The Natural Edge Project The Natural Advantage of Nations Whole System Design Factor 5 Cents and Sustainability Higher Education and Sustainable Development

"The next 50 years could see a fourfold increase in the size of the global economy and significant reductions in poverty but only if governments act now to avert a growing risk of severe damage to the environment and profound social unrest."
World Bank Report: World Development Report 2003: Sustainable Development in a Dynamic World

The Natural Advantage of Nations (Vol. I): Business Opportunities, Innovation and Governance in the 21st Century


Section 2: Natural Advantage a Business Imperative

Chapter 9: Accelerating the Sustainability Revolution
1 Overcoming short-termism
1.1 Incentives for business leaders
1.2 Reform of fiduciary duty for pension and superannuation funds trustees (L. Hunter Lovins and Walter Link)
1.2 Environmental management accounting in Japan (Chika Saka, Roger Burritt, Stefan Schaltegger and Tobias Hahn)
2 Grounds for change: the exciting developments in firm level economics
2.1 Efficiency gains within firms under voluntary environmental initiatives (Bruce Paton)
3 References List from the Book
Sample of Resources to Support Chapter 9
Ensuring Boards have quality information: Sustainability Reporting
Environmental Management Accounting Tools and Initiatives

Despite the benefits and drivers for change, success stories, and numerous obvious benefits to business outlined in this book, there is a lack of progress overall in the business world. David Suzuki and Holly Dressel lament the lack of progress in their book Good News for a Change; 'We now know that we can do it, we can make efficient cars, build green buildings, substitute for toxins, reuse and conserve, save the world's resources for the use of future generations. So the question remains: Why don't we?' The short answer is that a lot of this is new, this is a historical shift, and a lot of these pressures are relatively new. In addition few engineers, architects and designers are trained at universities in the latest whole system design techniques needed to make green buildings cost effective, for instance.

Then there can also be significant institutional, regulatory barriers, disincentives and market failures that can often halt change. For instance, one of the best win-win opportunities for business comes from energy efficiency investment. Significant work has been done since the OPEC (Organization of Petroleum Exporting Countries) oil crisis of the early 1970s in this area, demonstrating the benefits. But even here there can be disincentives for firms adopting energy efficient best practice. This chapter discusses a range of developments that address and change drivers for 'short-termism' in the marketplace that currently are a significant disincentives for investment in projects with long term pay back periods.

Ensuring Boards have quality information: Sustainability Reporting

Key Reference: Lovins, H. and Link, W., On Fiduciary Duty and Pension Funds.

Download PDF

"In 2001, 45 percent of the 250 largest global companies published reports covering the TBL, up from 35 percent in 1998. France has just passed legislation requiring French companies that want to be listed on its stock exchange to make information about their social and environmental performance available to investors. Similar legislation, requiring pension funds to publish the percentage of their portfolios that are in socially responsible investments, was passed by Britain in 2000. Almost half of the UK 's top 100 companies are now courting the funds with details of their TBL credentials. And in Japan , 72 percent of the country's top 100 companies now produce sustainability reports... In other words, big business, listen up, TBL is now a significant corporate issue." Australian Financial Review , Boss Magazine , October 2002 page 38-39.


Companies that have committed themselves to corporate reporting are increasingly following a set of guidelines drawn up under the Global Reporting Initiative. The Global Reporting Initiative (GRI) was established in late 1997 with the mission of developing globally applicable guidelines for reporting on economic, environmental, and social performance, initially for corporations and eventually for any business, governmental, or non-governmental organisation (NGO). A United Nations' Environment Programme (UNEP), the GRI incorporates the active participation of corporations, NGOs, accountancy organisations, business associations, and other stakeholders from around the world.

View Website


Sustainability Reporting Library

The Sustainability Reporting Library holds electronic copies of sustainability, environmental and social performance reports by organisations operating in Australia . The library currently lists 332 reports from 87 organisations, representing a decade of non-financial reporting in Australia.

View Website

United Nations Environmental Management Accounting Initiative

View Website


Environmental management accounting international networks

Environmental Management Accounting Network-Europe (EMAN-Europe);

Environmental Management Accounting Network-Asia Pacific (EMAN-AP); and the Environmental Management Accounting Research and Information Center (EMARIC) in the USA.


These are global networks for discussion and exchange information on the international harmonization of environmental accounting.




Environmental Management Accounting Tools and Initiatives

Key reference: Japan - METI (2002) Environmental Management Accounting Tools Workbook

View Website


Key reference: Japan - MOE (2001) Environmental Reporting Guidelines

Guidance for Publishing Environmental Reporting (Fiscal Year 2000 Version) Ministry of Environment, Japan.

View website


Key reference: Australian Federal Government's Environmental Management Accounting Online resources.

View Website


Key reference: Department of Environment and Heritage , Australia (2003), Environmental Management Accounting: An introduction and case studies for Australia, Professor Craig Deegan FCA of RMIT University in Melbourne. Sponsored by DEH, EPA Victoria, and the Australian Institute of Chartered Accountants.

View Website



References from the Book

1. In Australia for instance, ACF's Corporate Reputation Index for 2002, shows little change in corporate performance in Australia 's top 100 companies from previous years. A 1999 review of 30 Australian organizations found that their standards of environmental reporting were very poor compared to global companies.


2. Suzuki, D. and Dressel, H. (2002) Good News For A Change: Hope For A Troubled Planet, Allen & Unwin, Sydney, p46.


3. Lovins, A. and Lovins, L. H. (1997) Climate: Making Sense and Making Money, Rocky Mountain Institute, Colorado . Also highly recommended is Lovins, A. and Lovins, L. H. (1982) Brittle Power, Brick House, Ch 17.


4. Schaltegger, S., Hahn, T. and Burritt, R. (2000) 'Environmental Management Accounting: Overview and Main Approaches', in Bennett, M. and Bouma, J. (eds), Environmental Management Accounting and the Role of Information Systems, Kluwer Academic.


5. Lovins, L. H. and Link, W. (2002) Insurmountable Opportunities?: Steps and Barriers to Implementing Sustainable Development, Comments to the UN Regional Roundtable for Europe and North America, Vail, Colorado.


6. Refer to the 2002 Towers Perrin Report, Worldwide Total Remuneration, 2001-02.


7. Stiglitz, J. (2003) The Roaring Nineties: A New History of the World's Most Prosperous Decade, Allen Lane , London , p143.


8. Healy, J. (2003) Corporate Governance & Wealth Creation in New Zealand , Dunmore Press, Palmerston North, New Zealand .


9. Duty of superannuation trustees: in Australia under Section 52(2)(f) of the Superannuation Industry (Supervision) Act 1993 binds trustees to ensure that the investment strategy of the fund pays due regard to: the risk involved; the likely returns; the expected cash flow requirements; the extent to which the investments are diverse or involve the fund being exposed to risks from inadequate diversification; the liquidity of the funds investments having regard to its expected cash flow requirements and the ability of the fund to discharge its existing and prospective liabilities.


10. Linking Screened Investments to Shareholder Value: An Overview of Screened Investments and the Potential for Impact on Shareholder Value. Erik Mather Senior Manager, Screened Investments.


11. Guerard, J. B. Jr. (1997) 'Is There a Cost to being Socially Responsible in Investing? It Costs Nothing to be Good', Journal of Forecasting, vol 16, p11 (the 1997 Moskowitz Prize winner concluding: 'no').


12. Lovins, L. H. and Link, W. (2003) Pension Funds: Key to Capitalizing Natural Capitalism, Rocky Mountain Institute and Global Academy, Colorado .


13. In Australia , The Department of Environment and Heritage has developed a set of environmental management and performance indicators based on the GRI, but modified for the Australian context. These could be used as the basis for mandatory reporting indicators.


14. Berger, C. (2004) Submission to Treasury on CLERP (Audit Reform and Corporate Disclosure) Bill 2003, prepared for the ACF by Charles Berger, Law and Corporate Responsibility Coordinator, February.


15. Useful summaries of international developments include Emtairah, T. (2002) Corporate Environmental Reporting: Review of Policy Action in Europe, International Institute for Industrial Environmental Economics, February; Mansley, M. (2003) Open Disclosure: Sustainability and the Listing Regime, Claros Consulting.


16. Commission Recommendation of 30 May 2001 on the recognition, measurement and disclosure of environmental issues in the annual accounts and annual reports of companies (2001/453/EC).

17 MOE (Ministry of Environment, Japan ) (2003) A Survey of Environmentally Corporate Behaviour, MOE (in Japanese).


18. Mukoyama, A. and Hiroyuki, I. (2002) 'Environmental Information and Corporate Evaluation', paper presented to the Japan Accounting Association Annual Meeting (in Japanese).


19. The Economist (1994) 'After Valdez', 18 June, p20.


20. Department of Environment and Heritage , Australia publication, 'Environmental Management Accounting: An introduction and case studies for Australia .' Professor Craig Deegan FCA of RMIT University , Melbourne . Sponsored by DEH, EPA Victoria, and the Australian Institute of Chartered Accountants.


21. Burritt, R., Hahn, T. and Schaltegger, S. (2002) 'Towards a Comprehensive Framework for Environmental Management Accounting: Links Between Business Actors and EMA Tools', Australian Accounting Review, July, vol 12, no 2, pp39-50.


22. Schaltegger, S., Hahn, T. and Burritt, R. (2000) 'Environmental Management Accounting: Overview and Main Approaches', in Bennett, M. and Bouma, J. (eds), Environmental Management Accounting and the Role of Information Systems, Kluwer Academic.


23. Chambers, R. (1966) Accounting, Evaluation and Economic Behaviour, Scholars Book Co, Houston, Texas, p54; Schaltegger, S. and Burritt, R. (2000) Contemporary Environmental Accounting: Issues, Concepts and Practice, Greenleaf Publishing, Sheffield, UK, p45.


24. Parker, L. (1999) Environmental Costing: An Exploratory Examination, Australian Society of Certified Practising Accountants, Melbourne , February.


25. Schaltegger, S. and Burritt, R. (2000) Contemporary Environmental Accounting: Issues, Concepts and Practice, Greenleaf Publishing, Sheffield , UK , p58.


26. Schaltegger, S., Hahn, T. and Burritt, R. (2000) 'Environmental Management Accounting: Overview and Main Approaches', in Bennett, M. and Bouma, J. (eds), Environmental Management Accounting and the Role of Information Systems, Kluwer Academic.


27. Schaltegger, S. and Burritt, R. (2000) Contemporary Environmental Accounting: Issues, Concepts and Practice, Greenleaf Publishing, Sheffield , UK , p59.


28. Ibid, p90.


29. Ibid, pp61-63.


30. Ibid, p261.


31. The Japanese Institute of Certified Public Accountants (JICPA) has released Environmental Report Assurance Guidelines (Interim Report) for third party reviews of environmental information, indicating the close relationship between the accountancy profession and environmental accounting information in Japan . These guidelines provide a definition of the level of assurance, guidance for the evaluation of information accuracy/completeness and environmental management information systems.


32. Burritt, R., Schaltegger, S., Kokubu, K. and Wagner, M. (2003) 'Corporate Environmental Management Accounting Information and Appraisal of Staff Members: Some Cross Country Evidence', in Bennett, M., Rikhardsson, P. and Schaltegger, S. (eds) Environmental Management Accounting: Purpose and Progress, Kluwer Academic, Boston/Dordrecht/London, pp151-188.


33. Kokubu, K. and Eliko, N. (2001) Environmental Accounting Practices of Listed Companies in Japan , IGES Discussion Paper No 2.


34. Saio, K., Kokubu, K., Nashioka, E. and Imai, S. (2002) Current Status and Issues of Environmental Accounting Practices, Institute of Global Environment and Society (IGES) Discussion Paper No 2 (in Japanese), IGES, Japan (in Japanese).


35. Porter, M. and van der Linde, C. (1995a) 'Green and Competitive: Ending the Stalemate', Harvard Business Review, September-October, pp121-134; Porter, M. and van der Linde, C. (1995b) 'Toward a New Conception of the Environment-Competitiveness Relationship', Journal of Economic Perspectives, vol IX-4, Fall, pp97-118.


36. Australian Government Department of Industry, Tourism and Resources, Energy Efficiency Best Practice: Making a Difference, Working with industry to achieve results; Holliday, C.O., Schmidheiny. S. and Watts, P. (2002) Walking the Talk: The Business Case for Sustainable Development, World Business Council for Sustainable Development/Greenleaf Publishing, Sheffield, UK; Paton, B. (2001) 'Efficiency Gains within Firms Under Voluntary Environmental Initiatives', Journal of Cleaner Production, vol 9, pp167-178.


37. Palmer, K., Oates, W. and Portney, P. (1995) 'Tightening Environmental Standards: The Benefit- Cost or the No-Cost Paradigm?' Journal of Economic Perspectives, vol 9, no 4, pp119-132.


38. Jaffe, A. and Stavins, R. (1994) 'The Energy-Efficiency Gap', Energy Policy, vol 22, no 10, pp804-810; DeCanio, S. (1993) 'Barriers Within Firms to Energy-efficient Investment', Energy Policy, vol 21, no 9, pp906-914; DeCanio, S. (1994b) 'Why Do Profitable Energy-Saving Investment Projects Languish?', Journal of General Management, vol 20, no 1, pp62-71.


39. DeCanio, S. (1998) 'The Efficiency Paradox: Bureaucratic and Organizational Barriers to Profitable Energy-Saving Investments', Energy Policy, vol 26, no 5, pp441-454; DeCanio, S. (1994a) 'Agency and Control Problems in US Corporations: The Case of Energy-Efficient Investment Projects', Journal of the Economics of Business, vol 1, no 1, pp105-123.


40. DeCanio, S. (1997) The Economics of Climate Change. Background Paper, Redefining Progress, San Francisco.


41. Kreps, D. (1997) 'Economics: The Current Position', Daedalus, vol 126, no 1, pp59-85.


42. Teece, D. (1990) 'Contributions and Impediments of Economic Analysis to the Study of Strategic Management', in Fredrickson, J. (ed) Perspectives on Strategic Management, Harper Business, New York.


43. Kahneman, D., Slovic, P. and Tversky, A. (1982) Judgment Under Uncertainty: Heuristics and Biases, Cambridge University Press, Cambridge; Conlisk, J. (1996) 'Why Bounded Rationality?', Journal of Economic Literature, vol 34, no 2, pp669-700.


44. Leibenstein, H. (1987) Inside the Firm: the Inefficiencies of Hierarchy, Harvard University Press, Cambridge, MA.


45. Paton, B. (1994) 'Design for Environment: a Management Perspective', in Socolow, R. (ed) Industrial Ecology and Global Change, Cambridge University Press, Cambridge.


46. Ocasio, W. (1997) 'Towards an Attention-Based View of the Firm', Strategic Management Journal, vol 18, special issue supplement, pp187-206.


47. Nelson, R. and Winter, S. (1982) An Evolutionary Theory of Economic Change, Belknap Press of Harvard University, Cambridge, MA; Nelson, R. (1995) 'Recent Evolutionary Theorizing about Economic Change', Journal of Economic Literature, vol 33, no 1, pp48-90.


48. Nelson, R. (1992) 'The Roles of Firms in Technical Advance: a Perspective from Evolutionary Theory', in Dosi, G., Giannetti, R. and Toninelli, P. (eds) Technology and Enterprise in a Historical Perspective, Clarendon Press, Oxford.


49. Weibull, J. W. (1995) Evolutionary Game Theory, MIT Press, Cambridge, MA.


50. Howarth, R., Haddad, B. and Paton, B. (2000) 'The Economics of Energy Efficiency: Insights from Voluntary Participation Programs', Energy Policy, vol 28, nos 6-7, pp477-486.


51. For further information on these topics refer to Segerson, K. and Miceli, T. (1998) 'Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?', Journal of Environmental Economics & Management, vol 36, no 2, pp109-130; Segerson, K. (1999) The Efficiency of Voluntary Approaches, Presentation at European Research Network on Voluntary Approaches (CAVA) Workshop, Copenhagen, Denmark.