Brand dependencies
Certified reporting using NZ2100 will be only as good as the methodologies that are used to prepare the reports. So, the credibility and brand integrity of NZ2100 will depend on the various component brands that are used to certify appropriate use of financial procedures, appropriate processes for assembling data on CO2 emissions, and so on. NZ2100 does not stand alone, and relies on the huge investment of effort that has occurred already in developing processes and procedures.
Below are some comments on various technical tools that have been used for sustainable development reporting. There are of course a huge array of organisations and brands vying for credibility and standing in the area of ethical performance and sustainability reporting - whether social, economic, environmental, or cultural.
Environmental (full cost) accounting
In 2001, Bebbington and others documented the methods, motivating forces and barriers to wider uptake of environmental accounting, otherwise known as full cost accounting, or green accounting. Their radical definition of FCA included: Tier 0 costs - usual costs, both direct and indirect; Tier 1 costs - hidden costs, such as overheads, and the costs of regulatory and environmental managements systems; Tier 2 costs - contingent liability costs, such as fines and future cleanup costs, that may become real depending on circumstances; Tier 3 costs - less tangible monetised costs and benefits that arise from improved environmental management, such as changes in goodwill, and image; and Tier 4 costs - costs that would be incurred if the business took an environmentally-focused approach, involving zero net environmental effect. Less radical definitions of FCA did not include Tier 4. According to Atkinson (writing in 2000), the FCA idea dates back to the 1970s, but doubts have remained about how to reliably value the costs of pollution, as well as perceived corporate reluctance to sign up to specific numbers or unit costs purporting to represent external costs. Corporates were reluctant to disclose environmentally sensitive information, but they might still use environmental cost information internally to anticipate future policy, and to play a lead role and influence policy. Demonstrating that non-market valuation methods were robust was crucial, but the problem was also complicated by the need to incorporate other factors such as human health and biodiversity. Using single values as if they are applicable across all contexts and locations inevitably led to errors. Bebbington and her coworkers observed that FCA had little support among policymakers in the United Kingdom, Europe, or in North America. There were just a small number of practical applications.
Environmental financial accounting
The United States Environmental Protection Agency in 1996 provided a resource kit of tools for evaluating privately held environmental liabilities such as obligations related to compliance, remediation, fines and penalties, compensation, punitive damages, and damages to natural resources. This accounting is equivalent to including costs to Tier 2 in full cost environmental accounting. The Environmental Protection Authority of the State of Victoria, Australia, reported in 2003 that while managers have very little understanding of environmental management, there was however much scope for simple improvements in environmental management accounting in Australia, starting with measures such as appropriately allocating overhead costs to products.
Natural resource accounting
Natural resource accounting tracks changes in the magnitude of natural resources of value to society, in physical units such as us tonnes or cubic metres. Adherents to full cost accounting interpret sustainability as a requirement to maintain natural capital for future generations. Following the established accountancy practice of capital maintenance, natural capital inventory accounting records stocks of natural capital over time, with changes in stock levels used as an indicator of the declining quality of the natural environment. Four categories of natural capital can be recognised - critical natural capital, such as ozone; nonrenewable, substitutable natural capital such as fossil fuels, and non-renewable, non-substitutable such as rainforests, and renewable natural capital such as plantation forestry. Natural resource accounting can in theory be generalised to provide for accounting for social, human, and cultural capital. An example of natural resource accounting, at the national governmental level, was provided by Statistics New Zealand, in 2002.
Input / output (flows) analysis
Input-output analysis produces measures of the physical flows of materials and energy inputs, and product and waste outputs, in physical units, related to a particular business, industry, sector, or region. It does not provide a measure of sustainability but enables further analysis. Input-output analysis has been a standard tool in economic textbooks for modelling regional and national economies. In these economic systems, consumers and producers are linked through a complex set of resource flows. A given input or an output of the system can be affected by a large number of contributing processes or activities. Techniques such as life cycle analysis and sustainable chain management may capture the direct inputs and outputs of a business, the activities that process the inputs and outputs of this business, and even the second order activities that process the inputs and outputs of these first order activities. Recently (in 2005), Australian workers showed how input-output analysis could be used to account for the full effects from an infinite chain of supply paths. "Structural path analysis" was used to extract the top 10-20 activities contributing to an input or output indicator, and from there establish whether improved production methods should be focused on direct effects of the production process, or indirect effects within the supply chain. Operationalising the analytical approach would require standardised data collection by major trading partners to facilitate exchange of information across their full production chains. Such data exchange was already in place to support building national greenhouse emission inventories to an internationally agreed protocol. However, an extended input-output analysis needed specialised analysts, and results were sensitive to different social and environmental issues in consuming and assembling countries. Also, the tool was potentially disempowering to the people who redesign processes and plants, and posed huge challenges for development of integrated and sustainable systems for data collection, analysis and interpretation.
Ecological footprint analysis
The ecological footprint tool developed by Wackernagel and Rees in 1996 calculates the total amount of land required to sustain an economic activity directly, and indirectly. The economic entity is quite arbitrary and may be a business, organisation, a city or a nation. Ecological footprint is a sustainability indicator in that it measures the total ecological cost, in land area, of the economic activity - not only the land that may be used directly, but that which is also nominally required to sequester carbon emitted as CO2. The ecological footprint is also linked to the idea of carrying capacity as the land surface available for human activities, and to compensate for their effects, is finite.
Life cycle analysis
Life cycle analysis is a methodology for assessing all the environmental impacts of a product or service, from "cradle to grave"- that is, from initial extraction and processing of raw material to final disposal. LCA has four components. The first is scoping. The second, inventory phase, is compilation of quantitative data on both the direct and indirect materials and energy inputs and waste emissions. The third phase is impact assessment (or "eco-profile analysis") and includes classification of effects, characterisation and possibly also valuation. The fourth phase, improvement assessment, focuses on prioritisation and assessment of management alternatives. Implicit in the methodology is that every product must eventually become waste, although green economies seek to eliminate waste. Because of the immense scope of much LCA, the technique is vulnerable to poor data quality. LCA has been incorporated in the ISO 14000 series of international standards.
Life cycle costing
In 1996 Robinson discussed life cycle analysis LCA, full cost accounting, and non-quantitative accounting, and proposed using LCA with the net present value of the conventionally-calculated cash flows as a practical way forward. This is life cycle costing, or LCC. In contrast, FCA started with LCA and put a monetary figure on every impact, and was considered to be impractical, as a result of the high costs of assigning appropriate monetary values, and the difficulty of reflecting the interests of other species. Where LCC showed a positive NPV, the environmental externalities needed to be closely examined in order to assess the sustainability of the activity.
Social accounting
In 2001 One of the "fathers" of sustainability reporting and environmental accounting, Robert Gray, described three strands of social accounting - social audits, which were designed to hold an entity to account, were founded on conflict and power, and were needed to verify corporate claims of sustainability; silent social accounts, consisting of reporting that was currently happening as a result of legal requirements and voluntary disclosure, and that could be integrated to present the organisation as more than an economic entity; and a new generation of social accounting driven by various influences, but usually lacking rigour, and which included stakeholder dialogue, "sustainability reporting", and community reporting. The current practice of social accounting was a mix of discharging responsibilities to stakeholders, controlling stakeholders, moves towards sustainability reporting, and self-justification. Corporations needed to be clear on whether their focus was community wellbeing or stakeholder management and control. A formal model process was presented for engaging and responding to stakeholders to identify and address social issues. Attestation was essential to assure completeness and honesty in reporting but this was beyond the competence or integrity of most current auditors. Regulation was required to produce widespread consistent and systematic practice; voluntary reporting was inevitably in the interests of the reporting organisation and would not advance accountability.
Health Impact Analysis
An analysis by Mahoney and Potter in 2004 described the potential for integrating health impact analysis into a triple bottom line sustainability reporting framework. This was believed necessary for bringing health (environmental health and human health) issues into the broader agenda of government and business. Health impact assessment had two main models, both of which had potential to be used in conjunction with TBL reporting. These were the biomedical model of health impacts, and the strategic health assessment approach. Difficulties were seen in obtaining an agreed operational definition of health, however.
Sustainability assessment
In 2004 Lumsden presented a view of sustainability assessment as the way forward for corporate reporting. TBL reporting encouraged a focus on the past and short term, whereas sustainability demanded a long term assessment tool that would reveal the risk of negative impacts occurring over time. Business management was seen as the art of managing risk, and sustainability assessment could provide the means for managing medium-long term risks for business, the community, the economy, and the environment. Under this model, sustainability was conceived as the probability that human activities could continue without damage to environment and society, while ensuring ongoing economic feasibility. Sustainability assessment would therefore rely heavily on life cycle assessment to produce assessments over a specific period of time. Particular additional benefits of the sustainability assessment risk approach were that future risks were identified and quantified, mitigation of these risks would be more effectively planned, the strategic plan and policies of the organisation would be developed with more complete knowledge of the future business environment, and the company would have a better understanding of sustainability issues affecting its future. The analysis would also help to identify opportunities for enhancing short term and long term profitability, and lead to other benefits such as improved access to finance, greater innovation, and a future-oriented information system for planning and policy.
Sustainability Assessment Model
The Sustainability Assessment Model (SAM) is an extension of full cost accounting techniques, that identify all internal and external costs of an activity. Positive and negative impacts are organised into four areas - economic, resource usage, environmental and social, and the data is graphed, using both a positive and negative axis, to represent the "signature" of the impacts. The impacts are monetised and turned into an index which is an overall measure of sustainability. In 2005, Brown and Frame explored the potential for using SAM, as part of a wider "dialogic toolkit" to advance participatory accounting processes, and concluded that difficulties in obtaining the required data, socio-political barriers to uptake, and the potential for managerialist capture, all limited the potential as a democratising tool.
Quadruple Bottom Line reporting
Since the development of triple bottom line reporting, reporting on the quadruple bottom line has been suggested. The New Zealand Local Government Act 2002 has enshrined the four well-beings, social, economic, environmental and cultural, as the basis for sustainable development. Alternatively, in Europe, Spangenberg, writing in 2005, saw the "institutional imperative, or improving participation, as the critical fourth apex of a "prism of sustainability". Others have emphasised governance, ethics and spirituality in alternative language to describe an extended bottom line model.
Pressure-state-response environmental reporting
In this form of reporting, pressures may be in the form of demands on resources, leading to resource depletion, and demands on ecological processes, leading to pollution. Pressure indicators can be based on measurements or on model-based estimates of actual behaviour. The resulting state of the environment is compared with desirable (sustainable) states. State indicators cover the major characteristics of natural, physical, social and human capital assets. Response indicators measure progress towards regulator compliance or other government efforts. The framework has limitations as a sustainability framework because it treats human aspirations and activities as environmental problems. In practice, it has proved difficult to use the simple model of states, pressures and responses to describe a complex web of system interactions.
Eco-health-based state of the environment reporting
Recently, in 2006, Rapport and Singh described the limitations of pressure-state-response environmental reporting, and discussed the desirability of an approach based on ecosystem health concepts, that would also provide a "bottom line" that would provide the policy community, and the public, with an overall assessment of environmental trends. The ecosystem health approach allowed for a determination of the overall viability of environments and the identification of collective pressures that threatened that viability. An ecosystem approach allowed for a more explicit connection between the state of the environment and human wellbeing. Independently, Creative Decisions developed the "KiwiGrow" (NZ2100) ecosystem-based, community and environmental health approach to sustainable development, in 2004, first applied in consultancy in 2005.
Third Generation GRI Guidelines
A third generation of GRI (Global Reporting Initiative) Guidelines (G3) has involved harmonising GRI indicators with performance expectations under various international agreements, and programmes for improvement, such as the UN Global Compact, and the UN Millennium Development Goals, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and OECD Guidelines for Multinational Enterprises - leading to the "actualisation of universal norms into sustainability reporting". One ultimate goal has been to "bring GRI reporting up to the same level of rigour and utility as financial reports". Perhaps sustainability reporting should have its own, higher, set of reporting aspirations.
Composite sustainability indicators
Composite sustainability indicators are indicators produced by mathematically combining values for other indicators in order to report on some higher order concept or value. Others have pointed to the existence of multiple, non-comparable reporting methods for sustainable development and proposed calculating composite indices for social, environmental and economic performance, as well as a composite sustainable development index obtained by combining these sub-indexes, using weights that reflect the priorities of "decision-makers". The OECD has produced a guide for building composite indicators, that is available on their website.
Integrated TQM and sustainable development
Management researchers Isaksson and Garavare proposed in 2003, linking total quality management, TQM (with its concerns for customer focus, management commitment, participation, focus on processes, continuous improvement, and fact-based decisions) and business management including sustainable development. They used an existing indicators model with a three-way process model (management processes, operative processes, support processes) to develop indicators to report on Economy, Environment and Ethics.
Total Responsibility Management
Sandra Waddock and others described in 2002 how pressures on businesses, in the areas of environment, labour relations, human rights, and anticorruption practices, were leading to the idea of total responsibility management (TRM) systems approaches - incorporating inspiration and vision, integration, improvement and innovation, and effective use of indicators.
Community and regional sustainability reporting
In 1996 Virginia McLaren showed how sustainability assessment and reporting could be approached systematically by cities, using a variety of approaches. Indicator frameworks could be domain-based (e.g. social, economic, environmental), goal-based (e.g. with respect to carrying capacity, or meeting basic needs), sectoral (e.g. housing, welfare, and recreation), issue-based (e.g. relating to urban sprawl, or solid waste management), causal (reflecting conditions, stresses and responses), or they could be a combination of these. In 2006 Holden observed that indicators were being marshaled as practical tools to help achieve "lofty planning goals" in urban and regional planning, and described the Regional Vancouver Urban Observatory, an action research project begun in 2004 to test the idea that commonly held indicators could be developed through negotiation of values and ideals in overlapping expert-based and action-based processes aimed at sustainable development. Reed and coworkers has reviewed methods for building indicator-sets for sustainable development and concluded that processes should combine top-down and bottom up elements that provided maximum benefit from available expertise, systems thinking, and community knowledge and involvement. These processes and reporting systems have the potential to increase in importance as they can provide the community context for organisational and business sustainability reporting.
Sustainability-focused organisational learning
Molnar and Mulvihill wrote in 2003 that a need for big changes in organisational culture in turn suggested the need for a conscious process of "sustainability-focused organisational learning" and most companies were still in the early stages of this. The authors believed that frameworks such as The Natural Step provided a potential bridge linking organisational learning and sustainability, and enumerated the characteristics of learning organisations that companies should aspire to.
The Natural Step
Karl-Henrik Robert's "The Natural Step" Framework is a methodology developed in 2002 for organisational planning. It is based on systems thinking, and principles governing success within that system These can be summarised as (1) Substances from the Earth's crust (e.g. heavy metals and fossil fuels) must not systematically increase in nature, (2) Substances produced by society (such as CFCs and unrecyclable composites) must not systematically increase in nature, (3) The physical basis for the productivity and diversity of nature must not be systematically diminished, and (4) Fair and efficient use of resources to meet human needs. These principles lead to design criteria that can be used to direct social, environmental and economic actions to achieve sustainable development. For businesses, The Natural Step framework is used as a planning tool to help corporations integrate environmental and social considerations into strategic business decisions and daily operations. It complements other environmental tools and approaches such as life cycle analysis and ISO 14001 by providing a context and strategic vision that makes them more effective. More recently, in 2005, Sandstrom warned, however, that The Natural Step did not advance debate about corporate sustainability beyond the "business case" concept in which pursuit of long term profit maximisation and efficient use of resources, would assure sustainable development.
ISO 14001
This is an international standard for environmental management systems. It was produced as a response to the need for organisations to improve their environmental performance, reduce pollution, and improve compliance, and was also expected to facilitate international trade and remove non-tariff trade barriers. ISO 14001 specifies the structure of an information system, known as the Environmental Management System, which an organisation must have in place to be certified according to ISO guidelines. These standards enable a company to: establish an appropriate environmental policy, identify environmental aspects of the organisation's products, services and activities, and to determine their impact and significance; identify priorities and establish objectives; establish a programme to implement policies and objectives; facilitate planning, control, monitoring to ensure policy is complied with and remains appropriate for the organisation; be ready to adapt to changes in the business environment; and identify the relevant legislative and regulatory requirements. Moves to ISO 14001 may be motivated by: improved public relationships and corporate image, improved document control, a measurable response to customer pressure, as a requirement for doing business internationally, industry-standard or peer-level environmental performance, improved risk and liability management, better and less intrusive relationships with regulators, improved financial performance, and enhanced internal efficiencies.
Integrating ISO 14001 with sustainability principles
In 2005, MacDonald noted there was confusion as to where ISO 14001 sat in the complex array of tools for sustainable development. ISO 14001 had only vague guiding principles for continual improvement. ISO 14001 could be used with backcasting and The Natural Step to provide a strategic approach to sustainable development. There were limitations in how high sustainability could be raised within the corporate agenda using ISO 14001: the "ship needs a compass". Principles were often invoked for this purpose, but they didn't necessarily help to identify concrete steps in strategic planning. Backcasting from principles of success, using the process provided, was recommended as it was easier to agree on these than on detailed visions that were always constrained by lack of knowledge about future technologies.
Sigma Guidelines for Sustainability Accounting
These guidelines (Sigma Project, 2003) recognise that sustainability accounting is still in the early stages of adoption by companies, and provides information on the range of approaches known to be available, alternative frameworks to improve understanding of how these approaches may fit together, information on each approach and how organisations can start to use them, and suggestions for further development. The aim is to facilitate reporting using a "Five Capitals" model - manufacturing and financial (together comprising the "economic" stand of a TBL report), human and social capital (making up the "social" strand), and natural capital (making the "environmental" strand). Moving from financial accounting to sustainability accounting resulted in an extended Profit and Loss Account incorporating sustainability-related costs and benefits that directly affect the financial bottom line, as well as information on the external costs and benefits to the environment, society and the economy, which are not traditionally taken into account. It also led to an extended Balance Sheet to take a fuller account of the range of assets, including intangible assets such as brands, human capital and reputation, and "shadow" liabilities, including liabilities relating to sustainability risks.
Narrative assessments: "stories"
Noting the limitations of the use of indicators, the Australian Peter Newman in 2005 advocated the use of stories that captured elements, especially those related to social dimensions of sustainability, that communicated concepts such as a sense of place, heritage, and belonging. There was a need to strike a balance between statistics and stories.
UN Global Compact
The United Nations Global Compact was derived from the Universal Declaration of Human Rights, Fundamental Principles of Right at Work, and Rio Principles on Environment and Development. It was announced at the World Economic Forum in Davos, Switzerland, in 1999 and launched in 2000 as a response to concerns about the adverse effects of globalisation. Its purpose is to foster a more beneficial relationship between business and societies, with particular attention to the world's poorest people. The aim is for the Global Compact and its ten principles to be integrated into business strategy and operations, and that it will facilitate cooperation among stakeholders and promote partnerships in support of UN goals. It seeks to redefine corporate citizenship by creating a platform based on universally-accepted principles, to encourage innovative new initiatives and partnerships with civil society and with other organisations.
UN Human Rights Norms for Business
A commentary on these norms was prepared by Amnesty International, in 2004. They are a restatement of existing internationally-recognised standards of human rights that are proposed as new obligations for business. They are a response to requests by NGOs and some companies for existing standards on human rights to be drawn together in a coherent whole. The draft code is a non-voluntary set of obligations that would partly transfer responsibility for protecting human rights from national governments to companies. It creates a new international legal framework that cuts across most areas of business and aims to ensure that human rights become integral to corporate citizenship.
OECD Guidelines for Multinational Enterprises
These guidelines approximate a corporate code of conduct. Adhering governments are committed to promoting them among companies that operate within or from their territories. They were designed to provide greater certainty and understanding between business, labour, governments, and societies, and to promote positive contributions from multinational enterprises to economic, environmental and social wellbeing. The Guidelines comprise voluntary principles and standards for responsible business in areas such as human rights, disclosure of information, anti-corruption, taxation, labour relations, environment, and consumer protection.
AA1000 Assurance Standard
AccountAbility's AA1000 Assurance Standard is a non-proprietary, open-source assurance standard covering the full range of an organisation's disclosure and associated sustainability performance. The purpose is to promote accountability for sustainable development through the quality of sustainability accounting, auditing and reporting. AA1000 is used by businesses, service providers such as major accounting companies, NGOs, public agencies, and advocacy groups.
Social Accountability 8000
Social Accountability International's SA8000 standard is a global certification system for supply chain labour standards that is being implemented by companies worldwide. It is based on ILO Conventions, linked to United Nations Norms and overseen by a multistakeholder forum. It has strong support from the international trade union movement. SA8000 complements government regulation and national labour legislation and aims to improve verification of labour conditions in the production chain of suppliers. A facility must undergo a full certification every three years, in addition to more frequent surveillance audits.
Competition within the NZ2100 Network
We envisage a significant number of NZ2100 regional networks will come into existence and they will compete with one another for global credibility, and this will provide a key mechanism for determining the leading brands that will be most powerful in regulating national and international affairs. It is possible that an organisation such as the United Nations could attempt to establish some sort of global "hegemony" on the basis of its mandate and achievements to date, particularly through initiatives such as the Global Reporting Initiative, and the UN Global Compact, and its agencies and programmes such as the UN Development Programme, the UN Environment Programme, and UNESCO. Even the United Nations, however, is not guaranteed a pre-eminent position in brand leadership. Its history is scarred by underperformance and division. On the other hand, it is likely that the United States, for example, would wish to see an American version of the NZ2100 brand develop as a robust international standard for sustainability. Even with such backing, however, the recent experience of US involvement in international conflicts, and the distrust with which many view the large U.S. corporations (financial and otherwise) may count against a U.S. brand emerging as the one that is most trusted, at least in the short to medium term - much as we may wish this to happen, given the economic power and political influence of that country. A United States that is deeply committed to the values of NZ2100, and highly active as the principal champion, would be of tremendous benefit to both Americans and the world at large, and would strengthen credibility of a US NZ2100 certification label. In President Barack Obama, we have an example of the kind of extraordinary leadership that is required to make US brand pre-eminence a distinct possibility. To Americans we would say, show us you can do it. And we know, given your pride in your country and your ability to reinvent yourselves, we believe you can.
Then there are the religious communities and organisations who may see NZ2100 and global sustainability as a platform for presenting their own credentials as the most trusted. Certainly it is likely that they would play a role in some regions where one religion may dominate within the culture. But difficulties may arise where there are attempts to present the brand as a global symbol of trust and well-being.
What, of course, is required is a kind of global coming-together to establish agreement on standards and processes for a pre-eminent global sustainability brand. At the present time, this seems unlikely, and, on reflection, one wonders whether it is even desirable, as most of the actors involved have their feet firmly in the past, where matters of global well-being and sustainability are concerned. If the experience of entities such as the G8 and G20, and the United Nations, are anything to go by, negotiation would become a power-play rather than any kind of "spiritual" process involving a deep commitment to the common and greater good. As we progress into the future, however, it is likely that more and more global leaders will be aware of, understand, and be committed to sustainability values, and the kind of global accord that we need may become possible. We can but wait.
In the meantime, we are left with competition between discrete NZ2100 brands. On the face of it, the reporting process itself should reveal any tendencies towards unhealthy, oligopolistic brand behaviour. After all, organisations are required to be nurturing, supportive, contributing, and so on. But, as we have seen, there will be differences in interpretation. We believe that, within NZ2100 networks, "centres of influence" will emerge. Simply, these will be entities (communities, organisations, countries, or states) that will have a major influence on the form of the accreditation and certification processes that operate in the NZ2100 networks to which they belong. Because they may belong to more than one network, their influence may be felt globally. So, any entity concerned about global standards will aspire to become a centre of influence, through their understanding and interpretation of NZ2100, and their demonstrated achievements. These they will be able to document under the banner of "contributing".
Within this environment, KiwiGrow™ may be able to compete. New Zealand has significant expertise in sustainable development, and until recently had a national Sustainable Development Programme of Action. 
Commitment to sustainability goes across most political parties, so the country is capable of developing, as a nation, internationally credible sustainability institutions centred around KiwiGrow and NZ2100. In short, cities and organisations within New Zealand could reasonably aspire to become centres of influence and collaborate in advancement of KiwiGrow and NZ2100.
