Understanding sustainability through an accounting lens – guest post 1 by Dr Stephen Jollands

Guest post #1 by Dr Stephen Jollands

It is very interesting that Martin’s story of the wasted portions of condiments on an airline flight is a very simple setting to think through the complexities of the issues we face around sustainability. But before we examine Martin’s example further we first need to think about what exactly sustainability is and more importantly what it is not. The first question to ask is what is it that we are trying to sustain? While this may appear as quite a straight forward question the answer is not as most expect. Sustainability is about sustaining humanity. Put simply we need the ecosphere in which we live but it does not need us. This leads to an interesting understanding of a nested system view of the world. That is the economy resides in our societies and our societies in turn reside within the ecosphere. Thus no ecosphere then no society and in turn no society then no economy.

With having worked out what it is that we are trying to sustain we still need to investigate a few more things before we can put forward a concrete definition. In order to do so I need to introduce the ecological footprint, which is an accounting tool that measures the biologically productive area required to sustain a given population. This has been calculated for the entire world with the formula being the total biologically productive surface area divided by the population of the world. The result of this calculation gives us what is referred to as each individual persons Earth share. That is it provides us an indication of the average amount of biologically productive surface that we each have available to us to provide all that we need and want as well as absorb all the waste we generate. Based on 1996 data we know that the Earth share per person was roughly the size of one football field and this is not even taking into account the space required for other species we share our planet with.

To draw an appropriate conclusion from the above calculation of the average Earth share we need to draw an analogy between the ecosphere and a business. With a business we invest capital from which we expect to earn some form of interest. It is this interest that we expect to use to pay for the things we need and want to live from. However, in some situations we understand that the interest we earn may not be enough to support what we want and therefore we may decide to withdraw some of the capital. This is fine as long as we understand that we are doing this (and hence the need for good accounting) and that we understand that if we keep removing capital then the business will eventually go bankrupt. So it is with the ecosphere. Interestingly environmentalism first started to gain traction with space exploration back in the 1960s when it became very clear from the photos taken from space that we live on a finite planet. Hence we can view the ecosphere as having a finite amount of natural capital from which we derive natural interest (usually through interactions with the energy produced by the sun). So in terms of our Earth share this requires deriving everything we need from the football field without depleting the existing resources on that football field. However, the ecological footprint calculation based on 1996 data showed that our resource throughput (measuring resources being taken from the ecosphere as well as waste that the ecosphere is required to re-assimilate) was 20% over the levels of natural interest. This has increased to 50% over the levels of natural interest based on 2008 data. Put simply it would take one and a half years to generate the resources we consume within a year and thus we are currently, and potentially irreversibly, depleting the levels of natural capital, the very thing we require to keep sustaining us.

We can therefore define sustainability as humanity not over-consuming the resources available to them and thereby irreversibly depleting the levels of natural capital while at the same time ensuring an equitable and fair distribution, both within the current generation as well as across all future generations, of the resources available. Hence returning to Martin’s analogy it is not only the amount of things we waste that we must be aware of but also the levels of resources we utilise. Hence, what would the ecological footprint of Martin’s flight look like or in other words what was the amount of biologically productive surface area required to sustain this flight?

In the next post (as Martin has been kind enough to allow me to post two) I will briefly overview experiments around accounting for sustainability. As part of this we will investigate how well the measure up against accounting for a world of finite resources. We will even see that successful examples like the ecological footprint have inherent weaknesses that require us to question whether business that are serious about engaging with these issues may actually require a series of sustainability focused controls to guide their efforts.

Finally in closing, the large part of what I have written above is based on one easy to read book that I would suggest is the perfect place to start for anyone wishing to learn more about these issues:

Wackernagel, M., Rees, W.E., 1996. Our ecological footprint : reducing human impact on the Earth. New Society Publishers, Gabriola Island, B.C.