Sharing Responsibility along Supply Chains A New Life-Cycle Approach and Software Tool for Triple-Bottom-Line Accounting The Corporate Responsibility Research Conference September 2006, Trinity College Dublin, Ireland Dr Thomas Wiedmann Dr Manfred Lenzen

SD Reporting & TBL Accounting

World Business Council for Sustainable Development (2002) “There is a growing awareness that shareholders’ value is enhanced by increased corporate social and environmental responsibility.” “Corporate sustainability reports and sustainability ratings are increasingly used as key information for investment and lending decisions.”

Challenges remain… World Business Council for Sustainable Development (2002)  “There is little comparability among the various sustainability rating questionnaires sent to companies.”  “A key challenge remains reporting on the links between sustainability and the bottom line.”

Extend reporting boundaries World Business Council for Sustainable Development (2002)  “Business will increasingly be expected to report across the value-chain, i.e. on supplier- and consumer-related impacts of activities, products and services.”

Trucost & Defra (May 2006)

Reporting on direct and indirect KPIs  “The Government expects businesses to report on their significant environmental impacts whether they are direct or indirect.”  “Businesses are likely to derive benefit from positively influencing their indirect environmental impacts.” Trucost & Defra (May 2006)

Indirect (environmental) impacts Supply Chain Impacts (upstream) Direct Company Impacts (on-site) Downstream Impacts Energy Water Raw materials Logistics Product s in use Product disposal Boiler emissions Car fleet emissions Manufacturing emissions Landfill waste Recycling rate

 “… there is still a lack of quantification in most reporting. … the majority of reports lack depth, rigour or quantification.”  “Most business will have supply chain impacts that they should understand and consider reporting. There is no single, quantifiable measure that companies can use as a Key Performance Indicator for the effect of their upstream supply chain on the environment.” Trucost & Defra (May 2006) The problem of quantification

 Principle 1: quantitative  Principle 2: relevant & reliable  Principle 3: comparable  Principle 4: complete SD Reporting Principles

TBL Accounting without boundaries

Where to draw the boundary?

e.g. total emissions (direct plus indirect) e.g. direct (on-site) emissions e.g. purchases of a company

How to allocate indirect impacts along a supply chain?

Full (100%) Producer Responsibility >> only on-site impacts!

Full (100%) Consumer Responsibility >> all upstream impacts with the consumer

value added / net output

Sharing responsibility …

… shared responsibility

BottomLine 3 A new TBL software tool

Two data inputs  Financial accounts  On-site impacts

Outputs  > 100 TBL indicators  Quantification of total (direct and indirect) impacts  Sector benchmarking  Quantification of shared responsibility  Structural path analysis  Production layer analysis

Indicator My Bakery absolute impacts My Bakery total intensities Total Sector intensities GDP120,509 $8.69 ¢/$46.6 ¢/$ Gross operating surplus244,853 $17.7 ¢/$17.2 ¢/$ Employment13.5 emp-y1.12 emp-min/$1.27 emp-min/$ Businesses /$ /$ Greenhouse gas emissions343 t CO2-e247 g CO2-e/$465 g CO2-e/$ Energy consumption1,090 GJ786 kJ/$2,640 kJ/$ Water use30.5 ML22.0 L/$20.1 L/$ Ecological Footprint99.9 gha0.72 g-m2/$1.18 g-m2/$ Land use534 ha3.85 m2/$6.99 m2/$ Particulate Matter <2,5mm0.014 t0.010 g/$0.016 g/$ Main TBL indicators

Benchmark spider diagram (TBL)

Benchmark spider diagram (Footprint)

Quantification of shared responsibility (GHG emissions in t CO2-eq.)

Structural Path Analysis

Structural path analysis (particulate matter) RankPath Description Path Value Path Order Percentage in total impact 1Refined sugar > My Bakery0.008 t258.5 % 2Raw sugar > Refined sugar > My Bakery t37.56 % 3Animal food > Poultry > My Bakery t36.79 % 4Paper products > My Bakery t24.14 % 5Paper containers > My Bakery t23.35 % 6Electricity supply > My Bakery t22.28 % 7Electricity supply > Fresh meat > My Bakery t31.14 % 8Raw sugar > Animal food > Poultry > My Bakery t41.02 % 9Raw sugar > Plain flour > My Bakery t30.84 % 10Raw sugar > Raw sugar > Refined sugar > My Bakery t40.69 % 11Electricity supply > Plain flour > My Bakery t30.52 % 12 Animal food > Untreated milk > Dairy products > My Bakery t40.49 % 13Confectionery > Plain flour > My Bakery t30.44 % 14Animal food > Untreated milk > Cheese > My Bakery t40.38 % 15Fresh meat > My Bakery t20.38 % 16Animal food > Pigs > Fresh meat > My Bakery t40.38 % 17Animal food > Untreated milk > Butter > My Bakery t40.32 %

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