Triple Bottom Line Pilot Report

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					Triple Bottom Line Reporting
    in the Public Sector

 Summary of Pilot Group Findings
    Disclaimer: The central government and local government pilot group
    write-ups set out in Appendices IV and V have been written by, and
    are the sole responsibility of, the specific agencies listed in the
    Appendices. The Ministry for the Environment takes no responsibility
    for any reliance on the contents of any of these write-ups.




                 Published in December 2002 by the
                    Ministry for the Environment
               PO Box 10-362, Wellington, New Zealand

                          ISBN: 0-478-24075-9
                            ME number: 457

This document is available on the Ministry for the Environment’s website:
                           www.mfe.govt.nz
Contents


1   Executive Summary                                                                                   1
    1.1    Purpose of the pilot groups                                                                  1
    1.2    What is Triple Bottom Line Reporting?                                                        1
    1.3    Participants’ progress                                                                       2
    1.4    Central government pilot perceptions of value added                                          2
    1.5    Central government pilot perceptions of challenges/barriers                                  2
    1.6    Additional Ministry for the Environment conclusions                                          3
    1.7    Local government pilot perceptions of value added                                            3
    1.8    Local government pilot perceptions of challenges/barriers                                    4
    1.9    Additional Ministry for the Environment conclusions                                          4
    1.10   Overall conclusions                                                                          4
    1.11   Further actions regarding central government                                                 5
    1.12   Further actions for local government                                                         5


2   Purpose of the Pilot Groups                                                                         7
    2.1    Background                                                                                   7
    2.2    Entity focused performance evaluation                                                        7


3   What is Triple Bottom Line Reporting?                                                               9
    3.1    Defining Triple Bottom Line Reporting                                                        9
    3.2    Limitations in terminology                                                                  11
    3.3    Sustainability reporting?                                                                   12
    3.4    Conclusions on terminology                                                                  12


4   Central Government Pilot Group                                                                     13
    4.1    Participants                                                                                13
    4.2    Participants’ progress                                                                      13
    4.3    Participants’ perceptions of value added                                                    14
    4.4    Participants’ perceptions of challenges/barriers                                            17
    4.5    Participants’ recommendations                                                               18
    4.6    Ministry for the Environment’s conclusions                                                  18


5   Local Government Pilot Group                                                                       26
    5.1    Participants                                                                                26
    5.2    Participants’ progress                                                                      26
    5.3    Participants’ perceptions of value added                                                    28
    5.4    Participants’ perceptions of challenges/barriers                                            30
    5.5    Participants’ recommendations                                                               31
    5.6    Ministry for the Environment’s conclusions                                                  31




                  Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   iii
Appendices
     Appendix I:     Overview of Overseas Central Government Initiatives                     33
     Appendix II:    Overview of the GRI Content Guidelines                                  39
     Appendix III:   Key TBLR Resources and Further Reading                                  40
     Appendix IV:    Central Government Pilot Group Detail                                   43
     Appendix V:     Local Government Pilot Group Detail                                     78




iv      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
1          Executive Summary


1.1        Purpose of the pilot groups
The Ministry for the Environment (the Ministry) received funding to encourage and facilitate
best practice TBLR. In February 2002 we established pilot groups for central and local
government participants interested in Triple Bottom Line accounting and Reporting (TBLR).
Nine central government agencies and eight local authorities participated in the pilot groups.
The broad objectives of the groups were to increase understanding of TBLR; work through
issues; for those with an established commitment facilitate development of their TBL reports;
and to conclude on whether TBLR added value to reporting in the public sector.

The primary focus of the pilot group process has been to investigate the benefits of TBLR at an
individual entity level, rather than investigating reporting by whole of government on its
performance, for example, against any overarching national sustainable development strategy.



1.2        What is Triple Bottom Line Reporting?
John Elkington, who coined the phrase, has defined the TBL approach as:
       “At its broadest, the term is used to capture the whole set of values, issues and
       processes that companies must address in order to minimise any harm resulting
       from their activities and to create economic, social and environmental value. This
       involves being clear about the company’s purpose and taking into consideration
       the needs of all the company’s stakeholders.”

An earlier paper by the Ministry considered the definition of TBL in more detail1, however
during the pilot groups process we identified that best practice TBLR demonstrates the
following core elements or dimensions:
•      broadening the basis of performance evaluation from a short-term financial focus to
       include long term social, environmental and economic impacts and value added
•      a continuous improvement management process that aligns strategic planning with
       performance evaluation
•      engaging ‘stakeholders’ in the process of designing performance evaluation processes
•      increasing organisational accountability and transparency
•      some consideration of the trade-offs between, or relative importance of, the different
       bottom lines by an organisation.




1
    Goldberg E (2001) Profit, People Planet: Policy Issues and options around Triple Bottom Line Reporting.
    MfE.




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   1
1.3      Participants’ progress
Because of the short timeframe (four months) the production of final TBL reports by
participants was not an objective of the pilot groups. Rather the process was principally focused
on bringing together organisations who were engaged in or starting to think about TBLR so as
to facilitate increased understanding and discussion of the concept and issues involved for the
public sector.

All central government participants remain committed to investigating elements of a TBLR
approach or to implementing TBLR in full in the future. During 2002 the Ministry for the
Environment and Transit New Zealand are due to issue TBL reports on their performance to
June 2002.

Two local authorities (Christchurch City and Waitakere City) had or were about to release their
2002/03 annual plans on a TBL basis. All other councils were committed to working towards
reporting on a TBLR basis or at least integrating TBLR/ sustainability thinking into their
management processes.



1.4      Central government pilot perceptions of value added
Given only two participants were actually planning to produce TBLR reports in 2002 the
participants findings regarding value added and challenges/barriers are perceptions, rather than
being based on experience of a full TBLR process.

The central government participants’ key perceptions were that TBLR added value to existing
central government performance evaluation by:
•     improving organisational management through taking a broader view of performance
      evaluation
•     improving integrated decision making within individual organisations
•     improving transparency and stakeholder inclusion
•     improving alignment of strategic planning and performance evaluation
•     providing a tool for enhancing cross agency co-operation to achieve whole of government
      outcomes.



1.5      Central government pilot perceptions of
         challenges/barriers
The central government participants’ key perceptions of challenges/ barriers to the
implementation of TBLR included:
•     organisational resistance to another private sector ‘fad’ or further re-engineering
•     time and resources required, although these were generally anticipated to be higher in the
      short term
•     the need to integrate TBLR with existing processes and reporting rather than creating
      separate processes.




2        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
1.6        Additional Ministry for the Environment conclusions
In addition to the findings of the central government pilot group we have put forward our own
conclusions regarding value added and challenges/barriers. These can be summarised as
follows:
•      whilst participants perceived that TBLR can add value to public sector reporting, a more
       rigorous case still remains to be made based on actual experience
•      in particular, feedback from stakeholders is necessary before any firm conclusions on
       value added can be reached
•      we consider that TBLR has the potential to help meet some of the challenges highlighted
       in “Review of the Centre”2 and to further enhance the “managing for outcomes”
       initiative.3 TBLR could provide a tool for cross agency co-ordination in achieving
       government outcomes; engage stakeholders other than government in performance
       evaluation; and encourage the participation of public sector employees in organisational
       decision making
•      agencies involved in TBLR will need to ensure that any reporting is consistent with any
       performance evaluation required under the forthcoming national sustainable development
       strategy
•      participants all agreed that it could be useful for the government, acting in its own
       ownership interests, to investigate the cost and benefits of establishing its own
       environmental ‘footprint’.



1.7        Local government pilot perceptions of value added
The findings of the local government group are again mostly based on perceptions rather than
actual experiences of TBLR.

The local government participants key perceptions were that TBLR added value to existing
local government performance evaluation by:
•      improving organisational management by providing a better assessment of whether
       social, environmental and economic community outcomes were being achieved. All
       participants considered that the proposed revisions to the Local Government Act would
       require them to report in a triple bottom line format
•      encouraging well-rounded decision making by providing a greater understanding of the
       trade-offs to be made between social, environmental and economic outcomes.
•      improving accountability and transparency
•      focusing organisations on their key challenges
•      providing an opportunity for alignment of strategic processes with performance evaluation
•      providing management with additional information for performance management.



2
    Report of the advisory group on the Review of the Centre. November 2001.
3
    Refer Managing for Outcomes: Guidance for departments. August 2002, Steering Group Managing for
    Outcomes Roll-out 2003/04.




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   3
1.8        Local government pilot perceptions of challenges/barriers
The local government participants’ key perceptions of challenges/ barriers to the
implementation of TBLR included:
•      buy-in at a political level by councillors and by executive management
•      significant resourcing was required in the short-term to educate people and implement a
       TBLR approach, including the design of processes and indicators plus engagement with
       stakeholders, however, these should reduce in the longer term and be offset by
       performance gains
•      capability issues with regard to staff skills, in particular in the smaller councils
•      the absence of a sustainable development strategy for New Zealand.


1.9        Additional Ministry for the Environment conclusions
In addition to the findings of the local government pilot group we put forward our own
conclusions regarding value added and challenges/barriers. The key conclusions are:
•      there is value in assisting local authorities to adopt a triple bottom line approach to
       strategic planning and reporting.
•      while the Local Government Bill does not stipulate triple bottom line reporting as a
       requirement, its purpose will mean that in future triple (or quadruple) bottom line
       reporting will be necessary
•      participants were generally well resourced and advocates of sustainable development. It
       is important to balance their findings with recognition of the available resources and
       needs of smaller local authorities
•      acceptance of a triple bottom line approach is likely to change the way local authorities
       plan, make decisions, organise operational processes and report performance
•      we need to ensure that the agencies responsible for providing guidance on implementing
       the Local Government Act (Internal Affairs and Local Government New Zealand) are
       aware of the findings of this report.


1.10       Overall conclusions
Both pilot groups perceive that TBLR has the potential to add value to their sectors. In
particular, within central government TBLR could act as a tool for encouraging agencies to take
a whole of government approach in achieving governmental outcomes. The Ministry considers
that TBLR can add value to central government performance evaluation; however, resource
constraints exist, particularly in regard to the public service agencies already engaged in the
“Managing for Outcomes” roll-out. Consequently, we need to discuss these findings with the
central agencies4 responsible for performance evaluation before making further
recommendations. In the interim we intend to keep facilitating the existing central government
pilot group, so as to further investigate the case for TBLR based on actual experiences.



4
    Department of Prime Minister and Cabinet, State Services Commission and Treasury.




4          Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Within local government the Local Government Bill was seen to be creating a requirement to
produce TBL based plans and reports. Possibly because of this local authorities are to an extent
ahead of their central government counterparts in thinking about and developing tools to
operationalise managing and reporting on TBL performance. The Ministry intends to keep
promoting TBLR with the existing pilot group; all the local authority participants felt that there
was value in a continued pilot group process of shared experiential learning rather than further
guidance. Concerns were expressed about resource constraints for smaller local authorities and
the need to further investigate the development of regional TBL reports.



1.11     Further actions regarding central government
The Ministry will carry out the following actions.
1.11.1   Present the findings from the pilot group to the agencies responsible for the
         development of performance management systems in the state sector (‘the central
         agencies’).
1.11.2   Co-ordinate with the central agencies before initiating any further promotion of Triple
         Bottom Line Reporting (other than with the existing pilot group participants).
1.11.3   Fund the existing pilot group to meet twice during the next financial year. The
         objectives being to provide support and a shared dialogue on learning experiences for
         those committed to producing Triple Bottom Line Reports. This should contribute to
         their first Triple Bottom Line Reports being of a good quality and will enable
         continuing assessment of the tool, in particular in relation to costs and benefits
1.11.4   Raise with the Department of the Prime Minister and Cabinet, which is leading the
         development of a national strategy on sustainable development, the conclusion that
         any adoption of TBLR within central government is aligned with any performance
         evaluation system suggested under the forthcoming national strategy.
1.11.5   Raise with the central agencies the conclusion that an assessment should be made of
         the costs and benefits associated with a review of the whole of government’s
         environmental footprint.



1.12     Further actions for local government
The Ministry will carry out the following actions.
1.12.1   Present the findings from the pilot group to the Local Government Act
         Implementation working groups being run by Local Government New Zealand,
         Internal Affairs and the Office of the Auditor General.
1.12.2   Raise with those agencies working to assist local government implement the Local
         Government Act, the issues highlighted by the local authorities in the pilot group.
1.12.3   Co-ordinate with Local Government New Zealand, Internal Affairs and Office of the
         Auditor General before initiating any further promotion of Triple Bottom Line
         Reporting to local authorities (other than with the existing pilot group participants).




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   5
1.12.4   Fund the existing local authority pilot group to meet twice during the next financial
         year. The objectives being to provide support and a learning opportunity for those
         committed to producing Triple Bottom Line Reports. This should contribute to the
         first Triple Bottom Line Reports being of a good quality and will enable continuing
         assessment of the tool, in particular in relation to costs.
1.12.5   Raise with the Department of the Prime Minister and Cabinet, which is leading the
         development of a national strategy on sustainable development, local authority’s
         concerns about the absence of national guidance on the key sustainability issues for
         New Zealand and associated goals and targets.
1.12.6   Facilitate discussions on the pilot group findings and Triple Bottom Line Reporting in
         general at forums that local authority politicians and executives are likely to attend.




6        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
2          Purpose of the Pilot Groups

2.1        Background
In December 2000 the Ministry received funding from the green issues contingency to
encourage and facilitate best practice “Triple Bottom Line Accounting and Reporting”5 (TBLR)
by organisations.

During 2001 we focused on promoting TBLR in the business sector. During 2002 we wanted to
assess whether or not there was value in promoting TBLR in the public sector. To help us do
this we established two separate pilot groups for central government and for local authorities in
February 2002.

The objectives of the pilot groups were to:
•      increase participants understanding of TBLR and how it relates to their organisation’s
       responsibilities
•      provide a forum for pilot group agencies to work through some of the challenging issues
       associated with TBLR in their sectors
•      facilitate the development of TBL reports for the participating agencies (where the
       agency is committed to producing a TBL report)
•      document the key issues and lessons learnt from the pilot process
•      conclude whether or not TBLR adds value to existing reporting in the public sector.

The central government group was facilitated by URS New Zealand and the local government
group was facilitated by Audit New Zealand.

The first meetings were held mid-March 2002 and further meetings were held in April and June.
The consultants met with the participants for one-on-one meetings in between the group
meetings.

The participants reported back in July 2002 and their individual reports are attached as
Appendix IV and V (or are available on request if you have a copy of the summary document
only).



2.2        Entity focused performance evaluation
The primary focus of the pilot group process has been to investigate the benefits of TBLR at an
individual entity level, rather than investigating reporting by whole of government on its
performance, for example, against any overarching national sustainable development strategy.




5
    Hereafter, referred to as Triple Bottom Line Reporting (TBLR).




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   7
However, both pilot groups identified the need for any entity TBLR framework to be set in the
context of a whole of government sustainable development strategy and any performance
reporting requirements arising from such a strategy.

Appendix I contains an overview of the Australian and Canadian Federal government’s
initiatives for reporting at both the entity and the whole of government level against national
sustainable development strategies.




8        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
3             What is Triple Bottom Line Reporting?

No definition of Triple Bottom Line accounting and Reporting (TBLR) was provided in the
‘Green Issues’ cabinet paper that initiated the work stream. Discussions in the pilot groups
demonstrated that there is a range of interpretations of the concept.



3.1           Defining Triple Bottom Line Reporting
John Elkington of the UK consultancy SustainAbility, who originally coined the term, defined
the Triple Bottom Line approach as:
       (i)      “At its narrowest, the term triple bottom line is used as a framework for
                measuring and reporting corporate performance against economic, social
                and environmental parameters.”
       (ii)     “At its broadest, the term is used to capture the whole set of values, issues
                and processes that companies must address in order to minimise any harm
                resulting from their activities and to create economic, social and
                environmental value. This involves being clear about the company’s
                purpose and taking into consideration the needs of all the company’s
                stakeholders.”

From the pilot group process we have identified the following elements as core to a TBLR
approach:
•      Broadening the basis of performance evaluation: The identification by an organisation
       of its impacts or value added in spheres other than the financial. The additional spheres
       are broadly described as the social, the environmental and the economic.6 Amongst New
       Zealand TBLR reporters to date,7 this has typically meant the expansion of annual reports
       to cover qualitative and some quantitative analysis of:
       •       environmental performance in production and operation
       •       employment issues (training, turnover, staff, attitudes)
       •       equal opportunities and diversity practices
       •       occupational safety and health
       •       aspects of other stakeholder8 relations (e.g. customer satisfaction)
       •       philanthropic/community engagement initiatives.




6
    Note that various commentators make a distinction between ‘economic’ performance which is broader than
    narrow financial performance and for example may include an organisations’ impacts on an regional
    economy.
7
    As at September 2002 the Ministry understands that there are around 40–50 New Zealand organisations
    reporting or committed to reporting on a TBLR basis in the next two years.
8
    For the purposes of this report defined as “an individual or group of individuals who affect and/or are
    affected by an organisation and its activities”. Accountability 1000 Framework AccountAbility.




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   9
        TBLR reports to date have tended to specify social, environmental or economic
        objectives and to report performance against related commitments or targets. Indicators
        of progress are expressed in a mixture of quantitative metrics or even qualitative terms.
        Various companies in New Zealand9 have partially adopted the principles and content
        guidelines of the Global Reporting Initiative (GRI),10 as a basis for their reporting. The
        GRI seeks to promote consistency and comparability of “Sustainability Reporting” by
        defining a minimum set of non-financial indicators and policy areas to be addressed in a
        TBLR type report (refer Appendix II).
        In most published TBL reports, there is also a tendency to emphasise reporting on
        ‘internal’ operations of an organisation (office energy, staff attitudes, etc), over the
        reporting of the ‘external’ impacts or value added from products and services on the
        environment and society. Understandably, this emphasis reflects the complexity of the
        issues surrounding ‘external’ activities.
•       A management process: TBLR is about more than reporting, it is a management process
        covering strategic planning and objective/target setting; accounting for performance;
        auditing and reporting on the performance and embedding the results within
        organisational processes. This is generally set in the context of a process of continual
        improvement.
•       Stakeholder engagement: TBLR includes the targeted identification and engagement
        with stakeholders of an organisation in the process of performance evaluation.
        Stakeholder theory is based on the premise that the performance of an organisation is
        reliant on more than meeting the needs of its legal ‘stakeholders’, such as a corporation’s
        shareholders. The UK Institute of Social and Ethical Accounting AA1000 Standard11 is
        generally acknowledged as the most developed tool to be used by corporations in their
        stakeholder engagement. Examples of public sector agencies key stakeholders include:
                          Central Government                                       Local Government

                         Ministers/Government                                          Councillors

                   Parliament and select committees

                                                           Employees

                       Central government peers                                 Local government peers

                                       Community groups/NGOs/professional associations

                           Local Government                                       Central Government

                                                             Maori

                                                    Suppliers and contractors

        Other specific stakeholders include funding bodies, monitoring agencies, etc.




9
     For example Watercare Services, Landcare Research, Meridian Energy, The Warehouse.
10
     The GRI is an international multi stakeholder initiative to create a common framework for voluntary
     reporting of economic, environmental and social impact of organisational level activity. Currently over a
     130 international corporations are using the guidelines. Refer www.globalreporting.org
11
     www.accountability.org.uk




10          Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
•       Increasing accountability and transparency: The increased accountability and
        transparency of TBLR in the private sector can be seen as a response to the demands by
        NGOs and community groups for multinational corporations to justify their ‘licence to
        operate’. However, post-Enron/WorldCom the call for greater accountability and
        transparency has become a major public concern.
•       Comparison of the bottom lines: TBLR seeks to manage and report on performance
        across the social, environmental and economic dimensions.          There is ongoing
        debate/discussion about:
        – the extent to which the social and environmental performance parameters can be
           quantified and compared with quantitative economic indicators12
        – whether a common metric is the only basis on which to make meaningful decisions
           about trade-offs between the various bottom lines.



3.2         Limitations in terminology
The term ‘Triple Bottom Line Reporting’ has attracted criticisms, including:
•       Undue emphasis on reporting: The term is said to encourage an undue emphasis on the
        final report, versus embedding TBLR thinking into an organisation’s day-to-day
        performance evaluation and operational processes.
•       Triple to Quadruple: The term ‘triple’ is seen as too limiting and should be expanded to
        emphasise the cultural13 and/or the governance14 dimension.
•       Encouragement of ‘silo thinking’: The term encourages organisations to place their
        activities within either the environmental, social or economic ‘silo’s’, when the reality is
        that most activities have impacts which are integrated across all of the bottom lines.

The pilot groups used the term TBLR because of its links to our funding requirements. Our
responses to the criticisms are:
•       Undue emphasis on reporting: Generally private sector companies take one of two
        approaches to implementing a TBLR process,15 either:
        – A process-based approach, where TBLR systems and strategy are carefully planned
           and embedded prior to reporting or




12
     A minority of companies are investigating the use of metrics that enable them to calculate ‘net value’ (see
     Henderson D (2001). Page 25-26 which quotes the examples of Dow Chemicals and Shell International)
     across all bottom lines or techniques such as Full Cost Accounting (refer examples given in Bebbington J
     (2001) include Landcare Research and Forum for the Future (UK)) that seek to attribute monetary values to
     each bottom line. However, critics of these approaches point to the long running arguments within
     accounting circles over the financial valuation of intangibles such as goodwill, as evidence that such
     approaches are at best in their infancy.
13
     This was the theme of a speech by Tahu Potiki, CEO, Te Runanga o Ngai Tahu “The Quadruple Bottom
     Line”. Redesigning Resources Conference, July 2002.
14
     Speech by P Barrett, Auditor General for Australia “Public Sector Auditing”, 23 August 2002.
15
     This conclusion is shared by the WBCSD “The SDR Guidance Tool”, WBCSD Draft Document, March
     2002.




                        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   11
        – A report focused approach where the actual process of creating the report becomes a
           crystallizing point for a series of concrete learning experiences that subsequently lead
           to the design and implementation of necessary systems to support a future process.
        Whilst a process-based approach is necessarily best practice, it should not be
        underestimated how much practical learning occurs, particularly for smaller
        organisations, through the writing of the report itself.
•       Triple to Quadruple: Expanding the TBLR concept to emphasize the ‘cultural’
        dimension is necessary in the New Zealand context. However, although alternative terms
        such as ‘sustainability reporting’ are broad enough to encapsulate cultural concerns, that
        breadth can itself result in criticisms of a lack of clarity as to what is included.
        Throughout the rest of this report when we refer to TBLR we are implicitly including the
        cultural dimension.
•       Encouragement of silo thinking: Some of the group participants reported back that ‘silo
        thinking’ under TBLR was conceptually easier to grasp and, therefore, more practicable
        as an initial attempt to move towards organisational sustainable performance.



3.3        Sustainability reporting?
Most critics of the term TBLR prefer the use of Sustainability Reporting or Sustainable
Development Reporting to address the criticisms noted above.

We have some concerns that the promotion of the terms including the phrase ‘sustainable
development’ can be seen as confusing the issue of whether organisational sustainability
equates with the sustainability of society as a whole.16 We offer no conclusion on what
particular term should be used in any further development of public sector TBLR workstreams.



3.4        Conclusions on terminology
In summary, the limitations of terminology such as TBLR or Sustainability Reporting are
largely academic when compared with the need to encourage organisations in the public sector
to consider their environmental, social and economic impacts and value added in their
performance management and reporting practices.




16
     Gray R, Milne M. “Sustainability reporting: Who’s kidding whom?” Chartered Accountants Journal, July
     2002.




12         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4        Central Government Pilot Group

4.1      Participants
Agencies were approached in January/February 2002 and asked to signal their interest in
participating. The following committed to the project:
•      Antarctica New Zealand
•      Audit Office
•      Department of Conservation
•      Energy Efficiency and Conservation Authority (EECA)
•      Environmental Risk Management Authority (ERMA)
•      Hort Research
•      Housing New Zealand Corporation
•      Ministry for the Environment
•      Transit New Zealand.

Those in a watching brief only included State Services Commission, Treasury, Ministry of
Agriculture and Forestry, Ministry of Economic Development, Ministry of Social Development
and Parliamentary Commissioner for the Environment.

Individual agency feedback is set out in Appendix IV (or is available on request if you have a
copy of the summary document only).



4.2      Participants’ progress
Progressing participants towards producing a TBL report was only one of the groups objectives.
However, we have attempted to summarise the progress of the various participants in Figure 1
below.

All participants remain committed to investigating elements of a TBLR approach or to
implementing in full. The Ministry for the Environment and Transit New Zealand are due to
issue TBL reports to June 2002 during 2002.

Relative progress was largely predicated on:
•     senior level commitment to TBLR in the organisation
•     the seniority and breadth of organisational understanding of the actual participating staff
•     the degree of organisational/performance systems change experienced recently (e.g.
      Department of Conservation were concurrently involved in the Pathfinder /Statement of
      Intent roll-out).




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   13
                          Triple Bottom Line Process Stages
Organisation Senior       Senior         Commitment to Commitment     Scoping      Report to be Comments
             management   management     investigate      to report   report       published
             interest     understanding further or report June 2002   considered   post-June
                                         post-2002                    by           2002
                                                                      mangement

Antartica NZ                                                                                  Intention to incrementally progress TBLR in 2002/03
                                                                                              Included in Stratgeic Plan and SOI
Audit Office                                                                                  Use TBL to add new perspective to what Audit Office does,
                                                                                              measures and reports
DOC                                                                                           General management team briefed
                                                                                              Incremental approach
EECA                                                                                          Briefing paper provided to board June 2002
                                                                                              Will consider TBLR report 2004/05
ERMA                                                                                          Initial implementation scheduled for 2002/03
                                                                                              TBL chapter in 2002/03 business plan
Hort Research                                                                                 Scoping Report provided to be completed by June 2002
                                                                                              Uptake dependent on management commitment
Housing NZ                                                                                    Investigation of TBLR included in 2002/03 Business Plan
Corporation
                                                                                              Incremental approach will set up steering group
MfE                                                                                           TBLR Section in 2001/02 Annual Report
                                                                                              Separate TBL Report due 2002
Transit                                                                                       To be incorporated in 2001/02 Annual Report


Key:
Pre Pilot
Post Pilot


Figure 1:            Relative progress of central government pilot participants


Following private sector trends a majority of organisations chose to focus initially on their
‘internal’ environmental and social performance before extending the approach to their external
outcomes and impacts.

One participant (Department of Conservation) felt that there was too much emphasis in the pilot
group on the report itself rather than the processes of implementing TBLR.



4.3             Participants’ perceptions of value added
Because of the fact that all but three participants have not yet reached the stage of scoping17
their initial TBLR, the findings can only be expressed as anticipated/perceived value added,
rather than concrete assessments based on experience of undertaking a complete TBLR process.
A further caveat is that due to the participant’s personal experience of performance evaluation
some perceptions of value are not unique to TBLR, but are also representative of alternative
approaches to performance evaluation. The most common perceptions of value follow.




17
      A scoping report is a process step in the production of a TBL report where an organisation addresses the
      issues of why it should report, how it should report and what to include.




14              Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4.3.1      Improved management through broader performance evaluation

The public sector’s purpose is to influence the conditions of society through policies and actions
for the ‘public good’. In seeking to maximise the public good, public sector organisations have,
to different extents, always considered economic, social and environmental outcomes. In this
context TBLR was seen as more of a reminder to organisations that the evaluation of their
performance should be broader than the existing financial and output based evaluation.

All participants acknowledged that the broadening of their organisation’s existing performance
evaluation, to include long and short-term societal and environmental considerations, should
contribute to the better management of their organisation. Notably this included the areas of
extending risk management into environmental and social/ethical areas and prioritising projects/
workstreams.
        “[It] reminds us that performance has impacts that are short and long term,
        internal and external, with social, environmental and economic dimensions.”
        [Audit Office]



4.3.2      A tool for enhancing cross-agency co-ordination

Most participants felt that there was potential to enhance cross-agency co-ordination of policies
and activities, by providing a structure for thinking about the interface between agencies and for
identifying where there are opportunities to work together to deliver whole of government
outcomes.

An example of cross agency co-ordination is the joint initiative by EECA and Housing NZ
Corporation to retrofit housing stock with energy conservation technology. This initiative has
the potential for both agencies to synergistically realise environmental and health outcomes.
        “Potential to be able to demonstrate the wider societal benefits of core
        conservation business.” [Department of Conservation]
        “TBLR can enhance integration by illuminating the operational interests of
        different government agencies and community agencies, identifying interfaces,
        shared interests and duplicated effort.” [Housing New Zealand Corporation]



4.3.3      Improved integrated decision making within individual
           organisations

Most participants identified that TBLR could lead to improved consideration of economic,
social and environmental impacts of an organisation’s activities and, hence, improved integrated
decision-making.
        “Tool to measure and report EECA performance to assist achieving integrated
        decision making (and contributing to effective cross functional working groups).”
        [EECA]




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   15
4.3.4      Improved transparency and stakeholder inclusion

Participants were in agreement that greater transparency and engagement with stakeholders
could potentially lead to greater accountability, more relevant stakeholder reporting and
improved levels of trust, particularly if the making of trade-offs and the reasons behind them
became more transparent.
        “Facilitates stakeholder internal and external engagement (adding value to and
        creating relationships to achieve EECA objectives).” [EECA]



4.3.5      Alignment of planning with performance reporting

A majority of participants reported that the TBLR process reminded them of the need to
continually link an organisations’ primary corporate planning documents via strategic planning
process through to its performance evaluation and reporting.
        “Provides better alignment of mission statement, values and strategy, with
        behavior and the outcomes to its activities.” [Housing New Zealand Corporation]



4.3.6      Better linking of outcomes to outputs and activities

As part of the TBLR process participants were encouraged to explore the links between
outcomes and outputs so that outcome related performance indicators could be developed for
the organisation. Participants were also briefed on the CAP and pathfinder initiatives that have
lead to the roll out of the “Managing for outcomes” initiatives for public service ministries and
departments. This finding was not necessarily directly applicable to all of the Crown entities in
the pilot group, some of whose outcomes are directly specified in legislation or through their
existing Statement of Corporate Intent process.
        “[TBLR] provided some agencies with a framework for doing some important
        work on outcome measurement, in particular intervention logic modeling.” [Audit
        Office]



4.3.7      Other potential benefits

Other potential benefits reported by one or more participant included:
•       a chance for agencies to enhance governmental reputation through ‘walking the talk’ and
        demonstrating real leadership
•       the potential to improve staff motivation and morale by engaging with them as
        stakeholders in an ongoing dialogue about organisational values and roles and
        encouraging their participation in organisational decision making.




16         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4.4        Participants’ perceptions of challenges/barriers
Due to the limited timeframe of the pilot process and the varied progress of participants, the
same caveat applies to these being perceptions only of challenges and barriers to implementing
TBLR in the central government. The main challenges reported were as follows:



4.4.1      Organisational resistance

For some participants their colleagues perceive TBLR as yet more jargon. Participants see this
resistance as in part a response to the introduction of various management initiatives and re-
engineering exercises drawn from the private sector during the last decade.



4.4.2      Time and resources

Given only two participants were planning to report on their performance to June 2002,
participants were not at a position to be able to establish hard cost estimates for additional
resources and time involved in implementing TBLR.

However, all participants anticipated that initial costs were expected to be high in relation to
staff time; establishment of new data collection systems; additional stakeholder consultation;
management learning/review and actually printing any report. Moreover, the extent of costs is
related to the size and diversity of the organisation involved and, conversely, the perceived size
of the barrier was higher for the smaller agencies.



4.4.3      Integration with existing systems

Integration with existing systems is crucial for success – at least four participants were already
using or had used the Balanced Scorecard performance management system. All participants
stressed that TBLR must be integrated within existing performance planning and evaluation
processes, rather than being seen as an addition.



4.4.4      Other perceived challenges

Other perceived challenges reported by one or more participant included:
•       there is the obvious potential to be seen to be diverting attention and resources from what
        is perceived to be core business. Managing ‘two’ more bottom lines can be perceived as
        simply entailing more work
•       agencies should avoid a proliferation of performance indicators that do not add value in
        terms of management or stakeholder decision-making.
•       risks to the organisation’s reputation from increased transparency and honesty would
        have to be carefully managed
•       lack of understanding of the TBLR concept by designated funders/boards.




                     Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   17
4.5        Participants’ recommendations
In summary the main recommendations to the Ministry from participants were that:
•       we should continue to facilitate dialogue between the pilot group agencies as a forum for
        experimental learning and information on best practice
•       this information exchange should be available to other interested central government
        agencies
•       whilst most participants felt we should continue to “take the lead” in promoting TBLR
        within central government, a number felt that overall direction and support for TBLR
        now needed to be co-ordinated by the central agencies, particularly in the light of
        concurrent developments such as “Managing for Outcomes”
•       other recommendations included suggestions that we should:
        – investigate “Full cost accounting and understanding long term impacts; including
           inter-generational equity”
        – provide an environmental performance ‘template’ or guidance notes, in conjunction
           with other relevant agencies, for key internal environmental performance areas such as
           energy efficiency, transport, and waste management
        – provide guidance on the cost effectiveness of TBLR.

Recommendations regarding any future pilot group process were split between those who felt
that overall the balance between theory and discussion was appropriate and those who wanted a
more issue based discussion. Understandably these viewpoints tended to reflect the relative
starting points for the organisations involved.



4.6        Ministry for the Environment’s conclusions
Whilst the pilot group has identified various benefits and challenges, we set out below our
additional conclusions on areas were TBLR may add value or on challenges/barriers.



4.6.1      Has the pilot group met its objectives?

We consider that the central government pilot group has addressed the first four objectives of
the pilot group – to increase participants understanding of TBLR, to provide a forum for
discussion/learning, to facilitate development of TBLRs and to document key issues/challenges.

With regard to drawing conclusions on whether TBLR adds value to reporting in the public
sector, we consider that, although participant’s perceptions that TBLR adds value are
persuasive, a more rigorous case remains to be made based on actual experience.

In assessing whether TBLR ‘adds value’ the question needs to be asked to whom is the value
added attributable? We believe there are three main recipients of potential benefits:
•     a broad stakeholder audience to whom the organisation is accountable
•     the government in its position of ownership interest
•     the agency itself, for the better management of its business.




18         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4.6.2      Is there a broad stakeholder audience for TBLR reporting?

Public sector agencies have a wide and varied array of stakeholders with different needs. As
stated by the Audit Office agencies need flexibility in designing performance evaluation and
reporting that is relevant to its stakeholders needs. Broadly the assumption is that the main
potential audiences for public sector TBLR reporting are:
•       parliament, in particular the select committees
•       local government, community interest groups, Maori, NGOs, professional associations,
        business
•       public sector employees

Whilst it is important that agencies take an individual and flexible approach to identifying their
own stakeholder audience, we are concerned that there may be a tendency to assume such an
audience for TBLR exists, without confirming this interest through prior consultation. It may
be that the central agencies can provide some useful comment/guidance on their understanding
of the needs of parliament/select committees and public sector employees as a whole.

With particular reference to Maori as stakeholders, we consider that TBLR (as extended to
include the cultural dimension) could provide a framework for organisations to consider and
report on the impacts of their activities on government’s outcomes for Maori.
        “Accountability for results for Maori is not well embedded into the system.”
        [Review of the Centre 2001]



4.6.3      Government ownership interest in performance reporting

The government is one of the main audiences for any TBL reporting. Before recent initiatives,
the main elements of performance evaluation and reporting in the public sector have been:
•       financial information driven by a ‘principle’ based NZ GAAP18 approach
•       a focus on non-financial information on outputs produced rather than discussion of
        performance towards the government’s required outcomes
•       isolated examples of reporting non-financial information (driven largely by private sector
        best practice)
•       no alignment between strategic planning and external reporting of performance (although
        this is not as much a case for Crown agencies)
•       a one-year planning timeframe.

The main drive of the “Managing for Outcomes” initiative is to ensure agencies meet the
following four dimensions of the government’s ownership interest:
•       Strategic alignment with government interests, through a switch in focus from the
        achievement of outputs to the ‘management’ of outcomes and a move to report
        performance against strategic objectives over the medium term (three-year horizons)




18
     Generally Accepted Accounting Practice.




                       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   19
•       a focus on the capability needed to manage outcomes. Expressed in terms of people (as a
        resource), financial resources, systems, structures, culture, leadership and relationships19
•       integrity of the public service
•       cost effectiveness over the long run.

We consider that the TBLR concept can potentially enhance these initiatives in the following
specific areas.

Framework for cross agency co-ordination
The “Managing for Outcomes” initiative does not provide agencies encourage agencies to
consider the social, cultural, environmental and economic impacts of their activities on other
whole of government outcomes. For example, in preparing its first Statement of Intent we will
be required to focus on the government’s outcome for the environment. There is no requirement
to strategically consider our impacts on other government outcomes and, hence, no incentive to
consider how we can strategically create synergistic gains for other outcomes. Peer agencies
review our policies for their economic impacts on a case-by-case basis as they are developed.

An example of strategic cross agency co-ordination is the joint initiative by EECA and Housing
NZ to retrofit housing stock with energy conservation technology. This initiative will help both
agencies to synergistically realise environmental and health outcomes.

We, therefore, consider that TBLR has the potential to provide a framework within which
agencies can consider and report on how they can add value across the economic, social,
cultural and environmental bottom lines.

Stakeholder engagement with organisational performance
The “Managing for Outcomes” initiatives focus on the government as the main stakeholder
concerned with performance evaluation, in similar terms to the primacy of the shareholder in the
private sector.

TBLR in the private sector has concurrently been broadening the view of the role that focused
engagement with stakeholders can have in improving performance and particularly in
maintaining the “licence to operate”.

A 1997 interdepartmental working group on defining the four dimensions of government
ownership interests, expressed concerns that there was a missing dimension of ownership:
        “The missing dimension concerns impacts upon, and relationships with,
        stakeholders, customers, communities, iwi and particular publics.”20




19
     Per “Managing for Outcomes: Guidance for departments” August 2002, Steering Group managing for
     Outcomes Roll–out 2003/04.
20
     Taking care of Tomorrow, Today, State Services Commission, 1997.




20         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Central government agencies generally engage with their stakeholders to a much greater degree
than the private sector and report to them through a variety of mediums. However, we believe
that stakeholders are not always clear about how their concerns have been addressed or whether
agencies’ performance is achieving the outcomes that are important to the stakeholders. We
consider that the TBLR approach to stakeholders, with its emphasis on two-way dialogue in
defining and refining performance evaluation, is worth further investigation.

Public sector staff as stakeholders
We consider that one key stakeholder group who would benefit from a TBLR approach in the
public sector are employees. The engagement with staff in a meaningful dialogue concerning
relevant aspects of organisational performance and the public reporting of this process could be
an element in addressing the need, as reported in The Review of the Centre, to a “collective
engagement in organisational decision making”21 by public sector staff.



4.6.4       TBLR within a national sustainable development strategy

One conclusion not included in the final report backs, but agreed on by most participants in the
actual workshops, was the need for agency TBLR to fit underneath any National Sustainable
Development Strategy. This was seen to be driven by:
•       the need for agencies to be able to align the outcomes they are working towards with
        clearly formulated whole of government sustainable development goals/targets
•       the need for reporting on performance against sustainable development goals/targets by
        individual agencies as a part of any evaluation of whole of government’s performance.



4.6.5       Assessing the government’s environmental footprint

The combined central and local government sectors consume approximately one fifth of GDP.
Collectively, central government is the country’s biggest employer, largest landowner, and
consumes significant proportions of resources. It has been estimated by EECA that central
government (including the police, defence force, health, universities, etc) and local government
consume some 2.6 billion KWh of energy per annum and releases 0.6 million tonnes of CO2
equivalents per annum.22

Currently, there is no comprehensive data collection and reporting structure in place for
assessing the overall government’s environmental footprint, as is the case in Australia and
Canada (see Appendix I). There is also no requirement or encouragement of government
agencies to consider their environmental impacts outside the voluntary EECA Energy Wise
Government initiative and similar forthcoming initiatives under the New Zealand Waste
Strategy.




21
     Report of the Advisory Group on the Review of the Centre, November 2001, page 6.
22
     Source EECA internal report GEELP, 2000.




                       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   21
Comparatively, whole of government reporting of human resource capability and performance
on equal employment opportunities/diversity issues is well advanced in the public sector.
However, there is no requirement for reporting of human resources and performance against
equal employment opportunities targets at the entity level.

We consider that there are a number of strong arguments for an assessment of the costs and
benefits of establishing the whole of governments environmental footprint including:
•       the need to lead by example, particularly in relation to meeting national strategies for
        example in the areas of energy efficiency and conservation, waste minimisation and
        climate change
•       meeting our responsibility as a member of the OECD, under the greening governments
        initiative23
•       understanding any element of environmental risk in relation to the management of the
        whole of government.

Whilst not noted directly in the pilot group report backs, this conclusion was fully supported by
the pilot members during the workshop process. However, participants noted that resources
available to the agencies would have to be considered carefully, particularly in the case of an
agency such as Department of Conservation which administers 30% of New Zealand’s land
space.



4.6.6       Benefits to the agency: Environmental and societal risk
            management

Operational risk management and reputational management have been major drivers for the
adoption of TBLR in the private sector, i.e. the use of stakeholder consultation as an early
warning radar for pinpointing and managing environmental and social issues before they result
in costs or damage to reputation.

Whilst this was not a conclusion uniformly supported by the pilot group, we consider that
international developments indicate that there are potential benefits in considering TBLR in
terms of risk management. In taking such an approach we consider that the central agencies
should review the need for guidance for agencies, particularly those with significant
environmental impacts, on suitable models for environmental management systems and a core
set of environmental indicators to be used in reporting.24




23
     A recommendation passed by the OECD Council C(2002)3 lists steps that governments should take to
     “green” procurement. Governments are urged to introduce appropriate policies; establish procedures for
     product identification; provide relevant information and technical support; and, evaluate progress.
24
     Again this is the approach taken or being developed in Canada and Australia (see Appendix I) and also the
     UK where government departments are required to establish environmental management systems.




22          Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4.6.7      Additional considerations

The GRI as a content standard for the public sector?
During the pilot group some participants reviewed the Global Reporting Initiatives (GRI)
guidelines to assess their suitability for use in the production of central government TBLRs (For
an overview of the GRI Content guidelines refer to Appendix II).

The Audit Office commented that “The GRI model of reporting seems aimed at giving those
who mightn’t have one, a social/environmental consciousness – where our public sector
practices (and some of our measurement) are often already quite sophisticated (e.g.,
particularly in the HR policy area)”.

We concur that such human resource practices are well developed in the public sector and
reported on a whole of government level. However, the issue the GRI highlights is the lack of
consistent and comparable reporting of social and environmental information at an entity level.
Whilst it is also true that some of the categories included in the GRI, for example the presence
of child labour or forced labour, do not seem to apply directly to public sector agencies, it is
quite possible that these activities may be present further down an agencies supply chain.

As discussed above in 4.6.5–4.6.6, whilst an environmental conscience may exist in the public
sector, in relation to environmental considerations there is little or no reporting at the agency
level or the whole of government in the New Zealand public sector.

We consider that the GRI, which has been through a long and rigorous international peer review
process, remains a useful starting point for any guidance on additional reporting of social or
environmental information in the public sector.25 The GRI secretariat has confirmed to us that
they are considering the development of a public agency GRI sector guideline in the near future.

Valuing environmental and social externalities
TBLR reflects a move to a broader based concept of public sector performance evaluation that
encompasses financial and non-financial information in both its quantitative and qualitative
forms. However, we consider that further research into developing tools, such as ‘full cost
accounting,26 is required if external costs associated with environmental and social impacts are
to be internalised in financial terms into performance evaluation and decision making systems.

Initially we consider it would be beneficial to focus on, sub-disciplines of “full cost accounting”
such as environmental management accounting,27 which is probably more mature in its
development and practical application.28




25
     Refer also page 14, Report of the Taskforce on Sustainable Development Reporting (2002) Institute of
     Chartered Accountants of New Zealand. “The GRI represents a starting point for the development of
     external reporting and auditing of economic, social and environmental phenomena by entities.”
26
     An approach that seeks to incorporate social and environmental costs into the pricing/management
     accounting systems and, hence, decision making of organisations.
27
     Environmental management accounting seeks to incorporate environmental costs, but does not address
     social externalities.
28
     For example the Victoria EPA and ICAA are jointly working on Environmental Management Accounting
     case studies www.epa.vic.gov.au/programs/ema.asp




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   23
Organisational capability with regard to TBLR
The evaluation of the CAP roll-out29 highlighted concerns regarding public service staff
capability with regard to identifying intervention logic for linking outputs to outcomes and for
assessing organisational capability.

The implementation of TBLR would present even more problems in this area with agency
planning and reporting functions required to acquire skills in bottom lines outside their previous
experience (e.g. environmental and social aspects).

We consider that any initiative to incorporate TBLR or elements of the approach into
performance planning and reporting will require guidance to be developed and for resources to
be made available.

TBLRs and assurance issues
If TBLR is to be integrated into central government reporting requirements then it will be
necessary to address the issue of who gives assurance on the additional information supplied
under TBLRs. Current auditing requirements for central government agencies are fulfilled
through the awarding of audit contracts on a competitive basis to a range of private sector
auditors and Audit New Zealand.

The recent findings of the Taskforce on Sustainable Development Reporting of the Institute of
Chartered Accountants,30 give a clear indication that TBLR is seen to be able to fit within the
structure of New Zealand’s existing accounting principles and auditing guidelines. It
acknowledges that the expansion of information reported in a TBLR will require additional skill
sets from assurance providers, but does not see this as an insurmountable barrier to the
provision of assurance. Hence, the Ministry’s conclusion is that assurance on TBL reports
should be provided under the same competitive tendering model that exists for assurance on
financial and non-financial performance reporting.

Bias to the environmental bottom line
There was a clear weighting to organisations with an environmental focus, which was largely a
result of self-selection or peer pressure. Agencies in the economic and social arenas declined
the chance to join the pilot although many remained in a watching brief.31 Overall this resulted
in a bias in the workshops content to environmental performance reporting rather than social
and cultural considerations.

We consider that for any further work involving TBLR in the public central government sector
it is essential to have the participation of key agencies working in the economic and social
fields.




29
     An Evaluation of the Capability, Accountability and Performance Pilot, Economics & Strategy Group,
     November 2001.
30
     ICANZ (2002) Report of the Taskforce on Sustainable Development Reporting.
31
     Reasons for not participating varied from inadequate resources available; the timing compared to the
     “Managing for Outcomes” roll-out; to doubts about the usefulness of entity level TBLR in central
     government.




24         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Design of future pilot groups
Dependent on the objectives of any future pilot group process, we consider that for maximum
progress relative starting points need to be addressed with potential participants in the design
stage, to ensure there is:
•     clarity at the senior level about what a commitment to TBLR entails
•     participation at a senior level and with an understanding of the organisation’s planning to
      reporting cycle
•     adequate internal resources/potential for organisational buy-in.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   25
5                 Local Government Pilot Group

5.1               Participants
The following eight local authorities participated in this pilot group:
•     Auckland Regional Council
•     Christchurch City Council
•     Hutt City Council
•     Porirua City Council
•     Taupo District Council
•     Waitakere City Council
•     Environment Waikato
•     Wellington City Council.

Local Government New Zealand recommended these local authorities on the basis that they
were interested in considering the triple bottom line/sustainable development and as a group
were broadly representative of local government (i.e. a mix of regional and territorial
authorities, small and large organisations).

Details of workshop content and individual agency feedback are set out in Appendix V (or are
available on request if you have a copy of the summary document only). Below is a summary
of the key points made regarding progress, perceptions of value and of challenges/barriers to
implementing TBLR in local government.



5.2               Participants’ progress
We have attempted to summarise the progress of the various participants in the diagram below.
                            Triple Bottom Line Process Stages
Organisation Senior         Developing     Commitment to Developing     Plan/report Embedding     Comments
             management     organisational investigate/    measures     to be       and looking
             interest       understanding incorporate post and          published to LTCCP
                                           2002            indicators   post-June
                                                                        2002
Auckland                                                                                          Previously using Balanced Scorecard and Excellence Criteria
Regional
Council                                                                                           Committed to Annual Plan 2003/04 & Report 2003/04 to be TBLR

Christchurch                                                                                      Published TBLR Annual Plan 2002/03. Future Reports TBLR basis
City Council                                                                                      Main gains from learning about embedding TBLR in organisation

Hutt City                                                                                         Considering TBLR as part of LT strategy prior to pilot
Council                                                                                           Future TBLR approach to Community Plans and Annual Report

Porirua City                                                                                      Intends to consider TBLR in planning and reporting processes
Council                                                                                           as it develops its LTCCP

Taupo                                                                                             Team established to look at sustainable development thinking
DistrictCouncil                                                                                   in council process, practices and policies

Waitakere City                                                                                    Previously drafting a TBLR Annual Plan 2002/03
Council                                                                                           Reviewing Annual Plan process, TBLR Annual Report 2002/03

Environment                                                                                       Team established to look at sustainable development approach to
Waikato                                                                                           planning and reporting. Now working on indicators

Wellington City                                                                                   Internal TBLR section of 2002/03 Annual Plan
Council                                                                                           Expecting TBLR Annual report 2003/04
Key:
Pre Pilot
Post Pilot


Figure 2:              Relative progress of local government pilot participants




26                Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Two local authorities (Christchurch City and Waitakere City) had or were about to release their
2002/03 Annual Plans on a TBL basis. Porirua is leaving the development of TBLR until it
begins developing its Long Term Community Council Plan (LTCCP). All other councils were
committed to reporting on a TBLR basis or at least integrating TBLR/ sustainability thinking
into their management processes.

Auckland Regional Council: Before the pilot group Auckland Regional Council was focused
on the Malcolm Baldrige Performance Excellence Criteria and the Balanced Scorecard. It is
now committed to amending the balanced scorecard into a sustainability scorecard. In 2002 key
triple bottom line issues for the region will be defined. In 2002/03 the Annual Plan measures
will be reworked in a triple bottom line model. In 2004 the council will report on the 2002/03
year against the triple bottom line model using its sustainability scorecard.

Christchurch City Council: When it joined the pilot group the Christchurch City Council was
already preparing its first Financial Plan and Programme in a triple bottom line format. This
was published in July 2002. Annual reports in the future will report against the triple bottom
line indicators identified in that Plan. The main progress the Council made during the pilot
group was in terms of how to embed triple bottom line thinking within the organisation.

Hutt City Council: Hutt City Council was considering the triple bottom line as part of its long-
term business strategy before the pilot project. Hutt City intends to take a triple bottom line
approach to future community plans and then report against that plan. It is also interested in
developing decision-making tools to assist with consideration of social, economic and
environmental impacts for council activities.

Porirua City Council: Porirua City Council intends to consider incorporating a triple bottom
line approach into their planning and reporting processes. It will start doing this when it
develops a Long Term Council Community Plan.

Taupo District Council: Since being involved in the pilot group the Taupo District Council has
established a team to begin a process of introducing sustainable development thinking into the
council’s processes, practices and policies.

Waitakere City Council: Waitakere City Council was already starting to take a triple bottom
line approach to it draft 2002/03 Annual Plan. It has measures that give an indication of
Waitakere’s sustainability issues and a corporate sustainability section. The Council has
resolved to progress triple bottom line reporting through its planning and reporting processes. It
is now focusing on reviewing the Annual Plan and Report formats to ensure that the way the
information is structured reflects the triple bottom line. Waitakere expects to produce its first
triple bottom line Annual Report for the 2002/03 year.

Environment Waikato: Since participating in the pilot group Environment Waikato has
established a cross council team to work on developing a sustainable development approach to
business planning and actions. They have developed a sustainable development reporting
model for the organisation. They are now considering how to develop indicators that align with
their five corporate goals.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   27
Wellington City Council: Wellington City Council was starting to consider the triple bottom
line concept before the pilot group. It had prepared a concepts paper for the management team
and had approval for development of a triple bottom line implementation plan. The Council
saw the pilot group as an opportunity to take the first steps towards a triple bottom line report in
a supportive environment. A Triple Bottom Line Project Team was appointed in March.
During the pilot group process the team developed a number of documents for review (i.e. why
are we doing TBL?, what will it add?, building buy-in, draft sustainability issues, process for
defining outcome and output measures for strategic objectives). During 2002 the team will
focus on integrating triple bottom line measures with existing indicators and measures. It
envisages that the 2002/03 Annual Report will include a triple bottom line sustainability report
for internal review by councillors and the management team. In the 2003/04 Annual Report it
intends to have a TBL external report (city and corporate). Wellington City Council is also
working on assessment tools for business cases and committee reports.



5.3       Participants’ perceptions of value added
Because of the mixed progress of participants the findings can only be expressed as anticipated/
perceived value added, rather than concrete assessments based on experience of undertaking a
complete TBLR process.

The local authorities which participated in the pilot group considered that taking a triple bottom
line approach to planning and reporting within the local government sector has the potential to
add value; particularly if local authorities build on existing strategic planning processes and
performance measures. Many emphasised that reporting for its own sake is pointless – a triple
bottom line approach needs to be used to drive change in an organisation.

All participants considered that the proposed revisions to the Local Government Act will require
them to report in a triple bottom line format.
        “If local government is charged with creating sustainable communities, then it
        must be prepared to create strategy aimed at such an outcome, and then to
        measure and demonstrate progress towards that.” [Auckland Regional Council]

Some of the main themes on perceived value identified by participants are outlined below.



5.3.1     Broadens existing performance evaluation

Triple Bottom Line Reporting is seen as a tool that broadens existing performance evaluation
and leads to a more balanced set of performance measures. While many local authorities are
already seeking social, economic and environmental outcomes and have some performance
measures in these areas, it was felt by some that the majority of existing performance measures
were financial.
        “The TBL implementation project includes development and integration of new
        TBL performance measures at outcome and output levels.” [Wellington City
        Council]




28        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
5.3.2      Encourages well-rounded decision-making

Taking a triple bottom line approach has the potential to lead to a greater emphasis on well-
rounded decision-making (for example, the consideration of the full costs of activities not just
the financial costs). A triple bottom line approach can initiate the development of decision
making tools which consider economic, environmental, social and cultural impacts (for
example, impact templates for officer reports to council). This will enable decision makers to
be clearer about the economic, social and environmental tradeoffs being made in decision-
making and provides a greater understanding of the conflicts that exist between maximising
social, economic, environmental and cultural performance.
        “TBL is about making good decisions and publishing honest reports.” [Waitakere
        City Council]



5.3.3      Increased accountability and transparency

TBLR was seen to provide greater accountability and transparency, particularly to stakeholders.
        “Communities are increasingly recognising the links between the environment,
        sustainable economic development and the quality of life (health, safety, welfare).
        This raises expectations for information that links between environmental,
        economic and social aspects.” [Environment Waikato]



5.3.4      Focuses organisations on key challenges

        “Current reporting allows broader issues to be considered but doesn’t explicitly
        require them. Also, as councils have such broad involvement it is easy to lose what
        is really important within the current reporting framework. TBL forces the
        question [about what is really important] to be asked and answered.” [Waitakere
        City Council]



5.3.5      Opportunity for alignment of strategic processes

Some participants felt that it provides an opportunity to align operational plans and processes to
the organisation’s vision and strategy, mission and goals. Others considered that the fact that it
initiated cross-organisational teams working together was of great value.
        “Facilitates development of a more relevant and integrated monitoring and
        measurement framework.” [Wellington City Council]



5.3.6      Management performance evaluation

TBLR was seen to provide performance information of use to internal managers for decision-
making (i.e. information they don’t have in current reports or information reported in a way
which assists integrated decision making. For example, TBLR was seen to help make apparent
the links between capability and outcomes).




                     Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   29
5.4        Participants’ perceptions of challenges/barriers
Participants considered that it was too early to assess the costs associated with triple bottom line
reporting. Most are in the early stages of development and haven’t produced a report yet. Some
of the barriers and challenges they foresaw are outlined below.



5.4.1      Political and executive buy-in

Participants emphasised that getting buy-in at political and executive levels is critical if the
triple bottom line is to be embedded in an organisation. Auckland Regional Council
emphasised the importance of leadership because of the amount of change involved. They felt it
was essential for the leader to be committed to sustainability and have the ability to make it
compelling for staff. In some local authorities achieving buy-in at these levels is seen as a
major challenge. There is resistance to the jargon of ‘sustainable development and triple bottom
line’; it is perceived as another fad. In others, politicians are concerned by the potential political
risks associated with increased transparency.
        “Change is a leadership issue. It is about aligning people to a vision and letting
        them know what success is.” [Auckland Regional Council]



5.4.2      Long term gains and short term costs

A barrier to getting buy in for a triple bottom line approach is that it is not an easy process and it
will take time to see the benefits. Participants commented that it is likely to have higher costs in
the short term with many of the benefits occurring in the longer term. This presents a challenge
in a political environment with a three-year electoral cycle.

Many participants considered that significant resourcing was required to educate people and
implement the TBL approach. Staff time is needed to pull a TBLR process together, build
capability and commitment throughout an organisation and develop decision-making tools.
Additional time and resources may also be needed for stakeholder engagement (this is
dependent on the extent of existing mechanisms for stakeholder engagement).



5.4.3      Capability issues

Some local authorities felt they didn’t have enough staff with the right skills for triple bottom
line reporting (i.e. in some regional councils have a lot of scientific expertise but few resource
economists/sociologists). All considered that capability was a significant issue for smaller city
and district councils.



5.4.4      Absence of a sustainable development strategy for New Zealand

Participants considered that the absence of a government strategy outlining the key
sustainability issues for New Zealand and national goals and targets made triple bottom line
reporting for them more challenging and potentially less effective.




30         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
5.4.5      Achieving change within an organisation

Most participants considered that reporting for its own sake was pointless – it needs to be used
to drive change within an organisation. Many felt the real challenge wasn’t in the production of
a triple bottom line report but in achieving real change in the way an organisation does things
(i.e. assessment of projects includes assessment of economic, environmental and social impacts/
environmental units within the organisation working towards social outcomes where relevant).



5.5        Participants’ recommendations
Common themes coming through in the recommendations made by the local authorities
participating in the pilot group were:
        Triple Bottom Line Reporting should continue to be promoted in the local
        government sector.
        The Ministry should continue to facilitate the opportunity for local authorities
        working towards a Triple Bottom Line Report to network and exchange ideas.
        Many wanted to see a continuation of a forum for pilot group participants to meet
        and share progress. They felt that the pilot group process had accelerated
        learning for participants.
        Keep providing practical guidance to local authorities on these issues (some
        wanted to see production of guidance, e.g. a model sustainable development report
        or templates).
        Advocacy at a local authority political level for use of a triple bottom line
        approach is needed.



5.6        Ministry for the Environment’s conclusions
•       We consider that there is value in assisting local authorities to adopt a triple bottom line
        approach to strategic planning and reporting. We also consider that a forum that enables
        a group of local authorities to discuss issues and share ideas with their peers, is an
        effective way of capacity building. Participants considered that the pilot group process
        accelerated learning.
•       While the Local Government Bill does not stipulate triple bottom line reporting as a
        requirement, its purpose will mean that in future triple (or quadruple) bottom line
        reporting will be necessary. The Bill states the purpose of local authorities is to “enable
        local decision making by, and on behalf of, individuals in their communities, to
        democratically promote and action their social, economic, environmental, and cultural
        well being in the present and for the future.” One of the key purposes the Bill is “to
        enable local authorities to play a broad role in promoting the sustainable social,
        economic, environmental and cultural well being of their communities”. Local authorities
        are also required to report annually on their performance. This will involve providing a
        record on the measurable progress that it is making towards achievement of the desired
        environmental, social, cultural and economic outcomes identified in the Long Term
        Council Community Plan.




                     Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   31
•    The local authorities participating were generally well resourced and advocates of
     sustainable development. This will have influenced their views on the value of triple
     bottom line reporting and it is important to balance their findings with recognition of the
     available resources and needs of smaller authorities.
•    Acceptance of a triple bottom line approach is likely to change the way local authorities
     plan, make decisions, organise operational processes and report performance. For some
     pilot group participants it initiated cross- functional teams (including strategic planning
     and reporting staff); the bringing together of different types of performance information
     (economic, environmental and social); consideration of corporate impact; and a greater
     focus on how to achieve integrated thinking in decision making and operational
     processes.
     Internal Affairs and Local Government New Zealand are currently working on how to
     assist with the implementation of the Local Government Act (e.g. developing community
     outcomes, planning and reporting). We need to ensure that these working groups are
     aware of the findings of this report. We also need to ensure that any future initiatives in
     this area are co-ordinated with the efforts of Local Government New Zealand, Audit New
     Zealand and Internal Affairs.
     We consider that there is value in taking a regional approach to promoting a triple bottom
     line approach to planning and reporting. This would help address the resourcing and
     capability issues that are likely to arise for smaller local authorities.
     We consider that in implementing TBLR approach it is critical for local authorities to
     consider existing strategies and plans that outline environmental, social or economic
     issues for the area and existing performance reporting information.
•    Some of pilot group participants are quite advanced in developing assessment tools to
     assist decision makers take account of social, environmental and economic impacts in
     decision making. It would be worthwhile following the progress of this work.




32      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Appendix I: Overview of Overseas Central Government
Initiatives


Australian government sustainable development reporting

Whole of government reporting on sustainable development
One of the purposes of the Environment Protection and Biodiversity Conservation Act 1999
(EPBC Act) is to promote Ecologically Sustainable Development (ESD).32 Environment
Australia must prepare a report on the operation of the Act on an annual basis and a State of the
Environment report every five years.

Entity level reporting on sustainable development
Under Section 516A EPBC Act a Commonwealth organisation is required to include in their
annual report a section detailing its environmental performance and its contribution to
Ecologically Sustainable Development (ESD).           ESD Reporting Guidelines issued by
Environment Australia33 specifically requires organisations to report on the following six items:
•       how the activities of the organisation accord with the principles of ESD34
•       how the administration of legislation by the organisation accorded with the principles of
        ESD
•       how the outcomes specified for the organisation contribute to ESD
•       the effect of the organisation’s activities on the environment35
•       measures taken by the organisation to minimise its impacts
•       mechanisms for reviewing and increasing effectiveness of those measures.



32
     ESD defined as “development that improves the total quality of life, both now and in the future, in a way
     that maintains the ecological processes on which life depends”. National Strategy for Ecologically
     Sustainable Development.
33
     www.ea.gov.au/esd/national/epbc/guidelines/index.html
34
     The five principles of ESD are (EPBC Act Section 3A):
     a. decision-making processes should effectively integrate both long-term and short-term economic,
        environmental, social and equitable considerations
     b. if there are threats of serious or irreversible environmental damage, lack of full scientific certainty
        should not be used as a reason for postponing measures to prevent environmental degradation (the
        ‘precautionary principle’)
     c. the principle of inter-generational equity – that the present generation should ensure that the health,
        diversity and productivity of the environment is maintained or enhanced for the benefit of future
        generations
     d. the conservation of biological diversity and ecological integrity should be a fundamental consideration
        in decision-making.
     e. improved valuation, pricing and incentive mechanisms should be promoted.
     Notably, only the first and last of these relate to the integration and interface of social, economic and
     environmental issues. The middle three principles relate to environmental matters.
35
     In the latest guidance this has been expanded to include an agencies own operational impacts (e.g. office
     activities, vehicles use, etc) however, Environment Australia note that the emphasis remains on the impacts
     of policies or programmes.




                        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   33
The purposes behind public reporting under Section 516A are to:
•       demonstrate the government’s progress in its implementation of ESD
•       complement the government’s support for voluntary public environmental reporting in
        the private sector
•       promote the development of frameworks within which Commonwealth organisations
        integrate environmental, economic and social considerations.

The mandatory nature of these requirements are qualified by Australian Department of Prime
Minister and Cabinet (DPMC) Requirements for Departmental Annual Reports36 (2002)
guidance that given the diversity of agencies and “in line with the principles of CEO
independence, it is for agencies to have regard to their own circumstance in determining how
best to meet ESD reporting requirements”.

The Australian National Audit Office will commence a review of ESD reporting by agencies in
October 2002. The Ministry for the Environment is liasing with the project leader.

Entity reporting in the context of macro societal indicators
The ESD Reporting Guidelines suggest that organisations that wish to develop mechanisms for
assessing whether their activities accord with the principles of ESD may wish to identify, and
report against performance indicators and performance targets. Organisations are referred to the
24 published Headline Sustainability Indicators37 as a source of ideas “around which to
formulate frameworks for establishing their own benchmarks and indicators”.

Sustainable development in governmental operations
Environment Australia ESD reporting guidelines specifically state that annual reports need to
document the effect of the organisations activities on the environment. As well as the effect of
‘external’ activities such as the provision of goods and services; development and
implementation of policies; procurement processes, the guidelines require the organisation to
include their ‘internal’ operations, “for example normal office use of water, paper and energy”.

As well as the reporting initiatives, the Australian federal government also encourages:
•       all departments and agencies to have developed an Environmental Management System
        by December 2002 and to have accredited at least one site by December 2003
•       involvement of all agencies in Green Government procurement initiatives.




36
     www.pmc.gov.au/publications.cfm
37
     www.ea.gov.au/esd/national/indicators/index.html




34          Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
With regard to the reporting of corporate governance and social information, the DPMC
guidance includes the following checklist (abridged):
 Ref     Part of Report                                  Description                                Requirement

 11.1   Report on           Social justice and equity impacts                                      Suggested
        performance

 12.1   Corporate           Statement of the main corporate governance practices in place          Mandatory
        governance
                            Names of the senior executive and their responsibilities               Suggested
                            Senior management committees and their roles                           Suggested
                            Corporate and operational planning and associated performance          Suggested
                            reporting and review
                            Approach adopted to identifying areas of significant financial or      Suggested
                            operational risk and arrangements in place to manage risks
                            Certification of fraud measures in place                               Mandatory
                            Policy and practices on the establishment and maintenance of           Suggested
                            appropriate ethical standards
                            How nature and amount of remuneration for senior executive service     Suggested
                            employees officers is determined

 12.3   Management of       Assessment of effectiveness in managing and developing human           Mandatory
        human resources     resources to achieve departmental objectives
                            Workforce planning, staff turnover and retention                       Suggested
                            Impact and features of certified agreements and AWAs                   Suggested
                            Training and development undertaken and its impact                     Suggested
                            Occupational health and safety performance                             Suggested
                            Productivity gains                                                     Suggested
                            Statistics on staffing                                                 Mandatory
                            Certified agreements and AWAs                                          Mandatory
                            Performance pay                                                        Mandatory

 12.4   Purchasing          Assessment of purchasing against core policies and principles          Mandatory

 14.1   Other information   Occupational health and safety (section 74 of the Occupational         Mandatory
                            Health and Safety (Commonwealth Employment) Act 1991)
                            Freedom of Information (subsection 8(1) of the Freedom of              Mandatory
                            Information Act 1982)
                            Advertising and Market Research (Section 311A of the                   Mandatory
                            Commonwealth Electoral Act 1918)


Conclusions
On balance, the Australian’s have adopted a detailed checklist/content approach to reporting,
that is qualified by allowing department flexibility in assessing the significance of their impacts.
The inclusion of human resources type Social disclosures and environmental disclosures mean
that if an agency followed the guidelines they would be producing a narrow form of TBL
Report. However, from the guidance there does not appear to be much emphasis on the
stakeholder consultation elements of TBLR.

We have not reviewed a significant number of agency reports and therefore can offer no
conclusions about the quality of reports produced to date. The forthcoming audit of reporting
against ESD by ANAO will hopefully provide an overview of the extent to which agencies have
adopted ESD reporting and the barriers encountered.




                      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings       35
Canadian government sustainable development reporting

Whole of government reporting on sustainable development
There is currently no overarching whole of government sustainable development strategy for
Canada, however apparently one is under development. The only reporting requirement at the
whole of government level is annually by the Commissioner of the Environment and
Sustainable Development (the Commissioner).

Entity level reporting on sustainable development
Since a 1995 amendment to the Auditor General Act 28 Canadian federal departments have
been required to prepare sustainable development strategies at least on a three yearly basis.
Subsequently, strategies were published in 1997 and 2001.

The Commissioner has a specific duty to monitor and report annually on the extent to which
departments have met the objectives and implemented plans set out in their sustainable
development strategies.

Progress at 2001
The 2001 Report of the Commissioner of the Environment and Sustainable Development38
made the following observations:
•       annual departmental performance reports should be the primary means by which
        Parliament and others can monitor progress towards sustainable development
•       Canadian Treasury Board Secretariat Guidelines for the preparation of annual
        performance reports that pertain to reporting against sustainable development strategies,
        directed departments to report the following information in a brief half page listing/
        narrative:
        – key goals, objectives, long-term targets
        – performance indicators or performance results measurement strategy
        – targets for the reporting period
        – progress to date
        – corrective actions, if any
        – sources of additional information.

The Commissioner findings were that:
•       departments had met on average only 35% of their commitments
•       only seven departments had followed the Guidelines and four had not reported at all
•       the resultant poor reporting practices inhibited Parliament’s ability to exercise oversight
        and hold departments to account for their performance
•       specific weaknesses in reporting practices were:
        – failure to report against all commitments
        – no supplementary information
        – invalid and outdated referencing



38
     Available at //www.oag-bvg.gc.ca/domino/oag-bvg.nsf/html/environment.html




36         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
        – unreferenced supplementary information
        – vague reporting, that can be easily misconstrued
        – use of acronyms and jargon
        – reporting dates varied
        – focus on activities [outputs] rather than results [outcomes]
        – failure to report on variances
•       whilst a balance between detail and meaningful reporting was required, departments
        exceeded a half page limit and it was necessary to reference supplementary information
•       the Commissioner’s concurrent review of Sustainable Development management systems
        indicated that the existence of a management systems (e.g. modelled on ISO 14000) was
        a prerequisite for good reporting and reliable performance information
•       there was no enforcement of the Guidelines, Canadian Treasury limited its role to
        providing advice and the encouraging innovation by departments.

The Commissioner’s recommendations were that the Privy Council Office needs to ensure
departments were:
•     aware of the priority placed on sustainable development
•     understood their roles, including their obligation to report.

The government’s response was:
•       to revise39 Guidelines to address specific weaknesses, such as focus on outputs rather than
        outcomes, and the amount of space allocated
•       “Recognising the diversity of departmental programs and activities, the revised
        [Treasury] Guidelines also allow for departmental ... discretion on content and format to
        best provide meaningful, results based, performance information. This is particularly
        applicable to horizontal activities such as sustainable development. For example, some
        departments may choose to report their progress within their various business lines, while
        others may choose a discrete reporting format”.40

Entity reporting in the context of macro societal indicators
In June 2002 the Canadian Treasury released Canada’s Performance 200141 a report on the
broad quality of life as measured across four themes and 19 societal indicators used in the
annual government-wide report on performance. The four main themes are:
•     economic opportunities and innovation in Canada
•     the health of Canadians
•     the Canadian environment
•     the strength of Canadian communities.

Treasury guidance encourages individual departments to report their strategic outcomes in the
context of these macro level themes and indicators.



39
     See www.tbs-sct.gc.ca/rma/dpr/01-02/Guidance/guide_e.asp
40
     2001 Report of the Commissioner of the Environment and Sustainable Development.
41
     Available at www.tbs-sct.gc.ca




                       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   37
Sustainable development in governmental operations
Consensual reporting guidelines for a core set of ‘greening government’ indicators have been
developed42 and will result in a whole of government report possibly in 2003. The Canadian
government is the country’s single biggest landowner, vehicle fleet owner, largest single
employer and the largest landlord or owner operator of buildings. The report is seen as an
opportunity to demonstrate leadership by example, model good ‘environmental’ practice and to
highlight the government’s own ownership interests in managing the risks associated with its
impacts.

Individual departments are also expected to report against the indicators in their departmental
performance reports, specifically the 28 departments who prepare sustainable development
strategies and those departments responsible for the majority of the governments own
greenhouse gas emissions. The indicators are biased to environmental performance, rather than
broader sustainability/TBLR indicators.

Conclusions
The content of Canadian entity level reporting is predicated on individual sustainable
development strategies, although there is guidance to report outcomes in the context of the four
quality of life themes. The consensual guidelines for reporting should provide some structure to
the reporting of entity operational environmental performance only.

The Canadian model displays elements of a TBLR processed based approach, in that it is routed
in strategic planning and explicitly broadens entity outcome reporting to meet the quality of life
context. Although no express link has been made between strong sustainability management
systems and quality of reporting.

On balance the Canadians are favouring a flexible principles based approach rather than a
mandatory guidance regime, although the Commissioner is advocating for the benefits of
comparability and consistency under a mandatory guidance approach.




42
     See www.greeninggovernment.gc.ca/indexe.htm, the indicators cover energy efficiency, land management,
      vehicle fleet management, waste, water and wastewater, and human resources.




38           Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Appendix II: Overview of the GRI Content Guidelines


Comparison of a GRI43 Corporate Sustainability Report to central
government reporting equivalents
GRI main heading       GRI sub-heading                           Summarised relevant detail                         Central government reporting equivalents

1    Vision and      Contribution to          Statement of vision and strategy regarding organisations             No requirement
     strategy        sustainable              contribution to sustainable development
                     development
                     CEO statement            Covering key elements of report                                      No requirement – considered best practice

2    Profile of      Organisational profile   Operational structure, scale of organisation (employees number)      No requirement – considered best practice
     organisation
                                              List of stakeholders, their key attributes and relationship to the   Not applicable
                                              organisation

                     Report scope             Boundaries of report and specific limitations, significant changes   Largely covered by NZ GAAP requirements
                                              in size etc, basis of accounting for associated organisations

                     Report profile           Criteria and definitions used; significant changes in measurement Largely covered by NZ GAAP requirements
                                              methods, internal assurance policies and practices; policy current
                                              practice for independent assurance

3    Governance      Structure and                                                                                 Sec 37 PFA 1989 – management statements
     structure and   governance
     management
     systems         Stakeholder              Basis for identification and selection of major stakeholders;        Some consideration of stakeholders is best
                     engagement               approaches to consultation; key issues and concerns; resultant       practice – Audit Office: reporting public sector
                                              use of information                                                   performance

                     Overarching policies                                                                          Policies for risk management is best practice –
                     and management                                                                                Audit Office: reporting public sector
                     systems                                                                                       performance

4    GRI content                              A table identifying the location of each element the GRI report      Not applicable
     index                                    content

5    Performance     Economic                 Impact on customers (net sales, geographic segments)                 All financial reporting specified under Section
     indicators                                                                                                    35 PFA 1989 and NZ GAAP
                                              Impact on suppliers (total purchases by country/region)
                                              Impact on employees (total payroll and benefits by
                                              country/region)
                                              Impact on providers of capital

                                              Impact on public sector (taxes paid, subsidies received,             Economic outcomes and outputs
                                              community donations)

                     Environmental            Materials, energy, water, biodiversity, emissions, effluent, and     No requirement and no central reporting
                                              waste, suppliers
                                              Products and services                                                Linking of outputs to environmental outcomes
                                              Other: compliance; transport                                         No requirement

                     Social                   Labour practices and decent work (including health and safety,       EEO reporting centralised through the State
                                              training, diversity issues)                                          Services Commission
                                              Human rights (including freedom of association, child labour,        No requirements/elements not relevant
                                              indigenous rights, etc)
                                              Society (including community involvement, bribery and                No requirements/elements not relevant
                                              corruption, political donations, etc)
                                              Product responsibility (products and services, advertising,          Linking of outputs to societal outcomes
                                              privacy, etc)




43
     www.globalreporting.org




                                Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings                                             39
Appendix III: Key TBLR Resources and Further Reading


General – New Zealand and Australia

Environment Australia                                                      www.ea.govt.au
      Public Environmental Reporting (under revision)
ICANZ Sustainability Working Group                                         www.deloitte.co.nz
    Email news list and monthly meetings
Institute of Chartered Accountants in Australia                            www.icaa.org.au/tbl
       TBL special interest group
Manaaki Whenua Landcare Research                                           www.landcare.cri.nz
     Award winning TBL report
NZ Business Council for Sustainable Development                            www.nzbcsd.org.nz
     SDR project and SD reporting guide
Redesigning Resources                                      www.redesigningresources.org
     Case studies eight New Zealand and Australian companies
Sustainability Reporter                                                    www.sirisdata.com
      Web-based proforma sustainability reporting tool
TBL Victoria                                                               www.ethyka.com.au
     Scoping study, February 2002
Victoria EPA                                                               www.epa.vic.gov.au
      Environmental management accounting project



General – international

ACCA UK                                                                    www.accaglobal.com
    UK sustainability reporting awards
Federation des experts Compatables Europeens                               www.fee.be
      Environmental reporting, assurance in SD reports
Forum for the Future                                                       www.forumforthefuture.org.uk
     Environmental accounting case studies
Global Reporting Initiative                                                www.globalreporting.org
     2002 sustainability reporting guidelines
International Network for Environmental Management                         www.inem.org
      Sustainability reporting guide
Institute of Social and Ethical Accountability                             www.accountability.org.uk
       AA1000 standard (under revision)
New Economics Foundation UK                                                www.neweconomics.org
     Social auditing and corporate social responsibility
Project Sigma                                                    www.projectsigma.com
      Guidelines to facilitate the management of sustainability issues




40       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
SustainAbility                                                            www.sustainability.com
      Global reporters 2002 (due November 2002)
Tomorrow Magazine (WBCSD associated)                      www.tomorrow-web.com
     Links to corporate SDR reports and TBLR/SDR articles
World CSR.com                                                             www.worldcsr.com
     Gateway to various CSR initiatives
World Business Council for Sustainable Development                        www.wbcsd.ch
     SDR project



Central government resources

Australian Greening Government Initiative                 www.ea.gov.au/industry/sustainable/
                                                          greening-govt/tools.html
Environment Australia                                     www.ea.gov.au/esd/national/epbc/guidelines
      Guidance on ESD reporting
Canadian Commissioner for the Environment                 www.oag-bvg.gc.ca/domino/oag-bvg.nsf/
                                                          html/environment.html
Canadian Greening Government Initiative                   www.ec.gc.ca/grngvt/guide.html
Canadian Treasury Board Secretariat                       www.tbs-sct.gc.ca/rma/dpr/01-02/Guidance/
     Guidance on SD Reporting                             guide_e.asp
UK Greening Government Initiative                         www.sustainable-development.gov.uk/sdig



Local authority resources

Audit Commission UK                                                       www.audit-commission.gov.uk
      Quality of life indicators
Australian National Office of Local Government                            www.dotars.gov.au/nolg
      Details environmental initiatives, Local Agenda 21
Christchurch City Council                                                 www.ccc.govt.nz
      Triple Bottom Line Financial Plan 2003
International Council for Local Environmental Initiatives    www.iclei.org/anz/tbl
      International environment agency for local governments




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   41
Further reading
Bebbington J et al. 2001. Full Cost Accounting: An Agenda for Action. ACCA, UK.
Controller and Auditor-General. 2001. Reporting Public Sector Performance. Report of the Controller
and Auditor General.
Davenport E. 2001. Filling in the Gaps – Options for Developing Social and Ethical Reporting in a
Triple Bottom Line Framework. Social Audit New Zealand.
Elkington J. 1997. Cannibals with Forks – the Triple Bottom Line of 21st century Business. Capstone
Publishing, Oxford, UK.
Gilkinson B, KPMG. 1999. Accounting for a Clean Green Environment. KPMG.
Goldberg E. 2001. Profit, People, Planet: Policy issues and options around Triple Bottom Line
Reporting. Ministry for the Environment, Wellington.
Gray R, Milne M. 2002. Sustainability reporting: Who’s kidding Whom? William Evans Fellowship,
University of Otago (also reprinted ICANZ Charted Accountants Journal).
Henderson D. 2001. Misguided Virtue: False notions of corporate social responsibility. NZBR.
Howes R. 2002. Environmental Accounting: An introduction and practical guide. CIMA/Forum for the
Future.




42        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Appendix IV: Central Government Pilot Group Detail


What was covered during the workshops?

Introductory session
Attended by the final pilot group participants plus representatives from the State Services
Commission and Treasury.

Concerns expressed by the State Services Commission that the pilot will cover ground already
ably covered by the CAP and Pathfinder initiatives. Concerns expressed by Treasury of the
need to balance any perceived costs with proposed benefits of a TBLR approach.

The workshops covered the following:
        Workshop One                           Workshop Two                              Workshop Three

 Discussions of buy in             Agency report back on progress and          Agency report back on progress and
                                   issues                                      issues

 Why prepare a TBLR? What          Issues arising:                             Ministry for the Environment
 are the perceived benefits?                                                   presentation and discussion of draft
                                   •   Integration with current practices      operational environmental
                                       and new outcomes initiatives            performance indicators for its own
                                   •   Process issues – e.g. templates         TBLR

                                   •   Context of short-medium term
                                       political timeframes

 Who are the stakeholders?         Planning session – developing specific      Best practice reporting contents and
                                   objectives underpinning policy              guidelines
                                   statements

 Key issues and how they can       Discussion on how TBLR can add value        Summary of lessons learnt:
 be resolved?
                                                                               •   Expectations versus realities
 •   Maintaining a social focus
                                                                               •   Value of TBLR to the organisation
 •   Breadth of stakeholders
                                                                               •   Barriers/hurdles
 •   Ministers as stakeholders
                                                                               •   Value of TBLR for the public sector
 •   Drawbacks to TBLR

 Integration with existing         Update on NZ Sustainable Development        Measurement process
 reporting                         Strategy and discussion on content of
                                   Pilot Group write up

 Proposed key performance          Review overseas experience in               Where to from here?
 areas/ scope of TBLR              sustainable development reporting in
                                   UK, Australia and Canada

                                   Implementation of TBLR – best practice




                         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings           43
Issues arising from individual meetings
In between the workshops URS met with individual organisations. Issues arising included:
•     a small number of participants had little awareness of the content of their existing
      accountability and strategic reporting mechanisms and for the need for any TBLR to be
      closely aligned with these
•     there was some evidence of a rush to indicators without adequate definition of the
      objectives requiring measurement
•     varying approaches to the scope of the TBLR were evident with some focussing on
      internal operational performance. There was some confusion over the applicability of the
      TBLR concept to external performance.



TBLR process model – central government

Basic framework used by URS New Zealand to assist organisations prepare TBLRs

1     Define scope for reporting:
      •     internal (e.g. human resources, waste management, office energy efficiency,
            Ministerial advice, statute management)
      •     external (economic, environmental and social outcomes).
2     Define Key Performance Areas (KPAs)
      •     Internal and external – based on report scope
3     Identify key stakeholders – what is important to them
4     Define methodology – including stakeholder dialogue – importance of ‘buy-in’
5     Prepare scoping report
      •     Why – anticipated benefits
      •     What – the report will cover
      •     How – the report will be prepared
6     Carry out stakeholder dialogue – ongoing
7     Develop for each KPA:
      •    Strategy
      •    Policy
      •    Specific measurable objectives
      •    Procedures and behaviours need to meet objectives
      •    Process for checking
8     Identify information/data requirements
9     Report
      •    Use ‘best practice’ checklists – for example GRI
      •    Clear statement of commitment and progress towards these – for each KPA
10    Integrate behaviours, procedures.




44       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Central government pilot group write ups

Antarctica New Zealand

Report

Organisational background
Antarctica New Zealand is a Crown Entity, which was established on 1 July 1996 under the
New Zealand Antarctic Institute (NZAI) Act, to develop, manage and execute New Zealand
activities in respect of Antarctica and the Southern Ocean. It has a Board of six directors, a core
staffing in Christchurch of 22, and a temporary staffing in Antarctica of between 10 and 50
depending on time of year and level of activity. The Institute is located at the International
Antarctic Centre in Christchurch and at Scott Base in Antarctica.

Our vision is: Antarctica: refreshing global ecosystems and the human spirit. Our focus is on:
•     ensuring safe, effective and efficient operation of Scott Base and provision of services to
      support New Zealand activities in Antarctica
•     facilitating and managing high quality science
•     environmental stewardship
•     enhancing awareness of New Zealand’s interests in Antarctica and the importance of
      Antarctica in a global context
•     development of appropriate frameworks for private sector involvement in New Zealand’s
      Antarctic related activities.

Antarctica New Zealand has assessed the key influences on the future of the region, and the
values associated with Antarctica and the Southern Ocean that should drive Antarctica New
Zealand’s activities as:
•     Influences:
      – Scientific awareness of the importance of the Antarctic and Southern Ocean in the
         global environment
      – Enhanced appreciation of environmental values
      – Global warming and global environmental degradation
      – The effectiveness of the Antarctic Treaty System
      – Pressures for resource extraction from increases in the world’s population
      – Technology development allowing easier access and habitation
      – Interest in ‘different’ tourism destinations.
•     Values:
      – A unique environment for scientific research to enhance understanding of the global
        environment
      – A pristine environment
      – Ecosystem integrity
      – Intrinsic value which is not linked to extractive use
      – Exploration and discovery
      – Essential importance in the health of the global environment
      – An internationally accessible reserve devoted to peace and science.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   45
Antarctica New Zealand has a strong commitment to:
•     the strategic importance of Antarctica and the Southern Ocean to New Zealand
•     the valuable contribution that Antarctic science can make to the international scientific
      knowledge base and understanding of Antarctic and global ecosystems and processes
•     New Zealand’s influence in the future management of Antarctica and the Southern
      Ocean, and the importance of taking the opportunity to ensure human interaction
      develops in a way that is environmentally sustainable and recognises the values of the
      Antarctic region
•     the responsibility of Antarctica New Zealand as the dedicated government Antarctic
      agency to focus New Zealand’s efforts on the advancement of knowledge, appreciation
      and conservation of the Antarctic region for present and future generations of New
      Zealanders, as well as on efficient and effective provision of logistics and facilities in
      Antarctica.

Why Triple Bottom Line Reporting
Antarctica New Zealand’s vision is – Antarctica: refreshing global ecosystems and the human
spirit. It’s mission is: advancing knowledge, appreciation and conservation of Antarctica and
the Southern Ocean for the benefit of New Zealand and the world community through
leadership, partnership and involvement in high quality Antarctic-related activities.

Antarctica New Zealand has a commitment to best practice in its activities in Antarctica and has
introduced and implemented an environmental monitoring programme for Scott Base and for
New Zealand’s activities in the Ross Sea region. It is important therefore, that within the scope
of the organisation’s vision, mission and goals, the practices that are followed in Antarctica
should be similarly developed and followed in the Christchurch office, and that staff who are
encouraged to adopt a model of sustainability and responsibility in Antarctica should make it a
part of their work environment in Christchurch as well.

Antarctica New Zealand decided to participate in the pilot group for the following reasons:
•     It was interested in an organisational TBLR benchmark.
•     It has already made a commitment to a sustainable and responsible model in Antarctica.
•     It believes that TBLR or a balanced score card will become a ‘norm’ within the state
      sector and wishes to be part of the initial discovery process.

Progress to 30 June 2002
Antarctica New Zealand has established a core group to lead the organisation in the
development of TBLR. It has the support of the senior management team. It has written its
intention into the Strategic Plan (2002/2003) and also into the Statement of Intent (2002/2003).
The organisation intends taking small steps by identifying areas for development. The annual
report 2002 will state that the organisation has agreed on a process for the introduction of TBLR
and will outline the steps taken to date and what it intends to do. This will include expanding
the reporting requirements into areas of sustainability and responsibility in addition to
financial/economic reporting.




46       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Where should the emphasis lie?
Antarctica New Zealand sees TBLR as giving equal emphasis to the notion of sustainable
management through social, economic and environmental processes, and through the spirituality
of its vision particularly in the arts and education programme.

Responsibilities and steps from here

•     Environmental monitoring (internal)
      – Use of company car
      – Travel, both domestic and international
      – Recycling (e.g. paper, glass, etc)
      – Ergonomics
      – Use of energy (e.g. heat and light)

•     Staff management – good employer
      – Human health
      – Workplace health and safety
      – Appropriate levels of staffing
      – Working conditions
      – Professional development
      – Climate surveys

•     Stakeholder management:
      – Networking and communications
      – Relationship development
      – Level and methods of information provision
      – Biannual surveys and follow-up action
      – Science programme (see science stakeholders)

•     Community profile:
      – Good corporate citizen
      – Working and networking locally and internationally
      – Being an inspirational and innovative organisation
      – Taking responsibility for the agency and community leadership


Working with specific stakeholders – two examples

Science stakeholders
•     Process for science proposals:
      – Submissions/proposals are sent to Antarctica New Zealand by scientists/researchers.
      – They are assessed by a committee organised by Antarctica New Zealand (ARC).
      – Proposals are then sent for peer review and are ranked.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   47
     – The ARC meets again and does its own ranking. At this point proposers may be
       requestioned about parts of their proposals that require further elaboration before the
       final decision is made. The ARC ranking is then compared with the peer review
       ranking, and a benchmark set for the season.
     – The list of proposed projects is sent to the AntNZ Board for ratification.

•    Measuring success:
     – Number of ‘science’ or related publications
     – What level of publication (e.g. ‘Science’ or ‘Nature’ journals are highly valued)
     – International connections
     – Seminars – where researchers present their findings
     – Companion document to Annual Report
     – Bibliography on the AntNZ website

•    Issues:
     – Publications very focused on science community.
     – Difficult to attract national media interest.
     – No science television programmes, national radio science/environmental programmes
        timed for Sunday afternoon.
     – Competition with other science which may be perceived as more important (e.g.
        medical research, genetic engineering etc).

Artists programme

•    Process for applications:
     – Applications are distributed through identified networks to arts groups, individuals,
        galleries, museums, previous Antarctic Arts Fellows, Creative New Zealand, arts
        media writers etc.
     – Applications are shortlisted within Antarctica NZ based on application criteria,
        excluding peer review.
     – Shortlisted applications are sent for peer review through Creative NZ, and to the
        Antarctica NZ selection panel which includes two former Antarctic Arts Fellows.
     – The full list of applicants is also sent out to ensure that the best selection is made.
     – Two artists are usually selected.

•    Measuring success:
     – Profile of the artists
     – The art output, short, medium and long term
     – Networking with other Antarctic Arts Fellows
     – Ability to act as ambassadors for the New Zealand Antarctic programme
     – Media coverage
     – Building an art collection for Antarctica New Zealand




48      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
•     Issues:
      – Ensuring the quality of artists is maintained.
      – Maintaining the partnership between Antarctica New Zealand and Creative New
         Zealand.
      – Keeping the profile of the programme in front of the public.


Lessons learnt during pilot process
Antarctica New Zealand sees the pilot process as valuable in terms of observing progress made
by contributing agencies, assessing our progress against the other agencies and looking at
potential opportunities and problems. The value is in being involved, and being able to
participate in group discussion with other agencies.

It is apparent that some contributing agencies have made more progress than others, that some
agencies have identified funds set aside for TBLR establishment. Antarctica New Zealand sees
benefits in establishing an ongoing networking opportunity with agencies who are part of the
pilot programme that have something in common with us (e.g. ERMA, MfE etc).

Expectations vs realities to date
Preparing a Triple Bottom Line Report is not something that happens ‘in writing’ only. The
acceptance of the ‘sustainability’ model has to occur throughout the organisation and with key
stakeholders. Therefore some major work is required through relationship management and
staff interactions. ‘Walking the talk.’

Potential for change
Antarctica New Zealand is in the fortunate position of having already introduced strong
environmental measures in Antarctica and at our base there which reduces the introduction to
the notion of sustainability, environmental management and social responsibility. What we
want to do is use the model we have established at Scott Base to create a similar environment in
our Christchurch office and with our staff. That is the potential for change.

Potential barriers
•     Costs to collate and report on useful information.
•     Costs relating to staff time compared with dollars.
•     Working as a team.
•     Understanding our organisation.

Recommendations to MfE
•     MfE should encourage government departments and Crown entities to embrace triple
      bottom line reporting as part of their annual planning and reporting cycle.
•     MfE should take the lead and use the organisations that have participated in the pilot
      project as models for other agencies.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   49
•     A network of agencies can be established to work on issues and problems and to look at
      developing a consistent model (in print, or via a website) that can be used.
•     The network can be established in a similar way to E-govt with an appropriate level of
      government funding to ensure that the model is scoped and developed to the fullest
      extent.

Audit Office

Triple Bottom Line Pilot Group Report Back
20 June 2002

Our background and reasons for participating
The Audit Office is an office of Parliament, with approximately 280 staff, which conducts, or
contracts private sector audit firms for, the annual audits of all public entities. We also conduct
10–12 “performance audits” a year, and produce a significant amount of reporting and advice on
a sectoral or issue basis, related to public sector management and accountability, either for
Parliamentary select committees or for general audiences.

We therefore have a very significant interest in the question of what and how public entities
report on their performance to external stakeholders, and our views are influential in the
development of public sector reporting.

Also, over the last 2½ years we have been putting considerable part-time effort into considering
how to measure our own performance, because we want to “practise what we preach”. We have
approached this pilot exercise as a further useful device in this initiative, because we have a core
interest in the improvement of public sector reporting – it is one of our primary concerns.

So, we are both participants to help improve our own reporting, and keenly interested observers
as guardians of public sector accountability.

How this pilot exercise has helped us
•     It has reminded us that our impacts are both short and long term, internal and external,
      and may have social, environmental and economic dimensions.
•     It has served as a useful cross-check on our current ways of setting and measuring
      achievement of objectives, and in particular has helped the following developments:
•     Having revisited the question of relationships with our stakeholders we are now considering:
      – how we should relate to ratepayers and taxpayers
      – whether and how to involve major stakeholders in development of our reporting
      – it has made us consider the question of managing and measuring our credibility (and
        the contributing factors of independence and competence) more explicitly
      – it has made us aware that we do not know what our direct impact on the environment
        is. As a white-collar bureaucracy, we don’t have a major “environmental footprint”,
        but are energy and renewable resource users and wasters. We welcome MfE’s offer to
        give us a template for assessing (and benchmarking) our environmental impact
      – it has reminded us that we need to map more thoroughly the other influencers on our
        overall desired outcome (of “Parliamentary and public confidence in the financial
        integrity of the system”).




50        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
What we are going to do with this
We will use the triple bottom line “lens” to add a new perspective on what we do, measure and
report.

We will integrate the learnings above into our existing initiatives to improve the measurement
and reporting of our performance, over the next two years or so, by setting up development
projects on the following (in parallel with existing projects on the measurement and reporting of
our outcomes, capability and risk):
•     Stakeholder involvement, particularly ratepayers and taxpayers, in setting objectives and
      developing our reporting.
•     Measuring our credibility.
•     Measuring our “environmental footprint”, using the MfE template.
•     Mapping major influences on our major outcomes.

What barriers there are to further implementation?
The only significant barrier we see for ourselves is time and resources – in a smallish agency,
80% of which is in a competitive market, only limited effort can be devoted to this sort of
development. Some form of ongoing information exchange fostered by MfE or central agencies
would be very helpful to us and other smaller agencies in this respect.

What the pilot exercise has not yet helped us with, and where further work might
be considered
•     Getting a better handle on long-term impacts, including intergenerational equity.
•     On a related matter, doing some work on the development of “full cost accounting”.

How this exercise seems to have helped other agencies involved
It seems to have given some agencies a framework for doing some important work on outcome
measurement, in particular intervention logic modelling.

Other observations
The GRI model of reporting seems aimed at giving those who mightn’t have one a
social/environmental consciousness – where our public sector practices (and some of our
measurement) are often already quite sophisticated (e.g., particularly in the HR policy area).

KPIs look at risk of staying suspiciously close to just being output indicators.

TBLR (or SDR) is not as comprehensive a concept as our “Reporting Public Sector
Performance” framework. It seems strong on outcomes, strategies, processes and inputs (and
perhaps outputs?). It is light on states of the world, risk and capability.

At some stage, the Audit Office will have to consider and possibly develop assurance processes.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   51
Department of Conservation

Background of your organisation, size and characteristics (e.g. policy agency)
The Department of Conservation is the leading central government agency responsible for the
conservation of New Zealand’s natural and historic heritage. Its legislative mandate is the
Conservation Act 1987 and other key statutes such as the National Parks Act and Reserves Act.
Like other government department’s, the Department has the responsibility to advise Ministers
and the Government and to implement government policy.

The Department’s mission is “To conserve New Zealand’s natural and historic heritage for all to
enjoy now and in the future.” The Department’s vision is “New Zealand’s natural and historic
heritage is protected; people enjoy it and are involved with the Department in its conservation”.

The nature of the Department’s work means that structurally it is decentralised and operates a
far-flung network of offices. The Department manages almost one third of New Zealand’s
landmass: about eight million ha held in 14 national parks, 20 conservation parks and about
3500 reserves and other categories of protected land. In the marine environment, the
Department manages almost 7% of the territorial sea (less than 1% of the area within the
Exclusive Economic Zone): 1.1 million ha have some form of protection in 16 marine reserves,
two marine mammal sanctuaries, two marine parks and one specially protected area.

The Department has nearly 1500 permanent staff, and employs a large number of temporary and
seasonal staff and contractors. Thirteen conservancies are located throughout New Zealand.
Their main role is to ensure quality conservation management. Each conservancy has several
area offices that deliver conservation outputs. Three regional offices are tasked with continuous
quality improvement. The Department’s Head Office, based in Wellington, develops national
policies, provides leadership, and national service and support functions.

Why your organisation is considering TBLR and why it decided to participate the
pilot group
The Department is currently phasing in, over the next two reporting cycles, major improvements
to our measuring and reporting system. The new performance and measuring system will
support good judgment and decision making at all levels, enabling an improvement in
organisational performance. It will report on the value delivered and outcomes, enabling
effective communication with external agencies and staff so that performance is demonstrated to
all stakeholders.

Our involvement with the pilot group was to learn more about TBLR and to gauge the level of
change that might be required to our new measuring and reporting system to enable a TBLR
report to be introduced into our system.

Where your organisation will have got to with TBLR by 30 June (e.g. got buy-in
from executive, completed scoping report, produced first triple bottom line report)
The involvement in the pilot was agreed to by the Director General and the division responsible
for the Business System the General Manager, Business Management and his Manager Business
Systems represented the department in the pilot.

A briefing on TBLR was provided to the full general management team at the conclusion of the
pilot by the consultants. The department will not be providing a TBLR for the 2001/02 year.




52       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Whether or not your organisation intends to keep progressing TBLR (if so,
responsibilities and steps from here)
The department will be continuing to slowly progress TBLR with the next step being the
identification of our internal environmental footprint along with targets for improvement. The
responsibilities will continue to be addressed by the Business Management division.

Key lessons learnt during pilot group process
The key lesson we have learnt during the pilot group process is that there is too much focus on
the TBL report itself, instead of the process of implementing TBLR. The TBL report is an
annual report. However, it will take years to develop the processes/system to implement the
TBLR. The more you think about the processes and the difficulties/risks you will face in the
processes, the more chance you will have to succeed in the implementation and the end result,
the report itself.

Secondly, TBLR is not business itself. It is a methodology and concept to improve business. If
we don’t integrate the TBLR concept into the continuous business improvement, it will suffer
from lack of buy-in by the management and the whole organisation. TBLR should not be
treated as a project to introduce new jargons. Instead, it should be treated as an ongoing process
to improve business to achieve better outcomes.

TBLR is about having better economic, environmental and social performance. However, these
performance areas are not equal to an organisation. We need to balance our performance in all
these areas but we can’t forget what the core business of our organisation is. We still need to
prioritise our resources to deliver our core business.

Another lesson we have learnt is that we need to spend more time to develop the right measures
to measure the performance. If we can’t get the measures right, we never get the right results.
We also need to develop the tools to collect the data for those measures. We won’t have
accurate report without right data for right measures.

Expectations vs realities of preparing a TBLR to date
The department would not be in a position to seriously consider TBLR as part of our formal
reporting until at least 2004/05. However we are in a position where we believe we can identify
our internal environmental footprint and we will endeavour to do this in the 2002/03 year. Once
this is established it will allow for targets to be set for improvement and form a basis to moving
toward a full TBLR approach.

There is still a lot of work that would need to be carried out before TBLR could be considered
for the department. This is due mainly because of our size, the environmental nature of our core
business and the decentralised and dispersed nature of our business.

Observed or proposed future organisational changes as a result of TBLR (if too
early, what do they see as the potential for change)
There is no proposed or observed organisational change required as a result of TBLR, if there
was then this would be a significant barrier to change. The issue will be more about the type of
data required to provide robust information for the TBLR reporting requirements. It is
expected, but not yet confirmed, that the existing sets of information required for reporting on
the management of the business would be used and suitable for TBLR.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   53
Perspective on value of TBLR for your organisation. Potential costs and benefits
of preparing a TBLR (see below for some ideas).
The expectation is that once we have our environmental footprint confirmed that there will be
benefits to the department that will accrue through our target setting and achievement. Overall
it is expected that the costs will be shifts of cost rather than new costs and the benefits will be
measurable, quantifiable and greater than any change of cost. The jury will be out on this until
the initial internal measures are in place and have been tested and proven over at least two
reporting cycles.

Barriers to implementing TBL
The main barriers if there are any will be the need to change what we measure to get the data.
The wider environmental benefits that we provide to society in general are going to be harder to
quantify, but this is also an area where we are already working with the International Union of
Conservation Nations (IUCN) and the International Parks Strategic Partners (IPSP) group in
Australia.

Perspective of value of TBLR for local authorities/government entities. What does
it add to existing reporting?
We discussed this briefly at the end of the presentation to our general management team by the
consultants. The department sees considerable value in being able to identify our internal
environmental footprint and then being able to report to staff and other stakeholders how we are
improving our position.

Once we have a robust method for determining the wider societal benefits then we will be well
placed to demonstrate the value that we provide from our core conservation business. This will
be a significant and defining report once available.

Recommendations to MfE on whether it should continue promoting TBLR in the
public sector, and if so, how?
We are pleased to see MfE leading by example and look forward to their first TBLR. As we see
it there is an ongoing role for MfE in promoting TBLR and in providing a forum for best
practice and discussion. The initial pilot members are all at different points with TBLR and
there would be significant advantage in getting regular feedback (maybe once every three
months) from the group members on the progress that they have made.

The Department encourages MfE to continue with a further TBLR pilot next financial year and
we will continue to be involved if invited.




54       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Energy Efficiency and Conservation Authority

Triple Bottom Line Reporting Case Study Report to the Ministry for the
Environment
The purpose of this paper is to provide feedback to the Ministry for the Environment (MfE)
from the Energy Efficiency and Conservation Authority (EECA) as a requirement of
participation in the central government pilot group to consider to adoption of Triple Bottom
Line Reporting (TBLR) within the public sector.

The aim of the MfE pilot group is to establish best practice in developing TBLR for government
entities.

The EECA board are familiar with the fundamentals of TBLR and has expressed an interest in
adopting TBLR into EECA. They requested further information regarding the implications of
this from the management team, which participation in the MfE pilot group has provided an
opportunity for EECA to further investigate.

This paper is written in conjunction with a more detailed scoping report currently being drafted
by EECA, for consideration by the Authority. The scoping report will define key performance
areas and indicators of EECA. There is a need to identify the relationship between internal and
external performance areas indicators and how these are measured and reported.

A main focus for EECA has been to determine the value and implications of implementing a
Sustainable Development Reporting (SDR) framework (EECA will adopt the notion of SDR as
it is more explicitly related to sustainable development principles and EECA’s goals). This
focus includes how the framework will enhance the ability of EECA to increase organisational
leverage in influencing the activities of key stakeholders to achieve energy efficiency and
renewable energy objectives. EECA has focused on identifying how a SDR framework will
capture and integrate current monitoring and reporting procedures.

EECA background
EECA is an independent government agency with a mandate from the Energy Efficiency and
Conservation Act 2000 to “encourage, promote, and support energy efficiency, energy
conservation, and the use of renewable sources of energy” (s 21).

EECA is committed to achieving a number of environmental, social and economic goals by
facilitating the implementation of the National Energy Efficiency and Conservation Strategy
(the Strategy), (released in September 2001). These relate to a:
•       continuing improvement in New Zealand’s energy efficiency, and
•       a progressive transition to renewable sources of energy.

Under the Strategy, Five Action Plans provide a framework to implement The Strategy, aiming
to address barriers to energy efficiency and the uptake of renewable energy sources and meet
specific needs of the Government/Local Government, Energy Supply, Industry, Building and
Appliances and Transport sectors.

Approximately 45 staff support EECA in achieving these aims (located in Wellington,
Christchurch and Auckland) with a strong operational function in the energy supply, industry,
buildings and appliances and transport sectors as well as providing operationally informed
policy advice and using communications to foster greater uptake of the Strategy.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   55
A key component of the Strategy is the need to monitor the effectiveness and achievement of its
objectives through performance measurement.          A number of economic, social and
environmental measures that can be tracked have already been identified. These initial
measures are likely to be the basis for EECA’s external performance areas within a SDR
framework. Significant work is currently being undertaken to create an integrated driving
forces, state, response system of project planning, evaluation, and monitoring which is
anticipated to feed into the SDR framework.

Why is EECA considering SDR?
An important business principle of EECA is to maximise leverage resulting from EECA policy
and operational influence. This includes seeking opportunities to present the benefits of energy
efficiency and renewable energy forms to stakeholders. SDR provides an opportunity for
EECA to increase influence and exert a strong leadership role in moving towards sustainable
development. This is consistent with an increasing need for central government to be seen as
“walking the talk” – operating in a way consistent with the policies they implement.

EECA is considering SDR as a result of government recognition that is would like SDR
incorporated in departmental and Crown Agency reporting. Further the EECA Board has stated
that it would like to see SDR implemented and has requested management to investigate the
implications of this.

EECA considers that SDR could provide a framework to integrate and focus current monitoring
and reporting procedures. Furthermore, within EECA SDR could:
•     align measurement and reporting with EECA’s Strategic Business Development and
      Management Principles (May 2002)
•     focus on optimising additional areas of EECA’s performance
•     provide flexibility in reporting to different stakeholders and different needs and
      expectations
•     facilitate stakeholder (internal and external) engagement (adding value to and creating
      relationships to achieve EECA objectives)
•     change behaviour to move towards environmental, social and economic sustainability
      consistent with sustainable development (this is a significant objective of the
      Central/Local Government Strategy Action Plan)
•     reveal the wider impact of EECA activities and the Strategy policies.

The principles of SDR will be fed through to decisions made by individual staff. SDR can help
demonstrate that EECA minimises negative environmental impacts and consider the
expectations of society.

Progress report
By the 30 June 2002 made initial progress on a Sustainable Development Reporting (SDR) in
the form of a briefing report produced for the EECA Board.

EECA expects to implement an initial SDR framework in 2002/2003 financial year as a trial
run. A successful trial period is expected to lead into a comprehensive SDR framework being
implemented in the 2003/2004 financial year.




56       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
By 31 July 2002 a working group will be established within EECA to develop a work plan to
implement a SDR framework and to seek organisational buy-in. This includes gaining an
organisational understanding of the principles of SDR.

Furthermore (ongoing) EECA actions contributing to SDR include:
•     the development of an EECA stakeholder profile and a relationship management plan,
      internal policy formulation (including social, economic and environmental objectives,
      methods/procedures)
•     development of an integrated internal pressure-state-response project planning,
      evaluation, and monitoring framework
•     development of a project risk management assessment template.

Plans for the future
EECA is committed to progressing SDR and to identify the linkages with current project
measurement and reporting procedures and internal policy formulation and influences affecting
these relationships.

EECA plans to work with MfE to determine EECA’s role in the provision of central
government guidance to the public sector on SDR. This relates to areas of expertise such as in-
house energy efficiency and transport which will result in maximising EECA’s influence and
leverage and provide an opportunity to demonstrate leadership.

EECA will need to clearly detail the relationship between measures in the Strategy and SDR by
understanding a number of actions, including the following:
•     refine project quantifiable and qualifiable success measures
•     determine information requirements of a SDR system
•     design and build measurement systems
•     implement and review measures
•     keep informed on current movements of SDR in the public and private sectors to further
      learn from champion reporting systems and the experiences of other government agencies
      through continued communication with the MfE pilot group.

Key lessons learnt from pilot group participation
EECA has not prepared a SDR to date. However, a number of fundamental lessons have been
learnt from EECA participation in the TBLR working group. The pilot group revealed that a
number of issues facing EECA are common to public sector organisations, regardless of specific
organisational characteristics such as staff numbers. The issues include how to achieve staff
buy-in and how best to integrate the new SDR framework with current procedures.

Key lessons learnt from participation in the pilot group resulted largely from the opportunity to
interact and communicate with experts in the SDR field and with representations of other central
government agencies exposed to similar issues such as dealing with internal and external
monitoring and reporting accountabilities. Participation in the pilot group provided EECA with
guidance regarding how best to implement a SDR framework within EECA (background
information of SDR, national and international experiences, and the benefits of SDR).




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   57
The lessons learnt by EECA from participation in the government TBLR pilot group are that a
TBLR framework:
•     is a complex process requiring a staged “evolutionary” approach
•     creates “real” transparency of an organisations activities and its associated impact
•     may require new systems for measurement and reporting
•     requires networks and procedures for integration of measurement and reporting systems
•     structural process for reporting qualitative information on the organisations impacts on
      social, economic and environmental objectives
•     requires significant consultation to progressively induce stakeholder support, commitment
      and buy in
•     risks measuring the wrong aspects of key performance areas.

EECA has sound strategic principles. SDR provides the opportunity to translate these principles
into a reporting system to enhance EECA’s influence, further embed these within the
organisation and illustrate how the organisation “walk the talk”. Furthermore, SDR is a tool for
operationalising sustainable development. Stainable development is an important objective of
the Strategy, specifically the recognition of the fundamental importance of energy efficiency,
energy conservation and use of renewable energy for social, economic and environmental well-
being in all parts of New Zealand.

SDR will require a “whole of EECA” organisational approach. This is relevant to EECA’s
relatively small size in that SDR must be integrated with activities carried out by significant
number of staff members – requiring a high level of co-operation and input. This reinforces the
need to identify and integrate current measurement and reporting practices – SDR is useful in
identifying gaps in reporting and performance. It is important to achieve a co-ordinated
approach to policy formulation, implementation, measurement and reporting.

The importance of developing an external measurement and reporting framework separately
from the formulation of the Strategy (which was released in September 2001) means it is
important to adopt a framework that is consistent with the Strategy and accurately identifies the
success of achieving these objectives. The data collected and performance areas being
measured must be evaluate in terms of this ensuring that all indicators are relevant
representations of the specified objectives in the Strategy.

Proposed future organisational changes as a result of SDR
The most significant anticipated organisational changes required by SDR is the need to establish
networks and procedures to integrate the measurement and reporting of both internal and
external policy development and key performance areas and indicators.

Value to EECA of adopting SDR
It is recognised that the full extent of the benefits and costs will not be revealed until further
work on the scoping report is undertaken on developing a comprehensive SDR.

Potential benefits
SDR is expected to provide a holistic (social, environmental and economic) tool for measuring
and reporting EECA performance to assist achieving integrated decision making (and contribute
to effective cross functional working groups).




58       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Specifically, SDR is expected to allow EECA to demonstrate “walking the talk”, strong
government leadership and to maximise leverage. This can be achieved through stakeholder
engagement, risk management and business planning integration. SDR can provide a
transparent picture of EECA performance (social, environmental, economic dimensions)
focusing on staff communication/involvement (effective in building staff morale and trust).
This will help EECA meet external accountability requirements. SDR can demonstrate EECA’s
contribution to achieving sustainable development and provide a clear structure for comparison
with other SDR (within the public sector) to understand the relationships within the public
sector and establish best practice.

SDR will allow for EECA’s strategic business principles to be aligned with the key performance
areas (revealing any gaps), present useful information that is not found in other reporting
documents and provide incentives for improvements. This includes internal performance areas
(which are not currently measured and reported on). Additional performance information can
be supplied to internal managers and guide feedback to staff on individual performance. Such
integration provides a direct focus on outcomes and integrated long-term decision-making and
identifies critical success factors, which is important in risk management and in the integration
of EECA’s key performance elements in project prioritisation. This provides an understanding
of the trade-offs being made as EECA explicitly commits to certain performance objectives.

Related to this is the benefit of aligning individual staff performance with staff motivation and
EECA strategic business principles. The timeframes for this can be consistent with those of
individual performance review (annually). EECA can us this information to develop a
collective understanding of the organisation principles and staff motivations (this is of high
importance to EECA).

Potential costs
The potential costs of SDR include the risk of a SDR framework not being successful or
revealing that EECA activities are detrimental to the achievement of sustainable development.

Potential costs are associated with staff time involved in developing and implementing SDR
framework, maintaining organisational capacity to use and interpret the framework, gaining
staff buy-in and reviewing and monitoring SDR process. This includes additional measurement
and monitoring information requirements and associated information requirements and costs.

Barriers to implementing SDR
There are a number of barriers associated with understanding and implementing SDR creating
further risk (and associated potential costs).

Barriers to implementation of SDR include:
•     the need to integrate current and new measurement and reporting frameworks and public
      sector accountability documents
•     lack of networks/systems/processes to implement SDR and associated costs
•     measuring the correct performance areas (this can often not be determined until
      measurement has commenced or been completed)
•     moving beyond the scope of core business
•     clearly understanding associated jargon
•     gaining organisational buy in




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   59
•     risk of revealing “bad” organisational activities
•     not ultimately seen as delivering the benefits hypothesised (not truly cost effective).

What EECA needs
EECA views the pilot group as successfully achieving the project initial objectives, notably:
•     increasing participants understanding of TBLR and how it relates to their organisations
      responsibilities
•     facilitating the development of TBLR for the participating organisations providing a
      forum for government to work through some difficult issues associated with TBLR in the
      public sector.

However, it is suggested that it would have been valuable to examine in more detail the
pragmatic level of implementing TBLR.

Recommendations by EECA that the Ministry for the Environment should continue promoting
TBLR in the public sector through the following methods:
1     Guidance notes for the public sector implementation of TBLR in the form of model report
      for generic public sector organisations.
2     Guidance notes for public sector specifically on internal key performance areas and
      indicators – thorough incorporating expertise form relevant government agencies such as
      a model TBLR including standardised internal key performance areas, and indicators (for
      example energy efficiency, transport, waste management).
3     Facilitate continued correspondence between participants of the pilot group.
4     Guidance on the cost effectiveness of TBLR framework and clarity at a pragmatic level
      what government agencies can reasonably be expected to include as part of their
      accountability documents requirements.




60       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
ERMA New Zealand

Feedback on the MfE Pilot Group on TBLR
ERMA is a regulatory agency, administering one piece of legislation (the HSNO Act 1996), and
has approximately 60 employees. It is a relatively young organization, coming into existence
four years ago, and has undergone rapid growth over the past year.

ERMA initially became interested in TBLR as a result of interest in the concept being expressed
by a former board member in mid 2001. As a result, a board paper was prepared at the end of
2001. The board adopted the concept of TBL, with an initial implementation scheduled for the
2002/2003 financial year. This adoption coincided with the setting up of the TBLR Pilot Group
for central government agencies. ERMA agreed to participate, as it would allow us to more
successfully adopt the TBLR approach, given the guidance and assistance that was to be
provided by the pilot group.

By the end of the 2001/2002 financial year, ERMA will have prepared a chapter for the
2002/2003 business plan, which will identify our KPA’s, objectives, and performance
measures/indicators. Some identification of responsibility to collect information has been
completed, but it is anticipated that the majority of this work will occur at the beginning of the
2002/2003 financial year, as individual managers draw up their group plans, which are based on
the business plan.

The main benefit of adopting TBLR is that it means that the organization is more fully aligned
with the principles of Agenda 21, and that an organization’s impacts are in more than one arena,
and that in accepting this those impacts can be more appropriately managed.

ERMA’s approach has been to start ‘slowly but surely’ and as a consequence, many of the
performance measures are qualitative rather than quantitative, and reflects a commitment to
more fully develop TBL (for example, “ERMA will develop a green procurement policy”).
This also reflects ERMA’s ongoing commitment to TBLR. Rather than attempting to do too
much to soon, which is more likely to exhaust the organizational commitment (due to high
demands on individuals required by this approach), and is more likely to result in a poor quality
outcome.

There were some very useful messages that came out of the pilot group, about TBLR in general,
as well as more specific messages regarding TBLR in a governmental/public sector setting. A
primary message that we as participants obtained, was that sometimes TBLR can focus too
much on the R – ‘reporting’. This is not surprising, as all people want to tell their good stories,
and get a feel for how they are doing, however it is important that the underlying principles of
TBLR are always in the forefront of organizational thinking. This is reflected in the
encouragement by the URS consultants to be mindful of the possibility that TBLR can actually
provide the whole organizational planning structure. This may be a little hard for government
agencies, and would require some modification in planning and reporting requirements,
however it was a useful point to make.

Another very useful message they conveyed was the importance that the process was top down
rather than bottom up (i.e. you don’t start with your indicators and then decide why you are
measuring them, you look at what is important to the organization, what objectives fall out of
those, and consequently how you can measure the achievement of these). This also seems to fit
well with the existing government entity planning and reporting framework.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   61
There is certainly a potential for TBLR to actually enhance the efficiency of an organization,
however, this is something that is hard to identify when starting TBL reporting. This is likely to
be a benefit that is more recognized once TBLR has been instituted in an organization, as it is at
this point (in the measurement) that operational in-efficiencies/improvements will be
highlighted.

We have found that although the concept of TBLR is a very simple one to grasp, it is very
difficult to implement. Further, there are also some very unique aspects of implementing TBLR
in the public sector, which makes looking at private sector reports and efforts of limited
(although still helpful) use. Many of the participants seemed to express the similar sentiments
that “we are an environmental/social agency which must report on its economic performance, so
what benefit can TBLR be and how is this different to what we are in the business of doing”.

One useful distinction that was made was that government agencies are administering
legislation, and that the performance of that legislation in delivering outcomes is not the
question, but the organisation itself. This provides the opportunity to examine their
performance in the area’s irrespective of what they are in the business doing (i.e. HR policies,
internal environmental policy etc). However, it was noted that only focusing on the small
picture things can trivialise the philosophy of TBLR, so it is important to incorporate the bigger
picture things.

On this note, it was recognized that TBLR actually provides central government agencies with
an opportunity that has not necessary been available before, of providing a vehicle to tell its
good stories. Because government agencies are frequently under-resourced, they often are
unable to meet targets and objectives. The TBLR report provides the opportunity to identify all
the positive things achieved, as well as discussing those areas where progress was not achieved
as planned and give a progress report. This transparency may serve to improve both stakeholder
relations, but also may provide a good start for other agencies that are trying to identify areas of
work overlap, by examining the work programmes discussed in TBLR reports, providing one
consolidated location for this information.

Apart from resourcing, the main barrier we see to TBLR is the imbedding. There needs to be
consistent and obvious support from the top down for the successful adoption of TBLR, and if
this is absent, then the success will be limited, as those at the ‘front line’ are less likely to adopt
the concept into their work practices.

We believe that MfE should continue to provide support and direction in TBLR in the public
sector. Having said this, it is important that support for the concept is provided from the
government itself, if the concept is to enjoy long term embedding into the public service.
Further assistance would be desirable if funding was available, to provide a similar opportunity
to other interested central government agencies. Also further meeting on a less frequent basis
would be beneficial for this pilot group, so we are able to continue the dialogue and discuss
shared experiences.




62        Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
HortResearch

Feedback from TBLR working group for Ministry for the Environment (MfE)
Tessa Mills and George McIrvine
14 June 2002

Background
HortResearch employs approximately 500 staff located at 10 sites throughout the country.
Primarily a research company, which is funded through commercial revenue and FRST monies.
Our mission statement is: Developing and enhancing the competitive advantage of horticulture,
food and related industries through excellence in science and technology.

Why consider TBLR
Company is committed to good environmental performance and has an environmental manager
appointed. We are also a company with far-sited human resource policies that provide flexible,
positive working environments. A TBLR is one way to celebrate this fact and to get the most
out of our commitment to good environmental and social performance. We must lead by
example; HortResearch must contribute to the sustainability of our productive sector
environments so we must also operate under sustainability principles.

Where are we 30 June 2002?
Scoping report will be completed by June-July 2002. HortResearch has had some funding cuts
recently so the scope will not be circulated to senior management team until more appropriate
time. Our CEO has also resigned, as so until a new CEO is appointed we will hold back on the
presentation of the scope. Scope will likely be presented September-October 2002. From the
scoping report we will work with the annual report team and discuss options for implementing
the scope.

Will we continue with TBLR
Will depend on uptake from the management team and the annual report writing team. It is
likely that we will as HortResearch already has a TBLR philosophy. Will rely on
Environmental Manager to continue to promote and facilitate the process. Its success will rely
on the identification of meaningful and repeatable KPIs.

Key lessons learnt during pilot group
That a TBLR is more complicated than I expected. We have come full circle, given the TBLRs
that are currently in circulation HortResearch is not to far away. There have been times I think
when the pilot group has got bogged down and things have become more complicated than they
need to be. On the other hand there is more to it than I initially thought. This has been a
valuable lesson. Also important is that we don’t have to go ‘whole hog’ straightaway. Also a
TBLR can take many forms and although there are recipes for best practice there is a lot of
flexibility within this.

Expectations vs realities
As above.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   63
Potential organisational changes (potential because it is a bit early)
•     More holistic approach to business as usual
•     Placing value on social and environmental impacts.
•     Increasing staff awareness on what good company performance means

Value of TBLR to HortResearch
See 2 above.

Barriers to implementing TBLR
•     Resources to implement
•     Staff cynicism about TBLR

What does TBLR add to existing reporting
•     A more rounded approach
•     Increased accountability

Should MfE continue to promote TBLR
Yes, this is the way that global business is going. New Zealand, the land of the clean and green
can’t afford to miss out. We trade on our image; we need to get our act together. Please need to
think more about the true cost of business (environmental and social) rather than just the
economic. TBLR will reinforce this philosophy.




64       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Housing New Zealand Corporation

Report back to Ministry for the Environment

Corporation profile
Housing New Zealand Corporation was created on 1 July 2001 from an amalgamation of four
agencies:
•     Housing New Zealand Limited – the agency responsible for managing state-owned rental
      housing
•     Community Group Housing – the government agency responsible for providing group
      housing for people with physical disabilities, mental illness and other special
      requirements
•     Housing Corporation – the State mortgage lending arm
•     the housing policy unit of the Ministry of Social Policy.

The new Corporation continues to undertake the functions of the previous agencies but, on top
of this, provides additional services and support. For example, the Corporation has a
community renewal unit set up to transform and invigorate depressed areas. The Corporation’s
partnership group exists to facilitate partnerships with other agencies, community and
community-based iwi groups in an effort to provide the best housing solutions and establish and
build a strong third sector housing alternative. Environmental/health programmes include
energy efficiency retrofits and the Healthy Housing initiative, set up to reduce incidences of
overcrowding and meningoccocal disease, rheumatic fever and tuberculosis.

Why HNZC is considering TBLR
There are a number of drivers for HNZC’s interest in TBLR. These include:
•     The Government refers to sustainability and the triple bottom line with increasing
      frequency. Cabinet has agreed that the principles of sustainable development should
      underpin all of the government’s economic, social and environmental policies.
•     Reporting on the economic, social and environmental performance of HNZC provides a
      close fit with the Corporation’s objectives as set out in the Housing Corporation
      Amendment Act 2001: “to be an organisation that exhibits a sense of social responsibility
      ... and environmental responsibility…and operates with good financial oversight and
      stewardship... efficiently and effectively managing its assets and liabilities and the
      Crown’s investment ...”.
•     The Corporation developed and implemented a comprehensive environmental
      management system on 1 July 2001. The development of TBLR was included as one
      recommendation, considered a promising tool for assessing and informing on
      environmental performance.
•     The Corporation’s previous SOI (2001/02) requires the investigation of triple bottom line
      reporting as a means to enhance operations in a business-like manner.

HNZC was in the initial investigation stages of TBLR when the possibility for participation in
the MfE pilot group eventuated. TBLR is a relatively new concept, and with little knowledge of
the area, the Corporation saw the opportunity to learn from knowledgeable consultants and the
experience of other agencies grappling with TBLR.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   65
HNZC’s progress on TBLR at 30 June
The introduction of TBLR has not yet been approved either by the executive or Board of
HNZC, although the executive team has indicated strong support for the concept. The
comments below summarise the position of HNZC at this time, largely based on the
deliberations of the internal HNZC working group.

A paper providing information on TBLR was presented to the HNZC Board in March 2002.
The Board received this favourably and noted the Corporation’s intention to conduct further
work on an implementation plan for TBLR. A paper is to be presented to the HNZC Board
Assurance Committee in July 2002, detailing lessons learnt from the MfE pilot group process
and a proposed way forward for implementing TBLR.

TBLR is included as a major environmental activity in the HNZC business plan for 2002/03
(sub-section 5.5.3) under the Environmental Responsibility section as “Incremental
implementation of triple bottom line reporting”. This is an upgrade from the previous SOI
(2001/02) which proposed investigation of TBLR. This business plan contains HNZC’s
strategic outcomes (KPAs), key strategies and output class measures for 2002/03.

HNZC’s future intentions for TBLR
HNZC intends to reflect TBLR principles more fully in its 2003/04 business plan and future
annual reports. The Corporation will adopt an incremental approach to TBLR that will see a
gradual widening of reporting scope over time.

HNZC intends to set up a steering group from different units to progress TBLR throughout the
organisation. A gap analysis, using a TBLR lens, will be undertaken on the business plan for
2002/03 to establish such factors as the efficacy of the measures used, the link between outputs
and outcomes, definitions and the gaps in identifying environmental and social performance.
This exercise will inform the business planning process for the 2003/04 year. No explicit
implementation plan for TBLR has been approved to date.

Key lessons learnt during pilot group process
The Corporation came to the pilot group process with a simplistic view of TBLR, being that it is
solely a reporting mechanism. The pilot group process has highlighted, however, that TBLR
can add the greatest value as a lens through which to view the Corporation’s operations and
impacts. Considering the triple bottom line effects of HNZC operation through all phases of
policy development and implementation will lead to improved performance. On top of this, it
can be a vehicle for enticing and encouraging Corporation stakeholders to re-evaluate the value
of placing major emphasis solely upon the financial.

Traditional reporting processes facilitate information transfer from one party to another. This
information’s ability to inform and transform effectiveness is predicated on a number of factors
including the scope of the report, its comprehensiveness, its pertinence, its distribution and the
circular linking back of findings to inform practice. The pilot group process has made explicit
the advantages TBLR has over traditional reporting methods. TBLR increases the scope and
pertinence of the content. Such reports have more meaning, they are more interesting, and they
will subsequently have greater readership and generate more involvement.




66       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Expectations versus realities of producing a TBLR to date
HNZC assumed that overlaying the TBLR process upon the current reporting structure would be
much easier than has subsequently been the case. This difficulty has been eased by expert
guidance from the consultants involved and lessons learnt through the group process.

HNZC is a recently established agency in consolidation phase. As such, it has established that
an incremental approach to TBLR represents the most manageable and effective way forward.

Organisational change as a result of TBLR
It is difficult to see at this stage whether any structural change will eventuate as a result of an
incremental implementation of TBLR.

Staff roles, accountabilities and responsibilities will need to be assigned if TBLR is to be
successfully embedded into the Corporation. New procedures will need to be developed and
applied so that information flows throughout the Corporation efficiently and effectively.
Procedures will need to be consistent, clear, accessible and linked correctly.

In reporting terms, HNZC will re-evaluate reporting content and process. HNZC currently
produces highly detailed monthly and quarterly reports for its Board and Ministers that include
information not generally included in the annual report be reviewed.

Where HNZC would expect to see the greatest organisational change is in the doing. TBLR has
the potential to add value, and if that is the case and it can be successfully embedded, can lead
to major gains in effectiveness, efficiency and sustainability. Displaying and sharing an explicit
emphasis outside the financial could well lead to greater innovation and increased corporate
cohesion.

Perspective on value of TBLR for HNZC
To date, the Corporation believes that TBLR has the potential to:
•     lead to a better alignment of the Corporation’s mission statement, values and strategy
      with behaviour and the outcomes of its activities
•     provide a comprehensive, transparent picture of performance, including the Corporation’s
      contribution to global sustainable development
•     lead to greater consideration of environmental, economic and social impacts
•     promote integrated decision making by better understanding operations and their impacts
•     build stakeholder relationships based on shared values, trust and integrity by increasing
      consultation and transparency
•     reduce operating and compliance costs
•     improve risk management
•     benchmark the Corporation against international agencies reporting in the social housing
      sector and identify annual performance increments
•     improve knowledge and morale and stimulate innovation
•     enhance HNZC’s image/reputation.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   67
The Corporation is to some extent operating on a longer timeframe than the traditional three-
year parliamentary term. Medium and long-term planning can be expected to increase under
TBLR.

The costs to the Corporation are typical of those faced by most organisations:
•     Staff time to pull a TBLR together – collecting information, devising measures,
      implementing data collection systems, storing data in a retrievable form, maintaining
      organisational capability to use and interpret it.
•     Management time to review and continuously monitor.
•     Additional load on strategic planning (particularly in the initial phase).
•     Cost of producing the report.
•     Additional time/resources engaged in stakeholder consultation.

In some respects, HNZC would expect TBLR to provide cost savings. The extent to which
these are lost through the increased cost of reporting structures is unknown.

Barriers to implementing TBLR
•     The increased economic cost of reporting, setting up new structures, resourcing etc.
•     An absence of established staff networks and procedures for TBLR.
•     The increased cost of HNZC staff time.
•     Getting adequate staff buy-in.

Value of TBLR for government entities
The Government has indicated its intention to create a more enabling and inclusive society, one
predicated on reducing inequalities. TBLR has the potential to highlight numerous government
social and environmental programmes that may traditionally escape mention.

TBLR has the potential to provide greater transparency on the operations of government
entities. Stakeholders will have greater say in what gets reported with a consequent flow-on to
what actually gets done. Stakeholders will gain a fuller understanding of the justification for
trade-offs as an organisation commits itself to particular priorities at the expense of others.

Documents, such as the Review of the Centre, talk of the lack of integration across government
entities. TBLR can enhance integration by illuminating the operational interests of different
government agencies and community agencies, identifying interfaces, shared interests and
duplicated effort.

TBLR can enhance environmental consciousness through the influencing potential of TBLR
reports that indicate the importance of environmental responsibility.

TBLR has the potential to lengthen government strategies past the short term (three year cycle)
and into the medium to long term. Gaps and inadequacies in environmental and social
performance can be identified.




68       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
MfE’s future promotion of TBLR
MfE can provide a valuable service through further promotion of TBLR for the public service.
A lack of awareness and understanding surrounds what could be considered a fairly recent
phenomenon. The demystification of TBLR will facilitate much greater acceptance and uptake
by government agencies. Ideally a comprehensive process, such as that undertaken for this
particular pilot group, could be available to adequately cover the complexity of the issues
involved.

Despite the timing of the MfE pilot group process not being ideal, the Corporation has benefited
immensely from its involvement. Learning and interaction with both consultants and
participants has produced a more comprehensive picture, for the Corporation, of what TBLR
actually entails. The extended timeframe of the pilot group process allowed the Corporation to
develop greater internal understanding. The networks set up with other government agencies
offer excellent networks for education, support and the resolving of difficult issues in the future.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   69
Ministry for the Environment

Organisational background
The Ministry for the Environment (MfE) was established by the Environment Act 1986.

MfE is the government’s principal adviser on environmental management, the state of New
Zealand’s environment, solutions to environmental problems and new opportunities to improve
the environment. MfE’s main responsibilities are:
•     monitoring the state of the environment
•     developing national environmental strategies, policies and standards
•     contributing to New Zealand action on sustainable development
•     promoting environmental awareness and action
•     promoting effective management of natural resources
•     sustaining air, water and biodiversity
•     managing the risks of genetic modification
•     preventing pollution and managing waste
•     protecting the ozone layer
•     responding to the threat of climate change.

MfE is responsible for the following laws: the Environment Act 1986; the Soil Conservation
and Rivers Control Act 1941; Resource Management Act 1991; Ozone Layer Protection Act
1996; Hazardous Substances and New Organisms Act 1996.

MfE also monitors the operations of the Environmental Risk Management Authority and the
Energy Efficiency Conservation Authority.

Currently MfE has 157 full time equivalent staff. Most staff are based in the Wellington head
office, ten staff are based in the south island office in Christchurch and six are based in the
northern regions office in Auckland.

Why your organisation is considering TBLR and why it decided to participate the
pilot group
MfE has been charged with encouraging and facilitating best practice triple bottom line
accounting and reporting by organisations. MfE is considering producing its own TBLR
because:
•     producing our own TBLR will mean that we have a better feel for the strengths and
      weaknesses of the TBLR concept and greater credibility in promoting it
•     it is an opportunity to audit our own internal performance, particularly so we can lead by
      example on environmental performance
•     it is an opportunity to start working on how to assess MfE’s effect on environmental
      outcomes and its impact on the economy and society
•     it is an opportunity to outline our priorities for future years and to report on achievements.

We participated in the central government pilot group because we thought we would develop a
better understanding of the value of TBLR for the public sector if we worked with a group of
our peers who were also working on TBLR.




70       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Where your organisation will have got to with TBLR by 30 June
MfE completed its TBLR Scoping Report.

Whether or not your organisation intends to keep progressing TBLR (if so,
responsibilities and steps from here)
MfE will continue progressing TBLR. It will publish a “Towards a Triple Bottom Line”
separate from this year’s Annual Report later in 2002. This is being prepared by the triple
bottom line team in conjunction with staff from human resources, strategic policy, finance
(which is responsible for accountability reporting), property management, communications and
the waste group. A draft report will be submitted to the Executive Management Group in
August.

MfE will also be working on embedding the TBL concept within the organisation over the next
year. This will involve raising awareness of TBL amongst staff and improving some
management processes to better integrate TBL thinking within the organisation. MfE also
intends to do further work on assessing how MfE is affecting environmental outcomes.

Key lessons learnt during pilot group process

•     TBLR reminds organisations that their impacts are both short and long term, internal and
      external, and may have social, environmental and economic dimensions.
•     An organisation can take a TBL perspective without producing a stand alone TBLR.
      Several participating agencies were not interested in developing a separate TBLR.
      Instead they saw value in applying a TBL perspective to existing mechanisms (i.e.
      Statement of Intent and Annual Report) as a cross check for what they already do.
•     In the public sector there is greater scope to consider the environmental and social bottom
      lines. Our mandate is not narrowly focused on shareholder return/economic criteria.
•     TBLR provides a structure for understanding the interfaces between agencies and for
      identifying where there are opportunities to work together to achieve specified outcomes.
      (e.g. Housing NZ partnering with Health and EECA to ensure accommodation fosters
      rather than detracts from other health/energy efficiency initiatives).
•     Prompts a revisiting of consultation with stakeholders. Many public sector organisations
      already widely consult, but are not always good at communicating with stakeholders on
      how these discussions influence priority setting or performance. It has prompted some
      agencies to think about whether and how to involve major stakeholders in the
      development of their performance reporting.           Others think better stakeholder
      communication will build trust and more effective relationships with long term benefits.
•     Agencies are often not aware of their direct environmental impact.
•     GRI guidelines are of limited value in the public sector. Perceived as either too
      complex/daunting or aimed at agencies without a social/environmental consciousness.

Expectations versus realities of preparing a TBLR to date.
We have only prepared a scoping report so far. We found that it took longer than expected to
prepare (as more issues came up). It was a valuable exercise in itself in terms of pulling a lot of
information on the agency together in one place and systematically assessing performance
drivers. MfE also found that it had more information available for a TBLR than we expected.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   71
Observed or proposed future organisational changes as a result of TBLR (if too
early, what do they see as the potential for change)
It is too early for many observed organisation changes. Several that have occurred are:
•     MfE is aware of its waste stream (this is now being audited regularly)
•     a joint team has been established to better link Strategic Planning/Statement of Intent
      Document and the Annual Report. This consists of staff from the strategic policy group,
      finance, and environmental reporting (where TBL team is located)
•     a formal internal environmental policy has been developed.                      Previously there were
      informal policies.

There is potential for the TBL process to:
•     promote more structured assessment of the economic and social impacts of our policy
      advice
•     increase understanding of how our work affects environmental outcomes
•     increase awareness of our internal environmental footprint (e.g. waste, energy usage,
      green purchasing). This will enable us to show that we meet the standards we set others.

Perspective on value of TBLR for your organisation
Potential for benefits of TBLR for MfE include:
•     Improved environmental outcomes: A TBL approach encourages MfE to identify
      economic and social linkages to environmental pressures. By considering these areas in
      the design of policy MfE should be able to provide solutions that synergistically work to
      improve environmental outcomes.
•     Integration of policy advice: Although a goal of the CAP project was to encourage a more
      collaborative approach between government departments and monitoring agencies, TBLR
      has the potential to go further, by providing a framework by which agencies can consider
      the economic, social, cultural and environmental impacts of their activities.
•     Internal environmental impact: Whilst negligible compared to our external environmental
      impact, it is important for MfE to demonstrate that it meets the standards it sets others.
      While MfE has informal internal environmental policies TBLR has highlighted the value
      of bringing these policies together more formally.
•     Consulting with stakeholders: TBLR may help MfE in consulting with stakeholders to
      determine priority outcomes, build trust and lead to more effective relationships.
•     Embedding: TBLR includes a focus on ensuring embedding change within the
      organisation making TBL thinking/decisions an every day occurrence for staff and
      management.
•     Making trade-offs more visible: (i.e. MfE can’t do everything people want us to but may
      enable us to make the tradeoffs clearer).
•     Potential to increase the accessibility and centralisation of reporting on significant
      information.
•     Meets staff desire for concrete feedback: A lot is being done but there is an issue with
      communication of what is being done to address staff concerns.




72       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
•     Risk management: Risk management and ‘brand protection’ have been major drivers for
      the adoption of TBLR in the private sector (i.e. the use of TBLR techniques to enable
      companies to pinpoint and manage environmental and social issues before they result in
      economic costs or public relations ‘situations’). This also applies in the public sector.

Potential for TBLR to add to costs/risks
•     Incompleteness of consultation: There is the potential with TBLR that if an organisation
      misses an issue of significance to a stakeholder group, its omission can undermine any
      other value derived from the TBL Report. However, this is more a failure of
      completeness of process rather than a failure of TBLR.
•     Transparency and honesty: A concern with TBLR is that the media will only focus on any
      negative disclosures.
•     Additional burden of reporting: If not well managed and built on existing management
      reporting TBLR has the potential to simply add another level of reporting. The challenge
      is to design a process that manages and reports on the issues of significance to
      stakeholders.
•     Cross-functional outcomes: There are concerns about the potential for TBLR to burden
      agencies with attempting to identify their impacts on ‘bottom lines’ outside of their remit.
      However, whilst acknowledging its primary environmental focus, MfE already has to
      justify the economic impact of its policies through cost benefit analysis, business
      compliance cost impacts, and consultation with Treasury, the Ministry of Economic
      Development. Perhaps TBLR could act as a ‘holistic lens’ mechanism to ensure that
      agencies cross check their policies for potential impacts outside their own economic,
      social or environmental arenas.

Barriers to implementing TBL
•     Initially, lack of information to measure what impact we are having on the environment,
      the economy and society.
•     Continued resourcing, staff time to collate and report on useful information.

Perspective of value of TBLR for government entities. What does it add to existing
reporting?
The main benefits we see are:
•     Whole of government impact: Consuming approximately a fifth of GDP, it is crucial for
      the NZ government to start to review its own internal environmental and social impact.
      TBLR could provide a framework for summary monitoring and reporting of key
      performance indicators across whole of government.
•     Integration of policy advice: Although a goal of the CAP project was to encourage a more
      collaborative approach between government departments and monitoring agencies, TBLR
      has the potential to go further, by providing a framework by which agencies can consider
      the economic, social, cultural and environmental impacts of their activities.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   73
•       Enhancing organisational culture: Recent initiatives to enhance the public sectors ‘People
        and Culture’ have been focussed on capabilities (e.g. training in leadership, coaching and
        development of managers etc). No strategies have been put forward to address the
        perceived need for a “unifying sense of values” or for public sector staff “collective
        engagement in organisational decision making”.44 However, it is our belief that
        implementing the TBLR concepts of stakeholder dialogue and participation in
        organisational decision-making, start to address these areas.


Transit New Zealand

Feedback on Triple Bottom Line Reporting Pilot Programme

Background
Transit New Zealand is a Crown entity established under the Transit New Zealand Act 1989.
The principal objective of the board of Transit New Zealand, known as the Transit New Zealand
Authority, is to operate a safe and efficient state highway system.

Transit manages the state highway network, measuring 10,774 kilometres, which makes up
11.5 percent by length of New Zealand’s roads and accounts for 46 percent of the 34 billion
vehicles kilometres travelled each year.

As at 30 June 2001 Transit employed 235 staff across seven regional offices, and a head office.

In achieving its principal objective, Transit’s main areas of accountability (for which
performance measures are developed to report against) are:
•       strategic development of the state highway network, involving national and regional
        strategies which define levels of service to be delivered to meet stakeholder needs
•       actual levels of service delivered, including travel times, congestion levels, safety, road
        user costs, environmental impacts, value for money and stakeholder satisfaction
•       state highway policies and standards, adapting international best practice as appropriate
        for New Zealand state highways
•       annual state highway programmes, involving the recommended mix of priorities to be
        addressed in any year
•       maintenance of state highways, involving application of best practice, procurement and
        delivery
•       capital improvement/replacement of state highways, involving scheme investigations,
        project design and project procurement and delivery
•       traffic management on the state highway network, involving congestion management,
        information services, access control and incident management.




44
     See Review of the Centre – executive summary recommendations.




74         Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Why triple bottom line reporting?
Triple bottom line reporting enables Transit to focus on wider issues than just economics and to
demonstrate its commitment to sustainable development. This commitment to both sustainable
development and triple bottom line reporting is documented in Transit’s Statement of Intent
2001/2002 and Annual Report 2000/2001.

Key benefits for Transit in moving towards triple bottom line reporting include:
•     a better recognition of our social and environmental achievements and challenges
•     an acknowledgement of wider responsibilities and a framework for reporting against them
•     a wider perspective to planning processes
•     a framework for identifying and communicating our impact (positive and negative) in
      social, environmental an economic terms
•     a framework for explaining in a transparent way, the tradeoffs we sometimes need to
      make between social, environmental and economic objectives
•     a better ability to engage with stakeholders and influence their opinions
•     improve staff morale and pride in Transit.

Why participate in the pilot programme?
Transit seized the opportunity to participate in the pilot programme which would run in parallel
to Transit’s own processes to kick start its move to triple bottom line reporting particularly the
development of a revised set of performance measures reflecting a triple bottom line framework.
Transit saw the programme as an opportunity to learn from others experiences and to receive
constructive feedback on Transit’s own initiatives.

Progress at 30 June 2002
Since Transit’s adoption of TBLR in March 2001, it has made progress in the following areas:
•     Transit Authority gave direction on this issue at the April 2001 strategic planning session.
•     Strategic planning process specifically considered TBL drivers, and strategic goals reflect
      that by including one that is to “exercise social and environmental responsibility in all our
      actions”.
•     Key accountability documents clearly signal Transit’s commitment and intentions for
      triple bottom line reporting (Annual Report 2000/2001, Statement of Intent 2001/2002).
•     A decision framework for the state highway programme was developed that prioritises
      projects based on a wider range of parameters (including social and environmental) than
      the previous economic analysis.
•     Research strategy which was established in terms of road user (customer) research now
      also includes wider stakeholder research.
•     A new set of performance measures have been developed that reflect, and provide
      appropriate incentives to, the “business”. These measures are a first cut at developing
      performance measures (more or less within the constraints of ‘business as usual’) within a
      TBLR framework and there are areas where they will need to be improved over time as
      Transit works through the implications of its commitment to TBLR and is able to develop
      better indicators.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   75
Steps from here
As at June 2002 Transit is renegotiating its performance agreement with the Minister of
Transport and its National Roading Programme (NRP) Agreement with Transfund. These
agreements are expected to contain some or all of Transit’s new performance measures.

In the short term Transit intends to more explicitly define the new performance measures and to
refine existing measurement systems to better accommodate the new measures.

Transit is set to revise its National State Highway Strategy and this review will take a TBL
approach. In addition Transit has begun development of an environmental strategy, which will
set the framework for the environmental component of triple bottom line reporting.

Key lessons learnt during pilot programme
Key lessons learnt include:
•     While there is plenty of best practice advice in the public arena about how to prepare
      TBLRs and what they should look like, Transit has learnt that it is paramount that a
      TBLR fits within an organisation’s existing processes and culture. Best results, and
      possibly greatest initial gains, are achieved by establishing new concepts within existing
      processes/activities.
•     While it is “best practice” to not frame TBL reports in silo terms, it can be a helpful first
      step as it focuses an organisation on the three bottom lines where it may previously had
      an imbalance towards economics for example.
•     Importance of having strategic goals and objectives in place to support the development
      of performance measures.
•     A TBLR can be an opportunity to tell a story of an organisation’s successes and also an
      organisation’s limitations and failures to reach targets. This warts and all approach to
      TBLR can engender trust and credibility amongst stakeholders.
•     Important just to start – doesn’t have to be perfect – it’s an evolving process.
•     TBLR is a useful tool for the public sector and complements traditional government
      performance reporting.
•     Involve all the key internal players and consult, but recognise that getting widespread
      commitment will take time, and that there may be some backward steps in order to move
      forward. We should not expect TBLR or TBL management processes to happen
      overnight.

The value of TBLR for Transit
The key benefits are outlined above but in broad terms include:
•     opportunities to drive better outcomes and to have a more sustainable approach to
      business
•     improved alignment with stakeholders and communities through better engagement
•     increased recognition of efforts
•     transparency in tradeoffs that sometimes get made when there are competing objectives
•     increase in staff pride.




76       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Barriers to implementation
One of the biggest barriers to implementation is the risk that the organisation may lack the
commitment to face some of the “harsh realities” that this style of reporting may expose. To
successfully implement TBLR the whole organisation needs to buy into the new way of doing
business.

Transit currently formally reports to the Minister of Transport and Transfund New Zealand, the
extent to which TBLR will be a useful tool for Transit is dependent on the level of acceptance
from stakeholder agencies.

In developing the first set of performance measures within a TBLR framework Transit relied
heavily on the “quick gains” (i.e. the measures that it currently records as more or less business
as usual). This is a valid first step approach as it maximises current efforts and existing systems
for recording information. If Transit’s TBLR framework is to evolve and mature the harder
issues need to be addressed and the commitment of the organisation to a TBLR approach will be
tested.

Recommendations to MfE
Key recommendations in terms of future pilot programmes:
•     More experience sharing between the participating agencies.
•     Less focus on models/process and best practice – rather use that as a basis/foundation and
      then focus on the organisation’s individual needs.
•     Less workshop sessions required to get the same value.
•     Support the suggestion that the programme participants meet again in 6–12 months to
      share experiences in putting theory into practice and developing a TBLR.

Potential benefits and costs
The potential benefits have been discussed previously. The costs include:
•     resources to monitor and collect additional information
•     possibly more internal and external consultation
•     possible adverse public/stakeholder reaction to less than favourable results may “cost”
      Transit in terms of public perception.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   77
Appendix V: Local Government Pilot Group Detail


What was covered during the workshops?

Introductory session
Before the local authorities committed to being part of the pilot group the Ministry and Audit
New Zealand held a session outlining the objectives of the project. Local authorities were asked
what they wanted from the process. They were particularly interested in covering:
•         how to integrate the potentially new requirements of the Local Government Act and triple
          bottom line reporting
•         how to get buy-in within an organisation for taking a triple bottom line approach and
          communicating the concept within an organisation
•         how to develop the scope of a report and performance measures
•         international best practice within the local government sector.

They were also keen for the pilot group process to allow time for discussion of issues arising for
individual local authorities. They felt they could learn a lot from their peers.

The workshops covered the following:
              Workshop One                           Workshop Two                            Workshop Three

    Audit NZ’s process for preparing a     Update on progress made since the        Triple Bottom Line decision-making
    Triple Bottom Line Report (see         last workshop
    below for more detail)

    Sustainable development – what         Organisational change implications       Measurement
    and why?                               associated with the Triple Bottom
                                           Line

    Local Government Bill and Triple       Key sustainability issues for councils   Report structure
    Bottom Line Reporting                  and their cities/districts/regions

    Strategic planning and Triple Bottom   National sustainable development         Key sustainability issues and
    Line Reporting                         project                                  community outcomes

    International good practice            Discussion of key issues arising for     Challenges
                                           participants




Summary of key discussion points

Interesting discussions coming out of the workshops
Scope: There was discussion around the scope of what to cover; should a local authority just
focus on where it has responsibilities or should it look more broadly at where it could facilitate
others to work towards the environmental, economic and social outcomes the community is
seeking? “If you constrain yourself to functions it limits politicians’ ability to influence others
to achieve outcomes”. Participants considered that whichever way a local authority chose to go
it needed to be really clear about what they are responsible for addressing and what others have
responsibility for.




78            Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Organisational change implications: Some of the local authorities further along in terms of
reporting were finding that the biggest challenge was in embedding the triple bottom line into
the organisation’s processes. For example, getting an area within the organisation responsible
for environmental outcomes to think about opportunities for achieving social outcomes when
developing projects.

An organisational change expert from Audit NZ, Alida Robey, outlined some of the
organisational change implications that might need to be considered if local authorities want to
take a triple bottom line approach to the way they do business. She stressed the importance of
planning for organisational change.

Link between what local government and central government efforts
Graeme Campbell from the Ministry for the Environment updated pilot group participants on
development of a national strategy on sustainable development. Some of the key points from
the discussion were:
•     there is a need for central government direction on the key sustainable development
      issues for the country. Local authorities could then work towards assisting central
      government to address those
•     once the key sustainability issues for New Zealand have been identified it would be
      useful for central government to take a triple bottom line approach (i.e. identify the
      economic, social and environmental aspects of the issue), work out who can have the
      most influence over that aspect of the problem (i.e. central government, local
      government, business) and then work with the relevant agencies to address the issue
•     central government needs to be more aware of local government’s context/drivers (i.e. if
      central government wants local government to achieve environmental outcomes it needs
      to think about the social and economic context).

Identifying sustainability issues: There was discussion around how to identify key
sustainability issues, especially those of national or global importance when the focus under the
Local Government Bill is on community outcomes. One of the purposes of the Local
Government Bill is to encourage local authorities to work together and with other organisations
to:
•      promote local priorities, or
•      achieve local outcomes, or
•      contribute to the outcomes and priorities of other levels of government that are supported
       by their communities).

Some of the key points coming out of this discussion were:
•     Is it appropriate to consider some of the global sustainability issues arising when the
      legislation you operate under focuses on community outcomes? Local authorities
      intended to take a range of approaches. For example, one intended to do a scan of
      national and international issues before talking to their community. The community
      would then make an informed decision on the outcomes it wanted the local authority to
      focus on. Others intended to identify the key community outcomes and consider those
      alongside the important issues arising nationally or internationally.
•     The importance of each local authority considering their key performance drivers. What
      is the right approach for one council won’t necessarily be the right approach for others.
      There is a need to link what is measured back to the organisation’s vision and key
      functions.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   79
•       The usefulness of doing a stocktake/audit of what performance information is already
        being collected (e.g. Auckland Regional Council brought up the Regional Resource
        Management Plan and the associated information which is collected through that
        process).
•       Many felt they have identified economic, social and environmental issues but that there is
        no integration between the information they collect in these areas. Others felt like they
        have hundreds of measures – the challenge was to reduce them to a small set of
        meaningful ones.

Audience: There was some discussion around whether a local authority should work towards
producing one annual report in a triple bottom format or whether it should produce a range of
triple bottom line products for different audiences with diverse needs (e.g. chief executive and
managers vs. councillors vs. the general public). There is further discussion on this in the
Auckland Regional Council write up.

Assessment/decision making tools: Audit NZ introduced the pilot group to a Triple Bottom
Line Tool Kit which Melbourne City Council and International Council for Local
Environmental Initiatives developed.

Melbourne City considers that the Triple Bottom Line is a framework that underpins and
reviews environmental, economic and social performance; it can be viewed as a reporting
device or an approach to decision-making (e.g. use of decision making and reporting tools to
understand the economic, environmental and social implications of decisions) that can be
applied across council activities.45

The toolkit includes a guide for determining priorities, a sustainability assessment procedure for
council reports – this describes the process to be undertaken by officers completing assessments
for council reports, and an assessment procedure for capital works.

The local authority pilot group thought the tool kit was interesting but found the sustainability
assessment questionnaire quite complex.           The questionnaire assesses the potential
environmental, economic and social impacts of a proposal and checks the projects alignment
with council policies and objectives.

The pilot group then talked about some of the assessment tools being developed by participants.
Christchurch City Council already has an assessment tool for council reports and Waitakere
City and Wellington City Council are currently developing them. The main issue raised in
relation to these was the resistance within organisations to use such tools – it is enough of a
struggle for strategic people to think about the impacts.

Individual sessions: Leanne Holdsworth also spent one-on-one time with each agency
participant. Many of the local authorities in the pilot group were taking different approaches to
triple bottom line reporting. While the workshops provided the opportunity for participants to
learn from the approaches of others, the one-on-one time allowed the particular drivers,
circumstances and barriers of each council to be focused on. This also meant there were
considerable differences in material covered in one-on-one time. Examples of the way this time
was spent include:




45
     See www.iclei.org/anz/tbl




80          Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
•      working through strategic objectives and identifying gaps in council objectives using the
       already-identified key sustainability issues
•      working with a team to convert a balanced scorecard into a sustainability scorecard
•      overviewing the workshop material to a wider group and identifying barriers to making
       progress
•      assisting in the development of indicators for internal key sustainability issues, external
       outcome and linked output indicators
•      debating the difference between key sustainability issues and community outcomes
•      developing buy-in strategies
•      investigating the relationship between LTCCPs and TBLR.



TBLR process model – local government

A possible process for preparing a TBLR for a local authority
Audit New Zealand has developed this as a first attempt at identifying a process for TBLR for
local authorities. Each step has back up supporting steps. For further detail contact Audit New
Zealand.

Integrated sustainable development reporting
Step 1                     Sustainable development
                                   context



Step 2                                  Buy-in



Step 3                       Identify sustainability
                                     issues
                                                                   Continual improvement
                                                                         ‘SDR Live’
Step 4                       Develop KPIs, targets
                               and benchmarks



Step 5                       Practicalities of report



Step 6                       Verification/credibility
                                     review


Ref: Audit New Zealand, Good Practice




                       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   81
Local government pilot group write ups

Auckland Regional Council

Issues set out in the feedback requirements

Why is ARC considering triple bottom line?
Clearly, the ways in which ‘success’ for an organisation is established in strategy, and measured
has changed worldwide. The move towards the inclusion of a balanced set of measured based
on some of the key concepts of sustainability is consistent with many of the ARC’s current
strategic directions, but goes further in giving a consistent framework for the measurement of
outcomes along the same lines. For reasons set out above, the ARC prefers a hybrid mixture of
the Triple Bottom Line and the Balanced Scorecard to reflect the central importance of the
customer, as a key driver of organisational success, as well as sustainability issues. The
“sustainability Scorecard” will be the conceptual basis for us to implement the re-orientation of
our broader organisational and regional strategy more towards sustainable development.

Progress by 30 June
The Balanced Scorecard is in the early stages of implementation. Along with this, a review of
organisational strategy, and the development of a model which places SDR within the
framework of the Malcolm Baldrige excellence framework is being development. From this, a
new organisational and regional strategy will re-cast the key measures of success, and with it,
will create the opportunity to deploy and implement the Sustainability Scorecard.

Progress from here
A full Sustainability Scorecard, backed by appropriate strategy and measures is expected to be
fully deployed by 2003, with the 2003/04 Annual report presenting a full range of results. A
project exists in the 2002/03 year (beginning 1 July) to design and deploy the Triple Bottom
Line via the sustainability scorecard.

Key lessons learned
The pilot group has given invaluable experience in terms of learning of the journey of others, as
well as some suggestions for framework based on national and international experience. The
opportunity to learn more of Central Government’s actions and plans for sustainable
development was also of considerable benefit.

Expectations versus reality
No comment at this stage as we are in the early phases. However experience with the Balanced
Scorecard indicates that while a conceptual framework for performance management may be
simple, it takes a considerable amount of effort to reach a common level of understanding
amongst key groups as to the benefit of performance measurement, and the link between
strategy and measurement. Commitment and ownership at all levels in the organisation is a
crucial first step in any process. For the ARC, the use of the Malcolm Baldrige framework has
assisted with that process, although that has required its own programme of education and
facilitated buy-in.




82       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Expected organisational changes
A little early to say, but changes are likely to include:
•     a substantial revision of the strategic processes of the ARC
•     a focus on the current measures of success, and ongoing work to create a more balanced
      set, both in terms of the concepts of the Balanced Scorecard, but also from a SDR point of
      view
•     a greater level of alignment between individual work plans, and the strategic goals of the
      organisation
•     possible review of the current definition of outcomes for the ARC, once strategy is
      reviewed.

Possible value of triple bottom line for the ARC
For all the reasons set out in this report, the ARC sees tremendous value in the Triple Bottom
Line approach. All the costs and benefits listed are potential and real, however the key principle
must be that if local government is changed with creating sustainable communities, then it must
be prepared to create strategy aimed directly at such an outcome, and then to measure and
demonstrate progress towards that. Barriers and incentives will lie in front of any strategic
measurement framework chosen. The costs and benefits identified are relatively generic and not
unique to Triple Bottom Line Report. However, business excellence requires a commitment to
strategic measurement and reporting.

Barriers to implementation
These are also relatively obvious. First barriers are about the need to clarify and clearly express
in measurable terms our mission and vision. Without this there is no connection between tasks
and ultimate outcome. Secondly, there must be alignment between all tasks/projects and the
mission/vision. Actions which are not aligned need to be reviewed, and if agreed, resources
better deployed to meet the organisation’s and the region’s goals. Third, there needs to be a
relatively compete understanding of the key elements of the transition from strategy to results.
This involves a good average level of understanding of the key success drivers for the
organisation (for all employees ) in terms of:
•      leadership
•      strategy
•      customer focus
•      information management
•      people focus
•      process management
•      business results.

Lastly, and as mentioned above, we must continue to create a culture which is results and
achievement driven. Measures in the Balanced Scorecard, Sustainability Scorecard, Triple
Bottom Line must be meaningful and must connect through to high level measures of success
for the organisation and the region.




                     Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   83
Benefits to local government
These are self-evident.

Recommendations to MfE
Firstly, keep leading – it’s great to have MfE giving practical guidance on these issues to local
government.

Secondly, and perhaps more critically, get strategic and measurement tools into a framework
which makes sense, and promote this consistently. MfE sponsor the use of the Malcolm
Baldrige framework in New Zealand Local Government, but at no point in the discussion has
this framework been put up as a key mechanism to link focused strategy through to balanced
results while having regard to both the customer and key elements of social, economic, cultural
and economic wellbeing. This is imply a missed opportunity to provide even more rigour to the
development of a clear, consistent and simple strategic framework for sustainable development
in New Zealand local government. Taking such an approach would broaden the scope of the
facilitators and also the participants to consider a wider range of approaches, within a
framework that would point towards world-class strategy, processes and results for local
government organisations in New Zealand.


Christchurch City Council

Triple Bottom Line Reporting Pilot Groups: Report back for MfE

General background
In August 2000 Council “recognised the opportunity for the city to become an international
leader in sustainability and become a showcase example of a good place to live with clear
business, social, and community benefits” and “committed itself to leading a process to build a
sustainable Christchurch”. At the same time Council resolved that “Council’s 2002/03 Annual
Report being (prepared) on a “triple bottom line” basis.

Why your organisation is considering TBLR and why it decided to participate the
pilot group


Where your organisation will have got to with TBLR by 30 June
CCC will have final Annual Plan for 2002/03 in Triple Bottom Line format, following public
consultation in accordance with its usual Annual Plan process.

Whether or not your organisation intends to keep progressing TBLR
Yes – preparing and presenting the Annual Plan in a triple bottom line format has been seen as
an opportunity for significant improvements in the process, rather than just some experimental
and/or additional process.

What we’ve learned along the way




84       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Key lessons learnt during pilot group process
There are significant opportunities for joint collaborative learning amongst councils around
New Zealand but it takes some proactive initiative (by the Ministry for the Environment in this
case) to facilitate this happening. While Councils are facing diverse issues, there are many
common underlying issues.

Expectations vs realities of preparing a TBLR to date
A key to the success in preparing a Triple Bottom Line Annual Plan has been its complete
integration into the existing Annual Plan process led by the Financial Services Unit Manager,
together with a small group of staff from key service delivery Units. Because the advent of
Triple Bottom Line Annual Planning coincided helped to deliver what had established for some
time as a need for significant improvement to existing systems, its implementation was much
more straightforward, being accepted simply as an ongoing improvement.

Observed or proposed future organisational changes
There are significant opportunities for improvement on the Triple Bottom Line annual plan we
have produced, as we increase our understanding of both what is meant by social,
environmental and economic sustainability and how we can deliver better outcomes in a more
integrated way across the organisation. The TBL annual plan however gives us a structure
within which to make these improvements.

Perspective on value of TBLR for your organisation
Potential costs and benefits of preparing a TBLR (see below for some ideas). The potential
benefits are significant, providing a framework/climate for people to demonstrate the
sustainability of their activities and raises the profile of sustainable development generally.
Because Triple Bottom Line Reporting has been adopted as a fundamental part of mainstream
annual planning processed, the costs have been relatively minor, comprising primarily staff time
and some additional printing costs.

Barriers to implementing TBL
Lack of knowledge and understanding of the environmental, social and economic impacts of
activities, especially those areas outside traditional areas of expertise.

Perspective of value of TBLR for local authorities/government entities
Triple bottom line reporting is one tool which will help integrate what we do and better achieve
our strategic objectives, which have been written with a TBL flavour (though not explicitly
expressed as TBL) for some years.

Recommendations to MfE on whether it should continue promoting TBLR in the
public sector and if so, how?
1     Taking the role of a facilitator, trying to match Councils/staff with experience/
      information in specific areas with those struggling with or looking for assistance in that
      area, perhaps facilitating small specific workshops. Focussing some effort, at this early
      stage in the uptake of sustainable development, on helping stimulate changes in thinking
      by helping leading Councils to inspire those in need of changes in direction and/or areas
      where we as a country are least sustainable in our practices.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   85
2     Facilitating learning on the integration of sustainable development ways of thinking into
      decision making at all levels, rather than simply at the level of an Annual Plan or Annual
      Report.
3     MfE could value and recognise the benefit of simply facilitating the coming together
      (like we have in this MfE workshop on TBL) of local/regional and national networks of
      people trying to do similar things and coming up against often similar issues. This would
      need to be linked in obviously with the work of LGNZ, which is also looking at
      promoting networks and other groups.

MfE could establish itself as a central government agency which understands what local
government is trying to do and can help facilitate meaningful interaction with and joint
learning/partnership with central government initiatives MfE funding should be spent on
facilitating various different government and other agencies learning from each other,
recognising the power mentorship and of “learning by doing”, rather than trying to develop
specific academic “expertise” or guidelines.

Value of TBLR in the public sector/costs and benefits

Potential costs
Cost has been primarily additional staff time, to revise and produce/develop objectives and Key
Performance Indicators. However, the staff time has not been significantly more than that
required in any case for ongoing improvements in the Annual Plan.

Potential benefits
TBL is a driver to relate reporting to the longer term goals of the organisation and why the
organisation exists.


Hutt City Council

Triple bottom line reporting
Hutt City Council (Hutt City) is a territorial local authority with a rating base of 38,000
ratepayers and total revenues of $80 million per annum. Hutt City is the ninth largest local
authority in New Zealand and employs 310 FTEs.

Hutt City is a progressive organisation. Its vision for the city is a place where people,
communities and business thrive, a city that is seen as “A great place to live, work and play”.

Hutt City has been considering TBLR as part of its long-term business strategy for some time
now. The long-term success of a business is dependent on working within a sustainable
environment. Hutt City also recognises that in the current business environment higher
standards of corporate behaviour are required, and this is reflected in continuing planning
initiatives such as Hutt City’s participation in the Business Excellence Study Awards.

Other considerations also provide a way forward for Hutt City to adopt TBLR. The review of
the Local Government Bill, which is currently before Parliament states that Councils will be
required to publish Long Term Council Community Plans (LTCCP). The LTCCP will take into
account the impact a Council’s activities have on both the community and environment. If the
new Local Government bill is passed, one of Council’s roles will be to:




86       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
      “... enable local decision making, by, and on behalf of, individuals in their
      communities, to democratically promote and action their social, economic,
      environmental and cultural well being in the present and for the future.”

Regardless of the outcome of the Local Government Act review, Hutt City Councillors are
enthusiastic about developing a LTCCP and addressing sustainability issues. Because of the
nature of LTCCP, the process of integrating TBLR into Council procedures will become
inevitable.

As we have come to appreciate, TBLR is not just about producing a report. It is also about
changing the way people think on a day-to-day basis. An example of this would be the
requirement that all reports to Council would note their economic, social, environmental and
cultural impact, if any.

Expectations v realities
Compiling a TBLR would not be difficult. The difficulty arises in selecting the most
appropriate issues. This problem was realised when Hutt City employees produced a list of
current economic, social and environmental sustainability issues facing the city. It was difficult
to rank the issues in terms of importance.

There are both internal and external issues that are relevant to Hutt City. However in some
instances it is not clear where Councils responsibilities end or begin especially in respect to
external issues such as reducing crime in the City. Also, selection of such issues might require
Council agreement, as there may be political implications. In reality the warts and all disclosure
of sustainable issues could get lost in the political process.

As a consequence Hutt City would need to be very clear on what sustainability issues it wishes
to report on. Would it take into account both internal and external issues, or concentrate on one
only? Is it possible to do one without the other? Whatever the outcome, Hutt City would need
to clearly understand its role in each. Most of these questions hopefully will be answered with
the introduction of the Councils LTCCP in June 2003.

Future organisational change
In an ideal world, Hutt City would have on board a “TBLR champion”. A champion whose
responsibility it would be to drive the whole TBLR process at a senior management level.

However, what we can say at this stage is that Hutt City has been proactive in setting up internal
groups made up of management and staff who are presently developing draft outcomes based
around economic, social, cultural and environmental sustainability and overall community well-
being. Once completed these will be put out into the community for feedback. This is the first
step in the process of incremental steps Hutt City is taking toward creating a more sustainable
community – identifying the issues.

Another of our incremental steps is to introduce TBLR as part of the Annual Reporting process.
This year we will be incorporating what information we do have on issues of sustainability into
this report.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   87
Further, a model of integration similar to that adopted by Christchurch City Council could be
adopted. Each paper going to Council would incorporate sustainability impacts split into
economic, social, environmental and cultural. At this stage such impacts may not be quantified
however identifying Council decisions that impact these areas would be beneficial.

As noted above information to be reported through TBLR will be sourced from existing
economic, social and environmental monitoring programmes. Moving toward full TBLR would
be achievable on an incremental basis starting in 2002. This strategy would be further refined in
subsequent years.

Work on formally identifying sustainability issues will progress through the LTCCP
implementation process.

Who would our audience be?
Users of TBL reports are varied. Both internal and external stakeholders would use the
information published to measure the performance of Council. This would include Council’s
Executive Management Team (EMT) and other Council Officers who would use the
information to assist them in making informed strategic decisions, the Mayor and Councillor’s
in their governance role, and the wider community as end-users.

What value would Hutt City get from adopting the TBL philosophy?
The new Local Government Bill is likely to require planning to incorporate sustainability.
Value will also arise from the following:
•     Assist in identifying tradeoffs and improve performance measurement, not just the
      economic impact of decisions.
•     Provide more information for stakeholders. Annual reports and LTCCP will tell a story
      rather than disclose a static financial position.
•     Will increase accountability of HCC by providing more information to stakeholders.
•     Will improve long term organisational planning.
•     Increase staff involvement in organisational decision making.
•     Increase accessibility of reporting on significant information.
•     Will ensure HCC and the City become more sustainable in the long term.
•     Make balanced decisions across all sectors.
•     Increase cross organisation teams working together, making decisions together,
      collectively.

Barriers to implementing TBLR
Lack of resources is the most significant barrier to implementing TBLR. In addition there may
be lack of understanding of the philosophy behind TBLR and many may feel it is “just another
fad”.




88       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Application to local authorities
TBLR would add value to the reporting processes of Council. It would widen the scope of
reporting and provide more comprehensive information to stakeholders on non financial matters
which are presently under reported. Information on issues other than financial could also be
presented in reporting documents. This would assist the Council when benchmarking
performance against other local authorities.


Porirua City Council

Report on MfE Pilot Triple Bottom Line Reporting

Introduction
Porirua City Council thanks the Ministry for the Environment and Audit New Zealand for the
opportunity to take part in the Triple Bottom Line Reporting (TBLR) pilot. We hope in turn
that the perspective this Council brought during the workshops and reiterates in this report adds
value to the findings of the TBLR pilot.

PCC’s perspective on TBLR
Relative to the other Councils who took part in the pilot on TBLR, Porirua City Council is a
small organisation. As a result the available resources are limited particularly with regard to
organisational capability. This factor provides the background and primary constraints for this
Council’s approach to the TBLR exercise.

Porirua City Council has no immediate intention to produce a TBL report, either as a part of the
Annual Report or as a separate or supplementary report. There are two reasons for this. The
first is that as already mentioned this Council does not have the resources to carry out a project
such as a TBL Report in a silo, separate from other similar initiatives and outside of the
Council’s wider planning framework. Secondly we are of the opinion that it does not make
sense to do so. While it is appreciated that the scope of the pilot was restricted to reporting
frameworks, we do not believe that converting a local authority’s annual report into a TBL
Report is necessarily the best mechanism for implementing a framework for the monitoring of
sustainable development practice. Further we believe that this approach is inadequate for
obtaining the appropriate buy-in for a successful TBLR framework.

Porirua City Council believes that the TBL or sustainable development is much bigger than a
technical exercise in reporting. The principles of sustainable development need to be
entrenched within an organisation’s culture so that sustainable development thinking drives
every day decision-making at every level of Council. We feel that introducing sustainable
development through a TBLR framework will merely give the impression of yet another set of
requirements on top of the already heavy load carried with regard to record keeping and
reporting requirements. In fact the aim is to encourage staff to take on a completely new
approach to decision making, planning and reporting. Introducing culture change of this
magnitude requires engagement of staff, Councillors and the community at every level. In our
view TBLR is not a sufficient framework to obtain this level of engagement.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   89
Having laid down Porirua City Council’s reservations regarding TBLR we wish to make it clear
that as an organisation we are committed to moving to a TBL framework or similar. At the
Councillor level, TBLR is already part of the terms of reference for the Council’s Strategy
Committee. Our position is not that smaller local authorities do not have the resources to
engage in sustainable development, rather, it is the manner of implementation, which is likely to
differ.

TBL as best practice
We are committed to sustainable development because we believe that it is simply a matter a
best practice in the local government setting. It makes good sense to benchmark a local
authority’s planning, outputs, and reporting on social and environmental as well as economic
considerations. This position is backed up by the fact that there is significant pressure from the
community to ensure that these considerations are adequately accounted for and monitored in
decision-making processes. This fact was clearly established for Porirua City Council through
the consultation processes involved in producing the City’s 10-year Strategic Plan. The
community outcomes that emerged in the Strategic Plan process formed a comprehensive mix
that clearly encourages sustainable outcomes for the City in a triple bottom line sense.

The challenge for Porirua City Council is in the implementation of sustainable development
practices given the resource constraints discussed above. A critical part of this challenge is the
effective establishment of clear links between the sustainable outcomes desired by the
community and how Council will contribute towards these outcomes through the services it
delivers to the City. The forthcoming review of the Long Term Financial Strategy provides
Council with the opportunity to justify outputs in terms of the contributions they make to
community outcomes. Because the community outcome mix requires sustainable development,
it should follow that if Council is to respond to the community, the LTFS will set the scene for
the shift to a sustainable development decision-making and planning environment.

LTCCP and TBL
The anticipated introduction of the Local Government Bill is timely in this regard. In particular
the requirement in the Bill for local authorities to produce a Long Term Council Community
Plan (LTCCP). It is through the introduction of this planning mechanism, which will include
the review of the LTFS, that Porirua City Council intends to integrate sustainable development
concepts and measures into our planning cycle. There are two main reasons that this Council
believes the LTCCP is the most appropriate mechanism for this. The first is the requirement set
down in the Bill to link Council outputs to community outcomes, which will naturally direct
Council’s activities in a sustainable direction. As a result the better Council responds to the
community’s desired outcomes for the City the more sustainable these activities will become.
Secondly the degree of overhaul required on the current planning cycle which will affect every
part of the organisation, provides a suitable setting for introducing new approaches to justifying
and measuring the effectiveness of policies and decisions. Establishing buy-in for these
approaches is most likely to be achieved if there is a “hook to hang it on”, the LTCCP will meet
this need. The process of implementing the LTCCP will provide the go forward and
engagement that is necessary because it impacts the organisation at all levels and demands the
attention of elected members, management, and staff alike.

Naturally the integration of a sustainable development approach into planning will mean that
reporting in the future will increasingly align with the TBLR framework without the need to use
a reporting template that does not match the planning template it is reporting on.




90       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Reporting on sustainable development
When it comes to reporting on sustainable development we believe that there are some specific
issues that face local government, which deserve comment. We felt that there was some
confusion with regard to the scope of TBLR for local authorities in terms of a Council’s part in
sustainable development in a global setting. It seems to us that local authorities need to report
on two levels, in order to satisfy best practice and meet SDR or TBLR standards and in doing
this we feel that confusion may be avoided.

This view is based on the assumption that the activities of local authorities activities impact on
only a limited number of variables that influence the city and its progress Yet local authorities
have a responsibility in terms of monitoring the city’s progress and sustainability. Thus the two
levels of reporting are as follows. Sustainable development reporting is necessary firstly in
regard to Council’s outputs and services and secondly on the City’s global trends in which the
Council is only a player. Porirua City Council anticipates that reporting on these two levels will
naturally occur in response to the requirements of the Local Government Bill, the first within
the Annual Report and the second in the requirement to monitor community outcomes. As
these reporting mechanisms become more refined it will be possible to improve the quantitative
and qualitative links between the two levels which will give an even greater level of integration.

Conclusion
Porirua City Council believes that sustainable development is very appropriate in the local
government setting and should rightly be treated as best practice. However we would advocate
that the adoption of this approach should be initiated from the planning rather than the reporting
end of the cycle as we believe that such an approach is more resource efficient and enables more
effective buy-in to be established.


Taupo District Council

Report to the Ministry for the Environment on the Outcome of the Triple Bottom Line
Reporting Pilot Groups Project
This report answers the questions in the order requested.

The Taupo District Council (TDC)
Population:             31,521 in year 2001
                        Maori represent 29.3% of the population
Land area:              6354 km2
Lake area:              616 km2
Rateable properties:    18,492
Capital value:          $5634 million
Population growth rate: Approximately 1.5%year




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   91
Why TDC is considering TBLR and is participating in this pilot group study
TDC operates under ‘Community-driven’ Strategic and Annual Plans which are structured
around the three areas of:
•     the natural environment
•     the community
•     the economy.

However, the plans need to be improved to better reflect how the principles of ‘Sustainable
Development’ are being recognised and implemented by TDC.

TDC has endorsed, by way of resolution, Council staff being involved in this study. Council
staff believe that participation will lead to increased knowledge and ideas about TBLR and
thereby how TDC plans and reports can be improved-making them more informative and
relevant to the public

Where will TDC be with TBLR by 30 June 2002?
A ‘Sustainable Development Team’ has been formed. It’s formation has been approved by the
Chief Executive and the senior management group. The prime purpose of that team is to:
•     educate both staff and elected members about what ‘Sustainable Development’ means
      (particularly those who haven’t been involved in past attempts within TDC)
•     begin a process to introduce ‘Sustainable Development’ thinking into TDC processes,
      practices and policies.

The ‘Sustainable Development Team’ has already met and has agreed to hold a one-day ‘retreat’
on ‘Sustainable Development’ in July to allow it, as a team, to come to a better understanding
about ‘Sustainable Development’.

Council has approved the holding of a Council Workshop on ‘Sustainable Development’ in
August to begin the process of education and ‘buy-in’ at an ‘elected member’ level.

Progressing TBLR within TDC
TBLR appears to be accepted as something that TDC will implement as the next step toward the
implementation of ‘sustainable development’ within the organisation.

The responsibility of developing TBLR will probably rest jointly between the ‘Sustainable
Development Team’ and the Financial and Strategic Management Divisions of TDC. Because
Financial and Strategic Management personnel are part of that team, implementation of TBLR
should be relatively smooth.

Key lessons learnt during the pilot group process
‘Buy-in’ is the most critical factor to the successful introduction of ‘Sustainable Development’
(and thereby TBLR) within an organisation. It is important to get the ‘buy-in’ phase right. In
this regard it seems that the use of outside expertise to assist in this process is critical.

It is important to work with others who share a passion for Sustainable Development as an aid
toward introducing Sustainable Development within your own organisation.




92       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
There are huge differences between peoples levels of understanding about what sustainable
development is, and between the levels of implementation of the principles of sustainable
development within organisations.

There are a number of routes to achieving sustainable development.

Expectations versus reality
There are huge differences between peoples levels of understanding about what sustainable
development is, and between their levels of implementation of the principles of sustainable
development. Some people are not interested in sustainable development. If the senior persons
in an organisation do not support sustainable development, then its introduction is going to be
difficult.

Possible organisation changes as a result of TBLR
A change in TDC case is desirable because there is not a direct alignment between its
‘sustainable development-focused’ strategic plan and its organisation structure.

However, there may be alternative mechanisms for achieving that direct alignment-rather than
through an organisation restructure.

Value of TBLR to TDC
•     Helping to introduce the ‘principles’ of sustainable development into TDC ‘thinking/
      planning/policy’ processes.
•     Help focus TDC thinking toward sustainable development.
•     Increase the levels of awareness of TDC staff and elected members of the underlying
      reasons why we are doing some things at both the local and national levels. Energy
      conservation and waste minimisation are easy examples (to reduce global warming and to
      make better use of resources-rather than to save money).
•     Linking the local with the global (this is the above bullet point expressed in another way).
•     Help people appreciate the ‘wider’ impacts their decisions are having. Lets people think
      ‘outside their silos’.
•     Produce reports for the public which are more relevant and interesting to the them.

Barriers to implementation of TBLR
•     Main barrier is buy-in.
•     Resourcing-both dollars and personnel.
•     Willingness of elected members to participate on the same level with the community
      (allowing the community to participate/even make decisions, i.e. taking a bottom-up
      approach rather than a top-down approach).




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   93
Value of TBLR for local authorities/government entities
•     The biggest benefit will be both tiers of Government working together. Hopefully, the
      development of a ‘State of the Nation report’ with ‘national targets and indicators’ toward
      which both central and local government can work toward-together.
•     Help to introduce the ‘principles’ of sustainable development into the public sector
      ‘thinking/planning/policy’ processes.
•     Increase the levels of awareness of public sector personnel about the underlying reasons
      why we are doing some things at both the local and national levels. Energy conservation
      and waste minimisation are easy examples (to reduce global warming and to make better
      use of resources-rather than to save money).
•     Linking the local with the global (this is the above bullet point expressed in another way).
•     Help people appreciate the ‘wider’ impacts their decisions are having. Lets people think
      ‘outside their silos’.

It adds to existing reporting by hopefully, the development of a ‘State of the Nation report’ with
‘national targets and indicators’ toward which both central and local government can work
toward-together, making the reports more meaningful and relevant to the public.

Recommendation to MfE
Firstly, congratulations to MfE for taking this, and the many other steps it has taken, toward
introducing sustainable development throughout the fabric of thinking and practice in New
Zealand.

I would encourage MfE to continue promoting TBLR in the public sector. It should seek to
develop ‘templates’ which could be followed by the public sector. It could do this through
continuing with the two projects currently started-TLAs and the central government projects, or
it could combine the two into one project. I would favour continuing the two projects for say
four more rounds of meetings, and then holding say three rounds of joint meetings to see what
opportunities exist for synergies/combining, etc.

A ‘model’ sustainable development Annual Report could be developed. I suggest that MfE
engage the NZ Society of Accountants to help with this project.

D Gartner
26 June 2002




94       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Environment Waikato

Report to Ministry for the Environment
Sustainable Development Reporting: Pilot Group Feedback

Background


The pilot groups
The Ministry for the Environment (MfE) has been sponsoring a group of local authorities and
public sector organisations in participating in the process of Sustainable Development Reporting
(SDR, also called Triple Bottom Line Reporting (TBLR)).

The Ministry’s objectives in setting up the groups are to:
•     increase participants understanding of SDR and how it relates to their organisations’
      responsibilities
•     provide a forum for pilot groups of government entities and local authorities to work
      through some of the difficult issues associated with SDR in the sector
•     progress facilitation of the development of SD reports for the participating organisations
•     document the key issues and lessons learnt from the pilot process
•     come to conclusions regarding the value of SDR in the local government sector.

The new Local Government Bill has a number of clauses which promote consideration of social,
cultural, environmental and economic factors consistent with the adoption of SD. It is clear that
this is a policy direction the Government is pursuing.

This paper outlines the stage that EW is at in the SDR process. It also sets out what is required
to take this project forward if we are to fully take on board the concept of sustainable
development and commit to reporting on our progress.

Environment Waikato
Environment Waikato is a regional council established in 1989. We help communities,
industry, farmers and other groups to live and work with natural resources – water, soil, air,
geothermal areas and coasts – so we can all enjoy and use them for generations to come. Our
role includes:
•     using a mix of rules, plans, education and information to manage the Waikato’s natural
      and physical resources, as well as natural hazards and hazardous substances
•     providing, managing and maintaining flood control, drainage and soil conservation
      schemes
•     managing and controlling animal and plant pests such as possums, wild ginger and privet
•     planning and co-ordinating the region’s transport needs, including passenger transport
      services, Total Mobility for people with disabilities and road safety. We are also
      responsible for navigation safety bylaws
•     preparing and planning for managing the region in an emergency, such as a flood,
      volcanic eruption or earthquake.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   95
The region’s people are represented by 14 councillors who are elected every three years. The
next elections will be held in October 2004. Councillors meet regularly to discuss and make
decisions on a wide variety of resource management issues.

EW’s ‘mission’ is:
      To sustainably manage the region’s resources, working with the community to
      benefit present and future generations

and our ‘goals’ are:
1     to provide leadership within our legislative functions
2     to take into account the principles of the Treaty of Waitangi
3     to provide excellent customer service
4     to be a cost effective and consultative organisation operating in an open and accountable
      manner
5     to be an employer of a motivated and skilled workforce.

Why is EW considering SDR?
SDR would require reporting on EW’s impact as a whole and then setting procedures in place
that will result in some form of improved performance. Linking SD indicators to organisational
goals is a necessary early step.

It should be borne in mind that this process should not be purely about reporting. The key point
to remember is that SDR is a business approach and not an end in itself. The reporting process
should help inform all stakeholders as to progress made and what improvements are needed.
Information suggests that progressing SDR may require a fundamental shift in how we think
about our business rather than just being seen as ‘another’ project.

Where has EW got to with SDR?
The aim of the MfE trial was not necessarily to complete a SD report, but rather for members of
the pilot group to learn from each other’s experiences of taking a SD/TBL approach to planning,
decision-making and reporting. EW has already taken a number of steps forward:
•     attendance of the three workshops held by MfE and Audit NZ
•     identification of appropriate individuals across EW (including Resource Information,
      Resource Use, Policy, Corporate Development, Finance and HR)
•     preparation of a paper for team members setting out the concept and what was required
•     preparation of a summary document of team members’ responses
•     first team meeting held on 21 May
•     preparation of a draft list of sustainability indicators
•     second team meeting with Leanne Holdsworth of Audit NZ held on 28 May
•     submission of a paper to EW’s Executive Management Team (EMT) on 17 June
•     preparation for a Council Workshop to explore the concept of SDR.




96       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
It became clear at the first team meeting that there were many issues to be resolved, in particular
the split between internal/external reporting (i.e. ‘practice what we preach’ versus ‘how we
influence others’); resourcing; and why EW would want to be involved in the first place.
Clearly, establishment of the business case is a necessary first step.

The second meeting (which included Audit NZ) certainly helped to clarify some aims and
objectives together with an approach. This led to the framing up of an EW. This model has
since been modified slightly following internal discussions and is set out in Figure 1.

Figure 1:       Revised EW SDR model

                               Council and committees (e.g. policy, corporate services)



                                                        EMT



                                   Sustainable Development Project Control Group
                                                 (Steering Group)




        Corporate Reporting Group                                  Strategic Sustainable Development Group
 Purpose: Raising awareness, engaging staff,                     Purpose: Incorporating a TBL/SD approach as a
 getting runs on the board, using existing                       key principle for council (the way we work). The
 data, short term focus – but further                            group would also provide worked examples.
 refinement for future reporting



                                                                                      Worked examples
             Internal reporting
                                                      Annual                (e.g. biodiversity, waste management,
       Start internal process to develop              Report                 climate change, Taupo water quality
         indicators by October 2002                                               project, asset management
                                                                                   environmental guidelines)


In effect, the two groups can be viewed as an internal group (i.e. EW corporate performance)
and an external group (i.e. how we influence others and how we work). In the medium to long
term, it is envisaged that such a separation will merge into an overall ‘sustainability conscious’
way of working, with appropriate measures set in place.

EMT supports the model proposed and that all groups work towards incorporating a SD
approach to business planning and actions. Group managers will support through providing a
group champion. It is felt that SD concepts are embedded in much of our business practice –
there is support for us looking at how we work, and developing indicators to align with EW’s
five corporate goals. There is support for bringing other aligned organisational initiatives
together in an explicit way so as to be able to demonstrate what we are doing to progress SD
concepts in how we work and how we influence others.




                       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings      97
The numbers of people who will have involvement, therefore, get bigger as the project moves
forward. To contain that and keep the project manageable, the agreement is that a core team be
retained to manage scope and shape of project, using a larger reference group to check with,
action through, receive information and ideas, or promote ideas through to groups.

The future for SDR in EW
In order to progress SDR (and the whole sustainable development approach) in EW, there are a
number of issues to be resolved and initial steps to be taken. In particular:
•     councillor engagement and political mandate
•     link to strategic organisational goals
•     guidance from executive management
•     establishment of the business case
•     allocation of sufficient resources
•     an SD/TBL champion at EMT level
•     SD/TBL champions throughout the organisation being identified
•     selection of project managers/leaders for each group
•     selection of team members for each group
•     agreement on approach and development of a project plan for each group
•     setting of achievable milestones.

It is worth highlighting that it is still early days for the sustainable development approach in
EW, however, great strides have been made in the past few months. It is likely that further,
rapid, progress will be made in the lead up to our next Annual Report and Plan.

Key lessons learnt from the pilot group
Participation in MfE’s trial has led us to make the following conclusions on the use of a
SD/TBL approach:
1     Importance of buy-in. Buy-in is essential at the political and executive level, but in
      order for the whole concept to be successful there must be buy-in from councillors, staff
      and stakeholders (i.e. our regional community). Without this level of acceptance of the
      business case, sustainable development principles will not be fully taken on board and
      hence will not filter through the whole organisation and community.
2     Staff resourcing. It is vital to ensure there is sufficient resourcing to educate, implement
      and continue this project. A champion is required at a high level in order to engage
      senior management and councillors. It is important to translate interest into action. A
      combination of visionary leadership and pragmatic groundwork is important (with
      champions within staff also vital). There is also a need to build and maintain skills and
      capacity, especially for inter-disciplinary thinking to make effective links between the
      bottom lines (environmental, economic, social/cultural).
3     No ‘right’ answer. The pilot group has shown that there is no one way to undertake
      SDR. Each council needs to design an approach that is appropriate for themselves and
      their community. In this case, there is definitely no magic bullet. However, there is no
      need for re-inventing the wheel and duplicating efforts. Learning from others and the
      development of tools that provide guidance and where necessary standardised methods
      and protocols (e.g. for common indicators that can be used for benchmarking).




98       Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
4     The process of reporting should not be an end in itself but lead to change within an
      organisation (i.e. continual improvement along the sustainable development path). It is
      important to use a sustainable development approach at the beginning of a process (e.g.
      linking to strategic planning, project and work programme planning), and may also help
      to set priorities.
5     It’s not an easy process and will take time. Beginning the process has shown us that
      there are many challenges and opportunities along the way. The project must be viewed
      as a long-term one and should not necessarily seek short-term gains (although this does
      help with buy-in). The nature of sustainable development is long-term and this project
      should reflect this.

Value of SDR for EW
This is the key question and one we need to answer in order to progress the concept of SD in
local government.

There are a number of drivers – globally, nationally and locally:
•     the upcoming World Summit on Sustainable Development will renew the awareness of
      and need for sustainable development. The focus will be on implementation (action
      plan). Local government is a key contributor to the Summit and its resulting agenda for
      action;
•     the new Local Government Bill includes sustainable development principles as the
      purpose of local government. The new Bill is outcome focused and includes a number of
      provisions which require building partnerships and considering social, cultural,
      environmental and economic factors consistent with the adoption of SD. It is clear that
      this is a policy direction the Government is pursuing; and
•     communities are increasingly recognising the links between the environment and
      sustainable economic development and their quality of life (health, safety, welfare). This
      raises expectations for information that links environmental, economic and social aspects
      (e.g. environmental accounting, ecological footprinting and other sustainability
      indicators).

There is a need to build adequate capacity to align council’s work programmes and decision-
making processes with the above requirements and expectations. This means organisational
change – aligned with our vision and mission statement and our corporate values.

Audit New Zealand offer a number of additional reasons, with which there has been general
agreement within EW:
•     improves sustainability performance through measuring performance and establishing
      targets for the future
•     improves decision-making through improved information systems (i.e. having
      information available about the broader impact of a decision)
•     creates an improved understanding of the conflicts that exist between maximising
      social, environmental, cultural and economic decisions
•     improves the ability of the organisation to meet the Government’s enthusiasm to
      sustainable development and any resulting legislative pressure such as the LGA, David
      Cunliffe’s Bill (a Private Members Bill on Sustainability Reporting), etc.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   99
•     addresses issues of importance to the community
•     pressure to provide transparency in reporting between organisations objectives and
      outcomes
•     encourages creative thinking about achieving solutions that merge the best of social,
      environmental, cultural and economic performance
•     lead reporting as well as lag reporting allowing the organisation to pull holistic
      performance forward rather than just use reporting as a rear vision mirror
•     starts to address the issue of ‘licence to operate’ in the public sector
•     provides leadership within the public sector
•     supports culture change in respect of improved stakeholder outcomes.

In effect, SDR means reporting on EW’s impact as a whole and then setting procedures in place
that will result in some form of improved performance.

What does SDR add to existing reporting for EW?
The scope of additional reporting depends on how deeply EW chooses to engage in SDR. In the
short-term it may be that we produce relatively simple tracking reports that show trends in
quantifiable units (energy usage, consumption, productivity). We may also report on new
policies adopted by EW as a result of SDR considerations (purchasing policies, HR policies,
etc). However, the key changes to reporting in the long-term are:
•     making explicit the organisation’s contribution to SD region-wide
•     linking operational plans and processes to strategic SD objectives and our mission and
      goals
•     informing/driving decision-making on strategic priorities, business approach and budgets
•     making explicit the outcomes of business actions.

As our SDR efforts become more complex and extend to measures of community change, our
reporting challenges become more complex as well. The mechanics of how we report remain
relatively straightforward; the challenge is in what we report.

Current annual plan and reporting structure is built around outcome themes (e.g. freshwater,
coast, land). SDR provides an overarching focus to measure and report against our mission and
goals. SDR will provide an opportunity to develop a corporate measurement and reporting
framework that integrates a number of current reporting outputs, including:
•     corporate reporting: Annual Report (based on strategic plan/annual plan)
•     State of the environment reporting: benchmark SoE report 1998, progress since then
      through a set of environmental indicators using the website. The selected indicators are
      policy-relevant (i.e. will assess effectiveness of council policies – RPS, RP, RCP, RPMS,
      RLTS)
•     operational reports: annual reports by Biosecurity, Land Transport against Regional Pest
      Management Strategy and Regional Land Transport Strategy, respectively. Regular
      reports by resource use group on consents
•     other internal (e.g. human resources reports to EMT).




100      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Conclusions and recommendations
As can be seen from the above, it is still early days in terms of integrating a sustainable
development approach into the way EW operates and reports. However, initial steps have been
made with a substantial investment of thought to determine why we are doing this and how we
may achieve it. In the past week, senior management have been engaged and a way forward has
been identified with a Councillor Workshop planned. At the core of our approach is an
overarching sustainable development framework that may (eventually) filter through everything
we do in order to encourage a more sustainable, holistic way of thinking and doing.

We have found the pilot group process immensely helpful and wish to continue with some form
of group to enable on-going learning and sharing between public bodies in this area. We would
also find extremely useful the on-going involvement of an external facilitator as has been
provided by Audit NZ. This provides an independent voice and focus, and has been essential in
framing up a way forward for ourselves.




Matt Hickman                                             Clare Crickett
Team Leader                                              Strategic Development Manager


Waitakere City Council

Triple Bottom Line Reporting: Report Back to MfE

Purpose
This report has been prepared for the Ministry for the Environment as the “wrap up” of a pilot
project where the Ministry has assisted eight councils to develop Triple Bottom Line Reporting
(TBLR) through a series of workshops. It focuses on information about Waitakere City
Council’s progress with TBLR, comments on the assistance provided by MfE and makes
recommendations about a future MfE work programme.

Background
Waitakere City is the fifth largest city in New Zealand with a population of 168,000. The
people of the city are ethnically and culturally diverse. The city was originally designed as a
series of dormitory suburbs to feed the Auckland and North Shore industrial and service centres.
This style of urban planning placed immense pressure on the economic, social and
environmental well-being of the Waitakere community. In 1992, Waitakere City signed up to
the international Agenda 21 movement becoming New Zealand’s first Eco-City. This was the
first declaration of an intention to pursue a path of sustainable development on all fronts –
economic, environmental and social.

Waitakere City Council has around 550 staff delivering services to Waitakere City residents.
The Council has continued to provide a large number of services in-house rather than adopting a
strictly “outsourcing” approach although x any are now delivered via a LATE that is owned
jointly with North Shore City Council.




                   Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   101
Why TBLR for Waitakere City Council?
In evaluating whether Waitakere City Council had anything to gain in proceeding with a TBLR
approach a project team considered a number of issues.

What would TBL be when applied to Waitakere City Council?
For Waitakere City, TBL is seen as:
•     an opportunity to learn from best practice and to be part of a network of businesses, local
      authorities and others working towards sustainability planning and reporting
•     a new name, but not really a new concept. In practice most of what we do as “eco-city” is
      consistent with the “TBL” concept. Adopting TBL would give a framework in which to
      do the analysis and tell the story
•     an opportunity to fill in the gaps – implementing those aspects of TBL which other
      organisations are using more effectively than we are, as part of our commitment to
      continuous improvement.

What would be the benefits for Waitakere City Council of adopting TBL?
Since Waitakere City already implements TBL in many areas we are probably already reaping
some of the benefits. Integrated parks and stormwater planning is an example of “eco-city”
planning, supported by reporting.

However there will be benefits in filling in the gaps and bringing areas of the Council’s
operations and decisions which do not, or are not seen to, reflect TBL up to best practice
standards. By choosing and measuring what is really important in the areas where their is the
greatest potential to improve, we will not only measure how we are doing, we will create
incentives to improve our performance and tools to measure how much we have improved.

Why participate in the pilot group?
Having made a decision to develop a TBLR approach, Waitakere City Council was invited to be
part of the MfE pilot project. The major appeal of this process was the opportunity to learn
from best practice and the experiences of our peers. We found that most of the current guidance
material is aimed at the private sector and does not really grapple with the issues that an
organisation whose business is sustainable development has to deal with.

Progress by 30 June 2002
The 2003/03 draft Annual plan has been developed incorporating a TBL section identifying key
outcomes for the city. This is not the basis for a fully developed TBL report but does highlight
the measures that will give a clear indication of Waitakere City’s sustainability issues. In
addition all performance measures have an identifier(s) added to highlight the measuring of
social, economic, environmental and cultural issues. A corporate sustainability section, with a
mixture of measures and narrative, will be included in the final versions of 2002/03 annual plan
(for the first time). This will publicly indicate the sustainability issues with how the Council
operates. Having these measures on the annual plan will allow Waitakere City Council to
produce its first TBL annual report for the 2002/03 year.




102      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
The evaluation methodology has been largely developed although more work is needed to fine-
tune the various elements of the methodology. A high level implementation plan has been
developed for this methodology which considers both the ideal situation and the realistic
possibilities. The project group have agreed it would be best to pilot the use of the methodology
through the main decision making format for council, agenda items, and for new projects that do
not come through the annual plan process. This approach has yet to be approved by the Senior
Management Group of Council.

Next steps for Waitakere City Council
As council has already resolved to progress TBLR through its planning and reporting processes,
it is committed to this path, at least, for the next year. The next steps include a more
fundamental review of the Annual Plan and Annual Report formats to ensure that the way the
organisational information is structured reflects the Triple (or in local government’s case, the
quadruple) bottom line. This will be a sub project of the strategic review, which is currently
underway. Senior Management Group approval of the proposed implementation path for the
evaluation methodology will be sought. At present the overall TBLR project is guided by a
steering group led by the Directors of Strategy and Development, and of Finance.

Key lessons learnt during the pilot group process
The number one lesson learnt was that this is a difficult process for all and that Waitakere City
Council was relatively advanced. It had felt as if progress was exceedingly slow until becoming
a member of the Pilot Group. Another lesson is that most others are approaching this task with
more dedicated resourcing than Waitakere. While TBLR is philosophically well aligned with
the current activities of Waitakere City Council, the internal practices are not necessarily so well
in tune. Without the dedicated resourcing that others seem to have, the early “lead” we have in
actually implementing TBL approaches may well be lost.

Expectations vs realities of preparing a TBLR to date
Expectation was that this would be a straight forward exercise for Waitakere given our emphasis
on sustainable development. This has been the reality at the level of identifying appropriate
measures for the work that Council does but has not been the case for any of the other issues
that we have considered. TBL is as much about a way of working as what is done and this is
proving much harder to come to terms with. A key issue in this respect is the question of
stakeholder involvement in decision making. The internal project team has not yet come to
agreements on the appropriate level and timing of stakeholders in the decision making process.
Our feeling is that we should have much earlier involvement than is currently the case (even
though we are considered to be a council that has a good consultative track record). This will be
one of the hardest issues to “sell” to our organisation and, possibly, council.

Organisational changes as a result of TBLR
It is too early to see any real change as a result of implementing new TBL practices in
Waitakere City Council. We are currently going through an organisation review process and it
is interesting to note that people around the organisation are picking up on the project and
suggesting that changes will be made as a result (generally suggesting changes without any idea
of what TBL actually means). This does suggest there is some receptiveness to change but also
probably some very unrealistic expectations. The big potential that TBLR seems to offer us, is
the means by which we might align our organisation better with the council set vision and




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   103
strategy. The changes are broadly about working across the organisation to achieve outcomes
rather than within functional workgroups to achieve outputs.

Value of TBLR for Waitakere City Council
TBL is about making good decisions and publishing honest reports, for the organisation and for
the city. This is self-evidently valuable. In the Local government context, this decision making
and reporting is part of an overall accountability process which should be improved by more
openness and a stronger focus on what is important for both today and the future. The costs of
implementing TBL are difficult to quantify but include a change management process to get
staff buy in. There is a risk, rather than a cost, in TBLR for local authorities. In the political
environment, “bad news” is often punished harshly.

It is our view that implementing TBL processes will be valuable for local authorities. It
provides a consistent framework for considering both what we do and how we do it that looks
way beyond the Council boundaries in the first instance, then relates what is found back to the
local community. Current reporting allows broader issues to be considered but does not
explicitly require it. Also, as Councils have such broad involvement, it is easy to lose what is
really important within the current reporting framework. TBL forces this question to be asked
and answered.

Barriers to implementing TBL
The major long-term barrier to implementing TBL may be the resistance to the level of rigour
that TBL introduces to decision-making from both staff and Councillors. It has been reasonably
easy to justify projects that are not especially sustainable to date but if TBL were implemented
fully, this would impose a discipline that is not currently there. In the short term the main
barrier is understanding and lack of knowledge of the broader issues that are raised through a
TBL approach. This can be overcome with training and support but this will require a
significant resource commitment.

Recommendations to MfE
Waitakere believes that TBL is a valuable tool for Local Govt that supports the principles of the
proposed Local Govt Act. There should be continued promotion through Central Govt of the
use of this tool. This promotion could be at several levels:
•      advocacy at a political level for adoption of the framework
•      supplying tools, training and resources to staff of the Councils
•      facilitating networking and exchange of ideas.




104      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
Wellington City Council

Triple Bottom Line Reporting: Pilot Project Report back

Background
Wellington City Council is the sixth largest local authority in New Zealand. It has a population
of 167,824 and an annual budget of $234,999.000. It employs 1350 full time equivalents and
provides a wide range of services to ratepayers.

Over the last several years the Council has developed a comprehensive strategic planning
environment that links outcomes, activities, programmes and projects and city indicators. There
is also a requirement under the Resource Management Act for a “State of the Environment”
report, for which the Council has developed a framework for compliance. In addition the
Council operates a balanced score card system with both corporate and business specific
performance measures. Over time business units have also developed their own performance
measurement system. Both improvement and rationalisation of these processes has been
incremental. Triple bottom line reporting offers another improvement opportunity with its
emphasis on sustainability and practical as well as theoretical linkages.

Wellington city is currently undertaking a Strategic Delivery Review. This is a process that has
six streams of work and will culminate in the 2003/04 Annual Plan. The review process
comprises the following streams of work:
•     Stream 1 – Internal review of all council business units.
•     Stream 2 – Review of council facilities and services in communities to optimise
      resources.
•     Stream 3 – Review of council assets and investments to assess their effectiveness in
      meeting council objectives.
•     Stream 4 – The ongoing plan for development of the city.
•     Stream 5 – Policy programme to deliver policy work required to deliver on council’s
      outcomes and objectives.
•     Stream 6 – Communications plan to communicate with communities and stakeholders in
      Wellington.

This ambitious work programme is enhanced by the Triple Bottom Line pilot project which is
happening on a parallel time schedule and is informed by much of the work within the strategic
delivery review.

The pilot triple bottom line reporting project offers Wellington city the opportunity to look at its
planning environment to:
•     achieve compliance with the new Local Government Act
•     enhance the focus on sustainability.
•     improve decision making through both improved information systems and greater clarity
      on trade-offs
•     improve accountability
•     drive organisational change.




                    Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings   105
Progress to date
The Council’s Management Team has approved development of two TBL reports:
1     City report – focusing on outcome measures that affect the city’s performance against
      sustainability measures.
2     Corporate report – focusing on the Council’s corporate performance.

To advance this work a TBL project team was established in March 2002 with representation
from across Council. A number of meetings have been held over the March to June period as
well as two workshops facilitated by Leanne Holdsworth.

Several streams of work have been developed as foundation documents for subsequent work.
These are:
•     sustainable development context
•     why are we doing TBL?
•     what value will TBL reporting add?
•     who are our audience for TBL?
•     building buy-in for TBL
•     draft key sustainability issues for Wellington City.

Further work has also commenced on identifying sustainability gaps in Wellington City
Council’s current Key Achievement Areas (referred to as KAAs). Agreement has also been
reached on defining outcomes and output measures for strategic objectives within the KAAs as
a basket of measures. Initial work has taken place in terms of practical tools that can be used
throughout Council to make Triple Bottom Line Reporting meaningful to the whole range of
users. These tools include:
•      analysis of council report templates for TBL improvements
•      development of an improved business case template for business unit managers to use in
       developing new initiatives for the annual plan process.

The project team recognises that this is an iterative project, requiring refinement and
improvement over a number of planning cycles. While the aim is to have a TBL report for the
current year’s Annual Report (2002/03), the form of the report and the underlying planning
processes is likely to change over time as the council improves its awareness of the relevant
issues and organisational and societal awareness grows.

Key lessons learned
•     Building buy-in is complex and multi-faceted requiring different strategies for different
      audiences. Practical benefits need to be highlighted to get broad support politically and
      organisationally. Milestones need to be measurable and progress achievable.
•     One of the greatest advantages to TBL is its ability to drive an integrated planning and
      reporting system and rationalise any duplication or rework in current systems (TBL is
      more than just a different way to package annual reporting).
•     Using sustainability as a “lens” to identify gaps in the existing strategic framework offers
      a consistent methodology for an improved framework.
•     Developing the linkages between outcomes, activities and related programmes and
      projects is fundamental to drive change.




106      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings
•         It may be preferable to develop a basket of measures for a group of objectives rather than
          use a “silo” approach where each strategic objective has its own set of measures covering
          environmental, social, economic and cultural aspects.
•         Many of the building blocks for a high quality planning framework are already in place –
          the trick is to integrate them.
•         Social and cultural measures are more difficult to conceptualise, define and agree on.
•         The project requires energy, time and commitment from a wide range of staff and
          stakeholders.

Expectations versus realities of preparing a TBL report
The project team under estimated the amount of time, intellectual rigour, leadership and sheer
perseverance required in getting agreement on a strategy for implementing Triple Bottom Line
Report. There has been some frustration about process and the speed at which some practical
tools could be developed and used.

A sense of progress is dependent on milestones being achieved. The project team and staff have
been somewhat over optimistic at times in terms of achieving a “product” to sell the concept
throughout the organisation.

Organisational changes as a result of Triple Bottom Line Reporting
The organisational changes will come as the planning tools are amended and practical benefits
are achieved. This will occur incrementally as the organisation’s systems improve.

Costs and benefits of preparing a Triple Bottom Line Report
    Costs or barriers to implementing TBL                        Benefits of implementing TBL

    Initial staff time to develop a coherent TBL framework       Reduced staff time in dealing with multiple systems,
    (likely to be at the commencement of the project and for     reducing duplication (an ongoing issue for staff across
    a relatively few staff involved intensively)                 the organisation on a monthly, and quarterly basis)

    Resistance to change – there is a perception that            Business advantages as the system becomes effective
    Council’s existing planning and reporting framework is
    superior to those previously used in the organisation and    •   Improved policy advice function (both quality and
    therefore shouldn’t be altered significantly. Building buy       integration aspects)
    in could be both time and resource intensive                 •   Improved decision making (based on improved
                                                                     information on all aspects of an activity or initiative)
                                                                 •   Efficiency and effectiveness improvements over a
                                                                     longer planning timeframe

    Perception that TBL is another fad                           Greater accountability to the public (better information in
                                                                 a more useable form)




                           Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings             107
Recommendations
Triple Bottom Line Reporting is an opportunity for developing an integrated planning and
decision-making framework. It depends on:
•     robust leadership and intellectual rigour at the front end of the process
•     an accurate assessment of the resource load required by participating authorities
•     a staged and structured process that has key deliverables and agreed timeframes
•     a good input of knowledge about TBL concepts
•     provision of best practice guidelines (once pilots are completed!) and support structures
      to supplement written resource.




108      Triple Bottom Line Reporting in the Public Sector: Summary of Pilot Group Findings

				
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