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ACCG 260 Lecture 3
The Ecological Footprint and LifeCycle Analysis
The ecological footprint
2nd Semester 2013
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Is sustainability reporting at the organisational level useful?
The controversy regarding multiple indicators
Economic Investors Customers Suppliers Environmental Materials Energy Water Biodiversity Emissions Compliance Social Labour practices Human rights Society Product responsibility
• In financial accounting, we convert different transactions into a single measure: money. • But in much of sustainability reporting, impacts are reported discreetly. • This is justified on the basis that impacts are ‘nonfungible’ – i.e. that you can’t add apples and oranges • The disadvantage is that we can’t answer the question of how, overall, an entity is performing
Westpac
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Rio Tinto
Woolworths
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What’s the ‘bottom line’? 3
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The ecological footprint
The ecological footprint – an introduction
• The ecological footprint attempts to solve this problem by expressing environmental impact in a single measure: land. • This can be applied to various entities – nations, organisations, processes and individuals. • By comparing the footprint with available resources, we can determine how sustainable (or not) the entity is.
http://www.youtube.com/watch?v=94tYMWz_Ia4
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The Ecological Footprint defined
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How is an Ecological Footprint calculated? • The Ecological Footprint is calculated by considering all of the biological materials consumed and all of the biological wastes generated by that person in a given year. All these materials and wastes are then individually translated into an equivalent number of global hectares. • A global hectare is a common unit that encompasses the average productivity of all the biologically productive land and sea area in the world in a given year. Biologically productive areas include cropland, forest and fishing grounds, and do not include deserts, glaciers and the open ocean.
The Ecological Footprint is a resource accounting tool used widely as a management and communication tool by governments, businesses, educational institutions and NGOs to answer a specific resource question: How much of the biological capacity of the planet is required by a given human activity or population? Source: Ecofoot.org 7
Source: Ecofoot.org 8
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How is an Ecological Footprint calculated? • The amount of material consumed (tonnes per year) is divided by the yield of the specific land or sea area (annual tonnes per hectare) from which it was harvested, or where its waste material was absorbed. • The number of hectares that result from this calculation are then converted to global hectares using yield and equivalence factors. The sum of the global hectares needed to support the resource consumption and waste generation of the person is that person's Ecological Footprint.
How is an Ecological Footprint calculated?
Consumption ------------------Yield
Source: Ecofoot.org
• The Ecological Footprint of a group of people, such as a city or a nation, is simply the sum of the Ecological Footprint of all the residents of that city or nation. It is also possible to construct an Ecological Footprint of production for a city or nation, which instead sums the Ecological Footprint of all resources extracted and wastes generated within the borders of the city or nation. • The Ecological Footprint of an activity, such as producing a good (an airplane) or service (providing insurance) in the human economy, is calculated by summing the Ecological Footprint of all of the material consumed and waste generated during that activity. When calculating the Footprint of a business or an organization, the activities to be included within the boundaries of that organization must be clearly defined.
Source: Ecofoot.org
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Personal footprint calculator
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Country footprints - USA
http://www.footprintnetwork.org/en/index.php/ GFN/page/personal_footprint/
Source: Ecofoot.org 11
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Country footprints - China
Country footprints - Chad
Source: Ecofoot.org
Source: Ecofoot.org
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World footprint Overshoot
Criticisms of the ecological footprint
Source: Ecofoot.org 15
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Criticisms of the ecological footprint
Greenhouse gases • Over 50% of the footprint of most high and middle income nations is due to the amount of land need for greenhouse gas sequestration. • But do all greenhouse gases need to sequestered or eliminated? • As Footprint Network calculations suggest overshoot is 25% of current resources, if only half of greenhouse emissions needed to be sequestered, current overshoot would actually be zero.
Fiala (2008) makes a number of criticisms of the ecological footprint concept, especially in relation to: • Greenhouse gases; • Comparison with actual physical areas; • Technology; and • Land degradation.
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Comparison with physical areas
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Technology • Extrapolation of results – say, that we would need 5 worlds for everyone to live at the same level as Americans – ignore the impact of improving technology. • For example, from 1961 to 2006 cereal production increased by 2.17% p.a., while land area dedicated to cereal production only increased by only 0.09% each year. • Similar issues have been raised in relation to many ‘doomsday’ predictions in the past, such as the Club of Rome’s Limits to Growth report (1972).
• The footprint of a city is almost always greater than its land area • But city living is generally more efficient than rural living • Therefore we need to be careful about setting boundaries for the analysis. A city may not be unsustainable if the rural area it relies on is relatively unpopulated. • Similar issues exist in relation to comparisons between nations.
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Land degradation
Fiala’s conclusion
• Land degradation is a key environmental issue, because it is very difficult to restore • Degradation can occur for a number of reasons, such as overgrazing or land clearing • Yet the ecological footprint does not capture land degradation – in fact, overuse of land may manifest itself as a reduction in footprint
Given these problems with the calculation of the footprint, it is better to measure sustainability issues directly. We should have separate reports for: • Greenhouse gas emissions; • Land degradation; • Use of other resources.
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Response to Fiala (2008) Kitzes et. al. (members of the Footprint Network including the founder Mathis Wackernagel) responded to these criticisms in 2009.
Response to criticisms of the ecological footprint
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Greenhouse
Technology
‘Footprint accounts do not assume zero greenhouse gas emissions, but rather demonstrate that, like any waste product, zero net accumulation of fossil carbon in the biosphere is a necessary condition for long term sustainability.’ In other words, the increase should be zero, not the total.
‘Fiala does not acknowledge the difference between a system of accounts and a predictive model. Ecological Footprint accounts provide a static snapshot of consumption, production, and biological capacity in a given historical year. Footprint accounts do not make projections and are not designed to do so . . .’
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Land degradation
Overall view
‘[A] global Ecological Footprint lower than the global biocapacity has been proposed as a minimum criteria for sustainability, not a guarantee of it . . . many other human activities, such as systematic degradation of cropland or emissions of long-lived toxic materials, can also lead to unsustainability.’
‘Compound indicators reflecting complex interactions are often essential in decision making processes and have found important uses as educational and “big picture” contextualizing tools amongst many current users.’
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Conclusions • The Ecological Footprint is an attempt to aggregate environmental impact into a homogenous unit, namely the global hectare. • While this may be a useful objective, such an approach is open to criticism, especially as to the completeness and weighting of the elements it includes • In future weeks we will see extensions of this idea to concepts such as the ‘carbon footprint’ and ‘water footprint’.
Life cycle analysis and labelling
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The problem of embedded impact • Most resource consumption (such as carbon and water) is indirect • Yet typically ‘calls to action’ focus on direct actions • Therefore some commentators suggest the answer is ‘sustainable consumption’
Introduction to life cycle analysis
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Embedded impact - Energy
Embedded impact - Water
Source: ACF, 2007 p.5
Source: ACF, 2007 p.6
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Sustainable consumption
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Life-cycle assessment
• The premise of sustainable consumption is that we can move towards sustainability by changing our purchasing decisions • How do we know the embedded resources in a product? • Answer: Life-cycle analysis
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LCA in Social and Environmental Accounting Literature
Activity
• Little research or consideration of LCA potential • Primary benefit: ‘We in the West have enormous footprints . . . [and LCAs may] bring this essential ecological fact of life to the attention of the organization and to the forefront of management thinking’ (Gray and Bebbington, 2001, p. 192)
• What are the processes that comprise the lifecycle of tomato sauce? • Which has the greatest impact on the carbon footprint?
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Life-cycle assessment - Coffee
Activity
How much carbon is in a bag of coffee? http://www.youtube.com/watch? v=LxGleNh5Dco&list=UUciUU5bJvdwBEUfnXu9fd4 g&index=8&feature=plcp http://www.saltspringcoffee.com
• What are the processes that comprise the lifecycle of tomato sauce? • Which has the greatest impact on the carbon footprint?
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Life-cycle assessment - Limitations
Reporting boundaries
• Scope / Boundaries • Data availablity • Reliability
• As with many sustainability issues, setting boundaries is problematic • With life-cycle assessment, this is particularly the case. E.g.: – If assessing embedded carbon in production, should the assessment include the resources used to make the assembly line? – If assessing embedded water, how should the different aspects of water stress be taken into account?
• http://www.youtube.com/watch? v=puJlMED8GqY
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Sustainability-related labelling • Labels may contain information related to:
Labelling
Production
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Consumption
Life-cycle
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Recall the competing views on sustainability
Potential benefits of labelling • Provide an overall assessment of the impact of a product (or service) • Enable consumers and regulators to make better informed purchasing decisions • Provides an incentive for sellers to manage the entire supply chain
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Labelling and sustainability • Labels may therefore improve markets by improving purchasing decisions • Studies suggest labelling can have an impact: – Gruere (2006) – GM labelling in France and Canada – Weaver and Finke (2003) – Labelling of trans fats in US – DEH (undated) – Impact of WELS scheme • Mandatory labelling schemes seem to have the most impact (Gracia et al., 2007; Roe and Teisl, 2007).
Labelling limitations
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Sustainable consumption
Greenwash • “Greenwash” means making false environmental clams • Greenwash is common(Australian Consumer’s Association, 2008; Voiceless 2007) • This may explain the relative effectiveness of mandatory schemes.
Problems with labelling include • greenwash • product bundling; and • the issue of preferences versus beliefs
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Misleading labelling
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Product bundling
• Labelling might be accurate, but misleading • For example, food miles may be a poor proxy for embedded carbon (Muller 2007) • And water consumption does not reflect impact (Hazelton 2008)
• Any product represents a bundle of resource inputs and production processes • How should priority be assigned between them?
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Activity
Product bundles
• Apart from carbon, what other issues might consumers of tomato sauce want information about?
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Product bundles
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Product bundles
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Product bundling
Product bundling
• Any product represents a bundle of resource inputs and production processes • How should priority be assigned between them? • One possible answer is to compare products within particular categories (e.g. coffee)
• Another possibility is via technology, where detailed information is stored on a database and can be accessed via a handheld device
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Wants versus beliefs
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Wants versus beliefs Sageoff questions whether the market is an appropriate mechanism for settling questions of beliefs, because: • Decisions regarding beliefs should be decided through discourse • Markets deliver ‘proportional representation’ at best • Markets deliver outcomes skewed to the interests of the rich
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Conclusions • LCA offers a potential mechanism to capture the impact of a product across the whole supply chain • Such information can be communicated to consumers via labels (or perhaps databases) • However there are a number of limitations to labelling that should be considered, including boundary setting, greenwash, misleading labelling, product bundles and issues of preferences versus beliefs.
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