Episode 010: Markus Milne

Prof. Markus Milne is a critical accounting scholar who examines corporate social and environmental reporting. A passionate mountaineer and a passionate teacher, he has become increasingly pessimistic about our ability to put an end to the effects of consumer capitalism on the planet.

Transcript

Cameron Graham: My guest today is Markus Milne, Professor of Accounting at the University of Canterbury, in Christchurch, New Zealand. Prof. Milne is an accounting researcher who lives and breathes his research, not simply studying the impact of capitalism on our planet from the comfort of his office, but spending as many hours as he can in the great outdoors. He’s a rock climber and trekker with vast experience hiking through the mountains of New Zealand. This feet-on-the-ground experience shapes the way he approaches his research and how he talks about it to students, business people, and government policymakers. I interviewed Prof. Milne in Christchurch while I was there during my own sabbatical research. I hope you enjoy our conversation.… Markus, welcome to the podcast!

Markus Milne: Thank you Cameron. It’s a pleasure to be here.

Cameron: I want to talk to you about your own research, which is quite critical of the whole notion of corporate social responsibility, certainly as it’s currently practiced anyway. You argue that corporations constantly misrepresent their impact on the environment. What do you see going on?

Markus: Well, what I think I see going on is selective reporting. Even though increasingly there are so-called worldwide standards, the GRI, the Global Reporting Initiative, which provides a template for organizations to report against, the amount of discretion, the amount of flexibility that they have, enables them to present information that’s not untrue but is highly selective. And so they represent themselves in a particular way, which is always a rosy picture. I wouldn’t say that they lie. They just don’t make you aware of the greater impacts that they’re having.

Cameron: One of the things in the GRI standards that I’ve noticed is some very simplistic measures of environmental impact, like how many incidents have you been reported on to the government over a violation of the standard. There is so much more to our impact on the environment as a species than simply reported incidents of violations.

Markus: Yeah. The GRI is interesting because initially it was founded out of this principle that we needed to get increased transparency around social and environmental impacts of organizations. So ultimately, I believe it was originally an accountability template. In the late 1990s, early 2000s, it got kind of corrupted with the triple bottom line, because of its focus on economic, social and environmental impacts. It then became associated with the notion of sustainability, and that’s when I think things started to fall apart. But also, institutionally, the GRI over time — is now into its fourth or fifth iteration, so since 2000 right through to 2018, when it produced its standard — increasing amounts of flexibility in disclosure are being permitted.

Cameron: More flexibility, not more rigour?

Markus: Correct. GRI G1, which was issued in 2000, was actually a very rigorous accountability document. Organizations didn’t have a lot of discretion if they were going to claim that they had reported in accordance with [GRI]. It was a fairly prescriptive document. Now organizations can pick and choose what are called “material aspects,” and if certain aspects aren’t material, they don’t pay attention to them and they don’t disclose them.

Cameron: What does the word material mean?

Markus: Theoretically at least, it means that the organization, in consultation, in dialogue with its stakeholders, identifies what matters. And then it chooses to report against that.

Cameron: So is the problem that there’s not enough dialogue?

Markus: It’s a black box. One isn’t party to it. Organizations will disclose to some extent their processes, but a lot of it’s unknown. It’s not easy to peer in to find out what’s going on, and the question is, who’s in control of the process by which stakeholders are identified, processes through which their issues and concerns are identified, and then who’s in charge of the prioritization process? So the organization is still very much in control. The other part of it, for me, is it paints a picture of what I call a hub-and-spoke metaphorical understanding.

Cameron: What’s at the hub?

Markus: The corporation, with stakeholders spun around the outside at the end of these spokes.

Cameron: On the outside looking in.

Markus: Yeah. So it comes back to who’s in charge, who’s got the power, who’s deciding what matters.

Cameron: But there is also a conceptual issue of what should be at the centre, and I’m going to anticipate, I’m going to guess here, that for you what needs to be at the centre is the planet, the ecology, not the corporation.

Markus: Yes. I believe in systems. We have this artificial division in our world. We’ve created an economic system, and the corporation has become a very powerful player in that economic system. Our Western worldview doesn’t understand what I would call the material and ecological system that we sit inside. The energy and material flows effectively come through the corporation, in terms of inputs and outputs that can be costed and are a function of a transaction, historically. And that’s what goes through the accounts.

Cameron: Right, so if it can be costed, counted, then it matters as far as the corporate reporting is concerned.

Markus: Traditionally, yes, and what were now seeing is an expanded set of nonfinancial indicators of some selected flows into and out of an organization. But there are issues around boundaries, the so-called entity boundary. So historically the accounting entity is prescribed in terms of accounting rules and corporate law, but in an ecological sense, in a natural systems sense, it’s a rather meaningless boundary. You know, it’s to do with property rights, etc.

Cameron: You’ve got the issue of what it is that you’re trying to measure, right, and the artificiality of this corporate entity as the thing that should be measured. But even within that entity, the way that you measure and report what’s happening environmentally is often problematic. You’ve got one presentation I’ve seen where you look at Air New Zealand, and it’s one of many airlines it brags about its commitment to the environment and how fuel-efficient it is becoming, and you’re not convinced by that argument.

Markus: Well, early on, in the case of Air New Zealand, Air New Zealand rarely disclosed its absolute carbon footprint. In other words the total amount of carbon or GHG emissions associated with its activities as a totality. It does now. It actually produces a GHG inventory, which is actually signed off by an auditor, and we now know what Air New Zealand’s total carbon footprint is. But historically it didn’t do that.

Cameron: What did it do?

Markus: It tended to report selective data and it tended to emphasize what we might call efficiency. You know, pilots were learning to fly planes in a more efficient way. Air New Zealand was loading up the planes to make sure that when they took off they were pretty much 90 to 100% full. No spare seats. This kind of stuff. And so what Air New Zealand was demonstrating in its annual reports was that it was becoming more efficient. It was combusting less carbon per passenger per kilometre, and so it gave a wonderful impression of progress, improvement, continuous improvement. And over a 15 year period, we calculated that it made efficiency gains of about 15%. And when you took the same 15 year period –and in this case, because it didn’t disclose what its absolute carbon footprint was, we had to guesstimate it, so we used some fuel purchase data from the notes to the accounts, and then we spoke to an engineer about how much carbon dioxide is emitted when you combust a litre of kerosene, and we estimated roughly what we thought the fuel burn was and what the consequent absolute carbon footprint was. And it came out at just about 3½ to 4 million tonnes. And when we looked at that over the same 15 year period, the carbon footprint increased about 60%.

Cameron: So the fuel efficiency is improving 15% but the overall impact on the environment is going up by 60%.

Markus: Correct, because they are flying more people around, or they are flying the same number of people around further distances, etc. They are expanding capacity, and that capacity or that scale, as I call it, swamps the efficiency gains.

Cameron: You’ve made the same point about cars, automobiles, that over 100 years the efficiency gains are actually quite modest. If you look at advertisements and data from early on, the fuel efficiency of the earliest cars is not considerably different than it is today but there are, what, 670 times more cars on the road now.

Markus: That goes back to an article that appeared in Time magazine in 2008, and it celebrated 100 years of the Model T Ford. It provided some data. I don’t know about the veracity of the data, but the absolute veracity of the data is particularly important, it’s the general point. What they showed was that the number of vehicles that were owned in the United States had increased somewhere in the region of 650-fold over that hundred-year period. Fuel efficiency, Henry’s model T used to about 18 litres per 100 km. Now that’s what a modern Porsche does. But if you got a small European 1-litre engine vehicle, it might do 3 litres per 100 km. So you’re seeing a fuel efficiency gain of about a factor of six, and you’re seeing total scale of vehicle ownership rising over 600 times. And if you look at the population expansion in the United States over that same 100-year period, it’s a factor of five or six. So this isn’t just because there’s more people, it’s because there’s more people and more people are owning vehicles. And probably driving them further than they used to, as well. Back in the 70s, a population ecologist at Stanford University, Paul Ehrlich, very well known, in conjunction with some others [notably John Holdren], produced what he called the IPAT equation, which is “environmental impact is a function of population times affluence times technology.” Now technology can sometimes produce a diminishing effect. So if we take the motor vehicle, clearly it produces a reduction, if we go to the little European vehicles. But there’s more people and they’re more affluent, and they want to spend their money.

Cameron: Right. You see the same shift in China: as the middle-class rises, you have people shifting transportation from the bicycle to the car.

Markus: Yes. Yes. And in a way, what we’re talking about is sometimes called Jevons paradox. And when I talk to my students about this, I use a little joke on them. I remind them of a student who came to me, having had this lecture, who said to me, “I’ve sold my vehicle. I’m getting a bicycle.” And at the end of the year they come back to me and they say, “I cycled to and from campus all year and I saved X hundreds of dollars because I’m not using my vehicle anymore.” And I said, “What are you going to do with your X hundred dollars?” And they say, “I’m going on a jet bound holiday to Europe.”

Cameron: [laughs] What is the relative impact of a jet flight compared to a trip in an automobile?

Markus: On a per kilometre, per passenger basis? It's actually very efficient. But you fly thousands of kilometres further in a jet then you do in your vehicle. That's the problem. So again, an organization like Air New Zealand would emphasize the efficiency per passenger per kilometre, but that's not really how the world works. So it is the scale of effects that we need to be concerned about. And that's beyond the organization, really.

Cameron: So there's this question of how we go about measuring and what kind of relative comparisons we make, and whether it's per passenger, per kilometre, or per total distance travelled, the total carbon footprint. See you got this problem of measurement that's embedded in this very complex system and you’ve got boundary issues, right? So is this a problem that is simply too complex for us to deal with?

Markus: There are certainly certain aspects of the way society operates that makes it almost impossible to trace or track effects. Or impacts. So what I call complex molecular pollution is clearly a problem. So PCBs, which are a chemical, have been found in polar bear flesh in the northern Arctic. In fact they've also been found in Inuit flesh in the northern Arctic. Now those PCBs are not in that natural environment. So what you have is, where did they come from and how did they get there? And maybe they were manufactured in the Midwest somewhere, in some kind of chemical plant, and then they’ve been sold on to an agricultural customer who has then used them on the land. And they’re persistent, so they don't break down of the environment, they last for decades if not centuries. And they move around the natural environment through the food chain, through getting blown around or whatever, through decomposition and so forth. And over a long period of time and throughout long series of linkages, they end up in the polar bear or the Inuit. Now if that happened over 40 years, how do you trace that? How do you allocate that back in terms of responsibility to any single organization? We are beyond that now. So it's a bit of a myth to think that we can trace and track that back to any single organization.

Cameron: One of the issues in accountability, in general in our society, is our tendency to break things down to the level of the individual, either the individual voter or the individual wage earner or the individual consumer or the individual corporation, right? And tracking things systemically, and allocating responsibility in the system like that seems to be quite beyond us. The idea that if we hold the individual corporation more accountable in a better way, that that's somehow going to change things, is so difficult because of this complex interaction in the system.

Markus: There's that. I think the other part of it is, it reinforces this kind of sense of rational control. That if we measure things, and this attitude of “measure to manage,” you won't be able to manage unless you measure. While in part that's true, but then it locates the agency in a particular kind of place, with a certain kind of logic. And that then becomes the bind, because we don't have the kind of process, how do we avoid these kinds of effects? And you know, environmentalists will argue we have to adopt a proportionary principal. If we don't know, we won’t take the risks. And there are other examples of that kind of complexity. Again, chemicals, persistent chemicals are a problem. They were being dumped on the eastern seaboard of the United States. There is wonderful book called Toms River, which was written by a journalist [Dan Fagin] as it happens, but nonetheless it was an in-depth investigation in terms of chemical poisoning over the local population at Toms River, on the eastern seaboard of the United States. Now with the complex timeframe over which that occurred and the subsequent effects, even after a decade-long epidemiological study they couldn't demonstrate, scientifically, cause and effect. But there were some very large settlements out of court with Union Carbide and other chemical companies. So environmentalists would probably argue you shouldn’t be putting those chemicals in the dump, because you don't know what potentially might happen. It’s this precautionary principle. So it's who bears the risk? Where is that burden of proof and where is that burden of risk? But that takes us into a different kind of management regime really, in terms of how we manage ourselves and the planet. We’re no longer think in terms of accounting, per se. We’re now operating in terms of protocols, decision processes.

Cameron: So is that how we can shape the kinds of behaviours that corporations have, is through changing the protocols?

Markus: In part, yes. I mean, I think in part it comes through regulatory control.

Cameron: Does regulation work?

Markus: In some cases. I think if things are prohibited. And there are lots of things that are prohibited. We recently in this country just prohibited certain kinds of firearms because they are considered too dangerous to have in the general society. So therefore the decision is black-and-white, it's no or yes. As opposed to optimizing it through some kind of measurement process. But the other way, if I might continue, is the sense of attitudes and values, I guess. And this is where the moral code comes in, not so much just the legal code. It's about a sense of what is right or wrong in the first place, that you have as part of your cultural norms. Some things aren't done or are done because of those moral codes.

Cameron: So what role does academic research in your area have in terms of shaping or reinforcing moral codes?

Markus: Good question. I'm not sure I’ve got the answer to that.

Cameron: A lot of your work is been involved in not just necessarily doing your own primary research, but talking to other academics about how research should be done and what counts as good research, what counts is useful research. Your work with Rob Gray, for instance, you’ve looked at the way that CSR research is conducted. There is kind of an underlying problem of how we quantify things, and what happens when we quantify things, and the search for regularity in our research. Can you talk a bit about what you and Rob have written on this topic?

Markus: Yeah, I mean it was an invited paper, where we were asked to comment on a colleague's piece of work. But then we ended up expanding the commentary so we could discuss and critique more generally some work that was being done within the academy. It typically is done within certain regions, North America in particular, where there tends to be a predilection for large sample, cross-sectional research. A lot of it is tied to capital markets, so it's a sense in which how can we understand corporate environmental effects or corporate social responsibility. And these particular researchers are often interested in whether it makes a difference to the value of the organization on the stock market.

Cameron: The idea being that if you're doing good corporate social responsibility, you're actually going to be more profitable.

Markus: Uh , you may avoid potential future regulatory costs that politicians might impose on you, as we were just discussing. You know, if we can start prohibiting certain kinds of activities, that could be costly to a firm. So if you can demonstrate in-house responsibility, then maybe you avoid those future regulations or political costs, maybe you avoid needing to manage your chemicals through some kind of expensive cleansing process or whatever else. But most of the research that we see done in that area seems to be done with a notion of signalling. In other words, we’re signalling to the stock market or to investors, institutional investors, investment analysts, that somehow these firms are performing better in terms of their environmental effects. And these researchers are interested in how that translates into increased firm value and investor welfare. Well, I guess Rob and I come from a different worldview. We are not really interested in making investors richer. We’re interested in trying to avoid the impacts on the environment and/or society. So I guess the question then is, are the signals that this particular group of researchers are focused on, are they actually meaningful in terms of picking up on less environmental effect, in a real physical, material way? And that's where the critique comes in, because what we tend to find is that particular groups of social scientists use proxy variables. So they are looking for indicator variables. They will do something it a very simplistic level: they will look to see whether a corporation releases a social responsibility report, which as we discussed at the beginning of the interview are not particularly informative, or are highly selective.

Cameron: That's considered to be an indicator of social responsibility.

Markus: Yes. And so the difficulty is, as we just discussed, when you have got complex interactions with the natural environment, they aren’t easily measurable on any kind of cross-sectional basis. And so we see researchers doing, well, I guess, dumb research.

Cameron: Um, yeah. I want to get at what constitutes dumb research, but just to put this in context, it seems to me you're looking at two different or two related issues. One is that the overall project of corporate social responsibility research seems to be often founded on a win-win assumption. Right? That you can have better environmental performance and better economic performance, and there shouldn't be a trade-off. And you question that assumption. Right?

Markus: The win-win scenario typically comes through with less impact, less cost. So if you don't have to take your dangerous chemicals to a toxic dump, because you using less of them, then this clearly a payoff. What typically happens course, is those payoffs, they're not imaginary, they are real, but they are low hanging fruit. And they may then contradict, of course, with the scale effects of the organization's overall profitability plans. Firms want to grow and they want to grow their profits. And so we're back to the flying and using litres of fuel per kilometre per passenger. So the ultimate impact, the absolute impact, is probably going to increase. Unless you completely remove those issues or those chemicals from the process. In other words, you reengineer.

Cameron: So the second aspect of it, then, besides that underlying assumption that environmental performance is not incompatible with economic performance, that second issue is, we don't really have a good definition of environmental performance.

Markus: No, and we're back to the point I made earlier, about how you might actually locate that at the level of an economic entity anyway. Does it make sense? I mean I use another example with my students, because I live in the rural South Island of New Zealand, we have a lot of dairying around here, we have a lot of agriculture. And dairying has some fairly significant impacts on the natural environment, in terms of what comes out of cows is ending up in the ground, is ending up potentially coming through the aquifers, and it may come through the aquifers in 20 years time, in terms of nitrate pollution and so forth. A given farmer could be the squeakiest clean farmer there is. They can adopt modern technology, they can adopt practices, they can manage their waste as best they can. And they may reduce the impacts. And in fact, all farmers in the region might do the same. But if there's too many farmers for the catchment, then we’ve got a problem no matter what they do. So we’re back to who's responsible, in a sense, for the ecosystem? And not only do we have problems with organizational boundaries, we have a problem with ecosystem boundaries. Scientists aren't in agreement about where the ecosystem starts and finishes.

Cameron: So things that you just talked about, like a catchment basin, a watershed.

Markus: Yeah, it makes some sense in terms of certain kinds of systems, but you know, when we start talking about the climate system, well we are talking about the planetary level. New Zealand has just declared to go, under an interesting new climate change bill that is going through Parliament at the moment, wants to be carbon neutral by 2050. Net carbon neutral. So what's going on there is they're saying we will try and reduce gross carbon emissions and we will seek to offset them, presumably with forest replanting, with carbon sequestration, and we will get to net zero 2050. Now, let's say they do that. Well it’s little use if China has increased its carbon emissions over the same period by treble that. We've gone nowhere. So different systems imply different scales and require different kinds of governance regimes.

Cameron: So to do research on this kind of thing, you see a lot of quantitative research in this area the does things like scaling certain measures by the revenue of the firm, as a proxy for firm size, or trying to control for the type of industry. You've argued that a lot of the research that were doing has got fundamental problems with how it approaches the use of numbers. Things like using readily accessible data as opposed to the appropriate data.

Markus: Yes, so we're coming back to that research that my colleagues are doing that tries to tie firm environmental performance to capital market performance. What my research colleagues in those areas wish to do is they want firm-level comparative data. So they often want to reduce an organization's environmental performance or impacts to a single number that they can compare with another firm. And sometimes what they will do, in order to make those comparisons, is select a particular kind of performance indicator. Some of them have used the toxic release inventory in the United States, because it's readily available for a large number of facilities. Now the toxic release inventory in the United States was designed to enable local community members to understand when a local chemical has been released from a local plant, so they could react accordingly. Now, the data is so disaggregated that my colleagues actually need to re-aggregate it. And the problem is that you're actually re-aggregating a lot of facility-level chemical data, across a multitude of different chemicals, into a single indicator for one firm. So you end up with a toxic soup. And I cannot believe a physical scientist in ecology or toxicology would accept that it was a meaningful number.

Cameron: And yet it's considered meaningful in some areas of accounting research.

Markus: Because I guess my social science colleagues either don't care about the scientific integrity of the numbers they are plugging into their regression equations,  or they do but they decided it’s just too hard.

Cameron: So how has this critique of other people's accounting research gone over in the accounting academy as a whole?

Markus: I don’t know, and that is one of the issues, because one of the issues that we have in the accounting academy, as you’re fully aware, is that it’s somewhat fragmented. And we kind of have enclaves. And we kind of talk past each other at times. And I think that that is a particular difficulty, and that may explain why such challenges go unheard or become ignored, and why the work continues anyway.

Cameron: So the community itself is not necessarily talking to each other.

Markus: Not in the same way that I think you might see in engineering or medicine, for example.

Cameron: Okay. I think there’s kind of a soft assumption about academic research in general that everyone working together over time eventually will arrive at some sort of consensus about the truth. I get the impression that you feel there is actually some value in disagreeing, as opposed to trying to achieve consensus all the time. What’s the role of an actual disagreement between scholars?

Markus: I think in the sense that you get thesis-antithesis, and then potentially you get synthesis. And I tend to come at the world from not so much a sort of positivist, Popperian scientific point of view, more of an interpretivist kind of social scientist. So for me I’m much more likely to rely on a notion of a hermeneutic process, that there is a kind of way in which we make sense of the world as we move through it.

Cameron: So conflict is necessary then, or helpful, in what? In challenging our assumptions?

Markus: In making us aware that our interpretations are subjective. And there isn’t, in my belief, any kind of objective truth there to be found. It is a matter of interpretation.

Cameron: So how does that kind of engagement between academics, in helping us to become aware of the role of our assumptions and stuff, in producing our knowledge, how does that leak out into the corporate sphere? What’s the connection between the kind of discussions that academics have with each other and actual changes in behaviour in the corporation?

Markus: Well, within my own field, I think you have to look at it over time. I started my work in the late 1980s, when I came to New Zealand, and at that time there was very little corporate social reporting going on. The GRI didn’t exist. There weren’t these templates which organizations could follow. A lot of the early work that I am some of my colleagues did was highly normative. We would produce papers even for professional outlets — for the Chartered Accountants Journal in New Zealand, for example, and certainly the same occurred within the UK — that argued that this ought to be, that organizations had a moral responsibility, a duty, to disclose their social and environmental impacts. And at the time, none of this kind of reporting was common. You know, some of my professional colleagues produced professional reports for the accounting profession in the UK, which urged — it was a kind of a moral urging I suppose — that organizations ought to take greater accountability for their non-financial effects and let people know that.

Cameron: Right, so there's a sense of trying to remind people that they do have a duty of care towards others, whether they are a professional accountant or a manager of a corporation.

Markus:  Yes, and I think sadly the academy has drifted away from that kind of normative research model. The moral component has kind of disappeared somewhat, and I think that's a function of an increasing need, it seems, to use more complex statistical kinds of techniques to demonstrate the prowess of one's work. And so it’s become more empirical, it's become more technical: hence, complex regression models and so forth. And I guess at some level it is trying to appear more scientific, when, as I've just suggested earlier on with respect to some of the measures and some of the elements that are being used in those models, it is actually totally unscientific. But it gives the appearance, it has a rhetoric, of sophistication.

Cameron: There is this kind of a myth of value neutrality in scientific research, that we are in search of something that is completely objective and completely disconnected from our own personal values as a researcher. And I'm not sure that that's ever possible at all, but it certainly seems implausible to expect that in researchers who are looking at the possible collapse of our ecosystem.

Markus: Absolutely, or indeed any other kind of element of our social societies. When I was a young student and first following research training, I remember particularly a teacher told me, "People ain't molecules." And that's part of it. Not only are human beings complex in terms of having to study them, we are moral agents. And so both in terms of what we study and the fact that we are doing the studying, involves some kind of moral element. We can't avoid that.

Cameron: Yeah. One of the ways I think that in conversations with you, you have shown me that you are able to help people make a connection between these kinds of issues and their own lived experiences, but taking your students out into the backcountry and actually getting them to spend time there. Can you tell me about that?

Markus: Yes. I teach a postgraduate course called Business and Sustainability, and as part of that I have a field trip. If I was in biology or geology or anything like that, they always have field trips. The idea of a business scholar taking his students into the field is perhaps a little unusual, but as part of the course experience, I require them to do a reflective essay on what it is to be a human being in the world that you are hoping will be sustainable. And so we go to a backcountry hut, usually in the national parks, no electricity, no power, no phone technology, no cell signals. And we usually walk in. It takes about 2 to 3 hours, up a riverbed. They will get their feet wet. We get to the backcountry hut. We will have carried our food in; we’re not going to live off the land, that would not be possible. There's too many endangered species up there which we might feed on, or we would starve. So we do carry our provisions in. And then we spend a full day in the backcountry, and we usually go for a day walk. The students experience drinking out of rivers. I've had Asian students that have told me they would never have done that anywhere in their own home country. And it has a profound impact on them, but it's not just tied up with the lived experience they go through over those two or three days. They are required to pick a significant piece of literature, usually a book, in order to respond to an essay that was written in the mid-1980s by an environmental sociologist, that actually questions our capacity as a species to continue to exist. And that book is supposed to inform their understanding of that chapter and respond to it. And then they tie all this backup with the reflective retreat. And students pick on different things. Some of them pick on climate issues, some of them pick on diet food, some of them pick on other aspects of sustainable existence, transport for example. What profound effects it has on them once they leave, that's much more difficult to know. I certainly know that one or two of my students have gone on to do postgraduate study and are now operating as young academics elsewhere in the world, and it seems to have had some sort of effect on them. They certainly remember that field trip. So yeah, I guess it's a different way of being.

Cameron: There is a sense in which, one of the ways we have to teach business students (because we’re both business professors) is the whole problem, the whole neglect in our capitalist system of empathy. Right? The ability to understand and identify with the Other. And another part of that is the connection between your self and the environment. And I'm hearing this other piece in there which is about your ability to reflect on your own experience and to think about what you've been through, rather than simply live it and move on to the next conquest.

Markus: Yes, I think if you go into the backcountry and spend a week in there with just a tent for shelter, and your own provisions on your back, you begin to understand how small you really are. How insignificant you really are. Looking at the night sky, for example, will first of all give you a sense of your own insignificance. But also just actually managing yourself in that environment. Rivers will come up because it rains. You will realize the river has agency. You're not crossing today. The river is in charge. You are merely a pawn in nature's game when you're out there, and you have to move around with someone else in charge. You become much more tolerant, even of technological breakdowns in a modern society. So the cell phone tower's gone out and you haven't got cell phone coverage, or the airline can’t take off on time, or whatever else. You are then become much more used to the idea that you're not in control of everything. And I think that that makes you perhaps a little more humble.

Cameron: That sounds quite fundamental for an economic system that is based on the idea that we can control things.

Markus: Yeah, and we've lost sight. I mean, one of the quotes I used in another essay with Rob recently, about how insignificant Homo sapiens is as a species. We've only been here for a little over 300,000 years. We will go extinct. So in 4 billion years of existence of the planet, we are but an eyeblink, and yet we have a sense of we've always been here. A certain arrogance and hubris about it. And we have the sense that we will always be here. We won't.

Cameron: So does that mean that the decisions we make don't ultimately matter, because the ending's going to be the same?

Markus: Well, at some level yes. I mean, I have a brother who is a minerals planner in the United Kingdom, a practical geologist, and he constantly thinks in geological time frames. So for him, it excuses the exploitation of geological resources, because he operates in a different kind of mindset.

Cameron: That's interesting.

Markus: But similarly, you made the point before about the lack of empathy, and I think that one of the problems we now have is that we are a globalized world, we are a highly technologicalized world. Space and time, distance, has grown immensely. I mean, multinationals, senior managers in multinationals don't know what's going on right throughout their organizations. They are too complex. The number of linkages are too long. We are a long way from Adam Smith's bakers and blacksmiths. And yet it's happened in such a tiny time frame. Less than 250 years.

Cameron: So, what is the role of the academic in engaging in this system? Is it necessary for every academic to be engaged in the same way?

Markus: It is not for me to tell other academics had to do their work or live their lives. For me, it's a calling. It's something that's profoundly important to me, and it drives me in that sense. So I am highly passionate about what I do, but increasingly, as I get towards the tail end of my career, I become more cynical rather than optimistic about how much change we can actually effect. Early on, I was hopeful that if firms would be more honest about their social and environmental effects, and had to make them public, that would put some kind of moral pressure on the managers to behave, and try and change the way in which they operate. I'm increasingly cynical about the prospects for that sort of change.

Cameron: Well there's been some work by Martin Messner and John Roberts and others, who have looked at the limits of transparency. This notion of transparency, that if everybody could see what was going on inside a corporation, then the people in the corporation would have to be more accountable because they wouldn't be able to hide. And part of the issue is that the kinds of accounts you produce out of that data quickly get taken up and taken away from you, and used for other purposes, and you don't own that account anymore.

Markus: Well, that comes back to this point about the increasing complexity of the modern corporation. Managers now control at a distance, through numbers. They don't see people starving, or they don't see the effect of making people redundant, or whatever else. It is not like Adam Smith's baker or blacksmith. So the social ties are much reduced. And as I say, the linkages to the natural world are constantly being broken. People are highly urbanized now. I mean, Jamie Oliver in the United Kingdom, the celebrity chef, was going around schools and showing kids carrots and broccoli and things. They had no idea where they came from or what they were called. That's a very sad indictment of our modern society, when we don't even know what's produced in a vegetable plot.

Cameron: Right. So part of what you're doing is taking your students out into the wilderness and getting them to experience that. Could we set something like that up for corporate managers?

Markus: Oh, I think some of those kinds of retreats do occur, but I guess the thing is, you could point the finger back at myself with my own students: is it just a form of tokenism? How long-lived is it? I mean, I live and breathe it, in a sense, because I spend so much time out there, it is just part of me. But will become part of them? It might just be an interesting experience that they move on from. You know, I ask them how many pairs of shoes they have, when they write these reflective essays, and sometimes they reflect back on some of these things. If you go back to the 1960s, Boulding, Kevin Boulding, an economist, wrote an essay about the “cowboy economy” of Spaceship Earth. And if you read through that essay, he kind of questions some of the underlying indicators or notions of success. So we tend to think about success — let's keep the fashion industry analogy going — we might think about success as having dozens of pairs of shoes or dozens of pairs of jeans. Well why isn't success having just one pair of jeans that lasts 40 years? I mean, “I'm successful because my pair of jeans lasted so much longer than everybody else's.” That inverts our notion of success. It reduces throughput. We use less energy and materials in order to have that notion of success. So we're back to attitudes and beliefs, and that's not something that accounting is typically equipped to challenge, really.

Cameron: There is an overall reductionism in our society, when we take the individual and reduce them to the role of consumer: that's what we're here for, is to consume. And that doesn't necessarily lead to good engagement around issues that affect the planet.

Markus: Well, absolutely. I wouldn't say that's a totalizing effect, though. Clearly there are fringe elements of society that have rejected the consumer society, but they are typically seen as radical, or odd, or green — you know, beards-and-sandals types. Whether that will increasingly gain a foothold, whether climate change will generate that kind of consciousness like it did in the 1970s, onto what effects, is an interesting question. I mean, were certainly starting to see the public effects of that through some kinds of demonstrations. There is an increasing realization that our material and energy throughputs are simply impossible, going into the future. They will be beyond sustainable limits. How we adapt, whether we can progressively adapt in advance of any crisis, is an interesting question. I'm not so hopeful about that.

Cameron: You talked about approaching the end of your academic career. What do you see the prospects being for the people who are at the beginning of their academic career? Where is the role of the academic going in our society?

Markus: I don't know. That's a good question. I don't necessarily know how I would answer that. I mean, I certainly know that there are aspects certainly within my own academy, within New Zealand, within Australia, and within the United Kingdom, where there are increasing trends towards accountability of the academic. Measurement systems. High-level controls and monitoring. And a lot of academics have rebelled against that at some level. They see it as an imposition on their freedom. They see it as an unnecessary waste of time and energy on their part, to conform to some sort of public audit of what they're up to. I mean, we are taxpayer-funded, I'm not saying that we shouldn't be accountable, it's just the mechanisms by which we are being [held] accountable at the level of the individual seemed quite invasive. So young academic is going to face that increasing scrutiny, or imposition. Within my own field, I think there are increasing opportunities for young academics to get involved in those kinds of tensions between business activity and social and environmental activity, and effects. There are opportunities to move into accountability, in a very broad sense, in terms of civil society. We have a notion that there is some research being done around the notion of counter-accounts.

Cameron: Can you explain that?

Markus: Well, organizations, as we've discussed, provide apparent accounts of their social and environmental effects. They are in control of the production of that information. And there are aspects of civil society, activist groups, that will challenge that, and provide their own accounts of what is going on. And there has been a history of that. So they might produce alternative reports, or counter-reports. We had an interesting case in New Zealand, where a large state-owned coal mining company was producing environmental reports of its activities, and a small issues-based activist group produced a counter-report. In fact, they got taken to court for the counter-report because they put it out in advance of the corporation’s environmental report, and use the organization's logo as a parody. And it appeared, initially at least, without paying too much attention, that it in fact was the organization’s environmental report. And when you opened it up, the opening paragraph went along the lines of, "We as a coal mining organization have dug up thousands of tonnes of coal and created X tonnes of carbon dioxide for climate change, and we created acid rain in the local rivers and destroyed local fauna and biology,” and so forth. And it was a clear spoof. And this is one attempt by which accountability is trying to be urged in that tension between organizations and civil society.

Cameron: Hmm. But it seems that that tension is not going to go away in a hurry. We have large issues facing us, and hopefully the role of the academic is there to contribute in some small way to that kind of a discussion.

Markus: Yes, I mean, large organizations operating in society and the environment are at times clear contradictions, and I think the role of the academic, certainly the role of the critical academic, is to expose those contradictions and tensions.

Cameron: Great. Well Markus, thank you so much for coming on the podcast today. It was a pleasure to talk to you and learn a bit more about the way that you do your work, and the way that you discuss these issues with academics and students and the wider world.

Markus: Thank you, Cameron.

Links

Prof. Milne’s faculty profile at University of Canterbury

The Global Reporting Initiative (GRI)

Air New Zealand’s environmental sustainability reports

Paul Erhlich and John Holdren’s IPAT equation

Toms River: A Story of Science and Salvation by Dan Fagin (2013)

The Economics of the Coming Spaceship Earth, by Kenneth Boulding (1966)

Credits

Host: Cameron Graham
Recording engineer: Alan Larsen
Producer: Bertland Imai
Photos: University of Canterbury
Music: Musicbed
Recorded: May 14, 2019
Location: York University