Prof. Jan Bebbington: Lost art
Reporting that addresses economic, environmental and social impacts has been a welcome addition to corporate disclosure practices in recent years. This reporting, however, needs to increase in its sophistication if it is to contribute to achieving sustainable development (SD). Specifically, “triple bottom line” reporting does not tell us if the organisation is operating in accordance with SD principles as it currently stands. This essay seeks to suggest how this could be achieved.
Conceptualisations of SD in the UK are informed by the framework for sustainable development (www.sustainable–development.gov.uk/publications/uk–strategy/framework–for–sd.htm). Under this framework there are two high level outcomes sought, that of living within environmental limits and ensuring a strong, healthy and just society.
At the core of these outcomes is a realisation that development is not sustainable if it exceeds the earth’s carrying capacity or if it does not meet the needs of all within society. We know that we are living beyond our ecological footprint in terms of use of resources and pollution impacts (most pressingly being carbon emissions). This leads to the desire for one planet living (www.oneplanetliving.org). Likewise, the need for the Millennium Development Goals (www.un.org/millenniumgoals/) illustrates the extent to which a just society does not exist globally, while poverty within countries remains a problem.
The challenge for corporate level reporting is to link performance to these higher level SD conditions. Problems arise because SD is a spatial concept. That is, sustainable development can only hold for ecosystems (for environmental sustainability) or societies (for cultural and social sustainability).
Taking water as an example, an organisational level account of water use will not provide information of whether the organisation is operating in an environmentally sustainable way. In order to do this, information on the total water resource available in an ecosystem and its use would also be required along with how water is allocated to various users. As a result, if one wished to know if an entity was ecologically sustainable in terms of water then several conditions would have to be met: (1) the regulatory regime in which the entity operated would have to have been developed so as to satisfy the criteria of ecological sustainability (that is total water allocated would not exceed the ecological capacity of the ecosystem), (2) the rights of various individuals and entities within that ecosystem to use water would have had to be justly allocated and (3) the account by the organization would demonstrate if it had meet its obligations to act in defined (sustainable) ways. At that stage it would be possible to use corporate accounts of water use to evaluate the ecological sustainability of that organisation.
In most ecosystems resource allocations are not based on ecological sustainability and reporting often does not include details of resource use benchmarked against ecological benchmarks. As a result, reporting cannot provide an account of SD. The same problems exist, with significant complications, for reporting on social and cultural sustainability.
One innovation could help this situation. For ecological sustainability, if accounts were provided for ecosystems then it may be possible for the operations of a single organisation to be placed in some sort of context and the subsequent reporting of that company could be judged against SD standards. Such a role could be fulfilled by organisations such as Manaaki Whenua, who could, in addition, attempt to explain their impacts within the context of the ecosystems they operate within as well and the society in which they exist.