Young people, my interns or students attending my talks regularly ask for book recommendations. With no hesitation my first suggestion is “Silent Spring” by Rachel Carson. Called by some as one of the most important books ever, “Silent Spring” got the American environmental movement started. Al Gore describes it as the inspiration behind his involvement in climate change while Canadian geneticist turned activist David Suzuki reminds us that prior to “Silent Spring” there was not a single country with a ministry of the environment. Within 10 years, the United Nations Environmental Programme was created and the first global conference on the environment took place in Stockholm (Sweden). During the following two decades the environment became a key topic on the global agenda leading up to the 1992 Earth Summit in Rio.
Rachel Carson had been concerned about the negative effects of pesticides since the 1940’s. She finally decided to write “Silent Spring” after receiving a letter from a friend describing how birds in Boston were dying from the effects of DDT and other pesticides. The title conveyed the idea of a morbid spring with no birds singing. It was and remains controversial. It resulted in virulent attacks against her. She was called a hysterical woman that wanted to return humanity to the “dark ages” and that restrictions on the use of DDT caused the unnecessary death of millions. Rarely do critics mention that in most countries the use of DDT is still allowed for mosquito eradication but that growing resistance to DDT has reduced its effectiveness. President John F Kennedy ordered an investigation by the Science Advisory Committee which resulted in increased oversight and regulation of pesticides.
In “Silent Spring” Rachel Carson thought us that everything in nature is connected and that all our actions have consequences – most of them unintended. At a time when it was hoped that science and technology would allow humanity to dominate nature this book helped us realize how little we knew. This lesson is just as relevant today as it was in 1962. “Silent Spring” should be a mandatory read for all students and for anyone interested in the environment.
The report for a “Universal Declaration of the rights of humankind” was delivered last Friday by French ex-Minister of the Environment, Corinne Lepage and her team at the Elysée in Paris. The project originated from a request by the President to build on the human rights declarations and “laying the rights humankind, that is to say, the right of all people on Earth to live in a world whose future is not compromised by the irresponsibility of the present generation”, Francois Hollande, October 2014.
the non-discrimination on grounds of membership to a generation
“How can we guarantee to future generations the right to live in dignity and in a clean and safe environment?” said Valérie Cabanes, international lawyer specializing in human rights. Adding that “the consequences of our consumption patterns and production choices have become a threat to peace and human security”.
“Civil society from around the world must now mobilize and carry the message of the declaration so that it is widely shared and endorsed ahead of the December Climate Conference in Paris. This process is underway and the response so far is just amazing”, commented Corinne Lepage.
special announcement in Geneva on October 6
a broad consultation on the declaration
a side event on the subject will be held during the COP21
The objective being the adoption of a statement on the Declaration by the United Nations General Assembly in 2016. Given that this is a statement and not a binding document, it should be easier for member states to accept.
The team that prepared the declaration and joined Corinne Lepage to deliver the report includes: Ahmed Alami, Marie-Odile Bertella-Geoffroy, Valérie Cabanes, Francois Damerval, Hubert Delzangles, Emilie Gaillard, Christian Huglo, Adam Koniuszewski, Jean-Marc Laveille, Catherine Le Bris, Bettina Laville and Mathieu Wemere.
Over 40% of what we find in our plates including many fruits, nuts and vegetables, results from the pollination process. These “services”, mainly by bees but also butterflies, birds, bats and flies add over $215 billion annually to the global economy – some seven times the revenues of a multinational giant like Coca-Cola. Bees, including commercially managed bees, provide the bulk of this value through pollination while the honey, propolis, royal jelly and wax they produce represents only a small fraction. But the role of bees extends well beyond the economic. Ancient civilizations recognized and celebrated bees and their role in spreading the genetic material of thousands of plants. Honey was revered across the ancient world as a regenerative and mystical substance and the food of the gods in Mayan culture. In the Garden of Eden it is said that honey dripped from trees like rainwater and as far back as 5,000 B.C., “King Menes”, founder of the First Dynasty of Egyptian Kings was called the “Beekeeper”.
Today, industrial agriculture focuses on the utilitarian role of bees to pollinate vast monocultures. Honeybees are shipped when and where needed. The California almond is a case in point. 800,000 acres with 90 million almond trees stretching for more then 600 kilometers provide over 80% of the global almond production. With pollen available only in February, bees would starve in this environment. They must therefore be trucked-in from across the country for the job. A major logistical effort for some 5,000 trucks to bring 1.6 million beehives. This scale of trucking bees around is not without danger – accidents are common. Just last week, North of Seattle, a truck carrying over 20 million bees for blueberry pollination overturned on the highway, spilling 458 beehives that firefighters doused with flame retardant.
It is estimated that 2.5 million hives are being trucked around this way every year to Washington for apples and cherries, Dakota for alfalfa and sunflowers, Michigan for blueberries…
Bees in crisis
But the troubles of bees extend well beyond highway crashes. In the United States, beekeepers are reporting annual bee losses of 30% and more and the number of colonies shrank from its 5.5 million hives peak in the 1950s to less then 2.5 million today. This is the result of a combination of habitat loss, inadequate diets, mite infestation and disease, loss of genetic diversity and pesticides.
In Europe, since 1994, neonicotinoid pesticides have been associated with Colony Collapse Disorder (CCD) – where the insecticide confuses bees to the point where they abandon their hive. The same has been observed across the United States since 2006. UK studies link the pesticide to an 85% decline in queen production and confirm disruptions in the ability of bees to navigate and communicate. This is why the European Commission banned them in April 2013. Given that a worldwide ban would deprive Syngenta of 6.5% of its sales (source: Schroders Research), the science behind bees and pesticides is hotly debated and another culprit is pointed, the varroa mite, a parasite that has spread from Asia to the rest of the world and for which the impact of chemical treatment is showing mixed results – it is said that chemical treatment has helped the mite become more resistant at the expense of the bees.
Biodiversity decline and habitat loss are also having their toll. While farms located near natural habitats fare better, a study found that since the 1980’s there has been a 70% decline in key wildflowers. This means a lower diversity of plants from which bees can collect pollen. The genetically modified and neonicotinoid infected corn syrup they are fed by commercial beekeepers for their subsistence diet are also not helping.
The bee crisis is causing shockwaves well beyond environmental circles. New research by Schroders Investment Bank on “Bees and the Stockmarket” warns of impacts across industries including agrochemicals, food producers, retailers, beverages and the luxury sector. Meanwhile, the Obama Administration talks of a serious threat to food security and announced a federal strategy to protect honeybees, address habitat loss and biodiversity decline. $50 million has been appropriated across various agencies for research and to restore hospitable habitats for bees and other pollinators like the Monarch butterfly.
A Global Movement to Save Bees
Public authorities, the private sector and the public at large – all have a role to play. In 2010, the city of New York overturned a ban on beekeeping that had been in place since the late 1990s and “bee mania” has been spreading since with beehives being installed on skyscraper rooftops, community gardens and school backyards. Even the most exclusive institutions like the Waldorf Astoria Restaurant have joined this movement – its has six beehives located near Central Park and serves the most prestigious honey in town. The private sector is also on board with organizations like the Cirque du Soleil in Montreal and the LVMH Group in Paris setting up hives at their headquarters and engaging in the protection and promotion of bees. But much of the leadership comes from individuals and associations around the world that are fighting unfriendly regulations and attitudes, overturning bee bans, installing hives and creating bee-friendly gardens with native wildflowers that benefit all pollinators. It may bee that in their consciousness, people everywhere are starting to realize that by protecting bees we are also protecting ourselves.
Few are aware that business tycoon and philanthropist John D. Rockefeller, who became the richest person in recent history, started his career at 16 as an accountant. His diligence, uncommon ability to “see everything and forget nothing” and exceptional understanding of business financials allowed him to build his oil empire by making every major decision on the basis of precise to-the-penny financial calculations. “I charted my course by figures, nothing but figures” said John D. His success underscores the importance of accurate and reliable financial information for business leaders to make the right decisions.
Accounting Records, the Military and Sustainability
Recognizing the importance of relevant and reliable financial information, former Undersecretary of Defense Sherri Goodman said that “You can’t manage what You don’t measure” and called for better monitoring of energy use and full tracking of the Department of Defense (DoD) carbon footprint with the aim to get the US military off oil by 2040. But where did this determination to move away from oil come from?
An important element is the realization of the growing number of casualties in convoy operations that deliver fuel and water to the battlefield. The other is economic and has to do with the way fuel costs were accounted for. Historically, fuel purchases were recorded at their purchase price, say 2 to 3 US$/gallon or 0.50 to 0.80 US$/liter. More recently however, the military started looking at the “fully burdened cost of fuel” – that includes the cost of buying, moving and protecting fuel until it is ready to be used in the battlefield. In remote areas these can be hundreds of times higher than the purchase price. Figures of US$600/gallon (US$158/liter) and more have been reported.
With delivered fuel costs representing up to 36% of the total operations budget in Afghanistan, one can understand that energy efficiency has become a top priority for the military. A priority that lowers risk while generating dramatic cost savings. In one example, $95 million was invested in Iraq to insulate tents and temporary infrastructure reducing the need for cooling during daytime and heating at night. This measure saved US$1 billion in 2010 alone and removed the need for 11,000 fuel trucks. For more see Energy Security, America’s Best Defense.
The Need for Business Leadership
Yvo de Boer & Adam Koniuszewski
Business has a key role to play when it comes to sustainability. Of the largest 150 economic entities in the world, more then 59% are not countries but corporations and our most pressing sustainability challenges are largely caused by the way businesses operate and the impact of the products they sell. But today only business has the capacity and the ability to provide solutions to these problems. According to former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) and KPMG Special Global Advisor on Climate Change and Sustainability Yvo de Boer, “The bulk of the solutions to environmental degradation and climate change must come from the private sector”.
And forward looking businesses, including some of the world’s largest corporations like IBM, Dupont, Walmart and world leading carpet-tile manufacturer Interface, have profitably embarked on the path towards sustainability. Interface Founder Ray Anderson said that: “The business case for sustainability is crystal clear and we are pressing ahead with our sustainability initiatives as fast and as far as we can because it has proved to be so good for business”. From the beginning of their sustainability journey, greenhouse gas emissions per unit of production are down 71% (since 1996) and profits are up. In Ray Anderson’s words:
– “Costs are down, not up, dispelling that myth
– Products are the best they have ever been because sustainable design has opened up a wellspring of innovation
– People are galvanized around a shared higher purpose
– And the goodwill of the marketplace is just amazing!”
Check out as Ray Anderson shares his passion for sustainability with George Stroumboulopoulos:
The Interface journey began by attacking waste and diverting the savings to invest in reducing carbon intensity while developing innovative business processes and products. Proper accounting records and monitoring played a central role. Accountant Buddy Hay led this part by implementing the EcoMetricsTM measurement system to track all the materials and energy inputs and all outgoing products, waste and pollution. He says that: “When implementing sustainability programs, you have to measure, understand and articulate the drivers of success. This requires the same rigor and thinking used in financial accounting but applied to natural resources and environmental impact”. Improved tracking allowed Interface to reduce waste to landfills per unit of production by 95% since 1996, and to avoid millions of dollars in costs. This helped fund additional sustainability efforts while rewarding shareholders with a 444% share price increase (5 year period ending Dec 31, 2013).
The Prince of Wales and Accounting for Sustainability
Concerned that our current measures of profit and GDP are providing the wrong signals to leaders in business and government, His Royal Highness The Prince of Wales has embarked on a global project with the accounting profession to help embed sustainability into the DNA of business organizations. Through his Accounting for Sustainability (A4S) Project, The Prince of Wales aims to demonstrate the business case for organizations to embed sustainability into their operations, develop thetools and build the capacity for action and create an enabling environment for change. The objective is “To help ensure that we are not battling to meet 21st century challenges with, at best, 20th century decision-making and reporting systems.” And by working with the A4S Accounting Bodies Network representing two million accountants around the world, The Prince’s Accounting for Sustainability Project is helping the profession to overcome the false choice between business success, environmental sustainability and the development of human happiness and wellbeing.
A4S Executive Chairman, Jessica Fries, knows the importance of involving Chief Financial Officers in the process of building sustainable business models: “The A4S CFO Leadership Network is the first grouping of its kind to bring together leading CFOs to explore their role in developing practical approaches to integrate environmental and social issues into financial decision making. There is a growing commercial imperative for businesses to take these factors into account if they are to future-proof their organisations; and there is now clear evidence that companies which address environmental and social issues in a strategic manner can deliver improved commercial returns.”
Another area of focus is how to account for natural and social capital. One organization that has really helped to highlight the importance of better accounting for natural capital is PUMA, the global sport-lifestyle company. Jochen Zeitz, the company’s then CEO, conceived the development of PUMA’s Environmental Profit and Loss account: “We understand the importance of healthy ecosystems to the future of our business. We have embarked on a journey to develop an enterprise and supply chain wide view of our environmental impacts in monetary terms, so that we could take these impacts into account strategically and embed them in our business decision making processes.”
Valuing Natural Capital in the Montreal Region
David Suzuki and Adam Koniuszewski
Few realize that some of the greatest biodiversity hotspots in the Province of Quebec, are located in the Greater Montreal Region and are at risk from urban sprawl. The David Suzuki Foundation issued a report that valued the ecosystems services of a greenbelt that would protect 19% of the greater Montreal territory to be worth $4.3 billion per year! This work helped convince the Communauté métropolitaine de Montréal to create this greenbelt as part of its new urban plan and the Government of Québec to invest $150 million for its protection.
“With the robust analysis and quantification that the accounting profession can provide, we can better understand the value of natural capital and the importance of preserving and enhancing ecosystems and natural habitats for the greater benefit of our communities” said Quebec Chief Scientist, Rémi Quirion.
Sustainability reporting and the risk of Greenwashing
Despite the growing interest in CSR and sustainability reporting, the surge in revenues for accounting firms is not without risks. Professor of Social and Environmental Accounting at ESSEC Business School in Paris, Dr. Charles Cho, has published numerous studies on these topics. His particular field of interest is accounting and the public interest. Dr. Cho warns that “The recent proliferation of the ‘sustainability’ buzz, particularly within the business community, should certainly not become an avenue for opportunistic strategies and behaviors. We really need to pay close attention to what makes it substantive versus what is likely to become a mere symbolic representation—unfortunately, the latter happens more often than the former. A typical example is the production of stand-alone sustainability or CSR reports—recent mounting evidence has been provided that most of the information contained in these reports is generally biased, selective, trivial and sometimes misleading. Nevertheless, they provide a ‘legitimate’ shield, or a veil, on what is really happening inside organizations. Therefore, such reports should at least be monitored by a set of enforceable regulations, but it is far from being the case.
As for the role of the accounting profession—I remain skeptical on certain aspects such as the Big 4 public accounting firms seeking the next sustainability or CSR report assurance/audit engagement (this type of service is exponentially growing and one does not have to be Nobel Prize winner to understand that this is another great, highly profitable consulting opportunity for the Big 4). However, I am now more convinced that there are potential avenues for accountants, especially management accountants, to make a meaningful contribution to the sustainability agenda, notably by utilizing their technical skills to measure and report on real social and environmental impacts of organizations.”
Concordia University Professor, Dr Michel Magnan, FCPA, FCA, agrees that significant aspects of corporate sustainability reporting are symbolic rather than substantive. But in his view: “There has been progress in the quality of such disclosure over the years among European and North American firms. My research with colleague Denis Cormier shows that such reporting is relevant for market stakeholders (investors, analysts) when a firm exhibits good environmental performance (as measured by objective metrics) but comparability across firms and reliability of disclosed information are still major issues. One has to keep in mind that even for financial reporting, with strict regulatory enforcement and formal standard setting, there are still discussions as to comparability, relevance and reliability!
Another major issue is the scope of sustainability reporting: i.e., when do we stop? For instance, when looking at greenhouse gas emissions for a dairy confectionary company such as Nestlé or Danone, how far do we go to capture the emissions underlying the production process? Do we include the methane emitted by the cows that produce the milk, or even the process by which they get fed (which is often highly mechanized and polluting as well)? In my view, this is the next stumbling block for sustainability reporting to take off.”
“With the evolution towards a `materiality-focused` sustainability reporting, not only are we currently auditing (internally and externally) to provide accurate and reliable information, but our sustainability practices are also allowing organizations to better understand the material issues that relate to the overall strategy of the organization. With early stage moves towards Integrated Reporting, we anticipate an increase in the need for these services that are currently being provided across Quebec, Canada and internationally.” – Luc Villeneuve, FCPA, FCA, President, Deloitte Quebec.
Accountants and Sustainability
More then a century has passed since John D. Rockefeller retired from running his oil empire but the importance of robust and relevant accounting and financial information is more important then ever. The new global context, the state of the environment and the accelerating depletion of natural resources, present immense and unprecedented challenges and opportunities. Our ability to create economic systems that promote and reward businesses for restoring and enhancing natural environments, for conserving resources and for eliminating pollution and waste will help define our future prosperity. The accounting profession, the preferred provider of unbiased, relevant and reliable information, is ideally positioned to speed up this transition.
In this regard, Mr. Daniel McMahon, FCPA, FCA, President and Chief Executive Officer of the Ordre des CPA du Québec, mentions the strategic direction for 2013-2015 adopted by the Board of Directors : “ The Order aims to be recognized for the key role it plays in Quebec’s economic and social development and intends to highlight the role CPAs play in sustainable development. “
Other links of interest: CPA Quebec, Global Reporting Initiative (GRI), Center for Social and Environmental Research (CSEAR), Sustainability Accounting Standards Board (SASB), AICPA & Sustainability
About the Author: Adam Koniuszewski, CPA, CA, CFA is a Commerce Graduate from Concordia University in Montreal. He started his career with Big 4 Accounting-firm Deloitte & Touche in Montreal and London (UK) before continuing his international career with a global corporation (North America, Europe, North Africa) where he gained experience in strategy and business development, planning and risk management, corporate and government affairs. Adam has now joined the world of civil society where he works in the field of sustainability. He is a public speaker at international forums on global sustainability challenges and their business and financial aspects. Adam is also involved in several social and charitable initiatives.