Section
2: Natural Advantage a Business Imperative
Despite
the benefits and drivers for change, success
stories, and numerous obvious benefits to
business outlined in this book, there is a
lack of progress overall in the business world.
David Suzuki and Holly Dressel lament the
lack of progress in their book Good News for
a Change; 'We now know that we can do it,
we can make efficient cars, build green buildings,
substitute for toxins, reuse and conserve,
save the world's resources for the use of
future generations. So the question remains:
Why don't we?' The short answer is that a
lot of this is new, this is a historical shift,
and a lot of these pressures are relatively
new. In addition few engineers, architects
and designers are trained at universities
in the latest whole system design techniques
needed to make green buildings cost effective,
for instance.
Then
there can also be significant institutional,
regulatory barriers, disincentives and market
failures that can often halt change. For instance,
one of the best win-win opportunities for
business comes from energy efficiency investment.
Significant work has been done since the OPEC
(Organization of Petroleum Exporting Countries)
oil crisis of the early 1970s in this area,
demonstrating the benefits. But even here
there can be disincentives for firms adopting
energy efficient best practice. This chapter
discusses a range of developments that address
and change drivers for 'short-termism' in
the marketplace that currently are a significant
disincentives for investment in projects with
long term pay back periods.
Ensuring
Boards have quality information: Sustainability
Reporting
Key
Reference: Lovins, H. and Link, W., On
Fiduciary Duty and Pension Funds.
Download
PDF
"In
2001, 45 percent of the 250 largest global companies
published reports covering the TBL, up from 35
percent in 1998. France has just passed legislation
requiring French companies that want to be listed
on its stock exchange to make information about
their social and environmental performance available
to investors. Similar legislation, requiring pension
funds to publish the percentage of their portfolios
that are in socially responsible investments,
was passed by Britain in 2000. Almost half of
the UK 's top 100 companies are now courting the
funds with details of their TBL credentials. And
in Japan , 72 percent of the country's top 100
companies now produce sustainability reports...
In other words, big business, listen up, TBL is
now a significant corporate issue." Australian
Financial Review , Boss Magazine ,
October 2002 page 38-39.
Companies
that have committed themselves to corporate reporting
are increasingly following a set of guidelines
drawn up under the Global Reporting Initiative.
The Global Reporting Initiative (GRI) was established
in late 1997 with the mission of developing globally
applicable guidelines for reporting on economic,
environmental, and social performance, initially
for corporations and eventually for any business,
governmental, or non-governmental organisation
(NGO). A United Nations' Environment Programme
(UNEP), the GRI incorporates the active participation
of corporations, NGOs, accountancy organisations,
business associations, and other stakeholders
from around the world.
View
Website
Sustainability
Reporting Library
The
Sustainability Reporting Library holds electronic
copies of sustainability, environmental and social
performance reports by organisations operating
in Australia . The library currently lists 332
reports from 87 organisations, representing a
decade of non-financial reporting in Australia.
View
Website
United
Nations Environmental Management Accounting Initiative
View
Website
Environmental
management accounting international networks
Environmental
Management Accounting Network-Europe (EMAN-Europe);
Environmental
Management Accounting Network-Asia Pacific (EMAN-AP);
and the
Environmental Management Accounting Research and
Information Center (EMARIC)
in the USA.
These
are global networks for discussion and exchange
information on the international harmonization
of environmental accounting.
Environmental
Management Accounting Tools and Initiatives
Key
reference: Japan - METI (2002) Environmental
Management Accounting Tools Workbook
View
Website
Key
reference: Japan - MOE (2001) Environmental
Reporting Guidelines
Guidance
for Publishing Environmental Reporting (Fiscal
Year 2000 Version) Ministry of Environment, Japan.
View
website
Key
reference: Australian Federal Government's
Environmental Management Accounting Online resources.
View
Website
Key
reference: Department of Environment
and Heritage , Australia (2003), Environmental
Management Accounting: An introduction and case
studies for Australia,
Professor Craig Deegan FCA of RMIT University
in Melbourne. Sponsored by DEH, EPA Victoria,
and the Australian Institute of Chartered Accountants.
View
Website
References
from the Book
1.
In Australia
for instance, ACF's Corporate Reputation Index
for 2002, shows little change in corporate performance
in Australia
's
top 100 companies from previous years. A 1999
review of 30 Australian organizations found that
their standards of environmental reporting were
very poor compared to global companies.
2.
Suzuki, D. and Dressel, H. (2002) Good News For
A Change: Hope For A Troubled Planet, Allen &
Unwin, Sydney, p46.
3.
Lovins, A. and Lovins, L. H. (1997) Climate: Making
Sense and Making Money, Rocky Mountain Institute,
Colorado
.
Also highly recommended is Lovins, A. and Lovins,
L. H. (1982) Brittle Power, Brick House, Ch 17.
4.
Schaltegger, S., Hahn, T. and Burritt, R. (2000)
'Environmental Management Accounting: Overview
and Main Approaches', in Bennett, M. and Bouma,
J. (eds), Environmental Management Accounting
and the Role of Information Systems, Kluwer Academic.
5.
Lovins, L. H. and Link, W. (2002) Insurmountable
Opportunities?: Steps and Barriers to Implementing
Sustainable Development, Comments to the UN Regional
Roundtable for Europe and North America, Vail,
Colorado.
6.
Refer to the 2002 Towers Perrin Report, Worldwide
Total Remuneration, 2001-02.
7.
Stiglitz, J. (2003) The Roaring Nineties: A New
History of the World's Most Prosperous Decade,
Allen
Lane ,
London
,
p143.
8.
Healy, J. (2003) Corporate Governance & Wealth
Creation in New
Zealand ,
Dunmore
Press, Palmerston North, New
Zealand .
9.
Duty of superannuation trustees: in Australia
under Section 52(2)(f) of the Superannuation Industry
(Supervision) Act 1993 binds trustees to ensure
that the investment strategy of the fund pays
due regard to: the risk involved; the likely returns;
the expected cash flow requirements; the extent
to which the investments are diverse or involve
the fund being exposed to risks from inadequate
diversification; the liquidity of the funds investments
having regard to its expected cash flow requirements
and the ability of the fund to discharge its existing
and prospective liabilities.
10.
Linking Screened Investments to Shareholder Value:
An Overview of Screened Investments and the Potential
for Impact on Shareholder Value. Erik Mather Senior
Manager, Screened Investments.
11.
Guerard, J. B. Jr. (1997) 'Is There a Cost to
being Socially Responsible in Investing? It Costs
Nothing to be Good', Journal of Forecasting, vol
16, p11 (the 1997 Moskowitz Prize winner concluding:
'no').
12.
Lovins, L. H. and Link, W. (2003) Pension Funds:
Key to Capitalizing Natural Capitalism, Rocky
Mountain Institute and Global Academy, Colorado
.
13.
In Australia
,
The Department of Environment and Heritage has
developed a set of environmental management and
performance indicators based on the GRI, but modified
for the Australian context. These could be used
as the basis for mandatory reporting indicators.
14.
Berger, C. (2004) Submission to Treasury on CLERP
(Audit Reform and Corporate Disclosure) Bill 2003,
prepared for the ACF by Charles Berger, Law and
Corporate Responsibility Coordinator, February.
15.
Useful summaries of international developments
include Emtairah, T. (2002) Corporate Environmental
Reporting: Review of Policy Action in Europe,
International Institute for Industrial Environmental
Economics, February; Mansley, M. (2003) Open Disclosure:
Sustainability and the Listing Regime, Claros
Consulting.
16.
Commission Recommendation of 30
May 2001
on the recognition, measurement and disclosure
of environmental issues in the annual accounts
and annual reports of companies (2001/453/EC).
17
MOE (Ministry of Environment, Japan
)
(2003) A Survey of Environmentally Corporate Behaviour,
MOE (in Japanese).
18.
Mukoyama, A. and Hiroyuki, I.
(2002) 'Environmental Information and Corporate
Evaluation', paper presented to the Japan Accounting
Association Annual Meeting (in Japanese).
19.
The Economist (1994) 'After Valdez', 18 June,
p20.
20.
Department of Environment and Heritage
,
Australia
publication, 'Environmental Management Accounting:
An introduction and case studies for Australia
.'
Professor Craig Deegan FCA of RMIT
University
,
Melbourne
.
Sponsored by DEH, EPA Victoria, and the Australian
Institute of Chartered Accountants.
21.
Burritt, R., Hahn, T. and Schaltegger, S. (2002)
'Towards a Comprehensive Framework for Environmental
Management Accounting: Links Between Business
Actors and EMA Tools', Australian Accounting Review,
July, vol 12, no 2, pp39-50.
22.
Schaltegger, S., Hahn, T. and Burritt, R. (2000)
'Environmental Management Accounting: Overview
and Main Approaches', in Bennett, M. and Bouma,
J. (eds), Environmental Management Accounting
and the Role of Information Systems, Kluwer Academic.
23.
Chambers, R. (1966) Accounting, Evaluation and
Economic Behaviour, Scholars Book Co, Houston,
Texas, p54; Schaltegger, S. and Burritt, R. (2000)
Contemporary Environmental Accounting: Issues,
Concepts and Practice, Greenleaf Publishing, Sheffield,
UK, p45.
24.
Parker, L. (1999) Environmental Costing: An Exploratory
Examination, Australian Society of Certified Practising
Accountants, Melbourne
,
February.
25.
Schaltegger, S. and Burritt, R. (2000) Contemporary
Environmental Accounting: Issues, Concepts and
Practice, Greenleaf Publishing, Sheffield
,
UK
,
p58.
26.
Schaltegger, S., Hahn, T. and Burritt, R. (2000)
'Environmental Management Accounting: Overview
and Main Approaches', in Bennett, M. and Bouma,
J. (eds), Environmental Management Accounting
and the Role of Information Systems, Kluwer Academic.
27.
Schaltegger, S. and Burritt, R. (2000) Contemporary
Environmental Accounting: Issues, Concepts and
Practice, Greenleaf Publishing, Sheffield
,
UK
,
p59.
28.
Ibid, p90.
29.
Ibid, pp61-63.
30.
Ibid, p261.
31.
The Japanese Institute of Certified Public Accountants
(JICPA) has released Environmental Report Assurance
Guidelines (Interim Report) for third party reviews
of environmental information, indicating the close
relationship between the accountancy profession
and environmental accounting information in Japan
.
These guidelines provide a definition of the level
of assurance, guidance for the evaluation of information
accuracy/completeness and environmental management
information systems.
32.
Burritt, R., Schaltegger, S., Kokubu, K. and Wagner,
M. (2003) 'Corporate Environmental Management
Accounting Information and Appraisal of Staff
Members: Some Cross Country Evidence', in Bennett,
M., Rikhardsson, P. and Schaltegger, S. (eds)
Environmental Management Accounting: Purpose and
Progress, Kluwer Academic, Boston/Dordrecht/London,
pp151-188.
33.
Kokubu, K. and Eliko, N. (2001) Environmental
Accounting Practices of Listed Companies in Japan
,
IGES Discussion Paper No 2.
34.
Saio, K., Kokubu, K., Nashioka, E. and Imai, S.
(2002) Current Status and Issues of Environmental
Accounting Practices, Institute of Global Environment
and Society (IGES) Discussion Paper No 2 (in Japanese),
IGES, Japan (in Japanese).
35.
Porter, M. and van der Linde, C. (1995a) 'Green
and Competitive: Ending the Stalemate', Harvard
Business Review, September-October, pp121-134;
Porter, M. and van der Linde, C. (1995b) 'Toward
a New Conception of the Environment-Competitiveness
Relationship', Journal of Economic Perspectives,
vol IX-4, Fall, pp97-118.
36.
Australian Government Department of Industry,
Tourism and Resources, Energy Efficiency Best
Practice: Making a Difference, Working with industry
to achieve results; Holliday, C.O., Schmidheiny.
S. and Watts, P. (2002) Walking the Talk: The
Business Case for Sustainable Development, World
Business Council for Sustainable Development/Greenleaf
Publishing, Sheffield, UK; Paton, B. (2001) 'Efficiency
Gains within Firms Under Voluntary Environmental
Initiatives', Journal of Cleaner Production, vol
9, pp167-178.
37.
Palmer, K., Oates, W. and Portney, P. (1995) 'Tightening
Environmental Standards: The Benefit- Cost or
the No-Cost Paradigm?' Journal of Economic Perspectives,
vol 9, no 4, pp119-132.
38.
Jaffe, A. and Stavins, R. (1994) 'The Energy-Efficiency
Gap', Energy Policy, vol 22, no 10, pp804-810;
DeCanio, S. (1993) 'Barriers Within Firms to Energy-efficient
Investment', Energy Policy, vol 21, no 9, pp906-914;
DeCanio, S. (1994b) 'Why Do Profitable Energy-Saving
Investment Projects Languish?', Journal of General
Management, vol 20, no 1, pp62-71.
39.
DeCanio, S. (1998) 'The Efficiency Paradox: Bureaucratic
and Organizational Barriers to Profitable Energy-Saving
Investments', Energy Policy, vol 26, no 5, pp441-454;
DeCanio, S. (1994a) 'Agency and Control Problems
in US Corporations: The Case of Energy-Efficient
Investment Projects', Journal of the Economics
of Business, vol 1, no 1, pp105-123.
40.
DeCanio, S. (1997) The Economics of Climate Change.
Background Paper, Redefining Progress, San Francisco.
41.
Kreps, D. (1997) 'Economics: The Current Position',
Daedalus, vol 126, no 1, pp59-85.
42.
Teece, D. (1990) 'Contributions and Impediments
of Economic Analysis to the Study of Strategic
Management', in Fredrickson, J. (ed) Perspectives
on Strategic Management, Harper Business, New
York.
43.
Kahneman, D., Slovic, P. and Tversky, A. (1982)
Judgment Under Uncertainty: Heuristics and Biases,
Cambridge University Press, Cambridge; Conlisk,
J. (1996) 'Why Bounded Rationality?', Journal
of Economic Literature, vol 34, no 2, pp669-700.
44.
Leibenstein, H. (1987) Inside the Firm: the Inefficiencies
of Hierarchy, Harvard University Press, Cambridge,
MA.
45.
Paton, B. (1994) 'Design for Environment: a Management
Perspective', in Socolow, R. (ed) Industrial Ecology
and Global Change, Cambridge University Press,
Cambridge.
46.
Ocasio, W. (1997) 'Towards an Attention-Based
View of the Firm', Strategic Management Journal,
vol 18, special issue supplement, pp187-206.
47.
Nelson, R. and Winter, S. (1982) An Evolutionary
Theory of Economic Change, Belknap Press of Harvard
University, Cambridge, MA; Nelson, R. (1995) 'Recent
Evolutionary Theorizing about Economic Change',
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pp48-90.
48.
Nelson, R. (1992) 'The Roles of Firms in Technical
Advance: a Perspective from Evolutionary Theory',
in Dosi, G., Giannetti, R. and Toninelli, P. (eds)
Technology and Enterprise in a Historical Perspective,
Clarendon Press, Oxford.
49.
Weibull, J. W. (1995) Evolutionary Game Theory,
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50.
Howarth, R., Haddad, B. and Paton, B. (2000) 'The
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vol 28, nos 6-7, pp477-486.
51.
For further information on these topics refer
to Segerson, K. and Miceli, T. (1998) 'Voluntary
Environmental Agreements: Good or Bad News for
Environmental Protection?', Journal of Environmental
Economics & Management, vol 36, no 2, pp109-130;
Segerson, K. (1999) The Efficiency of Voluntary
Approaches, Presentation at European Research
Network on Voluntary Approaches (CAVA) Workshop,
Copenhagen, Denmark.