COVER STORY Governing Sustainably – The mainstreaming of a once fringe management philosophy

Sustainability has moved rapidly up the public policy agenda and is having significant impact on corporate governance in both public and private sectors.
Professor Jan Bebbington is New Zealand-born and trained accountant who has specialised in triple bottom line approaches to corporate reporting and the development of sustainability strategy. She spoke at Victoria University of Wellington seminar in July titled: Triple Bottom Line: Fad or Essential for Good Governance?
Bebbington is professor of accounting and sustainable development at the University of Aberdeen in the Centre for Social and Environmental Accounting Research within the School of Management. She is member of the Scottish Cabinet sub-committee for Sustainable Scotland.
Sustainability currently informs (in name at least) great deal of what is done in UK government (both at Westminster and in the devolved assemblies). At the same time the corporate governance debate remains centre-stage, as the fallout from the high-profile corporate collapses in the US continues. Bebbington discussed how corporate governance is being affected by the sustainability agenda.
Her focus was on trends within Europe and she used examples of UK businesses that are proactive in considering how the pursuit of sustainable development would affect their operations. Although she concentrated on the corporate form, the points she made could apply to any type of entity – public, private or third sector (not-for-profit).
‘Sustainable development’ (SD) is term that is widely used in Europe, whereas ‘triple bottom line’ (TBL) seems to be preferred in New Zealand, Bebbington noted.
Various forms of government in the UK use the phrase ‘SD’ when the interplay between economic, social and environmental goals are being considered.
“Indeed, the concept of SD is hardwired or mainstreamed into number of political processes.”
Bebbington outlined four examples of how SD thinking is infusing policy and politics.
1. The UK has Sustainable Development Commission that acts as an adviser to the Westminster Government (and is appointed by and reports directly to Tony Blair). The Commission is not as powerful nor as independent as the Parliamentary Commissioner for the Environment, but the two institutions play similar roles. The watchdog evaluates UK government action on the basis of SD principles.
2. An SD strategy was initially formulated in 1992 and is currently being reviewed. It is expected that new strategic document will be developed taking into account trends that have emerged in the past 12 years. The strategy guides policy and is supported by large series of indicators which attempt to measure progress towards SD.
3. The Scottish Parliament (which is devolved parliament governing most areas of Scottish life) has two elements focusing on SD. First, within its standing orders there is requirement for all pieces of legislation to be tested by reference to the principles of SD. Second, is cabinet sub-committee on Sustainable Scotland, chaired by the first minister (the equivalent of the prime minister) and including powerful portfolios such as finance. The sub-committee focuses on fostering policies, actions and partnerships which will lead both to sustainable Scotland and smart, successful Scotland.
4. Finally, the most recently devolved government – The Welsh Assembly – has, as its primary overarching objective, to seek SD for Wales.
In addition to the common use of the term ‘SD’, there are other related elements. Most commonly, companies will talk about their corporate social responsibility and they often relate their responsibility to the elements of SD that they can contribute to. What companies feel responsible for will depend on the accountability relationships they have with stakeholders – which vary according to the organisation and the activities it undertakes.
Bebbington went on to discuss why the idea of SD was ever mooted. It is contested notion, with groups and individuals differing in their ideas of what SD is, could and should be.
Before SD, societies were concerned to encourage development, which was seen as the mobilisation of resources (people, financial and physical resources) in way which met human needs for food, warmth, shelter (as minimum) and many other ‘goods’.
Around the 1960s there arose concern that the environmental consequences of development may create problems for society, firstly in terms of using up resources. In some places this did happen, for example with collapses in fish stocks in the North Sea and the consequent loss of livelihoods. In others resource substitution was possible which led to changes in development patterns.
The second concern was that development would result in adverse impacts from pollution – both local and global.
These concerns about the downsides of development led to the notion of SD. Development was still the objective but it should be re-engineered to avoid the negative outcomes of the past.
This meant SD had strong environmental sustainability focus from the start. The people-focus of development has meant that social justice and equity concerns have also come to the fore in SD.
Although TBL is preferred term in Australasia, the quadruple bottom line – which includes consideration of cultural issues, in particular issues arising from the Treaty of Waitangi – is also popular concept.
Bebbington views SD as being at least as comprehensive as the TBL – that is, it is concerned with the economic and how that interacts with both social and environmental outcomes.
The distinction, if any, between the two is that SD seeks explicitly to address the dynamic interaction of the three TBL elements. In addition, the issue of whether the scale of development activity is greater than the ecological capacity to support the development, takes higher priority in SD debates.
However, she believes any differences are only matter of country or individual preference. “The issues that each address are, at the core, the same.”
Bebbington then addressed the issue of the impact of SD on corporate governance processes. She listed the key reference points she would use as social environmental accountant with concern for how society may evolve towards sustainable development.
• starting point which fears that our economic systems continue to create ecological conditions which may threaten life on this planet. Governance needs to address this fundamental issue.
• In addition, these same economic systems create patterns of benefits and costs which fall unevenly on individuals and groups. Some people benefit enormously from corporate activity. (The focus on corporate rewards is motivated by perceptions that executives are overpaid.) At the other end of the spectrum economic activity may dispossess communities of their lands and livelihoods, poison their environment and damage their health.
• Both of the above observations recognise that economic activity takes place within legal, fiscal and cultural contexts which shape what is, and is not, acceptable and/or possible for corporate entities.
• Finally, therefore, in seeking to achieve governance in world of social and ecological crises, various technologies (including accounting) shape and drive corporate behaviour.
Bebbington views accounting as set of practices which have various significant impacts on the operation of our society. “Accounting is powerful technology that helps entities to plan, manage, control and report on their activities and in doing so they make themselves open to be governed by various stakeholders.”
For example, accounting processes and routines help to determine: which firms are able to raise finance and how much; if organisations are successful or are failing; what price should be charged for goods and services; what projects should be pursued; whether or not certain functions should be outsourced; what management bonuses should be paid; and so on.
As result, social, environmen

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