Measuring the Impact of Sustainability Efforts Some economists and financial executives are beginning to consider the possibility of reporting sustainability costs and benefits in a more comprehensive manner. The Nobel prize-winning economist, Joseph Stiglitz, and other economists have suggested that nations move beyond the traditional gross domestic product (GDP) measures of a nation’s output. They argue that GDP should include environmental assets and liabilities. For example, the marshlands in many parts of the United States are key to aquatic life, plant life, erosion control, and storm protection, providing billions of dollars of value. So development on these marshlands should be balanced against those values that would be lost in development. An example is the development of the wetlands of southern Louisiana. As a result of this development, New Orleans and southern Louisiana are now much more vulnerable to storms. Some have estimated that the value of those wetlands would be in the trillions of dollars if the wetlands had been there to reduce the impact of Hurricane Katrina in 2005. Canada, Germany, Mexico, Australia, and Japan are among the 24 countries that use some form of “natural capital accounting.”
Individual companies are also looking at the use of this type of sustainability accounting. For example, the sportswear company Puma has considered including on each product tag the estimated monetary value of the environmental cost of the production of the product.
Required List what you would consider to be some of the advantages and disadvantages of the more comprehensive sustainability reporting proposed by some economists for governments. What are some of the advantages and disadvantages of the type of sustainability reporting being considered by Puma for individual companies?
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