Sharing Responsibility along Supply Chains

1. The Corporate Responsibility Research Conference 2006 4-5 September 2006, Trinity College Dublin, Ireland Sharing Responsibility along Supply Chains A New Life-Cycle Approach and Software Tool for Triple-Bottom-Line Accounting Dr Thomas Wiedmann Dr Manfred Lenzen

2. SD Reporting & TBL Accounting

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

5. Challenges remain… • “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.” World Business Council for Sustainable Development (2002)

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

7. Trucost & Defra (May 2006)

8. 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)

9. Indirect (environmental) impacts Supply Chain Impacts (upstream) Direct Company Impacts (on-site) Downstream Impacts Energy Water Raw materials Logistics Boiler emissions Car fleet emissions Manufacturing emissions Landfill waste Recycling rate Products in use Product disposal Trucost & Defra (May 2006)

10. The problem of quantification • “… 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)

11. SD Reporting Principles • Principle 1: quantitative • Principle 2: relevant & reliable • Principle 3: comparable • Principle 4: complete

12. TBL Accounting without boundaries

13. Where to draw the boundary?

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

15. How to allocate indirect impacts along a supply chain?

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

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

19. value added / net output

20. Sharing responsibility …

21. Sharing responsibility …

22. Sharing responsibility …

23. Sharing responsibility …

24. Sharing responsibility …

25. … shared responsibility

26. BottomLine3 A new TBL software tool

28. Two data inputs • Financial accounts • On-site impacts

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

30. Main TBL indicators

31. Benchmark spider diagram (TBL)

32. Benchmark spider diagram (Footprint)

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

34. Structural Path Analysis

35. Structural path analysis (particulate matter)

36. THANK YOU www.bottomline3.com www.isa-research.co.uk