Sharing Responsibility along Supply

Chains

A New Life-Cycle Approach and Software Tool for

Triple-Bottom-Line Accounting

The Corporate Responsibility Research Conference 2006

4-5 September 2006, Trinity College Dublin, Ireland

Dr Thomas Wiedmann

Dr Manfred Lenzen

Integrated Sustainability Analysis

SD ReportingSD Reporting

&&

TBL AccountingTBL Accounting

SD ReportingSD Reporting

&&

TBL AccountingTBL 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)

Trucost & Defra (May 2006)

Indirect (environmental) impacts

Supply Chain Impacts (upstream)

Direct Company Impacts (on-site)

Downstream Impacts

Energy

Water

Raw materials

Logistics

Products 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

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?

How to allocate

indirect impacts

along a supply chain?

Full (100%) Producer Responsibility

>> only on-site impacts!

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MINING

GLASS MAKING

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

Full (100%) Consumer Responsibility

>> all upstream impacts with the consumer

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MINING

GLASS MAKING

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

value added / net output

Sharing responsibility …

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MINING

GLASS MAKING

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

Sharing responsibility …

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MININGshare

GLASS MAKING

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

Sharing responsibility …

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MININGshare

GLASS MAKING

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

Sharing responsibility …

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MININGshare

GLASS MAKINGshare

GLASS CONTAINER MAKING

FOOD PROCESSING

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

Sharing responsibility …

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MININGshare

GLASS MAKINGshare

GLASS CONTAINER MAKINGshare

FOOD PROCESSINGshare

FINAL CONSUMER

CO

2 em

issi

on

s [

t]

… shared responsibility

0

1000

2000

3000

4000

5000

6000

7000

8000

SAND MININGshared

GLASS MAKINGshared

GLASS CONTAINER MAKINGshared

FOOD PROCESSINGshared

FINAL CONSUMER

CO

2 em

issi

ons

[t]

BottomLine3

A new TBL software tool

BottomLine3

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

IndicatorMy Bakery absolute impacts

My Bakery total intensities

Total Sector intensities

GDP 120,509 $ 8.69 ¢/$ 46.6 ¢/$

Gross operating surplus 244,853 $ 17.7 ¢/$ 17.2 ¢/$

Employment 13.5 emp-y 1.12 emp-min/$ 1.27 emp-min/$

Businesses 0.55 0.0000004 /$ 0.0000009 /$

Greenhouse gas emissions 343 t CO2-e 247 g CO2-e/$ 465 g CO2-e/$

Energy consumption 1,090 GJ 786 kJ/$ 2,640 kJ/$

Water use 30.5 ML 22.0 L/$ 20.1 L/$

Ecological Footprint 99.9 gha 0.72 g-m2/$ 1.18 g-m2/$

Land use 534 ha 3.85 m2/$ 6.99 m2/$

Particulate Matter <2,5mm 0.014 t 0.010 g/$ 0.016 g/$

Main TBL indicators

Benchmark Spider for Old Yorke Bakery

Compensation of employees

Gross operating surplus

Government revenue

Imports

ExportsEmployment

Material flow

Total energy consumption

Greenhouse gases

Benchmark spider diagram (TBL)

Benchmark Spider for Old Yorke Bakery

Total Ecological Footprint

Fossil fuel energy Footprint

Nuclear energy Footprint

Crop land Footprint

Pasture Footprint

Built land Footprint

Sea Footprint

Forest Fooprint

Benchmark spider diagram (Footprint)

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

Responsibility retained by My Bakery

Responsibility passed on to other businesses

Responsibility passed on to final consumer

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00

1,800.00

2,000.00

2,200.00

Energy consumption (GJ)

Structural Path Analysis

Structural path analysis (particulate matter)

Rank Path DescriptionPath Value

Path Order

Percentage in total impact

1 Refined sugar > My Bakery 0.008 t 2 58.5 %

2 Raw sugar > Refined sugar > My Bakery 0.0011 t 3 7.56 %

3 Animal food > Poultry > My Bakery 0.0010 t 3 6.79 %

4 Paper products > My Bakery 0.0006 t 2 4.14 %

5 Paper containers > My Bakery 0.0005 t 2 3.35 %

6 Electricity supply > My Bakery 0.0003 t 2 2.28 %

7 Electricity supply > Fresh meat > My Bakery 0.00016 t 3 1.14 %

8 Raw sugar > Animal food > Poultry > My Bakery 0.00014 t 4 1.02 %

9 Raw sugar > Plain flour > My Bakery 0.00012 t 3 0.84 %

10 Raw sugar > Raw sugar > Refined sugar > My Bakery 0.00010 t 4 0.69 %

11 Electricity supply > Plain flour > My Bakery 0.00007 t 3 0.52 %

12Animal food > Untreated milk > Dairy products > My Bakery

0.00007 t 4 0.49 %

13 Confectionery > Plain flour > My Bakery 0.00006 t 3 0.44 %

14 Animal food > Untreated milk > Cheese > My Bakery 0.00005 t 4 0.38 %

15 Fresh meat > My Bakery 0.00005 t 2 0.38 %

16 Animal food > Pigs > Fresh meat > My Bakery 0.00005 t 4 0.38 %

17 Animal food > Untreated milk > Butter > My Bakery 0.00004 t 4 0.32 %

THANK YOU

www.bottomline3.com

www.isa-research.co.uk