It is thought that life on this earth, by taking in low entropy from the external environment and returning high entropy to the external environment, can maintain a distance from a state of equilibrium - in other words, from death. Life can be said to maintain itself by continually inputting low entropy from the external environment into the internal environment and by continually outputting high entropy from the internal environment to the external environment while creating a thermodynamic state of non-equilibrium. The maintenance of life is only possible through this exchange with the external environment. Through this kind of substance metabolism, life maintains a balance. This is known in physiology as homeostasis. The activities of a corporation receive benefits and influences from outside the corporation and at the same time distribute benefits and influences outside itself. A corporation engages in activities that maintain the "life form" called a corporation, behaving as organic life forms do. It does seem that corporations exist in the world through a relationship of giving and being given life. If we view corporations as such entities, what exactly does the balance sheet represent? Of course, a corporation must make profits to survive. But how do we evaluate these profits if they are achieved through the internalization of external positives (external economies) and the externalization of internal negatives (external diseconomies)? For companies, the market mechanism has played a role in promoting the internalization of external economies and the externalization of external diseconomies. Even if a corporation prospers, the conditions for the destruction of nature and the devastation of society are invited. Adam Smith's "invisible hand of God" becomes the all-too-visible hand of the Devil, and even when the market reaches equilibrium, "social equilibrium" remains far off. If corporate profits are gained through these kinds of mutual interactions with the external world, then we can evaluate a company's balance only by considering the gains from the benefits of nature and the losses from the damage done to nature, plus the gains from the benefits from society and the losses from the damage done to society. More positively, there are beneficial corporate grants to nature (environmental conservation) and beneficial grants to society (social contributions). England's John Elkington advocates the position that there are three kinds of balances (the "triple bottom line") to be considered in evaluating the balance of a corporation: the profit and loss balance (corporate accounting), corporate environmental balance (environmental accounting), and corporate social ethics balance (social ethics accounting). The 21st century is already being called the environmental century, in which the key concept will be sustainable development. If corporations are to pursue sustainability and if profits are to be evaluated in this manner, then they must not only present a profit and loss statement to the corporate stockholders, but also present a profit and loss statement to stakeholders -- that is, nature and society. Corporations which operate through the procurement of economic capital (stocks), natural capital and social capital (community capital) must give an annual report which covers all three of these accounts. Takara Shuzo, along with its "black ink" and "red ink" annual reports to its stockholders, also reports to nature its "green ink" (or negative "green ink"). Because it is a report on natural benefits, the profit and loss balances are reported in "ECO" units. Although this kind of environmental accounting will probably become the norm in environmental annual reports in the future, at present it a pioneering approach. Environmental accounting usually incorporates financial terms from American style environmental accounting or LCA and quantitative terms from European style environmental accounting, but the usage of ECO units as indicators is a new and independent approach to environmental accounting. It makes the Eco Challenge 21 effort and its results easy to understand. Takara Shuzo makes social contributions in addition to those indicated in the Green Ink Accounting Annual Report. I don't believe I'm the only one looking forward to a new "ink" indicator for a healthy society, to go along with the "green ink" indicator for a rich environment. I hope for continued progress toward integrating "economy", "ecology", and eventually "community society" into a comprehensive "Sustainability Report".
* Note from Takara Shuzo |
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