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Eco Efficiency pag

Eco Efficiency pag

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Published by: mirtre9912 on May 14, 2011
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44.The published data should reflect the assumption that the reporting entity is
expected to continue operations into the foreseeable future.

45.If the enterprise either intends or needs to liquidate or curtail materially the
scale of its operations, the eco-efficiency data may have to be prepared on a
different basis and, if so, the basis used should be disclosed(see IASB
Framework, paragraph 23).

46.The published report should also include the management’s assessment of the
consequences of moving towards modes of production and/or service delivery
compatible with sustainability (GRI 2001).

A Manual for the Prepareres and Users of Eco-efficiencyIndicators


Box3. Principle of Congruity and the Life-Cycle Approach

Most environmental accounting and reporting guidelines developed by environmentalists and
economists take a so-called life-cycle approach, meaning that the reporting entity should
include processes up- and downstream in the value chain (e.g. the Guideline on Sustainability
Reporting published by the Global Reporting Initiative). This framework and guidance clearly
takes a different stand on this aspect. It follows the approach used in financial accounting,
sinceenvironmental and financial data must be consistent, that is they must match the
transactions of the same entities included in a consolidated financial statement. If an
enterprise expands its eco-efficiency reporting to include the life cycle of its products and
services, it must make sure that, if the environmental item includes activities up- and/or
downstream, the financial item used as a reference figure alsocovers these activities.
Otherwise the two items are not congruent - they do not cover the same activities - and
therefore the eco-efficiency figure is inconsistent and the information worthless.

On the other hand, if an enterprise chooses sales as a reference figure, it must be aware that
its own sales also include part of the sales of its suppliers; what the company calls purchase
cost is sales from the supplier’s perspective. Consequently if sales are used as a reference
item and the environmental item should cover the same activities, then the relevant
environmental information of the suppliers linked to the reporting entities’ purchases must
also be included. To avoid these problems with sales as a reference figure and to arrive at a
consistent eco-efficiency indicator, a company must deduct the cost of goods and services
purchased from its sales figures. That way the financial figure represents economic activities
of the reporting entity only. This in turn makes it possible to restrict the environmental data
to the reporting entities’ own resource consumption, emissions or waste production.

These approaches illustrate that including up- and downstream information is highly
impractical. Especially in the case of anannual company report, it means that the expansion
has to be done for all thecompany’sactivities, products and services and therefore for all of
its suppliers and customers as well.

Life-cycle approaches provide highly valuable information but are too costly and impractical
to use on larger entities with many activities, products and services on a regular basis. The
scope and the objective of life-cycle approaches are to analyse specific products and to
optimize these products throughout the value chain. This is clearly not the intent of an
annual report, which describes the eco-efficiency of an enterprise.

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