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Deep Reporting environmental impacts that a company (e.g., a manufacturer) has during the production stage of a product's life cycle. Any company's total environmental impacts, however, will always be greater than those associated with the production or handling of a single product. Thus, an LCA is no substitute for a corporate sustainability report, and should never be seen as such. 4. As with all methodologies in which efficiency is involved, LCAs are fundamentally context-free. They do not measure or express environmental impacts relative to norms or standards for what such impacts ought to be, because LCA was never designed to address sustainability performance, per se. Nor can products, as we have already said, be held accountable for Accounting: A Primer Most people generally agree that a performance measurement and reporting system should make it possible to both understand the performance of an organization and compare its performance to others in like terms. Generally Accepted Accounting Principles (GAAP), for example, makes this possible with respect to financial performance, but what, if any, is the equivalent of GAAP on the non-financial side of performance? And what exactly is it that makes GAAP work in the first place? Let's deal with the second question first. As argued in our earlier dispatches, financial measurement and reporting systems such as GAAP are fundamentally capital- and context-based. They are capital-based to the extent that they anything. Since they are not morally accountable agents, any deal with organizations' effects or impacts on monetary capital, attempt to do so would be meaningless and nonsensical. This is and they are context-based in the sense that they measure and because products are inanimate objects. And if, by contrast, it is report performance relative to the quality and sufficiency of the actions of people who make, use, and dispose of products such capital, while also measuring incoming monetary flows that we are really interested in assessing, LCA has nothing to (revenue) against outgoing flows (costs). Like all context-based offer; instead, we must turn to other methodologies that have measurement, management and reporting systems, GAAP human actions as their primary referents of interest, and which measures revenue against a threshold, which constitutes a can help us measure the social and environmental impacts of financial standard of performance. That threshold, in the case people and their organizations relative to norms or standards of financial performance, is made up of costs or expenses, such for what such impacts ought to be. Indeed, people make that revenues should be no less than costs. Thus, revenues that choices, products don't. fall below such thresholds diminish the stock of monetary capital, which if continued unabated will put capital, and therefore 5. LCAs are, by definition, concerned only with the environmental impacts of products and services, although efforts are underway to develop a social LCA methodology.2 Thus, to the extent that we are interested in applying a triple bottom line interpretation of sustainability, LCAs only get us so far. And even insofar as they do address one of the three bottom lines of interest to us—the environmental one—they only do so in terms of efficiency and with no context to go by, as separately noted above; and also for products and services only, not organizations, as also noted above. That all said, LCAs do have a legitimate role to play in helping organizations to mitigate the environmental impacts of their products and services up and down the supply and demand shareholder well-being, at risk. Income statements and balance sheets are, at least in part, predicated on these principles. Once the theoretical underpinnings of a measurement model such as GAAP have been defined, templates or conceptual frameworks can be devised in order to operationalize them. Again, income statements and balance sheets and the categories of measures they entail fit this description in the case of financial management and GAAP, in particular. Furthermore, rules can be devised that explain how to use such frameworks and how to record different kinds of transactions within them. GAAP, for example, helps us understand the difference between an asset and a liability, and how to reflect these and other transactions in our financial measurement and reporting systems. chain, as well as to help users of products and services improve Now assuming everyone is using the same conceptual frameworks their own sustainability performance. Our objective is simply and following the same rules for how to use them, the financial to point out that the use of LCAs should not be confused with performance of one firm can be compared to the financial the separate need to measure, manage and report the performance of another in like terms. Despite their imperfections, sustainability performance of organizations in other ways; this is arguably one of the beauties of conventional accounting nor should it be viewed as a substitute or justification for systems in use by businesses today—they make cross- not doing so. organizational comparisons of performance possible, not to MAY/JUNE 2013 | www.thecro.com [17]