An Account of Sustainability: Failure, Success and a Reconceptualisation Abstract

An Account of Sustainability: Failure, Success and a Reconceptualisation
by Jan Bebbington and Rob Gray[1]
Abstract
The concept of sustainable development (hereafter SD) has a pre-eminent place in the environmental policy agenda where it is defined
as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs"
(UNWCED, 1987, p8). Within the accounting literature research activity has been focused on what SD may mean for business and
accounting activity (see, for example, Batley and Tozer, 1993; CICA, 1993; Gray et al., 1993; Gray, 1994; Rubenstein, 1994; Geno, 1995;
Stone, 1995; Bebbington and Gray, 1996; Milne, 1996; and Bebbington and Thomson, 1996). As part of this literature Gray (1992)
proposes the construction of an 'account of sustainability' utilizing the idea of a sustainable cost calculation (hereafter SCC) which
attempts to measure the additional costs which would be borne by the organisation if the organisation's activities were not to leave the
planet worse off at the end of an accounting period. This paper is a broadly ethnographic story of a case which attempts to construct a
SCC for Manaaki Whenua[2], Landcare Research New Zealand Ltd (hereafter Landcare Research). The paper tracks the background to
why such an account may be attempted, outlines the SCC, reviews the attempt to perform the calculations and reflects on the tensions
which emerged from the case. The case, while being unsuccessful in terms of its failure to produce the numbers expected, was
successful in that it highlighted conceptual mis-specifications of the SCC. This paper builds on this insight and attempts to theorize the
research process and reconceptualise the SCC. Further, an appendix to the paper provides an outline of the actual numbers calculated
in the case study and the assumptions made in the calculations.
1. Introduction
This paper is a story, or an account, of five years of struggling with the issue of how, and whether, an account of SD could be constructed
for a single business entity. The paper is written as an attempt to provide a historical view on a research process and is, broadly
speaking, ethnographic[3] in its character. This approach is an important element to the paper as there is a desire not to rationalize the
project undertaken. Rather, we believe there are important lessons to be learned from what could be viewed as a failed attempt to
develop an experimental form of accounting, which is told as a story to provide an account of our actions. Schweiker (1993) sees the
provision of an account of one's actions and intentions as being of fundamental importance and notes:
"Some of us all the time and all of us at least some of the time seek to render our lives intelligible to ourselves and to others. In its
simplest sense, giving an account is providing reasons for character and conduct, ones held to be understandable to others and thereby
rendering a life intelligible and meaningful. It is the discursive act of saying or writing something about intentions, actions, relations and
outcomes to someone - even if this is ourselves - amid complex and often limiting circumstances in such a way that an identity is
enacted as intrinsically interdependent with others." (p234).
More generally, this paper attempts to take forward the project (first suggested in Gray, 1992) of forging a practicable link between
sustainability and accounting. This attempt is based on a detailed case in which an attempt was made to apply the principles of
sustainable cost with the full cooperation of a New Zealand company. In doing so, however, a number of crucial tensions emerged. Some
of these were predictable, some were not. The predictable tensions related, first, to the genuinely dangerous attempt to reduce a
concept as rich and diverse as sustainability sufficiently to fit it within a straightjacket of financial accounting and, secondly, to the conflict
between the initial motivations of the researchers and the more immediate and pragmatic concerns of the company. These tensions,
although predictable in principle, manifested themselves in ways which were unexpected to the researchers. The unpredictable tensions
arose from the experimental nature of the SCC itself. That is, the experiment was unsuccessful in achieving the sort of figures originally
envisaged. However, the experiment was successful in suggesting how the initial visualisation of sustainable cost was severely and
crucially mis-specified.
The paper is therefore an attempt to engage with, reflect upon and re-direct praxis. It suffers all the problems of attempting to apply
theory as well offering a learning experience about mis-specified experiments[4]. The paper is written in a broadly chronological
sequence. That is, whilst we now realise that the initial specification was naive in the extreme and, indeed, actually missed the central
point, it seems to us that we can most clearly communicate this if we lay out the thinking that led up to the case, the direct experience of
the case and then, but only then, reflect upon the lessons from the case. We ask the reader to bear with, what we now know to be, a
naive initial ambition. We deal, hopefully satisfactorily, with this naivety in later sections of the paper. Consequently, the paper is
constructed as follows. The next section briefly outlines the principal elements of sustainability and SD with particular regard to their
application to business (and other) organisations. Then a brief review of the accounting and sustainability debate is provided in Section
3. These two sections provide the basis from which the case study was approached with Section 4 providing a description of the case
company and the processes undertaken with the company. Sections 5 and 6 then reflect on, respectively, the tensions between
researcher and researched (in a loosely ethnographic analysis) and on the mis-specification of the experiment. Finally, some tentative
conclusions are made. Further, an appendix follows the paper which outlines the detailed decisions made in calculating the sustainable
cost and details how the numbers used for illustration purposes in the paper have been derived.
2. Sustainability, Sustainable Development and Business
This section briefly explores the concepts of sustainability and SD[5] and places them in the context of business operations. Much of the
material in this section is in the public domain in a variety of places, which are referenced, hence it is not intended to rework the ideas in
any depth. They provide a context within which to place the discussion of accounting for sustainability.
SD and sustainability (and all their underlying concepts) have been in existence for much of mankind's history (see, for a sample of the
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literature in this area, IUCN, 1980, Holdgate et al., 1982, Redclift, 1987, 1992, Turner, 1988, 1993, Lele, 1991; Pezzey, 1992) but came
to wider western prominence with the Brundtland Report of 1987 which defined SD as: "development that meets the needs of the
present without compromising the ability of future generations to meet their own needs" (UNWCED, 1987, p8). The importance of SD as
a public policy goal was reinforced at the 'Earth Summit' in Rio de Janerio in 1992 where it formed the focus of the Rio Declaration and
Agenda 21 (Grubb et al., 1993; Keating, 1993) and continues to the touchstone in post-Rio commitments.[6] The very generality of the
Brundtland Report definition of SD encouraged widespread agreement on the desirability - even the necessity - of sustainability (Redclift,
1987; Pezzey, 1989; Lele, 1991). There is, however, significant disagreement on the detailed implications of the definition. While is
widely accepted is that sustainability is "more than a new word for the environment" (Goodman and Redclift, 1991, p2), the Brundtland
Report definition is so underspecified that even the most influential analyses available "offer at best a wide-ranging, but not exhaustive,
enumeration of the constituents of societal or global sustainability" (Yanarella and Levine, 1992, p761). Thus we have little to guide us in
making detailed statements about sustainability. However, certain things can be said which help bring the concept into greater focus.
It is, first, entirely anthropocentric in placing the human species at the centre of the discussion. This does not, however, necessarily place
other life in a lesser position, (see, for example, Zimmerman, 1994, for an excellent discussion of these issues)[7]. Second, the concept is
concerned with needs not wants - however difficult these might be to determine, (see, for example, SustainAbility, 1995, for a useful
introduction to these questions. See also Redclift, 1987, 1992; Grubb et al., 1993). Third, SD gives equal rights to those living and those
yet to be born. This is the intergenerational equity requirement which is central to the pursuit of sustainability (UNWCED, 1987; Turner,
1993). A concern for future generations leads directly to the fourth point. SD does not distinguish between the needs of the developed
and those of the (so-called) developing world (that is, it also demands intragenerational equity). This requirement becomes more
important when placed in the context of patterns of economic development over the last 25 years which have moved global society
further away from equitable distribution of benefits and costs of such development. For example, Tolba and El-Kholy (1992) note that
"[w]hile the world economy has grown considerable ... much of the growth has been in countries that were already consuming an
inordinate share of the world's resources. Many of the least developed countries had little economic growth and a substantial fall in per
capital production during the 1980s" (p816, see also, Pirages, 1990; Bartelmus, 1994). The pursuit of SD demands that this trend be
recognized and reversed. Fifth, sustainability is concerned with both the sustenance of the natural ecology and the justice and equity
with which the fruits of that ecology are employed. Commentators often frame these elements as being eco-efficiency and eco-justice
concerns (see, for example, Hawken, 1993 and Gladwin, 1993). Eco-efficiency issues are concerned with the ecological aspects of
sustainability (broadly speaking, the means by which development takes place) while eco-justice issues focus on social and equity
related concerns which arise from development (that is, the distribution of the costs and benefits of development).
From this, it follows - to our mind as a self-evident truth - that humankind's current social, economic and political organisation and activity
is not sustainable in any sense. Whilst certain of the lesser developed countries may be sustainable and many indigenous tribes living in
relatively harmonious environmental and social circumstances are probably sustainable, the globe as a whole is not sustainable and the
developed world is very significantly un-sustainable. (For more discussion on these issues see Brown, 1981; Norgaard, 1988; Dovers,
1989; Tolba and El-Kholy, 1992; Gray et al., 1993). Further, whilst sustainability is, essentially, a global concept and one which, in an
(less than) ideal world would be left to States and peoples, it is impossible to ignore the business hegemony within which all discussions
of sustainability appear to take place, (see, for example, Gladwin 1993; Hawken, 1993; Welford, 1997). Whilst 'business' is neither
homogeneous nor speaks with a single voice, business largely does control political, economic and social agendas. It is highly unlikely
that businesses can be sustainable but influential sectors of business would have us believe just that (see, for example, International
Chamber of Commerce, 1991; International Institute for Sustainable Development, 1992; Schmidheiny, 1992; Deloitte, Touche and
Tohmatsui International, 1993; and Mayhew, 1997 for a critique of these kinds of publications).
At this point, the central debate is whether or not business can deliver sustainability. In that debate, eco-justice is ignored and
eco-efficiency - crassly defined as "doing more with less" - is the focus. This debate is being lost as sustainability is increasingly equated
with environmental management and with unsupported motherhood statements about the efficiency of business (see, for example,
Schmidheiny, 1992 and for an analysis of these statements Bebbington and Gray, 1996; Bebbington and Thomson, 1996; Mayhew,
1997; Welford, 1997). Korten (1995) characterises the tensions thus. For SD,
"we must ... restructure economic relationships to focus on two priorities
i. balance human uses of the environment with the regenerative capacities of the ecosystem; and
ii. allocate available natural capital in ways that ensure that all people have the opportunity to fulfil their physical needs adequately
and to pursue their full social, cultural, intellectual and spiritual development".
Korten (1995) contrasts this agenda with the barriers to it which include "the powerful coalition if interests aligned behind an institutional
agenda that is taking us in a quite different direction. These are the corporate interests that benefit when societies make the pursuit of
economic growth the organizing principle of public policy". As Welford (1997) so persuasively documents, the 'environmental' debate is
being hijacked by corporate-speak. It is difficult to imagine anything more guaranteed to put the final nail in mankind's coffin than letting
that debate go un-contested. Accounting is an essential part of this cancer, and it to this that we now turn.
3. Sustainability and Accounting
The accounting literature has demonstrated a considerable increase in concern for the issues of sustainability and the roles, it plays in
legitimating business alleged belief in the sustainability of business operations, it can play in challenging that belief, and in alternative
accountings which may offer alternative constructions of 'nature', 'society' and 'business success'. See, for example, Gray (1992), Batley
and Tozer (1993), CICA (1993), Gray et al. (1993), Gray (1994), Rubenstein (1994), Geno (1995), Stone (1995), Bebbington and Gray
(1996), Bebbington and Thomson (1996), Milne (1996).
This, and related literature, is diverse. At one extreme we find the well-argued cases that accounting should stay well away from nature,
ecology and sustainability because there is nothing in accounting that can offer anything other than a pernicious malignity that can only
poison the preciousness of life, (see, for example, Maunders and Burritt, 1991; Cooper, 1992; Maunders, forthcoming). At the other
extreme is a literature which illustrates how accurate such an argument could be. Here we find sustainability, ecology and nature
reduced to contingent liabilities, provisions and impaired assets, (see, for example, CICA, 199.; FEE, 1993). If this is all that accounting
can offer then the radical critique is well-made and we would be best advised to expend all our efforts in removing accounting and
accountants from the planet as quickly as possible (but see Bebbington, 1997). Little better is the non-analytical, professionally
orientated managerial literature in which an unquestioning style assumes environmental management and environmental accounting will
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deliver holy grails. We find this in Schlatteger (1996), Stone (1995) and, to a lesser extent (and with more explicitly political objectives) in
much of Gray (1990) and Gray et al., (1993).[8]
More interesting to our mind, are the attempts to deconstruct the source of accounting's effects. This literature is large and diverse but
see, for example, Roberts (1991), Lehman (1992), Neimark (1992), Arrington and Francis (1993), Miller (1994), Power (1994). It is from
this that the present project emerges where an attempt is made to develop a praxis in which the accounting is turned upon itself,
sustainability is forced into the lens of accounting with the explicit assumption that this will crack that lens. If it does not do so, then the
project is mis-specified and, by default, belongs with the more pernicious "accounting for the environment" referred to above. Most
particularly, we are talking about the sustainability accounts suggested in Gray (1992) and developed, to some degree, in the United
States (White et al., 1993; USEPA, 1996). The central plank of this project is the sustainable cost calculation. The hypothesis that
businesses simply do not make a profit and that accounting - in its measurement of a thing which suggests success - is simply a lie.
Gray (1992), drawing from Turner (1987, 1988) and Daly (1980) suggests that a sustainable organisation is one which maintains its
capital in tact. From an accounting perspective the tracking of capital flows could provide some idea about the extent to which the
organisation is moving towards or away from sustainability. The SCC attempts to do this in that it involves,
"deriv[ing] a parallel accounting system which provides calculations of what additional costs must be borne by the organisation if the
organisational activity were not to leave the planet worse off, i.e. what it would cost at the end of the accounting period to return the
planet and biosphere to the point it was at the beginning of the accounting period" (Gray, 1992, p419).
Thus the SCC uses conventional accounting concepts to ascertain notional costs (rather than values) of restoring the environment on a
year by year basis. Given this focus, it is clearly not about full sustainability. Rather, it is an attempt to 'stop the clock' and try to estimate
the movement away from sustainability in any one year. While this is likely to be a conservative estimate, Gray (1992) suggests that if
the SCC was deducted from the profit measure of an organisation "no Western company has made a 'sustainable' profit for a very long
time, if at all" (Gray, 1992, p419/420). Hence a SCC, properly constructed,[9] should give the intuitively 'right' answer - that there is a very
large gap between present and more sustainable operations.
The idea of a SCC has been raised in discussions and interviews with a variety of people over the last five years and has been included
in presentations to a number of audiences, as a possible way to account for sustainability. Reactions to the idea vary. The most well
documented responses can be derived from Bebbington and Thomson (1996) where one interviewee noted "I certainly like the idea"
(p42) of sustainable cost, while another indicated that "if it [business] is going to pick up this [SD] sort of message, you have to start
talking industry language" (p43) and indicated that industry talks in terms of costs and benefits. Responses to what answer the SCC was
likely to yield are also insightful. For example, interviewees note "I think the answer is likely to be horrifying" and "My heart stops when
you think about the amount of money that would be involved" (Bebbington and Thomson, 1996, p42). It seemed from these quotes, and
other discussions that the SCC was indeed along the right lines and would yield the kinds of figures expected. Indeed, this realisation of
the enormity of the gap between present and more sustainable operations which would be highlighted by the likes of the SCC resulted in
an inability to locate an organisation who was willing to experiment with the idea for the five years it had been mooted. Therefore, the
opportunity to do so, especially in New Zealand, was very exciting and provided a chance to check if our own and others perceptions of
the potential of the SCC was warranted.
4. The Case
This section of the paper attempts to describe what occurred in the Landcare Research case and why particular decisions were taken
(see Bebbington and Tan, 1996, 1997). The difficult of doing this is recognized and the tendency to rewrite history is ever present.
However, this story is told jointly by one co-author who was in New Zealand, and embroiled in the process, while the other co-author was
anchored in the UK and more remote from the day to day detail of the work. This may assist the telling of a story which balances the two
set of perceptions concerning what went on.[10] The sections following this one then attempt to provide a commentary on the process
outlined here.
Table One: Operating divisions of Landcare Research
Biodiversity and Conservation:
Focuses on documenting and describing native and introduced flora and fauna in New Zealand. These provide the scientific basis for managing natural area
and preserving the natural diversity of species.
Weeds and Pests:
Research assesses the impacts of introduced weeds and pests on native and modified ecosystems.
Environmental Quality:
Research focuses on developing environmental technologies and information systems for sustaining the quality of land, and soil and water resources to
prevent degradation and contamination of water resources and the food chains.
Land Management:
Research focuses on sustainable land-use systems that are ecologically and economically viable, as well as socially and culturally acceptable.
Extracted from Landcare Research publications
Landcare Research is an independent crown research institute which conducts research, sponsored by the New Zealand Government
and private bodies, into the sustainable management of land eco-systems. Landcare Research employs approximately 400 staff who
include scientists and administrative staff. There are four areas in which research is focused: biodiversity and conservation, weeds and
pests, environmental quality, and land management. Table One provides some detail of the operating divisions of Landcare Research.
Landcare Research believes itself to be intimately involved with understanding and improving the physical environment and, as such,
ultimately sees its activities as having a positive effect on the pursuit of SD. This is reflected in their guiding philosophy which includes
the pledge to "care for the land and its ability to sustain future generations. Land is a source of healthy produce, clean water, recreation,
and of spiritual strength. Land provides for the abundant diversity of life, birth, death, decay and regeneration. We are pledged to
enhance this, the environmental inheritance of our country" (Landcare Research Annual Report, 1995, p1). In addition, their guiding
philosophy encourages them to participate in research which seeks to "integrate the ecological, social and economic components of land
use" (Landcare Research Annual Report, 1995, p1). In this aspect Landcare Research is gradually expanding its research activities to
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include those which have a social science focus. Thus this project, while not without precedent, was an exploration for them too.
Landcare Research had become aware of the idea of a SCC via an environmental accounting seminar held in New Zealand in 1994
(which one of the co-authors delivered), from reading Gray et al., (1993) and from attendance at a The Centre for Social and
Environmental Accounting Research (CSEAR) summer school in 1995. The finance and administration, and environmental manager
approached CSEAR with a proposal to try and develop the SCC. In March of 1996 one of the co-authors spent five weeks in New
Zealand to try and start the process of exploring such an account. From the outset Landcare Research was keen to provide support, but
not explicit research direction,[11] for the experiment and the wide dissemination of results was guaranteed. There was no visible agenda
from Landcare Research other than the desire to support and encourage the experimental work. Importantly, they were not required to
undertake this research, there was no legal or moral accountability to Government or external funders and it was not envisaged that this
account would be used as a control mechanism internally within the organisation.[12] Originally it was envisaged that the SCC would form
part of an environmental report which the organisation was thinking about developing. However, this was not undertaken to date (at least
partly due to the disappointing results that the SCC yielded). Further, it needs to be stressed that although the idea of a SCC had been
mooted for some years, neither the researchers or Landcare Research had any detailed idea about how to create a sustainable cost
account. However, there were a number of expectations about what the resulting figures would be and these expectations guided the
process.
The first stage of the process was to ascertain the scope of the organisation's operations. A detailed and explicit attempt at producing an
eco-balance was not undertaken (see later). Rather a very general idea of the activities of the organisation was sought. As a result, the
choice of what areas to develop sustainable costs for was a mixture of: (i) what appeared to be important environmental impacts within
the organisation, (ii) what impacts were considered to be readily quantifiable and (iii) areas which would help test the ideas behind the
SCC. On this basis the areas identified were: (i) energy (due to perceived importance of greenhouse gas emissions, ease of estimation
of emissions and the perceived ease of remedying some of the emissions relating to energy production), (ii) transport (due to it being a
major part of the operations of the organisation and being relatively easy to measure), (iii) a building project - the Fleming Building - (on
the basis that it would enable the SCC to be attempted on a capital project rather than only relating to revenue items) and (iv) the affect
of core activities (at first the operation of the laboratories were considered but this was deemed to be too difficult to gather data on and
too technical for the researchers involved. Finally, it was agreed that the effect on the environment of field work activities may be gauged
because the environmental audit system should be able to yield some data on this and the activities formed a core activity area for the
company).
At this stage the costing method to be adopted was also developed. The previous proposals for the SCC did not specify in detail how the
costs were to be calculated. Therefore, an attempt was made to model incremental steps in what more sustainable operations would
cost. These steps are illustrated in Table Two:[13]
Table Two: Stages in costing environmental sustainability
|----------------->
|----------------------------------->
|--------------------------->
|------------------>
(a) Present position
(b) Most sustainable option currently available
(c) Zero environmental impact
(d) Past damage remedied
Unsustainable operations
More sustainable operations
Fully sustainable operations
The stages in Table Two represent the following positions:
(a) is the present unsustainable position where many environmental impacts arising from the production of inputs to the organisation are
not included in the input costs. (b) is the most sustainable position which is currently attainable which imputes the cost of the most
environmentally sound products and services that are available from the market. It is expected that such products and services would
cost more than those under (a) because some environmental externalities have been internalised in their production and are
subsequently reflected in their financial cost. Position (a) and (b) examine input prices which can be found in an existing market for
goods and services. The remaining steps move into the realm of notional costs which would be incurred to remedy environmental
impacts. At this stage clean up costs are sought for the effects of both inputs and outputs.
(c) is a position where present operations would have a zero environmental impact in the current period. This requires two more cost
elements to be calculated which are: (i) the additional costs required to ensure that inputs to the organisation have no adverse
environmental impacts in their production. These are costs which arise in addition to those costs already internalised in the most
environmentally sound products and services which are currently available, and (ii) the costs required to remedy any environmental
impacts which arise from an organisation's operations which would still arise even if the organisation's inputs had a zero environmental
impact. For example, even if the generation of electricity had a zero environmental impact there may still be an environmental impact
from an organisation's use of that electricity. This environmental impact would need to be remedied in the current period for the
organisation to have a zero environmental impact.
(d) is a fully sustainable position where an organisation has no adverse environmental impacts during the current period and has also
remedied any adverse environmental effects arising from past operations.
The gaps between elements in Table Two represent parts of a full environmental cost. The gap between (a) and (b) represents the cost
of moving from present operations to a level where the best environmental options currently available are taken. The gap between (b)
and (c) is the notional cost that would be incurred to ensure that the first and second level[14] of environmental impacts of Landcare
Research's operations were remedied such that there was zero environmental impact from its operations in the current year. The cost of
moving from (c) and (d) is beyond the scope of this project but represents the amount of money that would be required to restore the
environment to a state where past damage had been remedied. The gap between (a) and (c) is the basis for the SCC.
As the experiment progressed it was evident that similar types of easily identifiable impacts arose in each of the areas considered. The
primarily impacts identified were the use of fossil fuels and emissions of various gases (with CO2 being the largest emission by
weight).[15] Table Three summarises these figures for electricity use, transportation and the Fleming building.[16]
Table Three: Summary of selected environmental impacts arising from Landcare
Research's operations for the year ending 30.6.96[17]
Fossil fuel substitution implied - electricity
452.06 MwH
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Fossil fuel substitution implied - fuel
198.26 tonnes
Emissions of Carbon estimated - ongoing
255.33 tonnes
Emissions of Carbon estimated - one off (from the capital project)
332.21 tonnes
Emissions of SO2 estimated
5.02 tonnes
Emissions of NOx estimated
4.48 tonnes
Emissions of CO estimated
38.28 tonnes
In Table Two the financial quantification of an organisation's impacts is separated into two parts. The first relates to incremental costs
associated with purchasing from more sustainable sources, with the second element relating to clean up costs. Each of these elements
of the SCC are considered below.
Over the course of the experiment it became clear that there was little scope for Landcare Research to move towards purchasing goods
and services from more sustainable sources than they were already (moving from (a) to (b) as expressed in Table Two). For example, as
electricity is purchased from a national grid Landcare Research cannot specify that they will only purchase electricity generated from
renewable energy sources such as wind power. Likewise, the ability of Landcare Research to purchase more sustainable environmental
options with regard to transportation is limited. More sustainable options to air travel could conducting travel in a manner which is less
polluting. For example, instead of flying to Auckland, it may be more sustainable to travel to Auckland using public transport (train to
Picton, ferry to Wellington and train again to Auckland). While the last option is technically feasible it would impose a considerable
additional cost on Landcare Research in terms of the time taken to conduct its business operations. As such, it was not viewed as an
option which was presently available because it would not allow the organisation to continue to meet its operating requirements (see
later). Therefore, only remediation costs were measured. Table Four attempts to quantify the amounts involved. It takes the quantities
from Table Three and applies a variety of cost figures to them.
Table Four: Quantification of financial costs relating to Landcare Research's operations for
the year ending 30.6.96 ($NZ)
Fossil fuel substitution - electricity (452.06 x 1,000 x $0.1016)[18]
$45,929
Fossil fuel substitution - fuel
?
Emissions of Carbon - ongoing (255.33 x $6.11/$100/$200)
$1,560/$25,533/$51,066
Emissions of Carbon - one off (332.21 x $6.11/$100/$200)
$2,029/$33,221/$66,442
Emissions of SO2
?
Emissions of NOx
?
Emissions of CO
?
There are several question marks due to the difficulty in obtaining the figures sought. The estimation of the clean up costs associated
with the emissions, except for carbon emissions, cannot be estimated due to scientific uncertainty surrounding how these emissions
interact together and how to remedy their effect. For example, it is known that SO2 and NOx combine together to form acid rain which,
among other things, acidifies lakes and may damage fish stocks. To remedy the impact of lake acidification it may be necessary to
counteract lake acidification and restock the lakes with fish. However, it was impossible to estimate the connection between the levels of
SO2 and NOx emitted by Landcare Research, lake acidification and the amount and cost of restoring the environment which would be
required. Furthermore, it is plausible that in this context there may be infinite values creeping in as it is impossible to remedy some of this
damage.[19]
The remedying of CO2 emissions, at first glance, appears less problematic than some of the other impacts identified. However, here too
a number of options exist. Two possible routes were identified for remedying the effects of carbon emissions. The first possibility is to
calculate the cost of planting a forest to soak up the carbon emissions using the figures from a New Zealand resource consent hearing
which estimated it would cost $6.11 per tonne of carbon emitted to soak the CO2.[20] The second possibility is to use figures publicised in
June 1996 in the report from the working group on climate change in New Zealand. That report suggested that a carbon tax in the range
of $100 - $200 could be imposed in the future.[21] These figures could also be used in the calculation, as they are costs which would
have been incurred if there had been a carbon tax in place (note that cost figures are now being derived on different bases and that any
addition of these figures will result in nonsense numbers - see later). All these three possible costs ($6.11/$100/$200) per tonne of
carbon are reflected in Table Four. On the basis of the above calculations and methods adopted, the initial sustainable cost figure is
estimated to be in the range of $49,518 to $163,437. This represents the incremental amount that Landcare Research would incur if it
were to start to move its operations onto a more sustainable basis.
Before this stage of the case study it become apparent that the numbers that were generated are not as large as envisaged and this
caused considerable consternation. The key to this concern was the extent to which the production of very small numbers did not fit with
prior expectations that the kind of number generated would be very large. For example, at the outset of the project the finance manager
estimated that he felt that the sustainable cost for the factors examined would be $1 million. Likewise, the expectation of the authors, and
those the concept was field tested on, was that the numbers would be very large. Clearly something had gone wrong in either the SCC
idea or the problem specification for Landcare Research. It was at this stage that the carbon tax idea was mooted and it also dictated
that the long run marginal cost of wind power was included. Without these two 'fudges' the figures would have been $3,589 and only the
CO2 would have been identified and costed. This is relevant of itself in that without these adjustments to the process it proved
impossible to generate any meaningful numbers for the SCC.
This section has attempted to provide an account of the process by which the SCC was derived for Landcare Research. It concludes by
suggesting that the experiment was a 'failure' in that the numbers generated by the process were significantly smaller than those which
were expected. This suggests that either some element of the application of the SCC to Landcare Research or the conceptualisation of
the SCC is problematic. The following two sections focus on these possibilities which are expressed in terms of two sets of tensions.
One relating to the differing agendas of the researchers and the case organisation which influenced the development of the SCC. The
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second set of tensions emerged from the manner in which to model was specified. In addition, a potential way forward for the idea of a
SCC is sketched on the basis of the problems identified.
5. Tensions in the Case: Differing Agendas
This section investigates problems which contributed to the failure of the SCC to generate the numbers expected and which inhibits the
ability to provide a meaningful commentary on those numbers which are presented. These problems are framed as arising from the
effect which differing agendas had on the process, with these differences arising from two principle sources. First, at any one point in
time the researchers had conflicting goals with regard to the purpose of conducting the case. On the one hand there was the explicit
political motivation to develop numbers which 'proved' the business unsustainability case. On the other hand there was a need to
develop a systematic and defendable account of sustainability which makes clear what aspects of the operations are in the account and
what is out, and provides a way to gauge the likely effect of those items excluded. Ironically, at this stage neither of these goals has been
wholly satisfied.[22] The second source of tension emerged from the differing implicit agendas of the researchers and the case
organisation.[23] Even though Landcare Research approached the experiment with no explicit reservations about the choices which
would have to be made, it emerged that there were 'sticking points' for them. These 'sticking points' were a surprise to them and the
researchers, as many of the choices which the exploration of the SCC generated were not anticipated. These two sources of tensions
are explored, which are grouped around three themes. First, the struggle for completeness is reviewed. Second, the problems in
obtaining cost data is highlighted and, thirdly, the constraining influence of the 'business as usual' assumption is explored.
From the outset the SCC was recognized as not being a complete account of sustainability because the justice and equity elements of
the concept were not addressed by the proposal. This was discussed with Landcare Research and it was believed that given Landcare
Research's focus on the generation of knowledge which seeks to enhance the sustainability of land eco-systems, it could reasonably be
assumed that overall their activities pushed towards sustainability. Prima facie we would share that expectation. However, this case has
not explicitly sought to proved this - in any case, such a question is not within the current conceptualisation of the SCC. Further, some
members of the management team felt that an account of sustainable development should consider if Landcare Research employees
and other stakeholders felt happy with their interactions with the organisation - that is, some kind of social audit was attractive to them.
Again, while this would be a valid part of an account of SD it this falls outside the scope of the SCC and hence the case at this stage,
although future interactions with Landcare Research may move in this direction. Therefore, from the outset we know that only a subset of
issues which relate to the contribution of Landcare Research to SD are encompassed by the SCC. This includes a focus only on
environmental factors and does not include a systematic investigation of whether the activities of the organisation contribute to
sustainability.
Within the space which the SCC inhabits, completeness and knowledge of that which is missing and that which was included was further
jeopardised at the outset when the decision not to construct an eco-balance was taken. In the face of an almost total absence of
information about specific inflows, leakages and outflows from the organisation it was considered more important to push ahead with
trying to achieve some progress on some areas first (reflecting the tensions inside the researcher which have been identified above).
Further, at the outset the problem of small numbers was not envisaged and hence completeness was not a high priority. In hindsight,
completeness becomes more of an issue. For example, this lack of completeness may explain the small numbers generated by the SCC
in that only a small number of areas were able to be addressed and only some of the impacts arising from these areas were quantified
and explored. This may have led to only the tip of the iceberg being identified here. However, it the absence of an eco-balance and more
detailed knowledge of the relative environmental effects of all impacts it is impossible to ascertain the effect of these restrictions. This
point highlights the problems of data gathering. Even in a very small and simple organisation such as Landcare Research the problems
encountered were substantial. Not just in terms of collecting data about the operations of the organisation itself but also in collecting data
about environmental impacts of the inputs to the organisation. However, a more systematic view of the organisation via an eco-balance
is certainly required in any extension of the case.
The second practical problem encountered was the difficulty in obtaining the cost data required by the specification of the SCC adopted.
In particular, in requiring information on the cost of remediating environmental impacts, data was drawn from the current economic
system. This introduced a previously unappreciated conservative bias which is likely have resulted in a consistent under-estimating the
cost of actually (as opposed to notionally) moving towards sustainability. For example, the ability to estimate the cost of replacing fossil
fuel use was hampered by the fact that such alternatives were not currently available. An organisation developing a process to produce
fuel substitutes from bio-mass was identified. However, data on costs would not be available because until their estimated costs reached
that of the present alternative production on any realistic scale (and hence accurate cost data) would not be generated. At this stage of
their experimentations they were unwilling, or unable (it is not clear which), to provide any cost data. This consideration also arose when
the cost of generating electricity from renewable energy sources was sought. An estimate of the cost of wind energy was available, albeit
that it is not presently economically viable. Hence while intuitively there seems to be a recognition that costs are likely to be large, there
is a practical problem in determining what the costs are. On a less negative note, the search for the current cost of more sustainable
alternatives did indicate the limited extent to which organisations can move towards sustainability in the current economic environment an important policy message for governments.
A more fundamental problem which emerged in the context was that in the end different measurement bases were used in the
calculation. This has consistently been the case with past experiments in both social and environmental accounting (see, for example,
the Abt and Associates accounts in Johnson, 1979; BSO/Origin Accounts and Rubenstein, 1994). Gray et al., (1993) caution against the
adding of "possible apples to approximate pears and subtract[ing] the result from hypothetical oranges" (p225). However, the solution is
far from simple - what empathy a little experimentation generates! This trap arises from the tensions identified at the start of this section.
Where a theoretical idea is poorly developed, as the SCC was at the outset, data ends up driving the process. Hence a muddling of
concepts almost invariably arises. It is hoped that the reconceptualisation will help to remedy this issue.
The third theme developed in this section follows on from the observed inability to obtain cost data for more sustainable options and
arose when attempting to determine what the most sustainable option current available actually was. If the focus remains on finding
alternative options for doing the same range of activities in the same time period, there are very few more sustainable options currently
available. We have phrased this focus as the 'business as usual' scenario, which can be illustrated by reference to the case.
When attempting to think through more sustainable motor vehicle transportation options, one alternative investigated was the possibility
of substituting some travel with electric vehicle travel. While it is difficult to know if electric vehicles are less polluting than conventional
vehicles on a full life cycle basis, it was believed that at the level of resolution which the project was based (looking narrowly at the first
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and second level impacts) electricity vehicles avoided the use of fossil fuel and some of the emissions which arise from combustion. In
addition, the local city council ran an electric vehicle and could supply cost data for capital and running costs, and details of vehicle
performance. An analysis of the types of trips undertaken by Landcare Research indicated that the vast majority would exceed the range
capacity of an electric vehicle in terms of the distance which could be travelled before a battery recharge was required. In addition, the
top speed of the electric vehicle was well below that of a conventional vehicle and capacity to carry equipment was limited. As much of
the Landcare Research travel is to, often remote, research sites with a need to carry a range of research equipment, this technology was
deemed not to be directly substitutable.
The above example (along with others) created the realisation that one of the tensions which Landcare Research faced was that while
more sustainable options existed they felt unable to see them as being feasible because their adoption would change the terms on which
they did business. In particular, more time, or more staff members, would be required to achieve current activity levels. This tension was
not anticipated by them or us. Nor was the realisation that alternatives are not actually alternatives unless they have the same functional
capacities within the same time frame as those which they are replacing. This 'discovery' of a 'business as usual' sticking point is one of
the most important of the case as it is likely that in a sustainable future, business will not be able to operate as they have done in the
past and that the pursuit of sustainability is likely to place constraints on operations. Therefore, we can suggest that unless governments
and business organisations recognize that the pursuit of sustainability will require fundamental changes in the way things are done then
progress towards sustainability is unlikely to be forthcoming. This is a theme which is returned to in the following section and which also
informs the reconceptualisation of the SCC. The focus of the paper now moves to tensions emerging from the case which reflect
problems with the mis-specification of the SCC model.
6. Tensions in the case: Mis-specification of the Model
The practical problems and tensions identified in the above section provide a backdrop to this section which examines the implications
which arise for conceptualisation of the SCC as a result of its practical failure. Questions concerning the nature of accounting also arise
from this case. Several points are covered here. First, the focus of the SCC on being an account of sustainability is questioned. Second,
the issue of additivity is briefly revisited. Third, the lessons which can be drawn from this case with regard to the nature of existing and
possible accountings are explored, drawing from a literature which addresses the nature and source of accounting effects. The final part
of this section draws these points together to suggest a revised SCC.
The first conceptual mistake made in the project was in the phrasing of what the SCC sought to measure. Rather than constituting an
account of sustainability the SCC is actually an account of unsustainability. The inverting of focus arises from the realisation that a
'business as usual' assumption was implicitly embedded in the case by the specification of the SCC. The SCC, as it is presently
constructed, provides an account of the cost of remedying presently unsustainable activities. It is backward looking in this respect, has a
conservative bias and does not explicitly identify ways forward which could be seen as developing a vision of how an organisation would
become sustainable. The costs generated in the case for the clean up of CO2 emissions provide an example of this conservatism. The
cost which was initially estimated took the Stratford decision $6.11 as the basis for remediation. However, this cost is based on current
market costs and on current patterns of forest planting. If forests were actually planted on the scale required to soak CO2 produced in
New Zealand the cost would quickly become much greater. For example, based on the Electricity Corporation of New Zealand's carbon
emissions (as per their accounts) 8,420 ha of forest would need to be planted to soak one year's carbon emissions. This represents 14
percent of 1994's total new forest planting (as per the New Zealand yearbook). In a similar vein, 1995 carbon emissions from vehicle
travel in New Zealand would require a 102 percent increase in new forest planting (again on 1994 figures) to soak the carbon. With
figures like this it becomes apparent that the cost of forest planting would escalate dramatically if it was actually carried out. Moveover,
land on which to plant forest would rapidly run out. In the long term forest planting is not a viable way to remedy carbon emissions (this
point was explicitly noted in the report of the working party on climate change in New Zealand - New Zealand Ministry for the
Environment, 1996). In contrast, an account of unsustainability could provide cost data around a range of sustainability scenarios which
exist under a variety possible conditions. This change in focus also reflects the need to challenge and move away from the implicit
grounding of the SCC in a 'business as usual' framework.
The second point in this reorientating of the SCC concerns the additivity of the numbers generated. Additivity was a requirement built
into the initial specification of the SCC and was a feature which proved problematic. Further, with the focus of the SCC on the
remediation of impacts then very few numbers could ever feasibly be produced. However, once the additivity requirement is relaxed
more interesting accounts appear to be possible, albeit with the loss of the political attractiveness of having one number to represent
sustainable cost.[24] In particular, the case emphasised the possibility that there are separate categories of responses to the demands of
sustainability. This was immanent in Table Two where a progressive shift in alternatives is evident and there were some doubts
concerning additivity at that stage. What was not apparent until the end of the case was that these shifts should be separately identified
and measured, as opposed to be added together. The different categories tell quite different stories about the (un)sustainability of an
organisation, hence a multiple account may be generated. It is still envisaged at this stage that the separate categories of cost could be
offset against an organisation's profit and the ability to do this from a political point of view remains important.
The third theme addressed here are lessons which could be drawn from this case which are applicable to our knowledge of the nature
and role of existing accounting and the possibility of new forms of accounting. In particular, what we believe we have observed is a new
form of accounting, which was explicitly (although not very well) designed to disrupt the existing focus of accounting, failing to do so.
An extensive literature exists which explored the nature and role of accounting practices in society. For example, Miller (1994) suggests
that,
"[a]ccounting can now be seen as a set of practices that affects the type of world we live in, the type of social reality we inhabit, the way
in which we understand the choices open to business undertakings and individuals, the way in which we manage and organize activities
and processes of diverse types, and the way in which we administer the lives of others and ourselves." (p1)
In particular, the pictures created by accounting is seen to enhance "the visibility and salience of economic and financial phenomena"
(Hopwood, 1990, p8) and is often "intrinsically linked to norms of financial performance" (Miller, 1992, pp.78/79). This tendency is
reflected in the way the SCC turned out in the case. Rather than providing an enabling picture to be drawn of the unsustainability of
business operations the accounting conformed to these characteristics of existing accounting and was sucked into a business rationality.
As such the SCC suffered from the same range of criticisms which are made of many attempts to develop an environmental accounting.
However, it is not clear at this stage whether this was a feature of the account itself or due to the mis-specification of the account.
These observations can be contrasted with more optimistic commentators who see possibilities for enabling forms of accounting. In
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particular, it contrasts with Power (1994) who notes the potential of accounting to articulate "[n]ew languages of 'waste' and
'sustainability', albeit subordinated to existing organizational codes via the rubric of efficiency, [which] may effect a new moral
environment within the organization. Accordingly, accounting has a 'colonizing' potential because if its status as a 'symbolic' practice
capable of appealing to diverse groups" (p383) and he notes that "'crude' forms of green accounting may have a legitimate role in
challenging dominant organizational rationalities" (p383). Within the case we would suggest there is some evidence for this optimism. In
particular, given it was known at the outset that the results of the SCC (if properly developed) would challenge the business is
sustainable rhetoric, the failure to generate this answer enabled the problems with the account to be identified. Indeed, the failure of the
SCC at this stage may well be the very factor which could enable its success in the longer term. Again it is problematic to draw any firm
conclusions regarding the enabling nature of the SCC as the way in which it was developed in the case was sufficiently mis-specified to
make it impossible to separate the particular account from the possibilities for an account. However, we believe that there is sufficient
evidence to suggest that reconceptualising the SCC is appropriate.
Notwithstanding the foregoing problems and limitations, an attempt to reconceptualise an account of sustainability is undertaken. This is
due to a belief that the political ideas which motivated the attempt in the first place remain valid and having conducted some
experimentation a more defensible account can now be attempted. This is in keeping with the conceptualisation of the pursuit of SD as a
process, with the SCC being one step along the way. Several principles have been developed in this and the preceding section which
are relevant here. A reconceptualised SCC would have to be an account of unsustainability, include a full eco-balance as a pre-requisite
and provide a multi-attribute account. Further, options to purchase more sustainable substitute items, remediate environmental impacts
and challenge the business as usual assumption would also be necessary.With these principles in mind, Table Five provides a tentative
reconceptualisation the SCC.
Table Five: A reconceptualised sustainable cost calculation
Quantification of
flows
Remediation costs
Cost of purchasing less
unsustainable alternative (business
as usual)
Cost of more sustainable
alternative (not business as
usual)
Travel
km
emissions and fuel
?
time
Paper
3
m
?
(say) 2 x $
?
Electricity
MwH
emissions and fuel
?
?
CO2
tonnes
trees
trees
?
NOx
tonnes
?
?
?
SOx
tonnes
?
?
?
?
OK ?
OK ?
?
Inputs:
ETC
Leakages
ETC
Outputs:
Services
do different things
Totals
N/A
$
$
$
A number of points are relevant. First, the reconceptualisation inverts the previous thinking about how to account for sustainability, which
started with current operations and estimated the costs to remedy their effect, in that it takes a variety of desired end points and then
works out the cost of pursuing them (this has echoes of Rubenstein, 1994). Second, the first column of the account would attempt to
report eco-balance information for the organisation. Hence an idea of what has and has not been included in the account would be more
clearly communicated and such an exercise provides a more systematic and defensible basis for the account.[25] Third, the additional
columns provide an account of various cost options. Some of these columns are similar to those utilized in the case. However, they differ
on two fronts. First, they are not additive in the same manner as previously envisaged. Second, a column for costs which would be
incurred if a 'business as usual' assumption were relaxed is included. The example of travel can be used to illustrate these points.
In developing a revised SCC for travel the following items are envisaged:
(i) Quantification of flows:
From the distance travelled (actual data for organisation) the inputs of fuel and energy required could be estimated from the
petrochemical industry. The emissions (that is, leakages) which would arise from the distance travelled could be estimated from
nation-wide data on the environmental impacts of transportation. The outputs could be described in terms of number of research sites
serviced or some other activity level indicator.
(ii) Remediation costs:
The costs of remedying the inputs for travel could be estimated in terms of fuel substitution required. Likewise, emissions clean up could
be estimated. In addition, other impacts from travel would need to be considered. For example, thought needs to be given to the impact
of the impact of the road infrastructure (it is not all that clear whether this should be thought of as a second or third level impact of
operations). It is unlikely that there would be significant remediation costs arising from research projects. However, if there were this
information should be picked up on a project by project basis.
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(iii) Purchasing less unsustainable alternative (with a business as usual assumption):
As has been seen from the case above it is difficult to envisage what options would fall into this category for this particular example.
However, for other parts of the organisation's activities this may still be an appropriate category. In any event it is conceptually a valid
category and if it turns out that it is not a practical category then this would be vital information.
(iv) Purchasing more sustainable alternative (without a business as usual assumption):
For example, if it were agreed that more sustainable transport patterns would involve the use of cycles and public transport to avoid air
travel, the amount of time (or alternatively the number of CEOs required) to enable an organization to continue to operate as they do at
present could provide some indication of the cost which this alternative would involve.
This is a brief attempt to sketch what a revised SCC could involve with the development of the different columns providing a fuller picture
of the cost of present unsustainability as well as the distance yet to be travelled in the pursuit of SD. In particular, it may be possible to
identify relative gaps between present, less unsustainable and more sustainable operations from this approach. Experimentation is
required to develop these ideas further. Again, there may be hidden mis-conceptions within the model which would emerge during further
experimentation.
Concluding Remarks
This paper started by documenting a desire to develop a project which examined practical links between accounting and sustainability. It
did so by providing an account of an unsuccessful attempt to develop a SCC within the context of a real organisation. The reasons, both
practical and conceptual, for this failure were examined and two important points were developed. The first related to the
mis-conceptions of the nature of the account. As we do not know what the point of sustainability looks like, one can only every produce
an account of an organisation's unsustainability. Secondly, the key to the failure of the SCC to produce the numbers expected lay with an
implicit attachment to a 'business as usual' scenario within the case organisation. This too is an important point - if business and society
are to undertake a SD path it will not be business as usual. As a result of these realisations a reconceptualised version of the SCC was
developed to take back to Landcare Research in an attempt to develop a more systematic and defendable account.
This iterative process of working within an organisation and then reflecting on the experimentation is also an attempt to understand more
about the nature of accounting. Roberts and Scapens (1985) suggest that "the only way to understand accounting practice is through an
understanding of the organisational reality which is the context of accounting, and which is the reality that the accounting systems are
designed to account for" (p444). This is a process fraught with difficulties when attempting to envisage new forms of accounting and
practice. This tension emerges as a potential for organisational capture of the research agenda. We believe this case illustrates the
capture of the initial SCC account. However, we also believe that experimentation is essential to assist the development of the SD
agenda and the reconceptualisation of the SCC attempts to push the accounting agenda forward. Arrington (1990) provides support for
such a position when he asserts that: "One need only care and accept the intellectual responsibility to try to make a bad situation more
tolerable through the discourse of accounting and to try and change that system in the interest of the victim" (p5, emphasis in original).
This approach will not be universally applauded, nor should it be (the arguments of the likes of Maunders and Burritt, 1991 and Cooper,
1992 are cogent). However, Bronner (1994) suggests that despite the risks of attempting to engage with practice "[r]efusing to make a
practical judgement, in the name of resisting the 'domination' supposedly implicit in such a choice, is merely an abdication of
responsibility; judgement is then always exercised by others" (p325). The final word is left to Power (1994) who notes that
"even in the most corrupted practice, ... residues of our deepest hopes and longing are present. Only on the basis of these distorted
fragments could their precarious critical project make sense as a transformation 'from within' rather than as a set of externally imposed
values ... Immanent critique is precisely that technique of questioning the existing universe of facts on the basis of residues (resonances)
of other possibilities within them" (p386).
Thus, the "creation of an accounting with the potential to change the 'factual universe' of the organization" (Power, 1994, p386) is
possible. This case has started this iterative process by examining the failure, success and reconceptualisation of the sustainable cost
calculation.
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Appendix I: Summary of the numbers[26]
The following sections contain a number of tables which attempt to summarise the data gathered for each of the four areas chosen for
more detailed investigation (electricity use, transportation, field work activities and building construction). A number of measures are
attempted. First, an estimation of the actual use of the resource or the resources used in the activity were calculated. None of this
information is available directly from the accounting information systems and it has been collated in a number of different ways. Second,
the likely environmental impacts arising from each activity were considered. Third, cost estimations were attempted for the points
identified in Table One (reiterated below) with these costs estimates forming the SCC. Following these sections a costing of the impacts
measured is attempted. All figures reported relate to the year to 30.6.96.
Table One is reiterated as a guide to the costing method used.
Table One: Stages in costing environmental sustainability
|----------------->
|----------------------------------->
|--------------------------->
|------------------>
(a) Present position
(b) Most sustainable option currently available
(c) Zero environmental impact
(d) Past damage remedied
Unsustainable operations
More sustainable operations
Fully sustainable operations
Electricity use:
Use of electricity by landcare was obtained from metre readings which are recorded on electricity invoices. Where no separate invoices
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were present estimates of site use were made by site managers.[27] The likely impact from electricity generation arises from two sources:
(i) the use of non-renewable resources in the generation of electricity and (ii) the emissions that arise from electricity generation.[28]
Table Two provides details of the physical quantities involved.
Table Two: The environmental impacts arising from
electricity use
Total mega watt hours of electricity used
[29]
Fossil fuel generation implied
Emission of Carbon
[30]
estimated
3,229 Mwh
452.06 Mwh
87.18 tonnes
Emission of SO2 estimated
5.02 tonnes
Emission of NOx estimated
1.38 tonnes
The cost elements arising from electricity use involves: (i) the cost of generating electricity from non-fossil fuel sources and (ii) the costs
of cleaning up the emissions which arise from the portion of electricity which has been generated from fossil fuels. Costing the first
element was difficult. At first, it was thought that the cost of electricity generation from different technologies could be determined.
However, the data available in this area is significantly distorted and 'costs' are not a good indication of the relative environmental impact
because the environmental damage from each technology is not internalised in the cost. As a result, it was initially decided to determine
the portion of the electricity generated which requires the use of fossil fuels. As fossil fuel are a non-renewable resource, the remedying
of this impact could be considered to be the replacement of the fossil fuel capacity from a non-fossil fuel source. This could be estimated
as being the cost of producing fuel from biomass technology. However, this too proved infeasible. While there is experimental work going
on into the commercial production of fuels from biomass in New Zealand, no cost figures were available due to commercial sensitivity. In
any event biomass fuel generation, in the absence of regulation, is only likely to be developed where the costs of doing so are in line with
the cost of fossil fuels. Hence, any cost estimates obtained would only equate with the future cost of doing so. In order to attempt to find
a more readily available figure, it was decided to use the long run marginal cost of producing electricity from a renewable energy source
(this being a more sustainable energy source) - in this case wind turbine generated electricity.[31] Costing the second element (the
emissions from electricity generation) is a little more straightforward. The primarily emission which is incorporated within the SCC is the
clean up costs associated with the emission of CO2.[32] Table Three summarises these steps.
Table Three: SCC elements for electricity
Fossil fuel
substitution costs
a -> b costs
b -> c costs
At present there is nothing available on the market
to allow such substitution[33]
Costs of replacing fossil fuel generation with non-fossil fuel generation - for
example, the cost of using plant biomass technology
Emission costs
Cost of cleaning up CO2 and other emissions that arise from the generation
of electricity.
Transportation:
The majority of travel undertaken on behalf of Landcare Research comprises of motor vehicle travel or air travel. Transportation activity
was estimated in a variety of ways: Car use was estimated via: (i) oedometer readings,[34] (ii) an estimation of how much of executive
car mileage was for business use,[35] (iii) mileage in leased or rental vehicles,[36] (iv) mileage where employee use their own cars on
business trips.[37] Air travel is made up of: (i) domestic miles travelled and (ii) international travel.[38] Both motor vehicle and air travel
have the same pattern of environmental impact: (i) use of fossil fuels and (ii) emissions which arise from Landcare Research's operations
in terms of land and air transport (ie: flying and driving create emissions of themselves). Table Four summarises the impacts which arise
from travel.
Table Four: The environmental impacts arising from air
travel and motor vehicle travel
Total amount of air travel
2,846,191 km
Total amount of motor vehicle travel
1,319,913 km
Fossil fuel replacement implied
198.26 tonnes
Emission of Carbon estimated
168.15 tonnes
Emission of NOx estimated
3.10 tonnes
Emission of CO estimated
38.28 tonnes
Table Five summarises the costing elements considered under this heading.
Table Five: SCC elements for transport
A -> B costs
B -> C costs
(i) Motor
vehicles:
Possibility of substituting some of the vehicles with electric
motor vehicles.[39]
The substitution of fossil fuels used in travel and the clean up of the
emissions from use of vehicles.
(ii) Air travel:
There are no more sustainable options with regard to air
travel.[40]
Field work activities:
The third category of impact which were considered relate to the extent to which Landcare Research's activities impact upon the physical
environment. This arises as a significant amount of research is field based. For example, if Landcare Research were studying the effects
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of tree planting in the prevention of erosion they would modify the landscape in order to conduct the study. Likewise, over a period of
time researchers would visit the site to assess the outcomes of the project. In this example the environmental impact of the work is likely
to be positive and indeed there would not be a cost of the particular project in terms of remedying costs.
At the outset it was realised that this would be a very difficult area on which to gain accurate information which would lend itself to
quantification and financial measurement in the context of the SCC. However, given the field work activities are central to Landcare
Research's operations it was felt that this area should at least be looked at. The framework proposed to do so is: (i) examine the
environment within which the project is taking place in terms of the land, water, fauna, flora and human elements, (ii) identify the
environmental aspects within that environment, (iii) assess the impacts which arise from these aspects and (iv) consider the cost of
remedying those impacts. This approach uses the language of the Resource Management Act (1990) which is New Zealand's primary
piece of environmental legislation. The data is thought be available from the environmental information system which Landcare
Research has developed and in particular from the site audits which have been conducted for ISO 14001 certification. Some of the
impacts arising from this area have been captured (via the examination of transport impacts), however it provided impossible to be
incorporated into the calculation this time.
Fixed asset adjustment:
The infrastructure surrounding an organization's operations forms part of their environmental impact. This part of the SCC attempts to
estimate the additional capital cost which would arise from having a building constructed from sustainable resources and made in a
sustainable manner. A new building, the Fleming Building, formed the basis of this part of the calculations. The Fleming Building was
constructed in a manner which was broadly representative of the majority of the other buildings, all of which are relatively new in any
event.
Initially it was thought that one could attempt to estimate the cost of construction a building with sustainable raw materials, using
sustainable energy and sustainable transportation. This was started but time limitations prevented a fuller attempt. For those started it
also proved very difficult to obtain the relevant data from either the public record or the suppliers of the raw material. Given these
limitations the work focused on identifying the physical inputs to the building and estimating the energy 'tied up' in these raw materials.
Using the quantity surveyors schedule of quantities use of raw materials, which were easily quantified, was estimated. The has resulted
in materials such as concrete, steel, glass, timber, wallboard and such like being identified. The value of the items identified constitutes
34 percent of the cost elements of the Fleming Building. They also constitute the framework of the building itself. The main limitation to
being able to quantify the rest of the infrastructure inputs arises from the nature of those inputs, which are manufactured items such as
switches, bookshelves, bench units, fume cupboards and lifts. These inputs are also likely to have greater impacts in their manufacture
(for example, they will be more energy intensive) than those which were able to be identified, therefore their exclusion will almost
certainly result in incomplete information being presented.
A variety of impacts are likely to arise from the inputs to the Fleming Building. These can be categorised into the following groups: (i)
Energy used in the manufacture of the inputs, (ii) fuel used and emissions arising from the operation of vehicles either in the actual
construction or in transporting building products to the construction site, (iii) emissions and the use of resources from the manufacture of
the inputs to the building and (iv) environmental impacts which arise from the sites/locations where the inputs to the building were
extracted.
At this stage the only element included in the SCC is item (i). This has been measured in terms of the amount of carbon which would be
released as a result of the energy used in the production and transportation of inputs. The "carbon co-efficients" used are ones which
have been derived for the New Zealand Building industry from work in the engineering field (see, Honey and Buchanan, 1992). The work
uses "energy coefficients" which are a measure of the energy sequestered per unit of quantify of material produced. The factors used in
the calculation are based on the assumption that hydro electricity constitutes 75 % of the total electricity generated - this is roughly in line
with the case in New Zealand at present. Table Six illustrates the quantification to date in this area.
Table Six: Building inputs costed
Input element
Energy co-efficient
Amount per quantity surveyors report
Kg carbon for input energy required
Preliminaries
0.74/$
$105,595
78,140
Administration
0.43/$
$39,375
16,931
Excavation
2.00/m3
175 m3
350
Backfill/hardfill
5.45/t
2412t
13,145
Sand
0.73/t
95.232t
70
Concrete - pouring
118.11m3
427m3
50,433
Concrete - pre cast
135.43/m3
270m3
36,566
Steel rods
0.64/kg
24,268kg
15,532
Reinforcing steel
0.61/kg
18,152kg
11,073
Structural steel
0.61/kg
4,847kg
2,957
Glass
0.61/kg
8,610kg
5,252
Timber
22.05/m3
121.1m3
2,670
Plywood
177.33/m3
22.67m3
4,020
Paper
0.14/m2
1,099m2
154
Insulating batts
2.87/kg
26,745kg
76,758
Electrical wiring
0.08/m
6km
480
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Gibboard
95.62/m3
68.09m3
6,511
Vinyl
2.94/kg
2,378kg
6,991
Copper pipes
0.84/kg
1,134kg
953
Steel pipes
1.03/kg
230kg
237
Paint
0.28/m2
10,675m2
2,989
332,212 kg
The excluded items may be very significant. For example, in a New Zealand context the fuel use for the transportation of raw materials to
the building site (item ii in the list of impacts) are likely to be substantial because there is often very few manufacturers of a particular
building product which means that the materials have to be transported over considerable distances. The cement manufacturer, for
example, identified this as an important element of their overall environmental impact. In addition, in this part of the calculation of the
other effects of the raw materials inputs have not been systematically identified for inputs. These elements were not pursued at this
stage due to time limitations and the complexity that was rapidly being introduced. At this stage 332.21 tonnes of carbon were estimated
to have been emitted in order for the Fleming Building to be constructed. This represents a one off emission of carbon which has to be
remedied.
Summary of impacts:
As the experiment progressed it was evident that similar types of impacts arose in each of the areas considered. Impacts included the
use of fossil fuels and emissions of various gases (with CO2 being the largest emission by weight).[41] Table Seven summarises these
figures for electricity use, transportation and the Fleming building.
Table Seven: Summary of the environmental impacts arising
from Landcare Research's operations for the year ending
31.6.96
Fossil fuel substitution implied - electricity
452.06 Mwh
Fossil fuel substitution implied - fuel
198.26 tonnes
Emissions of Carbon estimated - ongoing
255.33 tonnes
Emissions of Carbon estimated - one off
332.21 tonnes
Emissions of SO2 estimated
5.02 tonnes
Emissions of NOx estimated
4.48 tonnes
Emissions of CO estimated
38.28 tonnes
This table forms the basis for the discussion in the main part of the text.
[1]
Jan Bebbington is a lecturer and Rob Gray is Mathew Professor of Accounting and Information Systems and Director of the Centre for
Social and Environmental Accounting Research at the University of Dundee. Correspondence should be addressed to Jan Bebbington,
Department of Accountancy and Business Finance, University of Dundee, Dundee, DD1 4HN or [email protected]. The
co-operation of and financial assistance from Landcare Research Ltd is gratefully acknowledged, especially the input from John Tan,
Landcare Research's Finance and Administration, and Environmental Manager. Bebbington and Tan (1996, 1997) also provide details of
this project.
[2]
Manaaki Whenua is Landcare Research's Maori (the indigenous people of Aotearoa, New Zealand) name. Manaaki means to cherish,
conserve and sustain. Whenua encompasses the soil, rocks, plants, animals and the people inhabiting the land - whenua is the place
where we stand in the world.
[3]
The paper has an ethnographic flavour in that it attempts to provide a description of what actions have been taken in the context of an
organisation's culture. One of the co-authors entered Landcare Research's culture and worked within that context. This is an attempt to
describe that process and to make sense of the context within which the process took place.
[4]
One is reminded of Oscar Wilde's aphorism that experience is what you get when you were looking for something else.
[5]
Sustainability and SD are often used interchangeably - and frequently act as signifiers of very different concepts. For our purposes
here we conceptualise sustainability as a state. SD, on the other hand, we will conceive of as a process by which human activity moves
towards sustainability or maintains that state.
[6]
For example, the UK and other Governments have produced Strategies for Sustainable Development (see Integrated Environmental
Management, April 1994 for a variety of commentaries on the Strategy). In the UK institutional structures to monitor and push the
sustainability agenda onwards exist via the Government Panel on Sustainable Development and the UK Round Table on Sustainable
Development.
[7]
The concept is, in all probability, also a very western, modernist concept as well. These significant limitations on the concept - its
anthropocenticism, its western and modern foci - are not addressed in this paper. They need to be more carefully addressed in future
papers. In the meantime see, for example, Redclift (1987) and Grubb et al., (1993) on these matters.
[8]
It is important to recognize that the majority of this literature focuses on the environmental elements of SD. Eco-justice issues arising
from SD are only just being explored but it seems likely that social accounting has a significant role to play here, (see, for example, Gray
et al., 1996).
[9]
By properly it is meant a SCC which is constructed as it is conceptually conceived.
[10]
In writing this paper some of the tensions which this entails was evident. The authors are still in the process of negotiating an agreed
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understanding of how the events surrounding the case could be interpreted. Some of these tensions are reflected in the paper.
[11]
While Landcare Research did not actively drive the research approach, it was important that they were comfortable with the decisions
made during the project. This paper attempts to pull back from the close relationship, which naturally emerged from the case between
the researcher and the organisation, in order to assess the overall effectiveness of the case.
[12]
This is not to say that informal moral accountabilities did not exist. In particular, the researchers felt a moral duty to produce
something of relevance and use to the organisation, in addition to the generation of data which would be useful in the conceptualisation
and development of our ideas about the SCC. Further, the Landcare Research staff member championing the project was accountable to
the executive board for its progress.
[13]
The relative gap between each item does not necessarily denote the relative cost of moving from one point to another.
[14]
In order to make the project manageable, and to avoid the problem of infinite regress, only first and second level environmental
impacts are incorporated into the sustainable cost calculation. That is, only Landcare Research's own environmental impacts (first level
impacts) and those impacts that arise directly from inputs to Landcare Research's operations (second level impacts) are considered. For
example, in considering energy use only the impacts arising from Landcare Research's use of electricity and the impacts of generating
that electricity are included in the SCC. The environmental impacts which arose from the manufacture of the plant and equipment used
to generate the electricity (a third level environmental impact) are excluded from the calculation.
[15]
These will not be the only impacts which arise. However, at this first iteration the most obvious impacts were examined and impacts
which are attracting the greatest international attention were focused on. Later iterations of the experiment are likely to flesh out this
picture.
[16]
In the end a quantification of the impacts arising from field work activities proved too difficult at this stage of the experiment.
[17]
It is important to note that these impacts were estimated from data about Landcare Research's and other organisations' activities.
These impacts were not physically measured.
[18]
The figure of $0.1016 is the long run marginal cost per KwH of producing electricity from wind.
[19]
For the purposes of this experiment infinite values are ignored although they are clearly of considerable importance. However, if any
infinite values had been recorded then the SCC figure ceases to be useful in a practical sense, although infinite values are important in a
conceptual sense.
[20]
The hearing concerned a new power station which was going to be built at Stratford. One of the requirements for the environmental
consent being issued was that the company would create a carbon sink, by way of planting a forest, to soak up emissions which would
be generated over the life of the power station. The cost of planting the sink was estimated in the evidence for the Stratford case at $6.11
per ha/pa to absorb one tonne of carbon. This is a one off cost as the $6.11 is calculated on the basis of an annualized cost of planting a
forest to soak carbon over its life.
[21]
It is estimated that a carbon tax of $100 would stabilize net emissions at 1990 levels by 2010, while a tax of $200 would stabilize
gross emissions at 1990 levels by 2010. While such a reduction would constitute a move towards environmental sustainability it does fall
short of stabilizing global emissions to a level where no global warming would take place.
[22]
There is perhaps a third motivation inherent in the case which produces tensions of its own. The desire to engage with practice to
develop new, potentially emancipatory, accountings which do justice to both the practical goals of the research and the theoretical
insights which one hopes to develop regarding the nature of accounting exists. There is very little in the research literature which
provides guidance on how to develop such a project.
[23]
Properly speaking the case organisation agenda was represented by the finance and administration, and environmental manager.
While the manager was not actively involved in searching for ways of creating the account or finding the numbers sought he provided an
valuable sounding board within the organisation. His perceptions and comments were made with an eye on the extent to which he
believed that the organisation could live with the decisions being made and the focuses adopted.
[24]
Still to be explored is whether the seductive nature of the idea of additivity and the generation of a single number is an inherent
characteristic of accounting calculation.
[25]
It may be that the initial ideas of reporting movements in terms of sub-groups of capital flows (human-made, substitutable natural and
critical natural) would be dispensed with. This element requires further thinking through.
[26]
The appendix contains an outline sketch of the numbers which were calculated during the case study. More details concerning the
derivation of any of the estimates or choices made can be obtained directly from the authors and draws from Bebbington and Tan (1997).
[27]
Landcare Research often has facilities on university campuses, therefore, in many instances they are not directly charged electricity
rather it comes into their accounts via a site charge
[28]
These impacts arise because electricity generation in New Zealand is not 100 percent from renewable energy sources. However, a
significant percentage (some 80 percent) of New Zealand's energy is produced from hydro-technology, which does not require the use of
non-renewable resources and has low emissions in operation.
[29]
The Electricity Corporation of New Zealand's accounts were used to estimate the amount of electricity which would notionally arise
from fossil fuel sources.
[30]
While the emissions identified are that of the gas CO2 this is converted into tonnes of carbon emitted. This simplifies later
calculations which are expressed per tonne of carbon. The conversion factor used is that 1 tonnes of carbon equals 3.66 tonnes of CO2.
[31]
The long run marginal cost of producing electricity from wind (of 10.16 cents per Kwh) was used. This figure was drawn from a paper
by Doug Bell presented at a conference on managing the New Zealand energy market.
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[32]
Using ECNZ's accounts the notional distribution of electricity used by Landcare Research over all generation technologies was
calculated. The emissions of CO2 was then calculated (again from ECNZ accounts figures) on the basis of this notional split. Other
emissions (such as HCl, trace emissions, ash, dust and clinker) have not be accounted for (we have no NZ data). I have used UK data to
estimate SO2 and NOx emissions which would arise in this context, however these are not costed at present.
[33]
There is no ability to move to more sustainable options due to the nature of electricity supply - power is supplied and managed via a
national grid. There may be an ability to do this in the future (with changes to the market for electricity) but even with this market change
the mix of electricity nationally cannot be changed by purchasing policies.
[34]
Where vehicles are owned by Landcare Research there is a log of distances travelled which allows research jobs to be charged with
vehicle use. These logbooks formed the basis of the mileage readings.
[35]
All executive who operate cars have fuel cards which operate like credit cards. Bills are sent direct to the organization and these
invoices include oedometer readings at the time the fuel was purchased. These records formed the basis for the total executive mileage
data which was then reduced according to the amount of private mileage which had been done. Private mileage in a company car forms
the basis for Fringe Benefits Tax under New Zealand tax law and these records were utilized to determine the private mileage done in
each company car.
[36]
The car rental company keeps records of this and were able to extract it readily from their computer system.
[37]
This was much more difficult to extract from the records. Mileage reimbursements are not coded to a separate ledger account, rather
they form part of a larger account. This account was scanned for the six months and the payments to employees identified on the basis
of those payments which not to creditor account codes and the financial total was then divided by the mileage allowance to estimate a
total miles travelled.
[38]
Which is the estimate of the miles travelled as extracted from the travel agents records.
[39]
This would depend on the use to which the vehicles are put. An estimation of the number of vehicles that would come under this
category has been determined from looking at the mileage of these vehicles during the period and a judgement as to whether than
average usage could be supported by an electric vehicle. This option will become more practicable as time goes on and the clean air
requirements from California mean that more sophisticated electric vehicle technology will be developed. This option was basically not
accepted due to the operational requirements regarding vehicle range. From analysis of each trip undertaken for field work it was
estimated that a very small fraction of that travel could be undertaken in the same manner with electrical vehicles which have a limited
geographic range and speed.
[40]
Teleconferencing, while it does reduce the need for face to face contact - and hence travel, is not considered an directly substitutable
option within this context.
[41]
These will not be the only impacts which arise. However, at this first iteration the most obvious impacts were examined and impacts
which are attracting the greatest international attention were focused on. Later iterations of the experiment are likely to flesh out this
picture significantly.
© CSEAR, School of Management - University of St Andrews The Gateway, North Haugh, St Andrews, KY16 9RJ. Scotland, UK
Tel: +44 (0)1334 46 2805; Email: [email protected]
The University of St Andrews is a charity registered in Scotland, No SC013532.
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