The boundary within which an organisation accounts for its environmental, social and/or economic effects is usually defined as that over which the company has direct influence and can exercise control. Also

“[I]t is critical [that] the boundaries adopted for the purposes of reporting are clearly defined and obvious to readers of reports. Careful boundary definition also ensures a report can be verified and meaningful comparisons can be made between information from different reporting periods.”

The ‘careful boundary definition’ quoted above faces a number of challenges. The level of influence and control will vary from organisation to organisation and from year to year, invalidating comparisons within and between organisations. Moreover extending the boundary beyond the immediate control of the organisation still begs the question of exactly where to draw the line. Decisions will differ between organisations and over time. Establishing a clear boundary for an analysis that is consistent across all indicators seems at first sight to be almost impossible. Notwithstanding these challenges, the boundary problem can be solved by taking a full life-cycle perspective.

Generally an infinite number of upstream suppliers feeds into any organisation (see figure 1). Each one of them has triple bottom line impacts to be accounted for. Most audit approaches, such as that taken by the Global Reporting Initiative (GRI), are not designed to extend beyond the first level of suppliers. Whilst important local or on-site effects are captured by the audit, the considerable economy-wide effects are not accounted for or reported on. The same is true for downstream impacts, which are only partly accounted for in audit-type approaches (e.g. energy consumption “footprint” of organisations (GRI Indicator EN18) ). Boundary issues apply in both upstream and downstream accounting

The Global Reporting Initiative (GRI) is aware of the importance of the boundary problem. Its Boundaries Working Group has developed a Boundary Technical Protocol which uses the key factors of control and influence. It provides principles and a process for setting boundaries while recognising the complex issues involved, including the problems of comparability and consistency mentioned above. The CSIRO/University of Sydney team was active in the GRI’s development of this protocol . The ISA methodology solves the boundary issue by accounting for impacts of the full upstream supply chain .

Figure 1: Upstream, downstream and the issue of boundaries

Figure: A depiction of the complexities of industrial interdependence in a modern economy as a “tree” of upstream suppliers (shown at different levels). For illustration only, six types of suppliers are shown, each supplier will have TBL impacts that can be assessed with TBL indicators. An arbitrary boundary for an audit approach is also depicted (in blue) demonstrating how the full upstream supply chain is not taken into account. An example of a downstream effect is also shown where there is “feedback” of products into the supply chain of other industries.