Accountability Through MeasurementAccountability Through Measurement

Accountability Precedes Accountability Precedes Compelling MeasurementCompelling Measurement

Aligning Environmental Reporting with Aligning Environmental Reporting with AccountabilityAccountability

Dan Rubenstein, CA, MADan Rubenstein, CA, MA President, Scales of GovernancePresident, Scales of Governance

IISD Research AssociateIISD Research Associate

AgendaAgenda

• Part 1: The Argument-Reporting Without Compelling Part 1: The Argument-Reporting Without Compelling Accountability Has Limited EffectAccountability Has Limited Effect

• Part 2: What is Accountability And Why is a Necessary Part 2: What is Accountability And Why is a Necessary Condition for Environmental Reporting That Changes Condition for Environmental Reporting That Changes Human Behavior?Human Behavior?

– Principles of AccountabilityPrinciples of Accountability

– Accountability CycleAccountability Cycle

– Corporate Accountability for NatureCorporate Accountability for Nature

– Government Accountability for NatureGovernment Accountability for Nature

– ABCs of Compelling Accountability Reporting (CAR)ABCs of Compelling Accountability Reporting (CAR)

• Part 3: What Is Missing from Corporate and Part 3: What Is Missing from Corporate and Governmental Reporting on Nature?Governmental Reporting on Nature?

– Corporate Accounting: Information Without ContextCorporate Accounting: Information Without Context

– Government Accounting: Context Without InformationGovernment Accounting: Context Without Information

Part 1: Personal Experience- Part 1: Personal Experience- Environmental AccountingEnvironmental Accounting

• Experience as a Chartered Accountant, Auditor for Experience as a Chartered Accountant, Auditor for Shareholders 1970sShareholders 1970s

• No Accounting for the No Accounting for the Exxon Valdez (Black Oil, Red Ink) Exxon Valdez (Black Oil, Red Ink) 19891989

• Working with E.B. Eddy (Weston): Accounting for a Clear-Working with E.B. Eddy (Weston): Accounting for a Clear-Cut 1993: Cut 1993: – Inter and Intra-Generational EquityInter and Intra-Generational Equity– Accountable for Compliance HSE, Not for NatureAccountable for Compliance HSE, Not for Nature

• Working with Ontario Hydro Mid 1990sWorking with Ontario Hydro Mid 1990s– Damage CostingDamage Costing– End of Maurice Strong; Coal Fired Generation As UsualEnd of Maurice Strong; Coal Fired Generation As Usual– Environmental Accounting Without Commensurate Environmental Accounting Without Commensurate

Accountability Does Not Change Behavior.Accountability Does Not Change Behavior.• Helped Set Up CESD at OAG, Mid 1990s.Helped Set Up CESD at OAG, Mid 1990s.• Geographer’s Perspective on Accounting for Nature 2003.Geographer’s Perspective on Accounting for Nature 2003.• Scales of Governance 2007.Scales of Governance 2007.

Part 1: The Part 1: The ArgumentArgument

• Environmental Accounting Environmental Accounting Reports That Do Not Inform an Reports That Do Not Inform an Accountability Relationship Are Of Accountability Relationship Are Of Limited Use In Changing Behavior.Limited Use In Changing Behavior.

• Corporate Sector:Corporate Sector: Voluntary Voluntary CSR/Sustainability Reporting is CSR/Sustainability Reporting is Not Grounded in a Firm Not Grounded in a Firm Foundation of Accountability.Foundation of Accountability.

• Public Sector:Public Sector: Most Government Most Government Reporting Initiatives Do Not Align Reporting Initiatives Do Not Align Data With the Accountability of Data With the Accountability of the Different Levels of the Different Levels of Government.Government.

Part 2: What is Accountability Part 2: What is Accountability And Why is a Necessary And Why is a Necessary

Condition for Environmental Condition for Environmental Reporting That Changes Human Reporting That Changes Human

Behavior?Behavior?

Part 2: Accountability PrinciplesPart 2: Accountability Principles

Accountability and Accounting are based on an Accountability and Accounting are based on an accountability relationship where:accountability relationship where:

1.1. Authority is conferred Authority is conferred and responsibilities and responsibilities assigned.assigned.

2.2. Recipients Recipients mustmust justify their actions (and those of justify their actions (and those of subordinates) to the higher authority. subordinates) to the higher authority.

3.3. The higher authority The higher authority mustmust hold to account all those hold to account all those on whom it has bestowed authority and on whom it has bestowed authority and responsibilities. responsibilities.

4.4. Rendering of account is mandatory; caries Rendering of account is mandatory; caries consequences.consequences.

Accountability Cycle

Holding to Account

AccountabilityRelationship

Rendering of Account

Part 2: Corporate Accountability for Nature

Equity Interveners-Use of Nature & Human Beings

NGOs Civil Regulators With No Authority

Regulators: Compliance:

HSE Laws

Tax

Authorities

Accountability Shareholders

Bondholders

Bankers

Class

Entity: Corporate

Profit

Action

Liability

Relationship With Consequence

Third Parties Liability, Consumer Protection

Nature, Fabric of Society

Part 2: Regulatory Lag Times Put Part 2: Regulatory Lag Times Put Nature at RiskNature at Risk

Regulatory Regime

New Law

Multilateral EnvironmentalAgreements (MEAs)

Global Financial Covenants

Risks to Nature’s/Global Financial Ecosystems Carrying Capacity

Part 2: Federal Accountability for Part 2: Federal Accountability for NatureNature

Accountability relationship where: FEDERAL GOVERNMENT Accountability relationship where: FEDERAL GOVERNMENT HAS JURISDICTION:HAS JURISDICTION:

1.1. Authority is conferred Authority is conferred and responsibilities assigned. E.G. and responsibilities assigned. E.G. MINISTER OF F & O—SECTION 36 MINISTER OF F & O—SECTION 36 FISHERIES ACT(FA).FISHERIES ACT(FA).

2.2. Recipients Recipients mustmust justify their actions (and those of justify their actions (and those of subordinates) to the higher authority. MINISTER OF F & subordinates) to the higher authority. MINISTER OF F & O ACCOUNTABLE TO PARLIAMENT FOR O ACCOUNTABLE TO PARLIAMENT FOR FA.FA.

3.3. The higher authority The higher authority mustmust hold to account all those on hold to account all those on whom it has bestowed authority and responsibilities. whom it has bestowed authority and responsibilities. STANDING COM -MITTEE ON F & O HOLDS MINISTER STANDING COM -MITTEE ON F & O HOLDS MINISTER TO ACOUNT. TO ACOUNT.

4.4. Rendering of Account is Mandatory; Caries Consequence. Rendering of Account is Mandatory; Caries Consequence. MINISTER CAN BE FORCED TO RESIGN; CIVIL ACTION.MINISTER CAN BE FORCED TO RESIGN; CIVIL ACTION.

Part 2: Federal Accountability For Part 2: Federal Accountability For NatureNature

• SMART Targets for Federal Sustainable SMART Targets for Federal Sustainable Development Strategy (Development Strategy (FDSDAFDSDA):):

• Specific (10,000 Tons GHG, All Gov’t Operations)Specific (10,000 Tons GHG, All Gov’t Operations)

• Measurable: NRCan MeasuresMeasurable: NRCan Measures

• Accountable—Specific Organization or Person Can Be Accountable—Specific Organization or Person Can Be Held to Account: Public Works and Government Held to Account: Public Works and Government Services Canada (PWGSC), OGDs Services Canada (PWGSC), OGDs

• Results oriented—Measures a Tangible Outcome or Results oriented—Measures a Tangible Outcome or Result of Program: Greening Government OperationsResult of Program: Greening Government Operations

• Time bound: 2010-2011Time bound: 2010-2011

Part 2: Part 2: ABCs of Compelling Accountability ABCs of Compelling Accountability Reporting (CAR)Reporting (CAR)

• A--There is an Accountability Relationship With:– A Mandatory Rendering of Account– A Mandatory Holding to Account by Party With

Legitimacy

• B--Report with Compelling Accountability Changes Behavior of Reporting Entity/Shareholders/Regulators (Red Zone).

• C--There Are Consequences For Changes in Data, Key Indicators.

Part 3: What Is Missing from Part 3: What Is Missing from Corporate and Governmental Corporate and Governmental

Reporting on Nature?Reporting on Nature?

Part 3: Corporate Accountability Reporting for Nature—No Context

Human Use of Ecosystems (1.2 Earths)

Global Ecosystems (Air, Water, Land)

Sensitive

Large Scale

Ecosystems

Aquatic

Terrestrial

Estuarine

Coastal

Oceanic

Entity:

HSE

Unintended Depletion: Nature’s Carrying Capacity

Nature, Fabric of Society

Part 3: GovernmentPart 3: Government

• No Link Government Policy or Targets for Federal Jurisdiction or Provincial Jurisdiction (Under Constitution).

• Canadian Environmental Sustainability Indicators (CESI).

• National Greenhouse Gas Emissions Data—No Provincial Break-out.

• No Data on Individual Provincial Stewardship of Large Scale Ecosystems (Boreal Forests).

Part 3: Government Accountability Reporting for Nature—No Detail on Federal Footprint

National Measures

No Break-Out: Provincial, Municipal Data

Regional

Large Scale

Ecosystems

Aquatic

Terrestrial

Estuarine

Coastal

OceanicNo Detail on Federal

Footprint

Unintended Depletion: Nature’s Carrying Capacity

Nature, Fabric of Society

Accountability Precedes Accountability Precedes Compelling MeasurementCompelling Measurement

Aligning Environmental Reporting With Aligning Environmental Reporting With AccountabilityAccountability

Dan Rubenstein, CA, Dan Rubenstein, CA, MAMA

Scales of GovernanceScales of Governancedanielbrubenstein@rogers.com

613-695-4322613-695-4322