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Burr Stewart's presentation at July 2010's Triple Bottom Line Reporting workshop
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Getting to TBL Metrics
Burr Stewart, Burrst
Sustainable Seattle – Triple Bottom Line Accounting
July 15, 2010
Ideas for discussion today
• What is sustainability, and why do we care?
• What does it take to make change happen?
• What is the role of TBL accounting?
• Why is it so challenging? Boundaries? Partnerships? Conflict? Indecision?
• Where are we, in adopting TBL accounting?
Popular sustainability metaphors:
Economy
Ecology Equity Environmental
Social
Financial
Three-legged stool:Wedding cake:
Hence, the “Triple Bottom Line”Also, “Corporate Social Responsibility”
Sustainability is simply:
Looking “UP”
Looking “AHEAD”
self
organization
industry
region
world
country
Beyon
d th
is ye
arBey
ond
chea
p oi
l
Beyon
d bi
g bu
reau
crac
ies
Beyon
d ou
r life
times
With sh
ared VALUES
Money
People
Environment
In an increasingly complex world
ComplicatedSimple
Anarchy
Complex
Uncertainty
Disagreem
ent
…in an increasingly complex world:
Benchmarking
Scenarios
Pilot projects
Facilitation
Transparency
Listening
“Complicated” vs. “Complex”Types of Questions:
What is the problem?
Who’s in charge?
How can we convince them?
What makes you angry?
What is possible?
What matters?
Who else cares?
What has worked?
What gives you hope?
Actions: Plan
Create structure
Convince
Control
Stay the course
Notice patterns
Pilot programs
Learn in public
Self-organizing groups
Population
Greenhouse Gas Emissions
Global Temperature
Sea Level
2008
CO2 at 384 ppm
1990 2020 2050 2200
Cause and Effect Relationships in Climate Change
Mass Extinctions at ~1000 ppm CO2
Global Population6.6 Billion -> 10 ish
Bad!1900
Relationships 101:
Cause
Effect
Stop it
Deal with it
$$!
(Prevention)
(Adaptation)
Understanding Action
Clarifying Causes & Effects
GHG
Effects on Xpo
Prevention
Adaptation
$$!
Climate Changes
Effects on Local Society
Effects Outside study area
Energy Use
Population
We’re running out of time
We’reHere
OurGoal
What’s actually
Kyoto approach
What people think is happeningA proactive approach
happening
2020 20502007
What “collaboration infrastructure”do we need to manage this?
205520051955
0
Currently
projected path
Flat path
Historical emissions
2105
“wedges”
R. Socolow and S. Pacala Princeton University
Catching the waves
Efficiency
Simplicity
Fewer people
We are here
Equal visibility of system componentsEconomy
Society
People
Animals
Plants
Land and Oceans
Climate
Air & Water
Minerals
The forces & actions mismatch
Global
National
State
Regional
Local
Forces Actions& Actors
What is my responsibility to partner to achieve sustainability?
ME
OurSuppliers
TheirSuppliers
TheirCustomers
OurCustomers
The public
OurIndustry
MyOrganization
How far does Life Cycle Analysis need to go?
Who decides?!
The challenge of shared responsibility
MY actions
MY PROJECT actions
MY COMPANY actions
MY COUNTRY or WORLD actions
Our C
US
TOM
ER
S’ actions O
ur S
UP
PLI
ER
S’ a
ctio
ns
Who pays for these?
Local
Regional
National
Global
FreightPassengers
Airports
Airlines
Mfgrs.
FAA
ICAO
DistributionCenters
Businesses
Trucks
Hotels
Cars
Businesses
PleasuresPleasures
Transit
Travel Aviation LogisticsSociety Society
“Matrix” collaboration:
Who is in charge?
’50’s ’90’s ’20’s
Pub. Pvt. NGO
BasicNeedsfor:
Se
Self andFamily
Community World
Met by: PrivateSector
PublicSector
NGOSector
Paid by: Prices Taxes &Fees
Donations
Regulatedby:
Media Exposure
Laws & Courts
Chosen by: Markets Elections Collaborations
Coordinating the Strategy
Prevention
Planning
Response
Recovery
Terro
rism
&
crim
inal
act
ivity
Fire
Earth
quak
ePa
ndem
ic
Envi
ronm
enta
l
Volc
ano
& cl
imat
e
Cyb
er
Bridging the CAP—OPS Divide
Building Stuff:• Master Plans• One-time EIS’s• LEED checklists• As-built drawings• Debt financing• Economies of scale• Centralized decisions
Operating Stuff:• Business plans• Annual CSR reports• LEAN or ISO process• Asset mgmt systems• Cash financing• Outsourcing• Distributed decisions
We need to better visualize long term performance of assets at the rear end as
well as the front end of their life:
Revenues
CostsYears
Not just financial, but also environmental and social
Revenues
CostsYears
Ecosystem benefitsSocial b
enefits
Ecosystem impactsSocial burdens
“Graphic Portfolio Management” would help us see tradeoffs between various project costs and
revenues
Today
Whoever can solve this for clients, wins!
Social benefits
Ecosystem benefits
Revenues
Ecosystem impactsSocial burdensCosts
Global strategies
Process strategies
Learning in public
Organizational strategies
Chaos and research
Mission, strategies and objectives
Performance measures, budgets and resources
Initiatives and Projects
Hopes and worries
Why and what
How much and when
Action and results
Meetings and study
One sheet of paper
Many databases
Products, facilities and services
TBL Accounting
Making Change Happen
Performance Management for an organization
• Policy• Measurement• Actions
– Do projects– Influence others
• Transparency– Audit– Share
Board & CEO Direction & resources
Technical staff New TBL metrics
Proj. mgrs. Green everything
Business. mgrs Contract docs.
TBL auditors Review metrics
All departments Their parts in it
Who What
The “Planning” Model
Financial Objectives, Risks, & Value
Environmental Objectives, Risks & ValueSocial Objectives, Risks & Value
GatherMeasures,Data
WhoPays?
WhoDecides?
WhoActs?
The “Seeking” Model
Financial Objectives, Risks, & Value
Environmental Objectives, Risks & ValueSocial Objectives, Risks & Value
Act onL.H.F.
SeeWhoPays
Measure Adjust
EconomyEnvironment
Equity
Triple Bottom Line Strategy
Environmental Justice Social
Responsibility
EfficiencyAir and water quality, land use decisions, sediment clean-up
Financial performance, local economic impacts, local access to global economy
Employee benefits, community involvement, living wages, social responsibility
Organizational sustainability
TBL meets BSC
Customer
Community
Organization
“Triple Bottom Line”
Economics Society Environment
“Bal
ance
d S
core
card
”
Wages,Benefits
Profit,Capital
Greenoperations
Competitivepricing
Customerservice
Minimumimpact
Maximumbenefit
Corporatecitizenship
Localjobs
Triple Bottom Line Metrics
Economics Society Environment
• Financial– Quarterly NOI– Bond ratings
• Activity– TEU’s– Aircraft operations– Passengers
• Market– Destinations– Commodities– Market shares
• Job impacts
• Social Responsibility– Contract diversity
• Community involvement• Employment diversity• Health and safety• Educational opportunities
• Air quality improvements– Freight mobility– Emissions reductions
• Climate initiatives• Land/sediment clean-ups• Water quality
improvements• Noise reduction and
abatement• Sustainable practices
– Asset management– Resource and energy
conservation– Waste reduction and
recycling
Metrics about the Outcomes:
Metrics about the Initiatives:
Making Progress
• New budget software has provisions for non-financial performance metrics
• “Strategy teams” are trying to pick the best metrics to carry forward in time
• New CEOs want to see a “balanced scorecard” approach to management
• Long-term strategic plan updates can provide rationale for ongoing measurement
What else do we need to be doing?
• Shared infrastructure & resources• Systems dynamics modeling (long term CAP-OP
metrics tradeoffs)• Demand management & contingency planning• Intergenerational redevelopment funding• Integrating civic services (e.g. PSRC)• Life cycle based product labeling• Standards & process for integrating annual CSR
metric reporting (& budgeting!)• Taking this class!
What does this all mean?
• Human life is running out of room and resources on the planet- US consumes 25% of the world’s resources, but is only 5 % of the world population
• Survival depends on making a profound behavioral shift from a “cowboy” mentality to a “spaceship” mentality
• The resulting new economy will highly value efficiency and resource recovery
• This puts pressure on existing people and institutions to reinvent themselves quickly
Three reasons why I’m optimistic:
• The global climate crisis – provides the “burning platform” for shared objectives and actions
• The genome/biotech/nanotech revolution – provides knowledge & tools for redesigning a much more efficient global economy
• Computers, ITS and the internet revolution – provide vital analytical and collaboration infrastructure for shared decision-making
The Ken Wilbur model of systems thinking:
Inner (interpretive)
Outer (measurable)
Individual
Group
“I” “It”
“We” “They”
motives
shared values
actions
org. structure
What you seeWhat you don’t
HardSoft “The Soft stuff is the Hard stuff”
Brain Science
Over-arching brainwaves•Consciousness
•Conscience•Creativity•Context
•The “God-spot”
CARING
ADAPTING
UNDERSTANDINGLinear Processing
•Logic•Reading•Senses
Parallel Processing•Emotions•Boundaries•Memory
IQ EQ
SQ
Balance Individual and Corporate Personality Variations
Introvert
Sensing
Judging
Thinking
Extrovert
Intuitive
Perceiving
Feeling
SQ
