Environmental Managers: Time to Whip out the Balance Sheets

Material balance sheets in art: Lara Almarcegui filled the Spanish Pavilion at the 2013 Venice Art Biennale with mountains of crushed bricks, concrete, steel, wood and glass — the same type and quantity of materials used to construct the pavilion in the early 20th century. 

By Noam Gressel

Once upon a time, during the infancy of environmental management, thresholds were all the rage. Regulatory requirements and best practices tended to define “good citizenship” as one that keeps negative impacts, such as release of pollutants, below a certain threshold and positive impacts, such as recycling rates, above another.

There were good reasons for threshold-based accounting: Monitoring devices and wet chemistry methodologies were in their infancy, sporadic and relatively expensive — requiring focus on a few key impacts and simple “above or below” measures that were more feasible to operate. What’s more, a good part of what was being monitored had to do with acute exposures and with the prevention of risks to onsite employees or nearby communities.

But while these acute exposures remain a concern that must be managed daily, two key factors of this current era suggest we can and we must embrace balance sheet accounting.

For one, technology around us has changed, allowing real-time alerts and automation to cover for acute exposures and minimize their overall share of our impact on the environment. In addition, we’re dealing with a new set of system-based problems, where the name of the game is managing the “load” of pollutants being released or the “flow” of materials or energy being transferred from one location to another.

Climate change is a good case in point. At the most fundamental and global scale, this is an issue of material imbalance — where new industrial-era flows of greenhouse gases to the atmosphere cannot be negated by the natural uptake of carbon in vegetation, oceans and geological cycles. These cycles will not be able to fully prevent the buildup of greenhouse gasses in the atmosphere in the foreseeable future relevant for the next few generation. Also, at the corporate scale, climate change cannot be beaten simply by setting a threshold that must not be exceeded.

To drastically reduce its carbon footprint, business must embrace a much more sophisticated approach: seeking inputs of energy from carbon-free energy sources (e.g. renewables), material inputs with high recycled content (i.e. free of the prior negative impacts of these materials on the Earth), or more productive uses for material outputs they once considered waste.

Water footprints must be addressed in much the same way. Using the ECO-OS cloud-based platform, we recently adapted the Minerals Council of Australia water accounting framework for use by a much broader range of industries and businesses worldwide. We like this protocol for its clarity and systematic approach that eventually boils down to a single balance sheet and one page report of the various sources of water and destinations of wastewater.

Taking the balance sheet online enables insight into supply chains without burdensome infrastructure integration while also simplifying the conversation internally. Indeed, the MCA framework’s categorization of water qualities allows water engineers and corporate executives alike to hold meaningful conversations about the sustainability of their water balance, seek new, less impactful solutions for their water inputs and outputs and allocate investments for the imbalances that would otherwise come back to haunt the business in the public arena.

While the world seems to be in turmoil on just about every front, those watching the environmental management space carefully, can recognize some clear multi-year trends above the noise: We’re moving from a linear economy to a circular one; data management, transparency and reporting are such that we can no longer rely on one-off spreadsheets and ad-hoc studies; and the complexity of issues we’re currently addressing requires a business language that broadens the discussion beyond hard-core environmental professionals.

Indeed, it’s time to look beyond the threshold-based paradigm and whip out our business-oriented environmental balance sheets!

Noam Gressel is co-founder and CEO of ECO-OS.

Photo courtesy of the Author

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