Accounting for the Next Debt Crisis

It wasn’t so long ago that the Enron scandal emerged and “cooking the books” became a common expression.  Some corporations did almost anything to beat their competitors and as big banks were caught being leveraged more than 30 to 1, we witnessed another failed regulatory accounting method which has led to the current debt crisis.  As we claw our way out of this recession, numerous variations of how to account for such downfalls are emerging.  And this time the game is changing.

This past week over 1200 people from almost 80 countries and organizations, from Hess to Harvard, merged at the Amsterdam Global Conference on Sustainability and Transparency of the Global Reporting Initiative (GRI) to brainstorm on the issues of sustainable reporting and disclosure.  At a time when corporate greed seems to still waft in the air, full-cost accounting was the topic of choice.  Mark Gunther’s recent article The Next Debt Crisis Will Be Ecological seamlessly explains how we are living beyond our means.   Speakers at the GRI conference reported we are currently using, on an annual basis, 130% to 140% of the earth’s biocapacity or basically an additional 40% on top of what the atmosphere is capable of chewing up and spitting back out all cleaned up.

This form of full-cost accounting measures both the financial debits and credits but also brings into consideration  a company’s social and environmental impact.  As stakeholders demand more transparency from their organizations, GRI reporting is making its way to the top of the “to do” list for executives.  The Global Footprint Network organization will even guide individuals or families into finding out what their triple bottom line looks like.  For corporations,  it is becoming the norm to submit a GRI report.

For a country-by-country aspect on ecological debt throughout the world, a visual representation can really open one’s eyes.

As we all know, the true cost of things we buy really isn’t reflected in the price we pay.  That pen from China sitting on your desk shouldn’t cost just 10 cents, should it?  As this idea of triple cost accounting makes it way to the mainstream, consumers will become more aware of the devastation that is being brought to the planet’s biosphere and perhaps our accounting methods will be fullproof once and for all?  That is, unless Mr. Lay or Mr. Madoff get out of the slammer any time soon.

Editors Note: Click Here to find out how you can get certified in the GRI methodology of sustainability reporting.

Dale Wannen

Dale Wannen is President of Sustainvest Asset Management, an investment advisory firm focused on sustainable and responsible investing (SRI). Prior to Sustainvest, Dale was a portfolio manager at Harrington Investments and specialized in ESG investment strategies, securities analysis, and shareholder advocacy. Prior to this position, Dale was a financial advisor with UBS Wealth Management Services in San Francisco. He is often a guest speaker on the topic of ESG investing and shareholder advocacy.Dale has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He earned a B.A. in Economics from Rowan University and currently is a volunteer with Mentor Me Petaluma, Rebuilding Together Petaluma, and the founder of Green Drinks Petaluma.He also currently sits as Board of Director and Treasurer of San Francisco human rights organization, Global Exchange, teaches Economics for the Oakland non-profit Game Theory Academy and is a committee member for the National Resources Defense Council (NRDC) in San Francisco. Previous volunteer work has included Treasurer and Board Member for bird conservation organization, San Francisco Bay Bird Observatory (SFBBO), committee member of the Petaluma Pedestrian and Bicycle Advisory Committee (PBAC), and President of the Social Venture Finance Club at Presidio Graduate School.Dale currently holds the Series 65 FINRA license and has previously held the Series 6, 7, 63, 66 and California Life and Health Insurance Certification. He is a member of National Association of Professional Financial Advisors (NAPFA) and the Financial Planning Association (FPA).Dale lives in Petaluma, CA with his wife Lauri and their Malamute Shadow.

3 responses

  1. The solution? It’s a combination of things as I list in priority:-

    (1) population control
    (2) Cutting back on oil and coal etc.better phasing them out
    (3) Planting more forests
    (4) Really promoting alternative energy.

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