PAINTINGPainting continues to be a popular, and relevant art.docx

PAINTING
Painting continues to be a popular, and relevant art medium. It
has been used by artists for
thousands of years. But painting is really just a general
category. There are specific types of paint
you need to know.
Fresco is water-based pigment painted onto wet plaster. It is
what Michelangelo used for the
Sistine Chapel, and what Diego Rivera used for his celebrated
murals.
Oil was perfected in Renaissance, and was especially good for
painting lifelike people. It is still a a
popular medium used by all types of painters.
Acrylic was not invented until the 20th Century, and it was not
until the 1960s that it became
widely available for artists to use.
Encaustic is pigmented, molten wax. You must apply the liquid
wax while it is hot. This is an
ancient medium used more recently by the famous American
painter, Jasper Johns.
Watercolor is transparent, water-based paint usually applied to
paper. It is enjoyed for its fresh,
spontaneous qualities.
There are other paints too, such as egg tempera (made with egg
yolk), casein (milk paint),
gouache (an opaque watercolor), enamel (a shiny, flat paint, the

same as nail polish) and
distemper (glue paint).
As you look at paintings in person, online, and your textbook,
pay attention to the painting
medium and how and why the artist may have chosen it. Each
type of paint has its own qualities.
Beatriz Milhazes
(Brazilian, b.1960)
Coqueiral em marrom e azul celeste
2016 – 17
Acrylic on canvas, 11 × 6 feet
Beatriz Milhazes (Brazilian, b.1960)
Exhibition at Pérez Art Museum, Miami, Florida, 2014
Acrylic on canvas, 11 × 6 feet
Diego Rivera
(Mexican, 1886-1957)
Liberation of the Peon

1931
Fresco, 6 × 8 feet
Diego Rivera (Mexican, 1886-1957)
Man Controller of the Universe (or Man in the Time Machine),
1934, Fresco
4.85 x 11.45 meters, Palacio de Bellas Artes, Mexico City
Michelangelo (Italian, 1475-1564)
Creation of Adam, c.1508-1512, Fresco, 9 x 18 feet, Sistine
Chapel, The Vatican
Michelangelo (Italian, 1475-1564)
Ceiling and Last Judgment, c.1508-1512, Fresco, Sistine
Chapel, The Vatican
Raphael (Italian, 1483-1520)
Madonna and Child with Book, c.1502-1503
Oil on Panel, 21 x 15 inches
Pablo Picasso (Spanish, 1881-1973)

Woman with a Book, 1932
Oil on Panel, 51 x 38 inches
Tip: See both of these paintings in person, for
free, at the Norton Simon Museum in
Pasadena, CA.
Jasper Johns (American, b.1930)
Flag, 1954-1955, Encaustic, oil, and collage on fabric mounted
on plywood, three panels, 42 x 60 inches
Lourdes Sanchez (Cuban-American, b.1961)
Untitled (Morning Glories), 2019, Watercolor, 40 x 60 inches
9 CSR Reporting Standards and Practices
Shironosov/iStock/Thinkstock
Learning Objectives
After reading this chapter, you should be able to:
1. Understand the history of CSR reporting and past attempts to
standardize the process.

2. Explain how to use Global Reporting Initiative standards to
verify CSR and sustainability reports.
3. Summarize the challenges and benefits that organizations
face in creating CSR reports.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 9.1Financial and CSR Reports
Pretest Questions
1. Firms can legally report company earnings numbers in just
one way. T/F
2. Offering CSR or sustainability reports remains optional in all
industries. T/F
3. Publicity is the major leverage point for externally
motivating corporations to
report CSR. T/F
Answers can be found at the end of the chapter.
Introduction
Customers and other stakeholders (even employees) cannot
usually become aware of socially
responsible behaviors without some effort on the organization’s
part. Thus, accurate and
timely reporting of CSR efforts can engage stakeholders and
provide concrete evidence of
sustainability attempts and successes. However, not all firms
report the same way, and con-

sumers are not always able to protect themselves from false or
misleading reports. Also, some
firm managers still choose to only report financial returns and
don’t discuss the social or
environmental aspects of or contributions to those returns.
This chapter addresses types of financial and CSR reporting. It
discusses reasons why compa-
nies make the effort to report and describe standards and
general practices that, if adhered to,
can help such reports be maximally useful to customers and
other stakeholders.
9.1 Financial and CSR Reports
Today the most common type of corporate reports are financial
reports. Interestingly, com-
panies can legally present investors with two types of financial
reports: (a) those that strictly
adhere to generally accepted accounting principles (GAAP) and
(b) those that include
some simplifications or leave out some facts from the main
body of the report. The first type
is well known to accountants; such reports follow a
standardized format that make them easy
to compare to reports from other companies that use the same
standards. Thus, the GAAP
format enables the financial situation of two or more companies
to be compared. In contrast,
non-GAAP reports feature adjusted figures known as pro forma
or non-GAAP numbers. Com-
pany leaders have significant freedom in reporting such
adjusted numbers, in part because
there are no rules about what they can strip from the reporting.
This allows executives to
paint a simplified or idealized picture of the corporate situation
(Morgenson, 2015). Even

within the same industry, companies can differ on what they
include or exclude from the
nonstandard report. For example, one company may exclude
facts about how employees are
compensated, while another company in the same industry may
include such numbers. When
these differences occur, it makes it challenging for investors or
other stakeholders to compare
companies’ performance.
The existence of such different types of reporting means that
investors and reporters may pay
more attention to the nonstandard and adjusted numbers when
making investment decisions
(probably because they are typically and purposefully easier to
understand). This has ethical
implications, should people invest money based on what could
be misleading information.
For example, in the case of pharmaceutical company Valeant,
there were dramatic differences
between the company’s real earnings and its adjusted numbers
(and these differences were
more dramatic than differences in competitors’ reports). Under
GAAP reporting, the com-
pany earned $912 million in 2014, but its other report showed
“cash” earnings of $2.85 bil-
lion for the same year (Morgenson, 2015). Valeant stripped out

many expense items from
its non-GAAP revenue reports, including costs related to stock-
based compensation, legal
settlements, and costs associated with acquisitions. In fairness
to the company, Valeant did
present a list of excluded expenses, but not in a format that was
accessible to many investors
(Morgenson, 2015). In the last half of 2015, Valeant’s market
value dropped by almost $60
billion, largely as a result of investor reactions to the discovery
of the variance between the
two versions of the report (Morgenson, 2015).
What are government and exchange regulators doing about this
issue? In 2003, when pro
forma or non-GAAP earnings first became popular, the SEC
instituted Regulation G to help
investors. Regulation G requires companies that use adjusted
non-GAAP figures in regulatory
filings to present comparable numbers calculated using GAAP.
However, the regulation does
not cover news releases, a major source of information for
investors.
According to many, this kind of market deception reflects the
need for transparency and stan-
dardization in reporting, not just for accounting measures
(which are only one part of the
triple bottom line), but also for CSR (Howell, 2015b).
Transparency means being open, hon-
est, and direct about a company’s past, present, and future.
Standardization means using a
common system that allows people to make fair comparisons
between similar corporations.
Transparency and standardization are a foundational element of
sustainability because they

allow companies to fairly measure and compare shareholder
value, return on investment in
finance, and environmental impact and social contributions to
CSR. CSR reports are a rela-
tively new phenomenon, and making sure they are useful
requires understanding the history
of reports, the standards related to reporting, and cases of
reporting use and abuse. Doing so
also helps explain why some firms continue to resist the
practice and why so much variety
exists in how and why firms report. It also illustrates how one
disaster indirectly led to the
creation of a global movement.
History of CSR and Sustainability Reports
On March 24, 1989, an oil tanker named the Exxon Valdez,
bound for Long Beach, California,
ran aground in Prince William Sound, Alaska, spilling 15
million to 40 million gallons of crude
oil into the ocean (Skinner & Reilly, 1989). Considered one of
the most devastating human-
caused environmental disasters in history, the spill eventually
spread to cover 1,300 miles of
coastline and 11,000 square miles of ocean. Prince William
Sound is a remote location acces-
sible only by helicopter, plane, or boat. This isolation made
government and industry response
efforts slow and expensive, which only further devastated local
salmon, seals, and seabird
populations (Skinner & Reilly, 1989). The fishing industry in
that part of Alaska still has not
fully recovered from this disaster. The public’s outrage over the
event grew as investigations
and reports revealed that the crew was overworked and
underrested, and that some safety
monitoring equipment was broken and deemed too expensive to

fix (Skinner & Reilly, 1989).
The Exxon Valdez became a symbol of how the drive for
profit can conflict with environmental and social respon-
sibility, with devastating results. The short-term media
and social response was significant, and public outrage
and concern continued for years.
Some of the disaster’s long-term implications relate to
corporate transparency. The spill instigated new pres-
sures for firms to report how they were (or were not)
protecting workers and the environment. Groups of
activists began to push for accountability through vol-
untary corporate reporting. One of the leading orga-
nizations responsible for demanding more corporate
transparency was the Coalition for Environmentally
Responsible Economies (Ceres), which was formed in
response to the spill.
The Coalition for Environmentally
Responsible Economies
Ceres was formed by a small group of investors who
believed that if firms like Exxon had to publicly admit
they were overworking people (a social CSR issue),
were failing to invest in safe equipment (another social
CSR issue), or lacked the policies to protect the environment in
the event of an emergency,
they might find reason to fix such irresponsible and

unsustainable behaviors. Essentially, the
founders of Ceres believed that transparency could herald
change.
Over the organization’s 25-year history, its mission has
expanded. It has introduced report-
ing tools to help organizations weave environmental and social
challenges into company and
investor decision making. It has inspired a reevaluation of
companies’ roles and responsi-
bilities as stewards of the global environment when it published
the Valdez Principles, later
named the Ceres principles. These consist of 10 points of
environmental conduct that Ceres
encourages companies to publicly endorse (Lubber, 2014):
1. Protection of the biosphere: How well does the corporation
protect the general bio-
sphere, including by reducing greenhouse gases?
2. Sustainable use of natural resources: Does the corporation
strive to use renewable
resources and reduce the consumption of nonrenewable ones?
3. Reduction and disposal of wastes: Does the corporation
practice lean manufacturing
and seek to reduce or eliminate waste?
4. Energy conservation: Does the corporation conserve energy?
5. Risk reduction: Does the corporation have safety and
accident-reduction programs
in place?
6. Safe products and services: Does the corporation create
products and packaging that

are safe for consumers? Are consumers safe when they use the
product?
7. Environmental restoration: Does the corporation take steps to
renew and restore
the environment when damage is done?
John Gaps III/AP Images
In 1989 millions of gallons of oil
spilled from the Exxon Valdez
tanker, harming the surrounding
water, coastline, and wildlife in
Prince William Sound, Alaska.
8. Informing the public: Is the corporation transparent and open
in decision making?
Does the corporation alert the public to CSR progress and
setbacks?
9. Management commitment: Is the corporation’s management
and leadership knowl-
edgeable and committed to sound Ceres practices? To general
CSR and sustainability
principles?
10. Audits and reports: Does the corporation audit, report, and
generate data on envi-
ronmental compliance and CSR?

In 1993, after lengthy negotiations, Sunoco (an oil and gas
company) became the first For-
tune 500 company to publicly endorse the Ceres principles.
Since then many others have
signed similar agreements to follow the principles, and Ceres is
now the largest environmen-
tal monitoring data service for companies (Ceres, 2014),
although it is not used by all firms.
The creation of the principles and the requirement for
supporters to publicly declare support
ushered in renewed pressure to make public data on where
companies stand in regard to CSR
and sustainability. Ceres spearheaded a movement to get firms
to publicly report and state
sustainability and CSR goals, progress, and setbacks.
Recent research suggests that 93% of the top global companies
publish CSR or sustainability
reports (KPMG, 2013). The statistic indicates how far
sustainability and CSR reporting have
come, but the journey was not easy. As Bob Massie, Ceres’s
executive director from 1996 to
2002, stated in 2014:
The whole idea of having an environmental ethic, or measuring
your perfor-
mance above and beyond your legal requirements, was
considered completely
insane. Sustainability was considered to be a shockingly
difficult thing that no
company would ever take on as a goal. (Ceres, 2014)
As Ceres pushed reporting, it also spearheaded a worldwide
effort to standardize and system-
atize disclosure on environmental, social, and human rights
performance. In the late 1990s

Ceres launched a separate entity known as the Global Reporting
Initiative (GRI), the aim
of which was to create a standardized and transparent
accountability process that ensures
compliant companies follow the Ceres principles (GRI, 2015).
The Global Reporting Initiative
The GRI is the most widely adopted framework for
sustainability reporting. It was originally
created in 1997 to help leaders and managers navigate the
process of reporting—there were
no standards and very few examples to follow at that time. One
of the first steps organiza-
tional leaders took was to expand the conversation and
terminology so that more industries
could participate in the effort. For example, GRI leaders
broadened the focus beyond the envi-
ronment to also include social, economic, and governance
issues. The addition of more topics
and keywords served to strengthen the relationship between GRI
and basic CSR principles
and enabled more organizations to participate. In 2000 the GRI
published the first official
guidelines for corporate compliance reporting and created a
framework for comprehensive
sustainability reporting. The GRI team offered consulting
services for those who needed
advice on how to provide exemplary reports.

For the first 3 years, GRI kept track of which firms used the
guidelines and included links to
examples of all types of reports on its website. Over time,
enough firms began offering reports
that GRI stopped keeping track—a sign it had effectively helped
launch a movement.
In response to the GRI guidelines, the leadership at Ceres
decided to spin off the reporting
efforts from the rest of the organization. Thus, GRI became a
separate and independent non-
profit institution in 2001. The organization moved to
Amsterdam and became part of the
United Nations under its environmental program (the UNEP).
That same year, in 2002, the
second generation of guidelines (G2) was unveiled at the World
Summit on Sustainable Devel-
opment in Johannesburg, South Africa. The summit was the
most important international
convention related to climate change, and being part of it was
another sign of the organiza-
tion’s value and prestige.
Over the next 4 years, demand for CSR reporting guidance grew
dramatically, and the third
generation of the guidelines (G3) was launched with the help of
more than 3,000 experts
from multiple sectors, including packaged goods, shipping,
agribusiness, and more (GRI,
2015). However, it was not until 2007 that GRI created a
product for mass consumption and
utility—Pathways I. This publication provides a step-by-step
procedure for report makers. To
create a regional presence and learn how different regions
responded to the document, GRI
set up regional offices around the world, beginning with Brazil.

Today it has offices in many
countries.
To encourage the use and enforcement of the current guidelines
(G4), GRI launched a
60- question multiple-choice exam that enables individuals to
be accredited to use the G4
guidelines. The exam is available in more than 70 countries;
successful participants receive
a certificate and get their name published on the GRI website
for 3 years. While this kind of
recognition may seem narrow, it has significant weight with
environmentally and socially
conscious investors who have come to expect transparent
reporting and this kind of standard
measurement. Also, certified people can go into business for
themselves (or be selected by
employers) to help others create better CSR and sustainability
reports—this provides a way
for CSR and sustainability skills to be turned into financial
benefits. The more people who are
accredited to the GRI standards, the more the GRI brand grows
and the more the reporting
movement gains momentum and standardization. GRI’s vision is
for organizations to con-
sider sustainability throughout their decision-making processes
(GRI, 2015). Such a goal puts
them in partnership with corporate leaders and individuals who
are interested in increasing
CSR and sustainability.
The emergence of Ceres and GRI illustrate how a small group of
individuals can form a collec-
tive and ultimately drive major change. The ability of
individuals to report, support report-
ing efforts, and engage with standardized guidelines has moved

from nonexistent in 1992 to
being the purview of a few experts to being readily accessible
by almost all interested parties.
What have companies done with this ability, and what are the
consumer and competitive
pressures to conform? As stated earlier, data suggests that each
year, more companies report
and that these reports are becoming more accessible, detailed,
and useful to stakeholders.
The following section highlights this progression.
The Progression of CSR Reports
The three historic phases of CSR reporting clearly show the
gradual mainstreaming of envi-
ronmental issues, which were once seen as the concern of only a
few. Measuring and transpar-
ently reporting environmental impacts in a standardized way has
become common practice.
However, the journey to get to this point featured several
phases, each of which is impor-
tant because they illustrate how CSR efforts move in stages.
This information can encourage
people who want to start a movement related to a different CSR
and sustainability issues.
The phases are also important because they illustrate how
people come to accept new CSR
ideas—and some firms or managers may still be stuck in a
mind-set of an earlier phase. The
ability to recognize how people and ideas mature can help

future leaders and managers work
with people of varied mind-sets.
Phase 1
In the earliest phase of CSR and sustainability reporting,
corporations were more focused on
public image in order to impress shareholders, who mostly
expected annual financial reports.
During the 1970s and 1980s, CSR messages (if they existed at
all) were based on public rela-
tions goals more than truth or adherence to standards. One
important breakthrough came in
1972, when a consulting firm named Abt & Associates added an
unexpected environmental
report to its typical annual financial statements. This pioneering
effort focused strictly on
sharing data on air and water pollution by the company and its
affiliates. Abt & Associates’
financial auditor certified the financial data. But since he was
only trained to evaluate finan-
cial reports, he disclaimed any responsibility for the
environmental data, since no standards
existed for such audits. In response, John Tepper Marlin (1973)
wrote an article for the Jour-
nal of Accountancy suggesting ways accountants could measure
pollution; the article included
a model environmental report, which was subsequently adopted
by a few accounting and
auditing firms around the nation (Marlin & Marlin, 2003). Still,
neither the practice of report-
ing nor the practice of having auditors measure environmental
pollution gained much trac-
tion until the 1980s.
Phase 2
In the second phase of CSR reporting, Mar-

lin continued to innovate and improve on
his original ideas. He found an interested
innovation partner in gourmet ice cream
purveyor Ben & Jerry’s. In a groundbreak-
ing deviation from standard practice, Ben
& Jerry’s commissioned a social auditor to
work with its staff on a report covering the
previous year’s activities. This was unusual
because most firms only hired financial
auditors, not auditors to evaluate social and
environmental practices. For 2 weeks, the
company’s founders gave the social auditor
full access and permission to interview any-
one in the company. The auditor visited not
Toby Talbot/AP Images
Companies such as Ben & Jerry’s, the Body
Shop, and Shell Canada were among the first to
conduct environmental reports.
only the main ice cream factory but also the smaller facility
where the company made special
products, such as its Peace Pops. The auditor was encouraged to
speak with dairy industry
officials and public and private community representatives—
essentially anyone in the supply
chain or any stakeholders in the industry. In many ways, by
commissioning the audit, Ben &
Jerry’s leadership was requesting a fully transparent 360-degree

view of the company, prior
to the common usage of the term and practice.
The social auditor recommended the resulting document be
titled Stakeholder Report. Schol-
ars suggest that this may have been the first report directed to
and for stakeholders, includ-
ing financial shareholders as well as other stakeholders. That
first stakeholder report was
divided into categories that represented different audiences,
including communities (out-
reach, philanthropic giving, environmental awareness, global
awareness), employees, cus-
tomers, suppliers, and investors (Marlin & Marlin, 2003). This
was notable because it marked
the first time that Ben & Jerry’s considered suppliers to be a
stakeholder. The report was also
a landmark because it was commissioned by Marlin.
This report, as well as others from similarly progressive
companies such as the Body Shop
and Shell Canada, helped introduce a new model of corporate
reporting—a precursor to the
GRI standards. After the first social audit, Ben & Jerry’s
continued to issue social reports,
using different social auditors to refine the concept and practice
of CSR reporting. While these
audits still lacked a set of generally accepted standards by
which to measure CSR, they were
transparent and offered a road map for improvement (and
inspired others).
It is important to note that it was not just awareness and
goodwill that led to the rise in CSR
reporting during the 1980s. Legal issues were also at play in the
United States. The open

records and meeting laws passed in the 1970s as a result of the
Watergate scandal increased
the volume of environmental pollution emissions data that
entered the public record. In 1987
“right to know” legislation was extended by Congress to
establish the Toxic Release Inventory
and the Pollution Prevention Act of 1990, which created a
database that is used by investors
to document environmental progress. It is also a standardized
measurement that shows the
history of compliance (or noncompliance) to environmental
regulation (Katsoulakos, Kout-
sodimou, Matraga, & Williams, 2004).
Phase 3
In the third phase of CSR reporting, the need for third parties to
verify reports emerged as a
requirement (see Chapter 8). Verification bodies such as Ceres
and GRI accredit and certify
organizations’ behaviors, products, and practices using
transparent environmental and social
standards, though these had to be created. This newer phase of
CSR reporting makes the
social auditor stronger and less idiosyncratic and independent,
meaning that social auditing
individuals and teams follow more standards and produce
reports that are more consistent
across and between industries.
The third phase introduced advances that continue to define
CSR reporting. Now, when social
auditors identify a violation, they record the situation, and the
facility has an opportunity to

Section 9.2CSR Reports and Audits
take corrective action. Violations range from small infractions
such as a minor waste problem
that does not endanger certification, to egregious concerns that
jeopardize the environment
and the possibility of achieving report certification. Auditors
are generally solution oriented
and tend to give the corporation time to address any violations
before the problems affect
certification. Reporting in general, and the role of auditors in
that process, has matured into
an industry where auditors receive standardized training and
follow specific CSR standards
before certifying a company and its reports.
Several agencies and organizations stand out as early leaders in
the final phase of CSR
reporting. Among them is Social Accountability International,
which was founded in 1997
(Marlin & Marlin, 2003). Other auditing pioneers include the
FSC, the International Foun-
dation for Organic Agriculture, and the Fairtrade group.
Together, these groups formed a
larger organization called the International Social and
Environmental Accreditation and
Labelling, which sets reporting standards internationally and
provides uniform training to
thousands of social auditors. This group uses GRI standards as
well as others that change
by industry.
Such agencies help companies assess, measure, and certify CSR

and environmental compli-
ance. The very existence of such a wide number and variety of
certifying organizations indi-
cates how CSR and sustainability reporting has become an
established feature of modern
organizational life. Such reports provide customers, employees,
competitors, governments,
and other stakeholders the ability to evaluate whether firms are
moving toward CSR and sus-
tainability or not. Reports provide a way for people to better
understand and engage with the
CSR journey. However, reports are only valuable if they
represent the truth, and third-party
certification helps ensure such honesty.
9.2 CSR Reports and Audits
Reporting and obtaining certification via an audit is a complex
process that requires sup-
port and expertise. For organizations interested in starting or
dramatically improving
sustainability reports, the GRI offers guidelines on how to start.
As companies begin to
create CSR reports—and as these become more accessible,
valuable, and informative—
new formats and publishing platforms emerge. For example,
most reports are published
on paper, but a company named Symantec published both a
paper and an online CSR
report in 2015.
A detailed outline of how to create and publish a viable CSR
report is outside the scope of this
chapter, but every employee and future leader will likely need a
high-level understanding of
the process (see Figure 9.1).

Figure 9.1: GRI outline for CSR reports
f09_01
Step 1:
Identify
Step 2:
Prioritize
Step 3:
Validate
Step 4:
Review
CSR Report
Principles
Materiality
Stakeholder
Inclusiveness
Sustainability
Context
Completeness

Source: Adapted from “How to Define What Is Material,” by G4
Online, 2013 (https://g4.globalreporting.org/how-you-should-
report/how-
to-define-what-is-material/Pages/default.aspx
To begin, a publisher would focus on the steps of the process—
identification, prioritization,
validation, and review—to determine the organization’s most
significant economic, environ-
mental, and social impacts. The next task is to utilize four
reporting principles that define
report content. These include the following:
1. Materiality: Information must relate to the firm and its
operations and cannot be
unrelated or distracting.
2. Stakeholder inclusiveness: The report must not leave out key
participants in the
value chain or stakeholder set.
3. Sustainability context: Reports need to be clear about what is
and is not included for
evaluation.
4. Completeness: Report authors need to clarify how thoroughly
they followed an issue
or topic (GRI, 2015).
The principle of materiality refers to the data’s relevance to
day-to-day operations. Think back
to the discussion of greenwashing in Chapter 8—when reports
offer interesting but noncen-
tral data, companies end up reporting on nonmaterial aspects of
the business that might be

misleading. The principle of stakeholder inclusiveness is
foundational to the process—recall
how the early report from Ben & Jerry’s revealed to the
company the then radical idea that
suppliers were stakeholders. This type of awakening is possible
in every industry as leaders
fine-tune the definition of stakeholder inclusiveness. The
principle of sustainability context
ensures that reports include how an organization’s performance
influences sustainability
in a wider context (locally to globally). Finally, completeness
ensures the report’s topics are
adequately covered to provide stakeholders with sufficient
information about the organiza-
tion’s economic, environmental, and social performance. The
report should also detail its own
process and methodologies used, as well as mention any trade-
offs or assumptions involved
in creating the report. Once the report is ready, many companies
ask a third-party agency to
verify and validate it.
CSR Report Auditors
Earlier in this chapter, we discussed the way GAAP guidelines
inform the financial audit of
any publicly traded firm. While corporate financial audits were
and are a standard practice,
CSR audits are less common—a fact that began to change in

2002. That year, two of the then
major accounting firms, PricewaterhouseCoopers and KPMG,
jointly signed and verified a CSR
report from Shell Oil. This represented a landmark event for
CSR and sustainability efforts
because it marked the moment when mainstream financial
auditors became willing and able
to offer CSR audits, too.
It is important to note this change, because even GRI
representatives cannot consult on the
verification of reports, as doing so would be a conflict of
interest and violate the GRI mandate
to remain independent and impartial. Thus, GRI does not
recommend or endorse any audi-
tors or consultancies. However, it does suggest guidelines on
where to find auditing agencies
and how to engage with them. In selecting service providers,
organizational managers should
primarily consider the level of expertise and competency with
sustainability disclosures. To
ensure results are objective, managers should choose an external
provider who is indepen-
dent of the hiring organization.
External auditing firms generally fall into three categories:
accountancy, engineering, and
sustainability services. There are different advantages to each
type. Accounting firms typi-
cally connect to global networks; they usually have a business
focus and expertise in finan-
cial and nonfinancial reporting. Engineering firms, on the other
hand, may be able to offer
technical certifications and assurance, including the ability to
conduct important tests and
other scientific and technical verifications related to, say,

toxicity (or lack thereof ) of ingredi-
ents. Furthermore, engineering firms understand complex
processes and are typically famil-
iar with risk-based analyses. Finally, sustainability services
firms understand sustainability
issues. They are typically smaller than the other two types of
firms and are often locally based
and well versed in stakeholder management issues. Each type of
provider has a different but
compatible value proposition, and some firms may need to hire
more than one, depending on
operational and manufacturing factors. This means that a
technology firm might employ both
an engineering firm and a sustainability services firm to provide
different stakeholders the
assurances they desire.
According to the GRI Sustainability Disclosure Database, a
large majority of GRI reports are
assured by accounting firms, less than a quarter are assured by
sustainability services firms,
and slightly over 10% are assured by engineering firms. While
this breakdown illustrates
that accounting firms dominate the category, the fact is that all
three types of providers
have paying customers and an ongoing value proposition in the
auditing and third-party
validation space.

Verification and Assurance Standards
One of the first decisions that leaders of any organization
seeking to validate reports must
make is which reporting standard to adopt. This decision can
impact the type of report, the
choice of assurance agency, and the focus of report-related
research. (GRI, 2015). While there
are multiple approaches, three international standards are the
most widely used—ISAE 3000,
AA1000AS, and ISO 26000.
ISAE 3000
The International Standard on Assurance Engagements (ISAE)
standard known as ISAE 3000
offers guidelines for any assurance engagements other than
financial audits or reviews of
historic financial information. The standard came from the
International Auditing and Assur-
ance Standards Board of the International Federation of
Accountants; it was formed in 2003.
It emphasizes comprehensive procedures for evidence-gathering
processes and assurer
independence (GRI, 2015). Assurance reports in accordance
with ISAE 3000 standards can
only be issued by a certified accountant, as they must also
comply with the International
Ethics Standards Board for Accountants Code of Ethics for
Professional Accountants. Non-
accountants can use the assurance methodologies or combine
elements of ISAE 3000 with
other methodologies, but they cannot certify the results. There
are related ISAE standards
between 3000 and 3999, depending on the specificity of the
topic (for example, ISAE 3410
relates to assurance of greenhouse gas emissions). Leaders in

some industries will value that
accountants have verified and issued the company report; in
other industries the extra effort
to obtain this certification may not matter. Different types of
certification exist because some
firms value one kind of certification or assurance over another.
AA1000AS
The AA1000AS certification standard leans a bit more toward
sustainability issues, as it relates
to a document called the Accountability Principles Standard that
many organizations use to
guide their approach to sustainability. AccountAbility, an
advisory firm famous for being an
early provider of certification, published the 2008 version. In
response to foundational con-
cerns of AccountAbility principals, the AA1000AS standard
focuses heavily on whether the
organization and its sustainability reporting respond to
stakeholder concerns. This certifica-
tion matters most to firms that want to be associated with
AccountAbility and its brand or to
firms that really want to signal they care about stakeholders.
ISO 26000
After 5 years of negotiations between multiple stakeholders
around the world, the ISO
launched ISO 26000:2010. While not widely used, it is an
extension of EMSs. The resulting
document provides guidance rather than requirements, so unlike
most well-known ISO stan-
dards (such as the more famous quality standards known as ISO
9000), organizations cannot

be certified for being compliant. However, the guidelines
clarify the concept of social respon-
sibility, help translate key principles into effective action, and
provide examples of best prac-
tices in CSR from around the world. The document also helps
organize and unify activities
and verbiage, which is helpful as more organizations adopt the
principles and guidelines. ISO
26000 was developed by a working group of more than 500
experts (ISO, n.d.b). According to
the ISO, the working group disbanded after the standard was
published, but the leaders were
retained to provide support and expertise for those who adopt
the standards.
The United Kingdom’s Marks & Spencer provides an example
of how a major retailer inte-
grated ISO 26000 into its operational strategy.
CSR and Sustainability in Action: Marks & Spencer
In late 2015 Marks & Spencer introduced ISO 26000 standards
to its largest suppliers.
By voluntarily adopting ISO 26000, suppliers agree to conduct
business in a more
transparent and accountable manner, which helps them comply
with the sustainability
goals to which Marks & Spencer has publicly committed. In this
way the standard helps
Marks & Spencer nudge suppliers in a new direction and gives
the suppliers a head

start in meeting goals that Marks & Spencer has set. In
particular, given the volume of
clothing the retailer sells, the company uses ISO standards as
part of its effort to track
the supply chain and check the source of raw materials and
labor conditions in supplier
organizations. Although ISO 26000 is not an approved GRI
standard, it still provides useful
information for companies that want to improve CSR and
sustainability. After voluntarily
implementing the standard, the firm garnered free publicity,
gained additional industry
attention, and learned where it was weak and strong in terms of
CSR goals and progress.
Since the firm sells a wide range of product categories, the ISO
26000 data can be used to
appease a wide range of stakeholders, which offers Marks &
Spencer a strategic market
advantage.
For managers deciding which reporting standards to follow, it is
important to consider that
GRI recommends using external third-party validation for
sustainability reports. However,
GRI does not require third parties to prepare reports in
compliance with the G4 guidelines.
This means that various reports approved by GRI associates
may have a different look and
feel. As a result, reports continue to differ widely, and there is
likely to be continued variety in
terms of what constitutes a “good” report—this is because even
with third-party validation,
subjectivity surrounds the issue. This means there is a real
opportunity for different orga-
nizational leaders to help improve and standardize CSR
reporting. If companies voluntarily

follow GRI report guidelines and validate reports, they can
make them easier to compare and
understand. Essentially, those firms that provide validated
reports that stand out to stake-
holders have a real opportunity to set the tone for multiple firms
and industries.
The next section discusses reasons leaders should validate
reports with external auditors and
use third-party verification.
Benefits of Verified CSR Reports
Some leaders might argue that CSR reporting simply poses
another cost, possibly one that
lacks a clear benefit. Additionally, adding CSR compliance to
GAAP compliance can overwhelm
management. Even though CSR reporting and standards are not
universally accepted, they
are widespread enough that scholars and practitioners are
beginning to see the advantages
of CSR compliance. This section documents reasons to create
CSR reports that are certified by
auditing agencies.
The mere act of seeking external validation can increase a
report’s recognition, trust, and
credibility. Given that reports cost time, talent, and resources, it
makes sense to follow the
right process to get reliable results that can be benchmarked

each year to chart improve-
ment. Organizational stakeholders—including investors,
employees, or neighboring commu-
nities—are more likely to have confidence in an audited and
validated report. In an era of
increased cynicism toward business, verification can prevent
corporate claims from being
dismissed or discounted. Also, seeking verification indicates
that the company believes its
own story; it reflects a seriousness about the topic that
investors, customers, employees, and
other stakeholders may value highly. Rating agencies and
analysts increasingly look for audits
and verification when making investment and rating decisions
(Corporate Register, 2008).
Reduced Risk and Increased Value
The top international accounting and auditing firm, KPMG
(2011), reported that one third
of the 250 largest global companies amended reports after
auditors identified errors in the
company’s CSR compliance. This statistic feeds the cynicism
that companies issue untrue
or confusing data that they only correct once caught. Using a
qualified third-party reviewer
means there is a greater chance that the report reflects the truth
about a company’s efforts;
auditing reduces data-quality risks. Given how quickly news can
spread in our connected
age, firms can take extra steps to ensure that information is
checked before going public. GRI
documents also suggest that when firms make the effort to
produce robust, audited, and cred-
ible documents, the reliability and value of the entire reporting
process increases (GRI, 2013).

Improved Board and C-suite Engagement
Decision makers at all levels should evaluate choices based on
the best available data. This fact
about decision making holds for CSR and sustainability
decisions as much as for other invest-
ment and personnel decisions. Thus, when top management
teams must decide whether to
enact or otherwise support CSR and sustainability efforts, they
are more likely to consider
data from competitors and others if that data is verified as
reliable. In particular, members of
the company board of directors and top-level managers across
the C-suite (the chief executive
officer, or CEO; chief financial officer, or CFO; chief
information officer, or CIO; and so on) are
more likely to utilize audited documents to make CSR
improvements to organizational strat-
egy. The logic is that the higher the quality of decision-making
inputs, the higher the quality
of decisions that flow from those inputs. Audited and verified
documents have a high value for
market stakeholders as well as nonmarket ones. If you want to
convince upper management
to enact a policy or product change, you may have an easier
time doing so if you show evi-
dence from the CSR and sustainability reports of other firms
that had success with the idea.
Gathering, reading, and sharing the verified CSR and

sustainability reports of other compa-
nies is one strategy to help you and others make sound CSR-
related comparisons.
Improved and Stronger Internal Reporting and Systems
As an extension of the benefit of improved board and C-suite
engagement that stems from val-
idated reports, such robust reporting systems can also help
employees at all levels improve
results. If the validation process includes feedback on errors, it
can lead to learning, training,
and improved behaviors. External validation can also confirm
the presence of good practices
and processes, which further encourages and supports positive
efforts. For these reasons, the
process of reporting on CSR efforts and getting third parties to
verify constituent data can
offer a firm many benefits, even if it is in the early stages of
enacting CSR and sustainability
projects.
Improved Stakeholder Communication
As mentioned before and as evidenced in the Ben & Jerry social
audit, many (but not all)
report validation processes involve the review (or inclusion) of
stakeholder engagement
efforts. Once such processes are examined, they can be
complimented and broadcasted or
criticized and improved upon. Publishing results allows others
to copy good processes and
practices, which can improve the status quo across multiple
industries and organizations.
Some organizations even use reporting processes as an entry
point into conversations with
stakeholders; the reporting process can be an icebreaker that
helps start a conversation that

may not otherwise take place. For example, if a firm wanted to
create its first CSR report,
managers could contact key stakeholders and request a meeting
to learn which CSR topics
concern them. Managers could then use the information to tailor
the reporting process.
Apply Your Knowledge: Plan a CSR Report
Suppose you have been named the CEO of a midsize company in
a small community that
manufactures automobile parts. The plant sits in what were once
wetlands next to a
large river. The company has 125 plant employees and 17
administrative and sales staff.
All manufacturing processes take place in the plant, where raw
materials are shipped in
and product is shipped out. You were named CEO because of
your willingness to accept
responsibility for CSR reporting. No one in the plant has any
experience with this, but the
accounting department has filed an annual report using GAAP
principles. You are being
required to launch CSR reporting by the owners of the plant.
How do you begin?
Identify the following:
1. State what issues you will be addressing.
2. Describe how you will measure each of these issues.
3. Prioritize the issues.
4. Describe how you will get third-party verification for each of
the issues.
5. Identify any shortcomings or barriers to providing a complete
report.

Section 9.3Using CSR Reports
9.3 Using CSR Reports
Thus far, this chapter has addressed the history of CSR
reporting and introduced the concept
and benefits of third-party assurances for CSR and
sustainability reports. What remains to be
covered is how both the organization and the public can
interpret and use CSR reports.
Publicity
Organizations that create CSR and sustainability reports have
the power to influence readers
and stakeholders—and it is safe to assume that most people
create CSR reports to garner
stakeholder goodwill. However, reactions to reports can be
positive or negative.
An example of positive publicity comes from a study done by
Reputation Institute, a New
York–based consulting firm. In early 2015 the institute invited
approximately 55,000 con-
sumers to participate in a study that ranked the world’s 100
most reputable companies (“The
10 Companies,” 2015). It found that 41% of how people feel
about a company is based on
their perception of the firm’s CSR. As a result of this finding,
Reputation Institute separately
ranked the top 10 firms with the best CSR—and it did this in
part by focusing on CSR and
sustainability reports.

This example also portrays how CSR rankings and reports
remain vulnerable. After the rank-
ings came out, at least two of the companies, Sony and
Volkswagen, experienced dramatic
events that called into question their ranking and that no doubt
will result in lower rankings
from future polls. Sony experienced a computer hacking
incident that compromised confi-
dential data, including information about the company’s unfair
hiring and salary practices
(Phelan, 2015). Volkswagen faced reports of fraud, including
how the firm purposely misled
consumers by cheating on emissions tests and lying about its
vehicles’ fuel efficiency (Phelan,
2015). Consumers and leaders must work harder than ever to
continuously monitor firms as
they progress in the pro-CSR and sustainability journey.
It is also common for companies to experience some negative
publicity when they report
early CSR efforts. Sometimes, early efforts seem small or
insignificant, given the organiza-
tion’s size, or early reports mention baseline numbers that draw
criticism. Some stakehold-
ers may interpret the report data negatively. In these situations,
it is best to continue on the
path toward CSR and sustainability, so that with time naysayers
can come to realize that early
efforts were real and part of a longer commitment to CSR and
sustainability.
In other cases reports about CSR or sustainability efforts do not
originate from companies
themselves. Nongovernmental organizations also monitor
corporate behavior and may

report on findings that benefit larger society but that companies
may prefer to downplay or
ignore. Many organizations feel they have an ethical duty to
reveal and advertise negative
corporate activities as a way to motivate change. For example,
the Business & Human Rights
Resource Centre, a nonprofit organization dedicated to
advancing human rights in business,
tracks more than 6,000 companies and works to help eradicate
abusive corporate behavior.
Part of the organization’s mission is to broadcast when
companies fail to protect and advance
sustainability. The organization creates an annual report titled
“The Public Eye Awards,” an
account of companies with the worst CSR records for the year.
The following are the 2014
Public Eye Award “winners,” including the allegations against
companies:
Section 9.3Using CSR Reports
• BASF, Bayer, Syngenta: Used pesticides to kill bees,
which are vital for the environ-
ment, agriculture, and food production.
• Eskom: Negatively affected South Africa’s health and
environment by using coal
power stations.
• International Federation of Association Football: In
preparation for the World Cup,

forcefully evicted local communities in Brazil.
• Gap: Not being committed to effectively protecting the
health and safety of workers
in Bangladesh.
• Gazprom: Responsible for oil spills that negatively impact
the environment.
• Glencore Xstrata: Negatively impacted the rights of local
communities and indig-
enous groups.
• HSBC: Provided funding to companies that do not uphold
CSR ideals, such as Sime
Darby & Wilmar, a company accused of human rights abuses.
• Marine Harvest: Caused damage to the environment and
negatively influenced the
livelihoods of the indigenous people of Chile (Business &
Human Rights Resource
Centre, 2014).
Lists such as these can make the public more aware of problems
and also bring negative public
attention to offending companies. When this happens, managers
and leaders may react more
quickly or choose a more sustainable response than they might
have without the reports and
related negative press. In the long term, such reports can benefit
society. Changes that firm
leaders eventually enact have the potential to succeed in the
future and avoid being criticized
for poor CSR efforts.
Overcoming Challenges

Negative publicity is not the only risk faced by companies in
creating CSR reports. A study
undertaken by the accounting firm Ernst & Young and the
Center for Corporate Citizenship
at Boston College offers some insight into why firm managers
might resist reporting. Survey
respondents disclosed three primary challenges (Ernst & Young,
2013):
1. Availability of data: Sometimes the data that stakeholders
want requires extra time
or money to acquire. It may warrant new tests on chemical
composition, worker
welfare, or end-of-life product treatment,—information that may
not be readily
available.
2. Accuracy or completeness of data: Sometimes data is
available but is insufficient, as
it only covers some portion of the product or some aspect of
use. In such cases firms
need to work harder to obtain more data, and this process can
take time and money.
3. Internal buy-in: Sometimes people within a firm do not
understand or support
the logic behind obtaining more information; in such cases
people may resist data
collection.
An added challenge for some larger organizations is to find
subsidiaries and suppliers that
are large enough to help them implement sustainable practices
and support sustainability
reporting.

Given that CSR reporting can be a challenge and, in some cases,
be used against a firm, what
are the arguments in favor of it? The next section addresses this
question.
Chapter Summary
Benefits of Creating CSR Reports
The four primary motivations for reporting are:
1. Transparency: reports can improve investor confidence, trust,
and employee loyalty.
2. Competitive advantage: reports serve to differentiate the
company from its
competitors.
3. Risk management: reports allow managers to identify and
address potential envi-
ronmental and social risks.
4. Stakeholder pressure: reports can appease certain
stakeholders or alert new ones to
key firm accomplishments or goals. (Ernst & Young, 2013)
Reporting CSR and sustainability efforts can
also help recruit and retain employees.
There is also a financial advantage to shar-
ing CSR reports. Research shows that the
most transparent companies tend to have
higher cash flow (Margolis, Elfenbein, &

Walsh, 2007).
In addition to the survey results, data from
other sources suggest ways that CSR and
sustainability reporting benefit a firm’s
bottom line. GRI Chief Executive Ernst Lig-
teringen has seen companies change their
practices as a result of increased report-
ing. General Electric (GE) and Siemens, for
example, focused on increasing energy effi-
ciency and lowering emissions, both of which have helped the
company grow. GE’s “ecoimag-
ination” initiative is a company-wide effort to use sustainability
concepts to drive innova-
tion. The initiative has brought more than $160 billion in
revenue since 2005, while lowering
greenhouse gas emissions 34%, reducing freshwater use 47%,
and saving the company $300
million (Ceres, 2015).
Ceres (2015) finds that sustainability reporting is becoming
more mainstream in the United
States and abroad. Further, some governments even require
mandatory reporting—the Euro-
pean Union and India, for example, are in the process of
adopting mandatory sustainability
disclosure requirements. The integration of financial and
sustainability data by many firms
creates an opportunity to enhance the data on CSR and
sustainability practices (Ceres, 2014).
It also can lead to more CSR behaviors by a greater number of
organizations.
Chapter Summary
This chapter discussed the history of CSR and sustainability

reporting to clarify how the prac-
tice has changed over time. It also discussed the need for CSR
and sustainability reporting and
its benefits. As more companies provide reports, scholars and
practitioners learn more about
how to report and how communities and shareholders benefit. In
particular, all stakeholders
Manuel Balce Ceneta/AP Images
Companies that prioritize CSR and sustain-
ability can be profitable. For example, GE and
Siemens create innovative products that are
energy efficient.
Chapter Summary
benefit when reporting standards are fully developed and
deployed. While the GRI standards
have inspired many firms’ reports, there remains to be one
standard that is adopted by all
firms. Furthermore, CSR reporting remains a voluntary activity
in the United States and most
other countries, aside from India and some parts of the
European Union. Accordingly, there
are several common reporting standards used in different
industries, and some fragmenta-
tion in how and even why firms report.
Finally, this chapter described the value of third-party
verification and assurance of compli-
ance to CSR standards and closed by describing a few uses for

CSR reports.
Posttest
1. Best transparency practices involve .
a. keeping important company information secret
b. opening all files to all employees
c. proactively publishing all relevant information about the
corporation
d. hiring a public relations firm to release information that
makes the company
look good
2. CSR reporting standards were indirectly born as a result of .
a. the publication of Silent Spring by Rachel Carson
b. the founding of the U.S. Environmental Protection Agency
c. the work of several major accounting firms
d. the Exxon Valdez disaster
3. Which of the following is currently a leading reporting
method for CSR?
a. ISO 6000
b. AA1000AS
c. ISO 1000
d. GRI G2
4. According to a survey by Ernst & Young, which of the
following is a motivation for
reporting CSR?
a. risk management
b. reducing environmental impact
c. gaining goodwill
d. government pressure
5. All of the following are difficulties in the CSR reporting and

assurance process
EXCEPT .
a. availability of data
b. accuracy and completeness of data
c. internal buy-in
d. external pressure
Chapter Summary
6. According to the GRI, the following are all principles that
should define the content of
a CSR report EXCEPT .
a. stakeholder inclusiveness
b. materiality
c. completeness
d. prioritization
Answers: 1(c); 2(d); 3(b); 4(a); 5(d); 6(d)
Critical-Thinking Questions
1. Discuss the overall advantages of CSR reporting. When can
transparency be a liabil-
ity and expose a company to risk?
2. How is reporting CSR similar to a publically held
corporation’s responsibility to
report finances using GAAP? How are they different?
3. What are the three kinds of CSR auditor, and what are the
advantages and disadvan-

tages of each?
4. Suppose a small company would like to create a CSR report.
What are some sug-
gestions you could make to the company regarding how to start
the report? What
strategies would you recommend to ensure accuracy and prevent
negative publicity?
5. What are some ways CSR reporting can become more
standardized for all companies
on a global scale?
6. What does the history of CSR and sustainability reporting
illustrate about the power
of a small group of individuals to instigate positive change?
7. What kinds of value does sustainability/CSR reporting create
inside a firm? What
kinds of value does it potentially create outside a firm? How
might your answer
change based on a report’s content?
Additional Resources
Learn more about GRI by visiting:
https://www.globalreporting.org/Pages/default.aspx
For an example of a Symantec CSR report, see:
http://www.symantec.com/content/en/us/about/media/pdfs/2015-
corporate
-responsibility-report-en-us.pdf
Review the Public Eye Awards 2014 and corporate responses
here:
http://business-humanrights.org/en/documents/public-eye-
awards-2014

Answers and Rejoinders to Chapter Pretest
1. False. Non-GAAP members have considerable freedom and
can report earnings in
various ways.
2. True. There are no government or industry requirements.
3. True. There are few actual requirements enforced globally,
but good public relations
motivates many corporations to report CSR.
Chapter Summary
Rejoinders to Posttest
1. Best transparency practices include making sure all relevant
information about the
corporation is published in a timely manner.
2. Among the long-term consequences of the Exxon Valdez oil
spill was a push for more
accountability through voluntary corporate reporting, which
eventually led to the
creation of CSR standards.
3. The AA1000AS is a certification that focuses heavily on
whether the organization
responds to stakeholder concerns.
4. Ernst & Young found that the four main motivations for

reporting CSR were risk
management, transparency, competitive advantage, and
stakeholder pressure.
5. External pressure is not a difficulty in the process, but should
rather motivate com-
panies to report on CSR.
6. According to the GRI, prioritization is part of the process of
creating a CSR report,
but not one of the principles that should guide its content.
Key Terms
AA1000AS CSR standards based on
AccountAbility principles that focus heavily
on whether the organization and its sustain-
ability reporting respond to stakeholder
concerns.
Coalition for Environmentally Respon-
sible Economies (Ceres) An organization
that supports reporting tools that include
environmental and social responsibility.
Exxon Valdez An oil tanker that ran
aground in Prince William Sound in Alaska
in 1989, causing one of the worst environ-
mental disasters in history.
generally accepted accounting principles
(GAAP) Accounting standards and proce-
dures defined by the accounting industry
and adopted by nearly all publicly traded
companies in the United States.
Global Reporting Initiative (GRI) A

framework for sustainability reporting that
was originally created to help leaders and
managers start reporting.
ISAE 3000 The ISAE standard for any assur-
ance reporting that is not a financial audit or
review of historic financial information.
ISO 26000 The ISO standard that provides
guidelines for corporate social responsibility.
social auditor An external expert charged
with certifying annual progress on social
issues within a corporation.
standardization Using a common system
that allows for fair comparison between like
corporations.
6 The Corporation as Steward
Hxdyl/iStock/Thinkstock
Learning Objectives

After reading this chapter, you should be able to:
1. Compare and contrast the responsibilities of fiduciaries and
corporate stewards.
2. Assess the impact on the environment and how a life cycle
assessment can identify a product’s,
process’s, or service’s true cost to society.
3. Describe government regulatory agencies in the United
States, the European Union, and the global
environmental movement.
Section 6.1Corporate Fiduciary Stewardship
Pretest Questions
1. A fiduciary is another term for owner. T/F
2. Unit process data only considers the economic cost of
production. T/F
3. Yellowstone National Park was created during the Industrial
Revolution. T/F
Answers can be found at the end of the chapter.
Introduction
In this chapter, we examine the notion of financial and
nonfinancial stewardship and examine
how the corporation can be a steward of people, profits, and the
environment while managing

and even repairing environmental impact and damage. Firms
interact with (and sometimes
extract from and pollute) the natural environment in multiple
ways. Buildings use wood and
metal from forests and mines; companies require electricity
(from coal, wind, solar, nuclear,
or other sources of energy); and computers use components
from mines and fabrication
plants. Firm employees who drive to work use energy and likely
create pollution in the pro-
cess. Manufacturing companies use natural and human-made
inputs to create new products
for sale.
This chapter examines the relationship between the natural
environment and the corpora-
tion. It addresses the environmental issues introduced in
Chapter 5 and explores the true
social, environmental, and financial cost of certain corporate
activities. Part of addressing
how companies relate to the environment includes discussing
how they comply with legal
regulations, best practices prescribed by nongovernmental
agencies, and international orga-
nizations (such as the United Nations). This chapter describes
analytical tools that allow peo-
ple to identify risks, rewards, and impacts related to creating,
using, and disposing products
and services. These tools also provide data for companies that
want to create less damag-
ing or more restorative products. The discussion then turns to
communitarianism, the green
movement, and the formation of environmental regulatory
agencies in the United States and
European Union. It closes with a short discussion of how
strategic concerns about risk man-

agement and human welfare issues related to water rights and
water supplies may dominate
corporate conversations going forward.
6.1 Corporate Fiduciary Stewardship
Building on the environmental issues described in Chapter 5,
this chapter examines the role
and responsibilities of a corporate leader. Central to this
discussion is a pressing dilemma
of conflicting incentives that leaders in most publicly held
corporations face. By definition,
a publicly held corporation has multiple partial owners who
likely invested to gain a maxi-
mum return on their investment. Return on investment (ROI) is
a tangible, objective measure
of an investment’s quality. ROI measures the amount of return
relative to cost. To calculate
ROI, divide the return or benefit of an investment by its cost.
The result is a ratio that allows
investors to compare different types of opportunities so they can
evaluate the efficiency and
effectiveness of each choice and select the most profitable (or
otherwise ideal) option. Most
publicly held corporations are expected to deliver a high ROI;
otherwise, investors will take
their money elsewhere. By law, corporate leaders in public
firms have a legal responsibility to
provide a return on investment in both the short and long term.

This means corporate leaders
are required to manage trade-offs. Specifically, leaders of
public firms manage the trade-off
between protecting and restoring the environment (which can
have costs that reduce ROI in
the short term) and using the environment with less care in
order to improve ROI for owners
in the near term.
A fiduciary refers to a person who holds a legal relationship of
trust with one or more par-
ties (such as shareholders). Typically, a corporate fiduciary
prudently takes care of money or
other assets. Corporate leaders by default become fiduciaries, or
people with a special duty to
owners/shareholders to protect and keep assets safe but also
efficiently and effectively use
assets. By law, a corporate leader cannot profit at the expense
of corporate shareholders; he
or she can also be fired for not managing funds to maximize
profits. In other words, leaders
are morally and legally bound to seek profit on behalf of owners
(Inc., n.d.). Thus, fiducia-
ries are stewards, or caretakers, of the financial side of
business. However, seeking profit for
shareholders is not the only aspect of the complex notion of
stewardship.
Peter Block is a thought leader in the world of business who
spent the past 40 years advocat-
ing for an expanded notion of corporate stewardship; one that
goes beyond fiduciary con-
cerns. Rather than just representing the interests of
shareholders, Block (2013) advocates
that corporations should adopt a stewardship model of
management whereby they treat

people and natural resources as assets to be cared for, nurtured,
preserved, and respected.
Stewardship commonly refers to the responsible care and
management of an asset over time
that allows for sustainability and growth. Some argue that
stewards are caretakers who bal-
ance all interests in the hopes of sustaining the life and value of
an asset (Inc., n.d.). For Block,
stewardship is a mind-set that changes the fundamental way
corporate managers and leaders
behave. Block suggests that not only are managers and leaders
stewards of what happens
within the corporation, they are also stewards of the
corporation’s social and environmental
impacts.
Block (2013) says that corporate leaders are responsible for
ethical communication and for
providing a quality good or service. He challenges corporate
leaders to tend to environmen-
tal issues while simultaneously being fiduciaries of the financial
bottom line. Block makes a
compelling argument that most corporations act in immediate
self-interest and do not have
the capacity to balance long-term environmental needs with
demands for short-term profit.
Stewardship involves listening and weighing multiple interests,
including long-term financial,
social, and environmental interests, in addition to short-term
financial ones.
Religious, social, and environmental movements have long
advocated the notion of steward-
ship over resources, which suggests that human and natural
resources have intrinsic and
long-term value and thus should be viewed with a long-term

mind-set. But Block’s version of
environmental stewardship suggests going one step further—to
restore environments. Such
restorative behaviors include removing trash, planting trees,
leaving nature as you found it,
and actively caring for people and places. Stewards have a wide
range of choices in how to
act and may often feel squeezed between the short-term wants
of people and the longer term
needs of future generations and place or the environment.
According to Block (2013), good stewardship often means
choosing service over self-interest
and creating long-term value over short-term gain. He suggests
that stewardship can protect
the earth from harm by making people accountable for the
outcomes of an act or institution,
without forcing, controlling, or taking unwanted charge of
others.
In other words, good corporate stewards commit to the long-
term well-being of their region,
society, and environment. They also recognize the
interdependencies between four spheres:
1. Economy
2. Livable community
3. Social inclusion
4. Governance

Regarding economy, a good steward attempts to take into
account financial factors previously
discussed, such as shareholder investments, expectations, and
profits. But these interests can
best be sustained within a livable community, one that is
capable of providing well-trained
and empowered employees who are able to lead healthy and
productive lives. This means that
good stewards attempt to practice inclusion by involving all
stakeholders in communication,
and they practice, submit to, and attempt to exemplify
appropriate governance.
In order to embody this view, good stewards consider and work
across boundaries of juris-
diction, sector, and discipline to connect these four spheres and
create opportunity for the
region.
It should be noted that people who are not necessarily corporate
leaders are also considered
stewards. For example, educators and students exercise
important stewardship over society,
the environment, and future generations when they study the
world’s various interconnec-
tions. Society also entrusts politicians and civil servants to be
stewards of regions, resources,
and people’s well-being. Citizens can remove these privileges
(by vote or impeachment) if
government leaders do not practice stewardship. Owners can
also remove corporate stew-
ards (managers) if they are not acting in the corporation’s best
interests.
In some way, we all have stewardship roles. To be sure,

corporate leaders have macro stew-
ardship responsibilities, but employees at all levels are
accountable for many of the same
issues. People who work for firms come face-to-face with
stewardship issues if they waste
resources, are asked to dispose of toxic waste inappropriately,
take safety shortcuts, or lie on
a financial report. Stewardship is a shared responsibility. To
better understand our own stew-
ardship responsibilities, it is critical to discuss the concepts of
ownership and responsibility.
Types of Ownership and Responsibility
There are many different conceptualizations of ownership, and
different kinds of owners feel
different levels of stewardship vis-à-vis the organization. The
concept of private and transfer-
able ownership lies at the core of most functioning capitalist
societies. People in functioning
capitalist societies typically understand that a person or entity
who owns something can
transfer that property to another person through a sale or
through inheritance. A person who
owns a piece of property (or a company) also has a stewardship
over that property or firm;
such stewardship can be formally trans-
ferred to another person. Essentially, own-
ership carries with it the opportunity to be

a steward.
In a totalitarian state, ownership of private
property is disallowed or carefully con-
trolled—this makes it harder to be an effec-
tive steward because owners usually have
more power than other stakeholders. In
Communist states, such as the former Soviet
Union and contemporary North Korea, the
concept of ownership is totalitarian, and
the state owns most businesses and other
factors of production. In contrast, the United States and
European democracies conceive of
ownership as a state in which assets can be held privately or by
different government entities,
including on national, state, and local levels. For example,
governments may own transporta-
tion systems, such as Amtrak in the United States or British
Rail in the United Kingdom. Many
of the older European airlines, such as Air France, KLM, and
Swissair, began as government-
owned businesses. They have since been privatized or are
semiprivate, which means they are
jointly owned by government entities and private companies.
Partial ownership creates stewardship and legal challenges; it is
difficult to determine who
is responsible for performance when both shareholders and
elected governments own part
of a corporation. This state of affairs is further complicated
when an owner needs to be held
responsible by a court of law. When legal entities hold someone
responsible for environmen-
tal damage, for example, it is difficult to prosecute or defend
owners when the owner is the
same government that manages the regulatory agency.

Extending Ownership and Responsibility
When a corporate stakeholder sees a poorly calculated decision
or one that has a negative
environmental impact, it may not be easy for him or her to
signal concern; nor are such warn-
ings necessarily welcomed. It is clearly documented, for
example, that engineers from the
Morton Thiokol corporation foresaw the failure of the space
shuttle Challenger and tried
unsuccessfully to block its launch (Atkinson, 2012). When the
Challenger exploded on Janu-
ary 28, 1986, all seven astronauts on board were killed.
The first person to convincingly sound the alarm about social
and environmental concerns
(also known as a whistle-blower) serves as an early warning
system for the larger commu-
nity. While many people think of themselves in the role of
steward, many others believe they
are powerless to change systems and organizations. However,
this is not necessarily true, as
many important voices have pointed out. Among them is former
Czech Republic president
Vaclav Havel, who was a political organizer during the Soviet
occupation of his country dur-
ing the 1980s. In 1985 he wrote a compelling essay about the
powers of the seemingly weak.
In it, Havel (1985) argues that even those in the most
oppressive situations have power and
responsibility to change the system for the better. Similarly,
Margaret Wheatley (1996, 2003),
Frank Duenzl/picture-alliance/dpa/AP Images
Amtrak is an example of state ownership.

Section 6.2The Cost of Failed Stewardship
a thought leader in the world of business and an expert on
complexity theory and leadership,
believes that stewardship resides in everyone, regardless of the
social and leadership envi-
ronment in which they live.
This stance illustrates how some people, such as Wheatley,
consider individual workers and
actors to be quite powerful. Such a mind-set suggests that one
need not wait to have a leader-
ship position or be deeply experienced and highly credible to
guide an organization to sus-
tainability. Everyone has the capacity to be a good steward and
advance the interests of the
organization and the greater good.
How can stewards at all levels of an organization take
appropriate stances on critical con-
cerns? By respecting, encouraging, and considering multiple
voices.
Extending the ideas of Havel and Wheatley, Max De Pree, the
longtime leader of the Her-
man Miller corporation (manufacturers of office furniture),
publicly fostered the idea of an
inclusive corporation, or one in which all voices are heard and
given credence. He wanted
to create a caring organization that was also financially
successful. Because of that belief, he

opposed business ideas that only benefited senior management.
He suggested that good lead-
ers and stewards are open to communication. But most of all, he
was known for talking and
listening to anyone and considering and enacting ideas from all
levels of the company (De
Pree, 1987). Unlike Wheatley and Block, who are consultants
and idea leaders, De Pree was a
manager and corporate actor. His ideas focused less on what a
steward is and more on what
he or she does.
6.2 The Cost of Failed Stewardship
Up to this point, stewardship has been described as both a mind-
set and a set of behaviors
that can be distributed or enacted from inside or outside an
organization. Equally important
to cover are stewardship failures; indeed, examining failures
creates another way to motivate
action. Most instances of failed corporate stewardship go far
beyond harming financial stake-
holders. Such failures impact the social community, the
environment, employees, the legal
system, and the banking system (Clarke, 2004). For example,
the potential failure of the U.S.
auto industry in the 2008 recession triggered Congress to offer
massive financial aid to top
manufacturing companies. The subsequent financial “bailout”
was justified for a variety of
reasons, including to preserve jobs and national security.
However, the same bailout cost tax-
payers; cost the firms in reputational capital; and cost citizens
and investors stress, in terms
of uncertainty and fear.
What are the additional costs when stewardship fails? These can

be seen in the blunder by
Atlas Minerals, a now closed industrial site near the entrance of
the Arches National Park in
Moab, Utah. Driven by a demanding client and a perceived
threat, members of management
did not consider the longer term environmental impacts when
they decided how to mine and
store uranium. Atlas Minerals was not considering
sustainability, which involves meeting the
needs of the current generation without compromising the needs
of future ones.
Arches National Park is a tourist destination for visitors from
all over the world; they come
to see beautiful red rocks that have been hollowed by wind
erosion. But in contrast to these
natural wonders sits Atlas Minerals. When Atlas operated
between 1960 and 1990, it stored
large piles of tailings, or leftovers from the extraction process
from the region’s uranium
mines, at the edge of the Colorado River. The Atlas Minerals
mine and industrial site primar-
ily provided fuel for the nation’s nuclear reactors and helped
create fuel for nuclear weapons
used to defend the United States. As the need for uranium
dwindled, however, scientists and
the general public learned more about the toxicity of the
uranium tailings. Not only was the

dust from the tailings contaminating the population near Moab,
but water seeping through
the tailings was also flowing into the Colorado River, Lake
Powell, and the Grand Canyon.
What was once thought of as an acceptable risk and normal by-
product of manufacturing was
finally seen as an environmental disaster. With such discoveries
and related changes, Atlas
Minerals entered Chapter 11 bankruptcy, and in so doing
dodged liability for undertaking
a massive cleanup that cost many times more than the company
was worth. Since then, the
DOE has taken over the site (Grand County Utah, 2016) and is
now tasked with cleaning up
all such sites that contributed to pollution related to the creation
of nuclear weapons (Yahoo!
Finance, 2016).
After the DOE assumed ownership of the land, it set up a trust
to fund the site’s cleanup.
As of 2016, only 50% of the tailings had been removed.
Trainloads of radioactive tailings
are continuously removed from the site—about 5,000 tons each
week. The tailings are taken
approximately 40 miles away to a location considered less
environmentally sensitive because
it is not at the edge of the Colorado River (Yahoo! Finance,
2016). The project will cost taxpay-
ers many times the amount that Atlas Minerals made in profit
during its years in production.
In fairness, corporate leaders who in the 1950s endorsed the
plan to build a uranium mill and
store tailings near the Colorado River did so with the approval
of, and even encouragement
from, government agencies. They operated using the best
science of the time, although there

were environmental engineers, local workers, and others who
could see the folly of putting
a radioactive tailings pile so close to the Colorado River.
However, their concerns were dis-
missed, ignored, or discounted.
For the sake of short-term cost savings and expediency, and due
to a narrow definition of
impact, a river was polluted, the life expectancy of nearby
humans and animals was reduced,
and the cost of conducting a massive cleanup was passed on to
taxpayers. In contrast, cor-
porate leaders of today and the future, especially those who take
a stewardship mind-set,
research the impacts of location, sourcing, and product
ingredients on current and future
generations before making decisions.
If we agree with Havel, Wheatley, and De Pree, then most (but
not all) of the blame goes to
those who own the corporation. The bad planning, failed
science, poor execution, and bank-
ruptcy are not just the failure of corporate leaders, but also of
regulatory agencies, govern-
ment, and even local citizens and employees. We all share in the
blame for poor stewardship if
we are connected to a community. But as problems get larger
and involve more stakeholders,
it becomes increasingly difficult to reach agreement and take
collective action.
In addition, it may seem difficult to foresee the impacts of
large-scale corporate activities
on future generations. However, several tools can help assess
the environmental impact of
a product, process, plant, or any other activity in which an

organization may engage. One is
the life cycle assessment (LCA), which provides a way to
measure a corporation’s environ-
mental impact and includes energy costs and material usage
information. An LCA describes
the process of evaluating the social and environmental
implications associated with creating,
consuming, and disposing of a product, process, or activity
(American Center for Life Cycle
Assessment, 2016).
The LCA allows corporations to examine waste, reduce costs,
and innovate products and ser-
vices. In other words, it can lead to both short-term and long-
term fiscal and environmental
benefits if firms utilize its data to innovate.
It is often assumed that LCA projections are approximate and
should be adjusted when more
exact information becomes available. However, leaders should
not avoid LCAs or leave them
half finished due to lack of perfect information—instead,
leaders should make solid assump-
tions, state what these are, and continue with the LCA process.
LCAs can be extensive, comprehensive, and therefore costly,
depending on their level of detail
and accuracy. But they can also be enlightening, even in their

simpler and less expensive forms.
Whether extensive or simplistic, such analyses evaluate energy
inputs, environmental emis-
sions, and the social implications of business operations. In
contrast, the cost of not doing an
LCA can also be extensive, as seen in the Atlas Minerals case;
it can result in firms mistreating
stakeholders, wasting resources, incurring internal expenses, or
receiving bad publicity. Run-
ning an LCA would help managers identify and address weak
spots and risky areas.
When managers do not assess impacts, they may fail to see risks
as well as opportunities to
evolve products to mitigate environmental and social impacts.
For example, after performing
an LCA, Levi Strauss & Company implemented changes to
mitigate the environmental impact
of its jeans.
CSR and Sustainability in Action: Levi Strauss & Company
An LCA done by Levi Strauss & Company in 2016 showed that
approximately 1,003
gallons of water are used to make a single pair of jeans.
Producing the material accounts
for 680 gallons, and the washing and cleaning of machines and
manufacturing facilities
account for the rest. Almost 70 pounds of carbon dioxide are
produced to create each
pair of jeans, mostly during fabric production. The LCA, which
follows the product from
birth to end of use, also found that Americans wash jeans, on
average, after wearing
them 2 times. Europeans wear them 2.5 times, while Chinese
wear them 4 times before

washing. The LCA suggested that if consumers wear their jeans
10 times before washing
them, they could reduce the environmental impact of jeans by
77%. Using cold water
and air-drying them would further reduce jeans’ environmental
footprint (Levi Strauss &
Co., 2016).
Using these findings, Levi Strauss implemented the Project
WET Foundation to train
employees to save water and educate others on ways to conserve
water. The company
also used the LCA results to partner with Goodwill and
implement a special tag on
Levi’s products encouraging consumers to consider the planet
before washing the item.
The tag also suggested which washing settings to use to reduce
environmental impact
and encouraged those who buy jeans to donate clothes rather
than throwing them out.
Because of the LCA findings, Levi Strauss found innovative
ways to reduce its product’s
environmental impact and to encourage others to become
stewards of the environment.
The LCA Process
While there are several different approaches to undertaking an
LCA, the cradle-to-grave
assessment (the approach used by Levi Strauss) offers

comprehensive data and is most accu-
rate, because it looks at the complete process of making a
product. Cradle-to-grave is a term
that refers to the time from initial manufacture or “birth” of a
product or service to its dis-
posal or “death.” The cradle period for a car, for example,
involves the extraction of metals,
chemicals, and minerals for car parts and electronic
components, and the extraction of petro-
leum for plastics and the gasoline or electricity that will power
the car. Performing an LCA
for a car also means considering its end-of-life destination,
which for many cars is either a
junkyard, a landfill, or a recycling facility, where some or all of
the parts are extracted and
reused. As another example, consider the cradle-to-grave LCA
of a newspaper. Harvesting and
grounding trees into pulp is an energy-intensive process. Paper
is produced from the pulp;
the paper is shipped to suppliers and then sent on to printing
facilities that print ink on it. The
same facilities fold and prepare the paper to ship to vendors.
The paper is then delivered to
homes and offices in cars and trucks that produce pollution and
are powered by fossil fuels. At
this point, the paper has left the cradle stage and is now moving
through the life stage, where
it is consumed (read). It is then disposed of and heads toward
the grave stage. Newspapers
(those that still exist in this digital age) can be burned, used as
wrapping or protective cover,
be recycled, or thrown away to decompose in landfills. The
impacts of each grave can also be
analyzed. If papers are recycled, one possible outcome is to
create cellulose insulation, which
can be installed in homes and offices. It is also possible to

calculate the fossil fuel savings
from the insulation, along with the effects of most other steps in
the life cycle. Conversely, if
the papers are burned, then the release of carbon can also be
measured and assigned to the
product LCA measurement tally.
When recycling costs and benefits enter the picture, some
people suggest that the LCA
becomes a cradle-to-cradle analysis. Cradle-to-cradle was
discussed in Chapter 5.3; the term
was coined by design advocate Bill McDonough, who suggested
that when the output of one
cycle can be the input for another cycle, then materials need
never enter landfill or junkyard
“graves.” When the process of making and using a newspaper
ends with landfill expenses and
impacts, then the analysis is a cradle-to-grave analysis. If,
however, the analysis includes data
on recycling and finding alternative uses for the product, then it
begins to resemble a cradle-
to-cradle analysis (McDonough & Braungart, 1998).
Note that there is an entire industry of firms and practitioners
interested in conducting LCAs.
As these needs have increased, so has the need to standardize
and develop processes that
enable comparisons and ensure accuracy. There are widely
accepted standards in place that
are managed by the International Organization for
Standardization (ISO). Specifically, stan-
dards such as ISO 14040 and 14044 explain how to conduct
LCAs. Both sets of standards
recommend that the process include four distinct phases (as
illustrated in Figure 6.1). These
phases, or steps, are interdependent, which adds to the

complexity of the analysis. Further
complicating matters is the back-and-forth nature of this
process, where, for example, changes
in goal and scope impact inventory analysis, and changes in
inventory analysis impact goal
and scope.
Figure 6.1: Major components of a life cycle assessment
f06_01
InterpretationInventory
Analysis
Goal and Scope
De�nition
Impact
Assessment
Phase 1: Goal and Scope
An LCA begins with the statement of scope and a goal for the
study. The statement establishes
the context for the study and explains what added value to
expect from the project—it gives
the project a framework, purpose, and context. Some managers
might want to do an LCA to
understand carbon-related issues, while others might want to
understand labor, landfill, or

water-use concerns. Thus, all parties need to agree on the scope
and purpose of the LCA at
the outset. The goal is both general and specific. It is general
because it lays out the study’s
boundaries. It is also specific because it includes the technical
details that guide the subse-
quent work. The goal and scope statement describes the
functional units being studied, the
system boundaries, the study’s system limitations, and the
impact categories that have been
chosen. System boundaries comprise the limitations of the
study, and the boundaries differ-
ent managers choose can vary from company to company or
product to product. For instance,
in the Levi Strauss example, the company defined the “system”
by looking only at production
of the 501 model of jeans, thus limiting the study to one style.
That study’s impact categories
are also clear. Analysts looked at water usage and carbon
footprint but did not look at other
impacts such as hazardous waste.
Phase 2: Inventory
The next phase of an LCA involves creating an inventory of all
relevant inputs, processes,
and outputs related to a good or service. For example, an LCA
can apply to a cup of coffee, a
sweater, or a consulting assignment. Inputs may include energy,
water, materials, and labor.
They might also include required plants, factories, and
equipment, including land. This part

of the study examines all of the things that go into making a
product (or providing a service or
creating a process). The inventory also includes outputs, and
analyzing these involves answer-
ing questions such as, “What specific products or services are
provided?” “What waste is cre-
ated?” “What pollution is created?” “What secondary benefits—
such as recycled newspapers
becoming insulation—are created?” “What is the value added
when this product comes into
existence?” All of these data are needed to create an illustrative
flowchart of the entire pro-
duction process and the relevant supply chain.
If done correctly, inventory analysis yields a complete list of all
activities within the system
boundary, including the supply chain, the inputs, and the
outputs. The inventory analysis also
provides a complete map of all the activities in the production
system boundary, giving a clear
picture of what data can be presented to analyze the production
and distribution system. The
LCA shows how inventory flows into the system, how it is
changed, how it leaves the produc-
tion system, and what value is added (or destroyed) along the
way.
Phase 3: Impact Studies
An impact study searches out data to quantify the expense and
impact of each step in the LCA.
This phase of the LCA is designed to evaluate the significance
of social and environmental
impacts based on the system flow (how a product or service

moves through its life cycle). If
you are going to complete an LCA, begin with the following
questions:
• What are the impact categories (water usage, carbon
footprint, landfill space and cost,
mining activities, human toll of mining, fossil fuel use, and so
on)?
• What model will you use to measure impact (cradle-to-
cradle or cradle-to-grave)?
• How will you classify each stage of production? Where
and how are the inventory
parameters sorted and assigned to specific impact categories?
• What is the impact measurement? Will it be in dollars,
carbon output or usage, or
some other unit of measure?
• What is the overall impact category total? What
assumptions are included in that
number?
Data validity is an ongoing concern for LCAs because processes
change regularly, as does
the environment. Data must be accurate and current. Common
metrics must be used so that
data between systems is fair, accurate, and comparable. There
are two types of LCA data. The
first is unit process data, which is determined from direct
surveys of companies or plants that
produce the product of interest, and is carried out at a unit
process level and defined by the
study’s system boundaries. Unit process data is the actual cost
of producing a single unit—not

just its monetary cost, but its cost in gallons of water or carbon
consumption, for example.
The second type of data is environmental input–output data,
which is based on national eco-
nomic input–output data rather than data directly from company
sources and instruments.
Sometimes an analyst will need to use mixed sources; if this is
the case, it must be stated in
the report. Of course, it is ideal to gather all data from the same
type of source; however, at
times it is better to use mixed-source data than to ignore or omit
data.
Phase 4: Interpretation
The interpretation stage of the LCA is important and represents
the most subjective stage.
In this stage, the analyst, or team of analysts, assess and decide
whether some impacts are
“good” or “bad,” value adding or wasteful, and then determine
how to compare such results to
baseline or competitive data. In this step, analysts return to the
study’s goals and consider the
intended users of the results. They then make reporting and
summary decisions accordingly.
As with the entire process, the best way to protect the integrity
of the process and its results
is to state assumptions in footnotes or the body of the report.
Consumers of the report can

PAINTINGPainting continues to be a popular, and relevant art.docx

PAINTINGPainting continues to be a popular, and relevant art.docx

Recommended

Recommended

More Related Content

Similar to PAINTINGPainting continues to be a popular, and relevant art.docx

Similar to PAINTINGPainting continues to be a popular, and relevant art.docx (9)

More from karlhennesey

More from karlhennesey (20)

Recently uploaded

Recently uploaded (20)

PAINTINGPainting continues to be a popular, and relevant art.docx