of the newly approved Direct Action plan. The proposed method uses the NABERS star rating of a building as a measure of energy consumption.</p>
<p>In some ways the CBD program would be a natural fit with the proposed method. A building owner required to get a star rating under mandatory disclosure could potentially then bid for Direct Action funding to improve it. But Direct Action, which is focused primarily on large projects, requires bidders to achieve minimum emissions reductions of 2,000 tonnes of carbon dioxide per year – 10 times larger than the level <a href="http://www.environment.gov.au/submissions/emissions-reduction/green-paper/263-property-council-of-australia.pdf">advocated for</a> by the Property Council of Australia.</p>
<p>This means that an average commercial building attempting to cut its energy use by a very ambitious 30% would need to have a floor area of at least 18,000 sq m to be eligible for Direct Action. This would exclude almost 80% of office buildings, unless the savings from various different buildings were lumped together to form a bigger project. </p>
<p>It seems unlikely that the CBD program will be entirely scrapped, particularly as it has proved to be effective in cutting emissions without direct government subsidies. Its alignment with Direct Action plan also further strengthens the case for the CBD to be retained in its current form. </p>
<p>But there’s a danger that the large minimum emissions reductions required for Direct Action funding and ongoing policy uncertainty will act as barriers to efficiency improvements being made in much of the commercial building sector.</p><img src="https://counter.theconversation.com/content/32748/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Daly does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. He is a current member of The Greens.</span></em></p><p class="fine-print"><em><span>Paul Cooper does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.</span></em></p>Australia’s policies to cut greenhouse emissions have been shrouded in uncertainty over the past few months. The contentious Renewable Energy Target review and the swapping of the carbon price for Direct…Daniel Daly, PhD candidate at the Sustainable Buildings Research Centre, University of WollongongPaul Cooper, Professor and Director of the Sustainable Buildings Research Centre (SBRC), University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/315692014-09-23T01:46:08Z2014-09-23T01:46:08ZStyle over substance: sustainability reporting falling short<figure><img src="https://images.theconversation.com/files/58895/original/zzkgspy9-1410522936.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sustainability reporting still lacks consistency and comparability</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>Once on the fringe of institutional investors’ considerations, reporting on environmental, social and governance related issues is now common practice among major listed companies.</p>
<p>But the quality and consistency of sustainability reporting remains a problem, with some companies distorting their reporting to highlight positive news.</p>
<p>Despite the sector being driven by the needs of socially responsible investors, sustainability reporting practices are diverse, reflecting the differing motivations behind these disclosures. There is still a need for many companies to demonstrate greater transparency and genuine evidence of good corporate citizenship as their primary motivators in this area.</p>
<p>According to <a href="http://www.kpmg.com/global/en/issuesandinsights/articlespublications/press-releases/lists/expired/corporate-responsibility-reporting.aspx">KPMG</a>, sustainability reporting has evolved into mainstream business practice over the last two decades. Now 95% of the largest 250 companies worldwide provide sustainability disclosures. This is further supported by the <a href="http://acsi.org.au/images/stories/ACSIDocuments/generalresearchpublic/Sustainability%20Reporting%20Journey%202014.Jul%2014.pdf">Australian Council of Superannuation Investors (ACSI)</a> which claims 85% of the ASX200 now provide some level of sustainability disclosure. </p>
<p>The socially responsible investment community relies on sustainability reporting data to derive market value of companies. </p>
<p>Yet despite the formation of the United Nations Principles of Responsible Investment, consisting of more than 1200 signatories, the quality of sustainability reporting still remains questionable. </p>
<p>The indicators used by publicly listed Australian companies, even within industry sectors, are often inconsistent. </p>
<p>I recently compared sustainability reports between 2007 and 2011 for 10 companies within the construction industry. I found significant differences in common indicators such as carbon emissions and health and safety. These differences were not only in terms of the units adopted for the indicators, but also the reporting time frame and the nature of information disclosed. </p>
<p>For example, some companies separated <a href="http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/About-the-Mechanism/What-emission-types-are-in-and-out/Pages/default.aspx">scope 1 and 2 carbon emissions</a>, some made no distinction, and some divided emissions into whether they derived from diesel, electricity, petrol or gas. Individual companies also changed their assessment of health and safety indicators from year to year, making it difficult to assess any progress in the area.</p>
<p>Companies were also more likely to graph indicators with favourable trends. Of the graph indicators that I analysed (covering a range of issues across economic, environmental and social dimensions), 68% distorted results to highlight positive news more prominently. </p>
<p>These findings are worrying as investors are increasingly interested in environmental, social and governance data as a way of assessing companies’ risks. These investors need to be able to compare data over time and between companies to be able to distinguish real leaders from laggards. However, the inconsistency of indicators and evidence of graph obfuscation is making it difficult to benchmark companies’ performance.</p>
<p>The <a href="https://www.globalreporting.org/reporting/g4/Pages/default.aspx">G4 Sustainability Reporting Guidelines (G4)</a> provide an opportunity for companies to respond better to the demands of stakeholders. They are divided into two parts: reporting principles and standard disclosures; and the implementation manual. <a href="http://banarra.com/images/uploads/pdf/G4_In_Practice_-_Australias_Early_Adopters.pdf">Early adopters of G4</a> in Australia have already reported on its many benefits.</p>
<blockquote>
<p>“We’re on a journey towards more meaningful reporting and disclosure and G4 has a key role to play in that. It worked well with integrated reporting and helped us share the non-financial risk and value story with our stakeholders.” - Stockland Australia</p>
<p>“G4 helped us show people what we’re doing and why. It’s a good tool in terms of internal communication. It also has a role to play externally, helping us demonstrate that we as a business are embedding sustainability and it is key to our success - and you might want to do it too.” - ERM Australia</p>
</blockquote>
<p>Companies certainly need to keep in mind two important G4 principles. First, they need to ensure there is comparability between their own reports over time and those of their competitors. Second, they need to represent both positive and negative performance in a balanced manner. </p>
<p>Until companies can fully adopt these principles, sustainability reporting will not have significant meaning for investors.</p><img src="https://counter.theconversation.com/content/31569/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Renard Siew is a volunteer with the Global Reporting Initiative - Focal Point Australia (views in the article are his own and do not reflect that of GRI).</span></em></p>Once on the fringe of institutional investors’ considerations, reporting on environmental, social and governance related issues is now common practice among major listed companies. But the quality and…Renard Siew, Postdoctoral fellow, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/227982014-02-05T14:45:57Z2014-02-05T14:45:57ZExplainer: what is the triple bottom line?<figure><img src="https://images.theconversation.com/files/40675/original/7s9tzpkv-1391535133.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Three's a crowd.</span> <span class="attribution"><span class="source">wwarby</span></span></figcaption></figure><p>The triple bottom line is a term coined in the late 1990s by the influential business thinker and consultant, <a href="http://www.amazon.com/exec/obidos/ASIN/0865713928/ethics">John Elkington</a>. </p>
<p>It captures a very neat idea, namely that a modern organisation has three broad areas of impact: economic, social and environmental. While we measure one of these through financial profit, we have no systematic means of measuring the other two. A “triple bottom line” would therefore capture not just the financial bottom line (the profit or loss) but the social and environmental impacts of activity as well, although not necessarily as an amount of money. So far so good.</p>
<p>The influence of the triple bottom line, both positive and baleful, is considerable. Indeed, it is almost ubiquitous, especially in and around discussions of what sustainability means for business. </p>
<p>But the concept is employed in two quite different ways. First, it suggests a good manager should manage the business to optimise the three bottom lines. Such an ambition is virtually impossible as the three are often measured in quite different and incommensurate ways, and the financial bottom line will always dominate a commercial entity. </p>
<p>Through a disturbing sleight of hand, the argument then mutates into the dangerous nonsense that there is no conflict between managing social issues, managing environmental impacts and managing for shareholder wealth. Of course there is. Even if there are a number of win-win opportunities for good managers to exploit, maximising financial return will never minimise environmental impact and is unlikely to generate unqualified social good. Such arguments go to the heart of what a modern corporation is, what capitalism is and what our planetary society and ecology entail. These are not trivial or simple matters.</p>
<p>The second use of the triple bottom line is more plausible – it suggests that an organisation should be accountable for its financial, social and environmental performances. For instance, this notion would see the annual report of a company containing three broadly equal sections. Each would be produced to similar and mandated standards, each would be independently audited, and each would discharge the appropriate social, environmental and financial accountability of the organisation. </p>
<p>This is an outstanding, democratic ideal and one which is both practicable and in keeping with business claims to be responsible, transparent and accountable.</p>
<p>Unfortunately, almost no organisation of which we are aware produces anything which looks even remotely like such accountability. This is all the more tragic because the essential idea behind the highly influential Global Reporting Initiative (GRI) has been to encourage organisations to produce triple bottom line reports, albeit voluntarily. But by any reasonable measure a “good” GRI report is still a <a href="http://dx.doi.org/10.1007/s10551-012-1543-8">very pale imitation</a>.</p>
<p>So after nearly 25 years of voluntary initiatives, cajolery and claims that business can get its own house in order, the triple bottom line remains a most attractive but unfulfilled notion.</p>
<p>Maybe, you might say, progress is slow; but it is still progress. Yes and no. Unfortunately, the GRI claims to be helping develop sustainability reports. Companies do not report on their triple bottom line performance but on, they would have you believe, their <a href="https://www.globalreporting.org/resourcelibrary/G3-Sustainability-Reporting-Guidelines.pdf">sustainability performance</a>. And managers now manage, we are told, for sustainability – not for the triple bottom line. But even a really good triple bottom line report tells you exactly nothing about the sustainability of the entity, or the <a href="http://www.millenniumassessment.org/en/Products.BoardStatement">social and ecological systems on which it relies</a>.</p>
<p>There are three basic reasons for this. First, sustainability means little unless it refers to the planetary level: there seems no question that mankind’s ways of organising are very clearly not sustainable. We are not leaving future generations with the equivalent possibilities that we inherited. </p>
<p>Second, and perhaps most substantially, sustainability is a systems-level concept and exceptionally difficult to apply at a single organisational level. The triple bottom line, however, is an organisation-level concept: the two need joining up and this is very difficult, if not impossible. </p>
<p>Finally, all the data suggests that, in all likelihood, most, if not all commercial organisations are [actually contributing to unsustainability](https://risweb.st-andrews.ac.uk/portal/en/researchoutput/accountability-sustainability-and-the-worlds-largest-corporations-of-csr-chimeras-oxymorons-and-tautologies(3e8ba773-c268-4b00-9270-4fd3f97932ad). A proper sustainability report would indicate the broad extent of an organisation’s contribution to unsustainability: something a triple bottom line is very unlikely to be able to do.</p><img src="https://counter.theconversation.com/content/22798/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Gray has received funds from a wide range of organizations over the years. His last research grant was from ACCA and no conflict of interest arises from that..</span></em></p><p class="fine-print"><em><span>Markus J. Milne does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The triple bottom line is a term coined in the late 1990s by the influential business thinker and consultant, John Elkington. It captures a very neat idea, namely that a modern organisation has three broad…Rob Gray, Professor of Social and Environmental Accounting, University of St AndrewsMarkus J. Milne, Professor of Accounting, University of CanterburyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/211852013-12-10T05:04:26Z2013-12-10T05:04:26ZSustainability reporting - finally taking off?<figure><img src="https://images.theconversation.com/files/37323/original/ycxtqkhh-1386650672.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Two reports show the uptake of sustainability reporting is increasing.</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>This week has seen the launch of two significant reports, the <a href="http://www.theiirc.org/">International IR Framework</a> and <a href="http://www.kpmg.com/AU/en/IssuesAndInsights/ArticlesPublications/Pages/corporate-responsibility-reporting-survey-2013.aspx?utm_source=theconversation">KPMG’s Survey of Corporate Responsibility Reporting 2013</a>. The Framework marks a paradigm shift in “corporate” reporting and the KPMG Survey signals that the world is ready for it.</p>
<p>Together they bring a real sense that business and accounting is changing. Integrated Reporting, important as it is, is an outcome of a different approach to thinking about performance and, at best, a different way of doing business. </p>
<p>The process of change through reporting began with sustainability reporting, where from early green wash and just plain lies, a few major corporations have emerged as leaders in not just doing good, but being good – for people, planet and ultimately their shareholders. <a href="http://bit.ly/19Kl1nx">Integrated reporting</a> will take these changes further as accountants start to grapple with, amongst other things, the value of nature to business. Who would have thought it?</p>
<p>KPMG’s work shows that there has been a significant growth in sustainability reporting in emerging economies and in the Asia Pacific region. KPMG have completed eight world-wide surveys of Corporate Responsibility (CR) Reporting (also known as Corporate Social Reporting and, most commonly, Sustainability Reporting) in 20 years. The 2013 survey looks at the 100 largest companies by revenue in 41 countries and specifically at the global top 250 companies (the G250).</p>
<p>Since the <a href="http://theconversation.com/mixed-result-on-sustainability-reporting-but-asx-proposes-greater-disclosure-18689">last survey</a> (in 2011) the number of top 100 companies preparing sustainability reports has increased most dramatically in India (53%), Chile (46%), Singapore (37%) and Australia (25%). The average number of top 100 companies producing a sustainability report in each of the countries studied has increased from 64% to 71%. At 51% the proportion of companies including sustainability information in their annual reports is a significant increase on 2008 (9%) and 2011 (20%).</p>
<p>The vast majority of the G250 identified “megaforces”, commercial opportunities and risks in their reports. The most common “megaforces” identified are climate change, material resource scarcity and energy and fuel. Commercial opportunities identified from social and environmental change include innovation in products and services, strengthening brand and reputation, growing market share and cutting costs. </p>
<p>Risks identified from social and environmental impacts include regulatory, competitive, physical, social and legal risks. But only 5% of the G250 include information on the financial value at stake through social and environmental risks – something investors will increasingly be asking about.</p>
<p>A quality report should disclose the process of engaging with stakeholders, determining material issues and managing sustainability in the supply chain. It should have time bound targets and we will see increasing disclosure of strategy and context as reporting is influenced by the International <IR> Framework.</p>
<p>The KPMG criteria for measuring the quality of the G250 reports fall into seven categories: strategy, risk and opportunity; materiality; targets and indicators; suppliers and the value chain; stakeholder engagement; governance of CR; transparency and balance.</p>
<p>The lowest level of disclosures were of suppliers and the value chain, something which is likely to change given the number of recent examples of the lack of performance management of social responsibility/sustainability coming back to bite companies. Improvements also need to be made in reporting of engaging with stakeholders and determining materiality (that is, the fair presentation of a company’s performance or financial position).</p>
<p>Still, 13% of the world’s largest 250 companies do not yet report any sustainability targets. However, the percentage of companies referring to the <a href="http://www.globalreporting.org/">GRI Reporting Guidelines</a> (which have focussed primarily on historical performance) has increased by 9% since 2011 to 78%.</p>
<p>The proportion of the G250 companies that have their sustainability reports externally assured is now 59% - up from 46% in 2011.</p>
<p>The leading companies in sustainability reporting are predominantly European. Of the top ten scoring reports on quality, seven are from companies based in Europe and three in the United States.</p>
<p>Mark Joiner, NAB’s outgoing Chief Financial Officer, is <a href="http://bit.ly/1d2z9bx">convinced of the need for change</a>:</p>
<blockquote>
<p>There is a paradigm shift between the way my generation thought about business and the new generation coming through. They think more carefully about who they work for. They don’t want to work for companies that do good things, they want to work for companies that do good.The emergence of social enterprise is changing business models. It is attractive to talent and customers. You can no longer think about returns to financial capital.</p>
</blockquote>
<p>The extent and quality of sustainability reporting is set to further increase as stock exchanges and governments increase mandatory social and environmental reporting requirements. In my new book, <a href="http://bit.ly/1bubeD8">Understanding Integrated Reporting: The Concise Guide to Integrated Thinking & the Future of Corporate Reporting</a> preparing a sustainability report is the first of ten steps to <a href="http://bit.ly/19Kl1nx">integrated reporting</a>. </p>
<p>An organisation cannot fully understand its business model and tell its value creation story without understanding its sustainability performance or engaging stakeholders in determining material issues. Some organisations are already extending these processes to involve senior management and consider broader contextual issues – the beginnings of <a href="http://bit.ly/1caI8v6">integrated thinking</a>.</p>
<p><em>Carol Adams is co-author of <a href="http://bit.ly/17YupWG">Accountability, Social Responsibility and Sustainability</a> to be published in January.</em></p><img src="https://counter.theconversation.com/content/21185/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carol A Adams is a member of the GRI's Stakeholder Council and served on the IIRC's Technical Collaboration Group. She is a former employee of KPMG.</span></em></p>This week has seen the launch of two significant reports, the International IR Framework and KPMG’s Survey of Corporate Responsibility Reporting 2013. The Framework marks a paradigm shift in “corporate…Carol A Adams, Director, Integrated Horizons. Part-time Professor, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.