Summary of 4 principles of Natural Capitalism" By Amory Lovins and L. Hunter Lovins ABC News (press here) :
TD - Transorganizational Development. TD relationships are required to implement principles of Natural Capitalism. ISO is attempting to implement envirnmental management practices as a world standard. For example, ISO is a transorganizational network of organizations certifying, training, and consulting firms to be ISO 9000 and ISO 14000/14001 certified. The purpose of this site is to provide links to TD Environmental Accounting Resources. However, there are question as to whether the new ISO- eco-optimists will be able to implement sustainable business practices under conditions of declining natural resources. In accounting, this means that a move from fuctionalist accoutning focus on compliance and risk is moving to a more green consciousness in accouting for natural resource stewardship. Critical postmodern accouting work is instructive in this regard.
Critical Postmodern Environmental Accounting Theory and Practice -
I would like to expand on Lehman's (1996), Lehman and Tinker (1996) and Lodh's (1996) work for the present project. Lehman (1996) for example, looks at two ideal types of accounting ontologies. I am call the first Functionalist (Free Market, Individualism) EA and the Second Green (Communitarian, Ecocentric) EA in other parts of the Green Accounting Gameboard. There are of course other types. For example Lodh (1996: 4) list 10 theoretical approaches:
(1) Functionalist/Individualism - There are three functionalist/individualism philosophies of accounting presented below in Table One. Pristine capitalism and expedient' philosophies both adopt neo-classical frameworks of utilitarian and rational self-interest in unrestricted market economies (Buhr & Reiter, 1999: 5). The third philosophy of functionalist/individualism is the social contract approach corporations that interfere with the rights of other humans are subject to regulation. Accounting practices in liberal-democracies where the state's role is that of "service station" providing regulatory fuel for the system. Liberalism here refers to free market economies in which government's role is to regulate as little as possible and leave environment to the free market, self-steering forces of the invisible hand. The assumption of this ontology is that environmental and social problems can be solved via "free market" forces (Lehman, 1996: 7). The problem arises when functionalist accounting programs are not able or willing to trace and measure ecological and social costs in ways that inform managerial and policy decisions. Accouning's role is to provide an account of organizational performance limited to just the facts that are measurable on the bottom line. Liberal free market accounting firms advocate for minimal interference in corporate affairs including market deregulation and this is accomplished by a refusal to trace and measure green costs and revenues streams. Here there is a utilitarian motive to maximize human satisfactions without looking too deeply at externalized social and ecology cost accounting (Lehman, 1996: 3). In organization theory there is a preference for agency models and transaction cost models of the firm, without much attention to the harder to measure externalized costs of corporate behavior. Functionalist accounting sustains an optimism in the progress of technology to find solutions to air pollution, toxic water, eroding top soil, and species diversity decline. Banerjee (1999: 3) argues that progress in the functionalistic/individualism philosophy has come at a high price to the Third World and people of the land:
(2) Greeen/Communitarnian - In Table One below there are four philosophies (#4 to #7) that capture various approaches in Green Accounting. These range from social ecology, social, radical feminist to deep ecologist philosophies. Whereas functionalist/individualism has a focus on anthropocentric views, these Green Accounting philosophies embrace more ecocentric views. In communitarianism (e.g. social ecologists), there is a minimalist ecocentric view, which defines "good of the community" as a set of individual utilities in a given community. It deals with social institutions concerns about roles and norms that are important to a well-functioning community. The focus for accounting is to get enough community participation to allow accounting practice to attend to its social covenant. Communitarians seek a high moral stand on the predatory behavior of corporations. Together with the social contract proponents, some social ecologists and communitarians are calling for a corporate charter movement in which corporations could have their charters revoked by communities claiming social and ecological exploitation. Communitarians put their faith in social consensus approaches to direct democracy that will develop universal norms and essential codes of conduct that will bind corporate greed. If type one is technological optimism and free market ideology, type two is the positive ideology of free democracy and the modernist project of social consensus. Normative ideals are adopted in a community in which a corporation operates. Modern society, for example, may maximize human pleasures and wants without looking at eco and biotic needs. There is the growing communitarianism movement in accountability with the work of Amati Etzioni. In terms of accounting, the communitarians are highly critical of agency theories of accounting where managers or board members represent the interests of firm and ecology. The preference is form more participative models of multiple stakeholders. The distinction is one between stakeholders of the mind (the agent thinking of the other stakeholders) versus stakeholders who meet and debate preferences in some social arena (participatory stakeholder transorganizational models). The communitarian model seeks to transcend the voluntary compliance level of norms by appeals to forming social consensus that can bind corporate predatory behavior. Green Communitarian accounting focuses upon moving beyond utilitarian criterion of self-interest of corporate owners, agents, and investors to a community of stakeholders worldview. This is a path that can lead to more regulation instead of the deregulation of free market individualism. There are postmodern concerns I raise about U.S. versions of communitarianism (See TD Gameboard). In particular, the U.S. movement is wedded to a fundamentalist approach to social engagement. Lehman (1996: 9) on the other hand, appears to take a more critical theory approach to communitarianism, seeing the movement as a bridge between Marx's early and later works. After proposing some middle ground, I want to look at a more critical postmodern ontology (items #5 through 7 in Table One). Briloff (1972, 1990, 1993) argues that accounting has violated its sacred trust to society, a "covenant... reinforced by generally accepted accounting principles (GAAP), generally accepted auditing principles (GAAS) and the AICPA's Code of Professional Ethics" (Macintosh et. al., 1997: 20). For example, in the U.S. Saving and Loan Thrift Industry scandal, the nation's taxpayers paid out between $150 to $200 billion dollars. The RJR Nabisco junk bond scandals was rooted in accounting trickery.
(4) Critical Postmodern Ontologies of Accounting - Critical and Postmodern perspectives combine in what is called critical postmodern theory. Critical Postmodern theory is a different ontology than the first three areas of accounting summarized in Table One below. A critical postmodern perspective (e.g. Best & Kellner, 1997) looks at the entropy limits to both the functionalist and the green accounting ontologies as they arise in accounting practice. Lets look at the postmodern, then the critical aspects of critical postmodern accounting.
The Postmodern Aspect - Macintosh, Shearer, Thornton & Welker (1997) argue from a Baudrillardian perspective on accounting, that "many accounting numbers do not represent or refer to any real world" (p. 1). Accounting numbers in accounting charts and tables and in financial reports and audits create instead of reflect or mirror reality. Behind the illusion of the mirrored-representation is the politics of accounting and the social construction of the hyper real. Bougen and Young (1997: 2) assert that generally accepted auditing standards can be seen as "assemblages, defined as heterogeneous collections of things and people becoming connected in different ways and at different times." There are rhizomatic lines of movement of auditing assemblages intersecting with labor and environmental croporate practices. An audit is in-between, a process of making a corporation aware of green and brown practices and always an unfinished continuous improvement when the audit is taken seriously. Each audit is a snapshop full of green policy assessments and prescriptions as well as unearthing problematic non-green practices to be improved. Like Bougen and Young's (1997) analysis of bank fraud, green auditing assemblages have "neigher beginning nor end, orgin nor destination, ... always in the middle" (Deleuze & Guattari, 1987: 263). An audit is always in movement, a spectacular encounter between auditors, visible green accounting failures and corporate greenwash. Auditing can be the story told of a corporation becoming green or in movement to look green in a continuously deteriorating ecology. An audit is a moving assemblage of transorganiztional connections in a succession of audits, denials, and changes. At the same time the auditor is the "confidential agent" of the corporate officers (Bougen & Young, 1997: 7). The auditor lives in-between confessor to corporation and green world citizen and stakeholder. And the auditor is becoming aware of the moving assemblages and connections to multiple and competing stakeholder philosophies that affect green accounting praxis (See Table One). Accounting is being drawn out of functionalist roots and into postmodern, critical, feminist, and deep ecology aspects of accounting work.
Table One: Underlying Philosophies of Functionalist and Green Accounting Praxis*
|1. Pristine Capitalists - the dominant view in accounting and finance in which the only responsibility of the corporation is to make money for shareholders|
|2. Expedients - those with a long-term view who realize that economic welfare and stability can only be achieved by the acceptance of certain social responsibilities|
|3. Social Contract - an attitude that companies and other organizations exist at society's will and are therefore responsible to respect and respond to that society|
|4. Social Ecologists - those who are concerned for the social environment and feel because large organizations have been influential in creating social and environmental problems that they should also be influential in helping to eradicate these problems|
|5. Socialists - who feel that there should be a significant readjustment in the ownership and structuring of society|
|6. Radical Feminists - those who feel that there is something essentially wrong with the aggressive masculine constructs that guide our social systems and that there is a need for more feminine values such as love, compassion and cooperation|
|7. Deep Ecologists - who hold that humans have no greater right to existence than any other form of life|
The Critical Aspect. As Lehman (1996: 6) argues "accounting for sustainability devoid of any critique of capitalism simply acts as a chimera for business as usual." Lehman and Tinker (1996) argue that in order to democratize accounting and develop a more emancipatory and progressive accounting agenda it is necessary to reformulate "environmental accounting as part of its instrumental modus vivendi perpetuating the terrible slide into subjectivism and anthropocentricism where humanity is seen as capable of controlling and measuring nature" (p. 2). In other words, accounting debates whether environmental decay can be codified in annual reports as a way to ward off litigation instead of looking at more ecocentric reasoning.
The Feminist Aspect - Merilainen and Pesonen (1999) looks at much of environmental management discourse as dominated with male language. And as the story goes, it is a way for corporations to learn a bit of green rhetoric so that "greenness" can be commodified and sold from premium prices (p. 6). In the next act of this story the corporations with environmental managers are best equipped to carry out the task being a steward of the environment. The tools adopted by these managers are rational and positivistic, more masculine than feminine in their archetype. The environmental manager is the Good Father taking over from the Bad Father manager who is not a good steward of the Mother Earth. And Mother Earth has to be tamed and managed and subordinated to Good Father in paternalistic control. Merilainen and Pesonen (1999: 8) "suggest that it is the masculine mode of thinking in strategic management... that creates and maintains the ways by which business organizations try to solve their environmental problems." The issue for environmental accounting is how auditing and assessing involves mechanistic analyses that calculate, grade, accumulate knowledge of, and otherwise rationalize logics of paternalistic corporate control over nature. Instead of mastering and controlling knowledge over nature, a feminist approach to environmental accounting would look at living with (not over) nature.
Buhr and Reiter (1999) argue that that last four philosophies in Table One rethink the relationship between human and nature in a more holistic view. In particular deep ecology and ecofeminism (along with other radical feminist positions) argue that both human and non-human life have vital needs. Work in ecofeminism helps overcome important dualisms such as human/nature and masculine/femine that perpetuate anthropocentric accounting practices rooted in instrumentalism and rationalism. In there review of five environmental reports that were all recipients of an environmental report award, Buhr and Reiter (1999: 8-12) point out that they adopt three framing devices" moral responsibility, empirical objectivity and aesthetic judgment. Here are web links to 4 of the 5 reports.
First, that they adopt pristine and expedient worldviews (See Table One above).
Second, the corporate reports reflect worldviews that are anthropocentric and instrumental toward nature.
Third, forms such as Noranda, adopt a social contract view toward sustainability, such as returning the land to a productive state after they are done with it (press here). WMC also instructs its personnel to "give proper consideration to the care of the flora, fauna, air, land and water, and to the community health and heritage which may be affected by these activities" (Press here). The auditing and assessing activities of the accountants of these five firms is undertaken to increase profit and shareholder value while engaging in responsible environmental and social behavior.
Fourth, what is not analyzed in these approaches is issues around biodiversity, ecosystem health, and any notion of the earth as a living biotic organism.
Fifth, from a critical postmodern perspective, there is strong belief in the progress myth, that technology will find a rational way to control the environment. Naranda mining operations, for example "assume that [its mining] intrusions are necessary and that their effects can be minimized and erased, that the earth and indigenous cultures can be restored to an 'acceptable' state" (Buhr & Reiter, 1999: 22). This version of the progress myth reflects a mechanistic scientific management rather than a living organic science view in which analytic environmental accounting techniques can somehow control and preserve and even save community and nature in acts of sustainability.
Sixth, the five reports reflect a male view of power over nature. For example, Merilainen and Pesonen (1999: 5) in another analysis point out "by creating 'Environmental Management" it is believed that in the end, if done well enough, the [environmental] problems will disappear." Ecofeminists are skeptical of the application of scientific management and Environmental Management logic to silence the voices of indigenous cultures. Whereas small communities rely on more participatory democracy, the scientific managers rely on expert power (p. 23). To the deep ecologist and the ecofeminist, nature is not an "inferior" other in the background of a technological society and its functionalist corporate colonizers. Merilainen and Pesonen (1999: 5) argue "that it is questionable whether environmental management thinking, as being a part of a dominant strategic management logic, does more good or more evil to the 'Environment, Social Equity, and Prospects for Future Generations'."
Finally, the reports reveal the use of environmental rhetoric, "although an increased concern with environmental issues is not accompanied by radical changes in conceptualizing the role of humans, nature, and corporations" (Buhr & Reiter, 1999: 24). This would include issues of the interconnectedness and complexity of ecosystems. For example instead of attacking the underlying root issues, environmental management attacks the symptoms (Merilainen & Pesonen 1999: 5).
In order to move from functionalist/individualism philosophies to more green ecocentric philosophies, there is a role for accountants "There is an important role for accountants, as persons who understand models of corporate decision-making, to help in affecting this change" (p. 25).
My take on this, is to move beyond an Etzioni communitarianism to a more postmodern position (see TD Gameboard - Restorying Square). A Critical Postmodern accounting would treat the biotic community as their client, not an individual firm. The accounting practice would integrate biotic costs into each firms chart of accounts and reveal patterns of sustainability and unsustainability to community as well as to corporate players. Shadow pricing estimates of environmental and social costs can reported in a separate set of accounts or in a nest set of accounts on organizational performance (Lehman, 1996: 9). The critical postmodern approach to green accounting is to look at how a chart of functionalist accounts masks the underlying reality of everyday life. Lehman (1996: 9) argues for the calculation of more realistic rents in the surplus accumulation process. There are important differences between a communitarian focus by Habermas with an emphasis on ideal-speech communities (Lodh, 1996) and consensus structures and that of Etzioni that favors restrictions to free speech and to individualism in order to sustain universalizing community norms, including ecological norms that affect accounting practice. In short, from a postmodern theory perspective, there are multiple communitarian approaches including that proposed by Lehman (1996) which takes a more critical theory approach to communitarianism. All three are within the modern and pro-modern resituation and reconstruction of the enlightenment project. A critical postmodern perspectives attends to the ethics of the environmental accounting project. While human emancipation is a worthy goal, it is a narrower focus than an ecocentric position in accounting practice. The emancipation perspective privilege of community over instrumental-individualism is one step toward more ecocentric and less anthropocentric accounting practice.
Hyper-Goods - Taylor (1989) for example introduces the notion of a "hyper-good" a good that is so important that it can determine the outcome of lesser goods or "second-order good" (Lehman, 1996: 4; Taylor, 1989: 63). Hyper-goods such as rainforest products are sources of deep social conflict/
The critical postmodern perspective has a focus on the social construction of accounting language. For example, accounting language and cost accounting practices can give a mechanistic account of the world to managerial decision makers. The communitarian ideal speech situation of Habermas fits well with the learning organization and knowledge organization initiatives in transorganizational consulting practice. Yet, from a postmodern perspective, the numbers of the functionalists and the social dialogue processes of the communitarians can both yield a false consciousness, a universal and totalizing claim that business behavior and techno solutions are realizing gains in sustainability on a local and global level. Narrow functionalist accounting models with a focus in instrumental cost accounting and limitations in what is easily measurable or what is measurable with the least controversy allow a totalized story of the sustainable firm to be told to investors, customers, and regulators. IMplementing communitarian stakeholder participation models along with environmental audit studies of the ISO variety allows a firm or industry to story itself as a sustainable business practitioners, a good citizen of the environment. Yet there are problems with the totalizing good environmental citizen stories.
If we accept an epistemology and ontology that is poly-vocal (many voices), polysemous (many simultaneous meanings) and polycentric (many centered), then the monological and mono-tone stories are hegemonic. A more critical and postmodern storytelling or accounting would register contrary, fragmented, and multiple stories of organizational performance. The questions would be raised, "accountable to whom?" and "accountable for what?" While a move from the expert story of the functionalist accounting auditor-as-expert to the accounting communitarian seeking a plurality of dialogues is a first step. A next step, from my view, would be Tamara of multiple accountings brought into a more polyvocal registry of social and ecological practices. The unitary, narrow, expert focus of the functionalist accounting paradigm covers and camouflages environmental costs while the communitarian does more sharing of dialogue, that camouflage can still be sustained under the illusion of a democratic reading.
Green accounting then is a simulacrum, a fuzzy and shadowy imitation of organization performance within some imagined ecosystem. But the simulacra of the double entries and estimated numbers can no longer even remotely represent material objects. Instead a romantic ideal of a free market story in which the numbers mean sustainable choice-making and accounting is presented to investors and customers. Green accounting is a simulacrum and hyper reality substituted for "real." The substitution is legitimated by a story that says, we can not measure real social and environmental costs, so we substitute these particular simulations, and make our decisions accordingly. Accounting is dominated by a language of symbols and numeric representations of processes and material flows. The financial report then is a text of this symbolic representation content substituted for real. The audit is supposed to do a genealogy of how the numbers came to represent the real, a kind of tracing of the historical and material conditions of the symbols in the annual report. Yet, from a postmodern perspective this genealogy is not a linear story, but one disrupted by significant gaps, emergences, and dislocations. The accounting audits do not seem to capture how a genealogy of disruptions story the link between sign and nature. Baudrillard points out that the sign or symbol can precede the real, go looking for real, and become a substitute for real. "The sign no longer refers directly to the referent" (Macintosh et. al, 1997: 5). The green sustainable accounting audits become one more idealized model of business and ecology. The hyper real accounting charts and report present a decision simulation matrix and a story of sustainability progress that is more real to CEOs and consumers than the fact that species diversity is deteriorating, rainforests are being turned into dessert sands, and water and air quality is deteriorating on a global scale.
"Their hyperreal situation is more real to them than the fact that children work in sub-human, slave-like factory conditions, paid a pittance, while Jordan earns more from Nike in a year than all of Nike's factory workers" Macintosh et. al., 1997:6). Perhaps not all their workers, but certainly more than those in all of Vietnam and Indonesia combined. We absorb the simulations of social and environmental accounting in ways that de-contextualize the symbols from natured reality. In the spectacle of production and consumption media, "cars and washing machines are purchased less fro their utility in providing transportation and cleaning cloths than for their signification value" (p. 6). Consumption of Nike sneaks has become a morally institutionalized way of life to millions around the globe in a system where a Nike sneaker is a status symbol and the conditions of sneaker-manufacture is not part of the shopping decision. The consumer purchases Nike and other commodities to be part of the star power of Michael Jordan (Cole, 1996).
Nike lives by its 1,000 member Labor Practices Department, who can perpetuate the mythos that Nike labor practice scandals in the past decade are unusual and exaggerated claims by ill-informed activists, exercising poor methodology skills, and with axes to grind at Nike's expense. Behind the Nike Tamara is a 1,000 Nike Labor Practice storytellers sent to college campuses, sending press releases to the media, promoting its own web stories, delivering speeches to stockholders, buying Ernst and Young environmental audits, sending a former Ambassador on a whistle stop tour, and buying TV time. With thier story-counter-story style, the public does not know whom to believe, the Ernst & Young audit report leaked to the press, the ESPN report, a CBS 48 Hours report on labor practices or the Nike web site? It is a situation of one simulacrum chasing another, one story spinning another, and more moral tale of helping Third World nations into economic prosperity chasing a tale of labor and environmental exploitation and domination. Since the simulacra or hyper-real reigns, no appeal to the "true" conditions of labor and environmental practice has any widespread consumer or investor appeal. No lens of communitarian dialogue and no functionalist accounting report stems the advertised storyline.
In sum, a move from
functionalistic to communitarian accounting practices can be aided by
attention to critical postmodern issues. In particular the
instrumental reasoning of the functionalist accounting practices
(Lehman, 1996; Lehman & Tinker, 1996) acts as a way to dualize
nature as too subjective to measure and business as operating on the
rigor of measurable financial outcomes. From a critical
postmodern perspective this issue is how to relate nature to human
practice in ways that allow for the communitarian dialogues of
participation. However, a critical postmodern perspective on green
accounting takes a more ecocentric stand than the communitarians and
looks more at the substitution of simulacra for real issues of
environmental biotics. Somehow the accounting reporting and
audit frameworks need to be recontextualized in ways that permit an
accounting for social and environmental costs. This will no
doubt take a mix of communitarian democratic discourse, new
dysfunctionalist gap analyses, and postmodern critique of the
spectacle of production and consumption. This essay has argued
that green accounting requires critical ontologies from critical and
postmodern theory to be applied to the accounting profession.
Alberto, Luis 1999 "The Use of Accounting in Arranging Maquiladoras inside urban zones in Ensenada, Baja California, Mexico" (press here then click Accounting - for PDF file download). Paper presented to Critical Management Studies Conference, July 14-16 1999 Manchester, England.
Bougen, Philip D. & Joni J. Young
1997 "Auditing and bank fraud: Life on rhizomatic lines." University of New Mexico, College of Business, Accounting Department (April).
Buhr, Nola and Reiter, Sara 1999 "Environmental Disclosure and Accountability: An Ecofeminist Perspective" (press here then click Environment - for PDF file download). Paper presented to Critical Management Studies Conference, July 14-16 1999 Manchester, England
Banerjee, Subhabrata Bobby 1999 "Sustainable Development and the Reinvention of Nature" (press here then click Environment - for PDF file download). Paper presented to Critical Management Studies Conference, July 14-16 1999 Manchester, England
Cole, Cheryl L. (1997) "P.L.A.Y., Nike, and Michael Jordan: National Fantasy and the Radicalization of Crime and Punishment." Center for Cultural Values and Ethics. department of Kinesiology, Women's Studies Program, Unit for Criticism and Interpretive Theory, University of Illinois at Urbana-Champaign, Louise Freer hall, 906 South Goodwin Avenue, Urbana, IL 61801 (press here) for web paper.
Gray, R., Owen, D. & Adams, C. 1996 Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting. London: Prentice Hall.
Lehman, Glen (1996) "Social and Environmental Accounting: A Review of the Non-Role of Accounting." Paper presented at the International CPA Conference (press here).
Lodh, Sudhir C. 1996 "Critical Studies in Accounting Research, Rationality and Habermas: A Methodological Reflection." Paper presented at the International CPA Conference (press here).
Lehman, Glen and Tony Tinker (1996) "Environmental Accounting" Accounting as Instrumental or Emancipatory discourse?" (press here).
Macintosh, Norman, Teri Shearer,
Daniel Thornton & Michael Welker
1997 "A Baudrillardian Perspective on Accounting." Queen's University School of Business Research Program Working Paper 97-06 Kingston, Ontario, K7L3N6. Paper presented to the September 1997 conference, "Accounting, time and Space" sponsored by the Accounting, Organizations and Society and the Copenhagen Business School.
Merilainen, Susan and Pesonen, Sinikka 1999 "The Masculine Mindset of Environmental Management" (press here then click Environment - for PDF file download). Paper presented to Critical Management Studies Conference, July 14-16 1999 Manchester, England
Reid, Richard A., Elsa L. Koljonen, and J. Bruce Buell. 1997 "Deming's Cycle provides framework for managing environmental improvement projects." Unpublished paper at Anderson School of Management, University of New Mexico. Albuquerque, NM 87131.
Hong Kong Eco-Net (press here). Good source for audit courses.
RMS - Links to ISO 14000 (press here).
CICA Canadian Institute of Chartered Accountants (press here)
Global Environmental Management Initiative (GEMI) (press here). The Global Environmental Management Initiative (GEMI) is a non-profit organization of leading companies dedicated to fostering environmental, health and safety excellence worldwide through the sharing of tools and information in order for business to help business achieve environmental excellence.
GREEN Page (PRESS HERE). green directory for environmental technology.
World Business Council for Sustainable Development (press here). The World Business Council for Sustainable Development (WBCSD) is a coalition of 125 international companies united by a shared commitment to the environment and to the principles of economic growth and sustainable development. Includes Eco-Efficiency Case Study Collection (press here).
Management Institute for
Environment and Business (press
here). founded in 1990
to help companies improve environmental quality through business success. MEB seeks to demonstrate and communicate to the business community the opportunities of sustainable development. We do this by educating current and future business leaders. MEB works with business schools to integrate environmental issues into the core curricula, and we provide direct industry outreach and training. MEB merged with WRI in October, 1996