The University of Sydney AUSTRALIA

Christopher Dey, Manfred Lenzen, Joy Murray Richard Wood & Thomas Wiedmann (SEI) Analysis of Sustainability

1. What is sustainability “ development that meets the needs of the present world without compromising the ability of future generations to meet their own needs” (Bruntland Report of 1987 )

Meets the needs of the present generation

Doesn’t compromise the ability of future generations to meet their needs Rault Family Biscuiterie

Socially and economically sustainable

The Walmart conversion

(Dec 2009) Economic: wages & pensions monies received & paid taxes paid and subsidies received Environmental: energy & greenhouse materials & effluents water & biodiversity Social: labour practices human rights bribery & corruption

2. Triple bottom line accounting: the issues

 A lot of reporting… is still very general… data and reporting are not standardized…not… a true apples- to-apples comparison Mike Tunnell, director of environmental research for the American Transportation Research Institute, June, 2010  we need a reliable, consistent way to measure impacts UK Climate Change and Env Minister Ian Pearson (May 2007)  There is no single, quantifiable measure that companies can use for their upstream supply chain Trucost & Defra (May 2006) Standardised, quantifiable

Carbon Disclosure Project

Take one environmental indicator for example…

cheatneutral Helping you because you can't help yourself Are you a cheater? Can I offset all my cheating? Loyal and faithful? What is Cheat Offsetting? so far, cheatneutral has offset 65, 768 cheats and has 9002 faithful people ready to neutralise your misdemeanours When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere. 28/06/07

How the system works they fund Chris and Mim through Cheatneutral Chris and Mim promise to remain loyal and faithful. “Cheatneutral gave us advice on how to reduce our cheating first.” “We offset the remaining, unavoidable cheating by funding projects like Chris and Mim." 28/06/07 James and Jo have been together since school.

So what does ‘Carbon Neutral’ mean? …cancelling out the harm done to the earth’s atmosphere by carbon- generating human activities, through other human activites that: either reduce CO2 emissions by an equal amount ; or prevent an equal amount being generated ‘there is no common agreed definition of the term ‘carbon neutral’ and there is evidence of this being exploited for PR purposes’ inance_week_06_2006.htmlhttp://uk.standardlifeinvestments.com/content/data/press/press_articles/f inance_week_06_2006.html SLI, 2006

What do we count? Where do we draw the boundary?

Production layers and structural paths Lenzen & Murray, 2003

Know your supply chain  Government expects businesses to ‘maintain high environmental standards throughout the supply chain’ (03/12/09)  Businesses’ approach to corporate responsibility needs to extend throughout the supply chain Defra (Nov 2009)

Why is it important? Case 1: Investors & consumers need meaningful company benchmarks Water service provider A Pumping Catchment Water service provider B Pumping Catchment C D

Why is it important? Case 2: Policy makers want to avoid loopholes in legislation Dairy farming Transport Dairy processing A Dairy farming Transport Dairy processing A 1 A 2 Water use 98% <0.1% 2%

Why is it important? Case 3: Producers need incentives for improving performance Dairy processing B Alum. / HDPE Packaging X Bio-plastic Packaging Dairy processing B Y

Why is it important? Case 4: Investors & insurers need to see hidden risks, eg. GHG emissions Construction Pty C On-site emissions Embodied emissions from materials Water supplier Pty D On-site emissions Lower embodied emissions from materials

3. Boundary-less quantifiable TBL accounting

Boundary

Bounded and un-bounded approaches ISA The GRI

Quantification: Input-Output Analysis Wassily Leontief (from 1930s) – eventually a Nobel prize Elements found in many economic models:  “neutral from both an analytical and ideological point of view” (Nobel Laureate Richard Stone) Static, snap-shot of the complex linkages in an economy Appropriate for reporting and linkage analysis

Agricultu re MiningManufact uring UtilitiesServices Agricultu re Mining Manufact uring Utilities Services Input to mining Input to services Output from mining Output from Services

Input Coefficients To Ag,For&FishMiningManufacturing Utilities,Trade,T ransport&Com municationServices Ag,For&Fish 10.9 ¢/$0.0 ¢/$4.5 ¢/$0.4 ¢/$0.2 ¢/$ Mining 0.1 ¢/$8.3 ¢/$4.5 ¢/$1.2 ¢/$0.1 ¢/$ Manufacturing 16.5 ¢/$10.6 ¢/$23.8 ¢/$15.2 ¢/$6.1 ¢/$ Utilities,Trade,Tra nsport&Communic ation 13.5 ¢/$12.8 ¢/$9.8 ¢/$17.1 ¢/$9.8 ¢/$ Services 5.7 ¢/$6.2 ¢/$5.2 ¢/$14.8 ¢/$20.3 ¢/$ 4.5c of agriculture is needed for every dollar’s worth of manufacturing

Quantification: Input-Output Analysis ‘Generalised IOA’ means that other production factors (eg. labour, imports, energy, etc) are incorporated Result is a common framework for different indicators

Integration National Input- Output Tables Structure and function and knock-on effects Physical data

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

Satellite Account Greenhouse gas emissions 6.2 kg/$0.6 kg/$0.3 kg/$0.4 kg/$0.1 kg/$ Water use 441 L/$7.2 L/$2.6 L/$9.2 L/$1.5 L/$ Land use m2/$ 0.01 m2/$ 0.05 m2/$ 1.05 m2/$ 441 L of water for every dollar’s worth of agriculture

A triple bottom line analysis of 135 sectors of the Australian economy Barney Foran 1 Manfred Lenzen 2 Christopher Dey CSIRO/ANU 2 University of Sydney

Key aspects of the BA report a complete life-cycle assessment of 135 industry sectors across 10 sustainability indicators comparable since related to the same $ of final demand full chain analysis (no boundaries - all upstream) standard data sources (ABS, ABARE, AGO …) quantitative and repeatable benchmarks descriptions of sectors, future trends and opportunities

Sectoral performance: the spider diagram

Wheat and other grains

Production layers

Structural path analysis

Knowing your full production chain Confectionary (Cn) Water: 90 litres per $

4. Knowing your organisation’s supply chain

Two types of data inputs  Financial accounts  On-site impacts

Financial accounts

Allocation

Outputs More than 100 TBL indicators Quantification of total (direct and indirect) impacts Sector benchmarking Production layer analysis Structural path analysis

Typical TBL results

Benchmark spider diagram (Footprint)

Structural path analysis (energy) RankPath DescriptionPath Value Path Order Percentage in total impact 1My Bakery1,438 GJ146.1 % 2Electricity supply > My Bakery568 GJ218.2 % 3Refined sugar > My Bakery189 GJ26.05 % 4Vegetables > My Bakery56.0 GJ21.79 % 5Paper products > My Bakery49.1 GJ21.57 % 6Electricity supply > Fresh meat > My Bakery47.3 GJ31.52 % 7Road freight > My Bakery39.0 GJ21.25 % 8Paper containers > My Bakery34.4 GJ21.10 % 9Flour mill products > My Bakery32.2 GJ21.03 % 10Fresh meat > My Bakery26.6 GJ20.85 % 11Electricity supply > Electricity supply > My Bakery25.0 GJ30.80 % 12Raw sugar > Refined sugar > My Bakery24.4 GJ30.78 % 13Wholesale trade > My Bakery23.3 GJ20.75 % 14Gas supply > My Bakery20.3 GJ20.65 % 15Electricity supply > Poultry, slaughtered > My Bakery19.1 GJ30.61 % 16Electricity supply > Flour mill products > My Bakery18.9 GJ30.60 % 17Eggs > My Bakery18.9 GJ20.60 % 18Gluten > My Bakery17.0 GJ20.55 % 19Dairy products > My Bakery15.5 GJ20.50 % 20Electricity supply > Offal, hides, skins, blood meal > My Bakery13.3 GJ30.43 %

What's New GHG Protocol releases India GHG Program Guide Read More Read More Sign-up for our quarterly newsletter: Supply Chain Partners. … standards for measuring and managing GHG emissions throughout the product life cycle and across the entire … value chain. GHG Protocol’s Product and Supply Chain Initiative launches in Washington, DC and London GHG Protocol Steering Committee members in Washington, DC …accounting methods that can … produce robust results, and encourage …adoption by companies and organizations around the world.

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