Sustainable Finances
Reporting on Sustainability for NHS Finance Managers Version 1.1 Sustainable Finances www.sdu.nhs.uk [1]
Sustainable Finances Reporting on Sustainability for NHS Finance Managers
Introduction This paper will help finance professionals consider the best ways to report on sustainability in NHS organisations. It discusses how reporting progress as part of an NHS organisation’s wider reporting commitments can enhance its governance, financial stability and reputation. This will enable the development of systems and processes which will help meet more rigorous forthcoming requirements. Some mandatory monitoring and reporting is already underway in the NHS, driven by internal and external forces such as greenhouse gas emissions, energy consumption, waste generation and water use. Reporting progress more widely, in this fast moving area, will greatly benefit NHS organisations and can be easily realised by better monitoring of consumption, and public disclosure of the results of this activity. Reporting on sustainability provides the NHS with some clear challenges, but the opportunities gained from doing it are far greater, including promoting the NHS’s role as an agent for positive change in corporate and civil society.
Contents Introduction
2
Executive Summary
2
Background
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The Sustainability Agenda in the NHS 5 Mandatory Reporting CRC ERIC Quality Accounts Financial Reporting Manual
6 6 7 7
Forthcoming changes
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Additional Reporting
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Conclusions
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References
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Executive summary This paper is designed to help NHS finance experts understand the health, cost, governance and reputational benefits associated with reporting on sustainability issues. It is becoming increasingly clear that the environmental sustainability agenda has many financial implications and benefits. These can be easily highlighted in the annual reporting process and show the value that your organisation places on improving its sustainability credentials. The reporting process also deepens the association between the financial impact of a sustainability programme and the actions taken to pursue it. Some mandatory monitoring and reporting already takes place in the NHS, driven by internal and external forces such as greenhouse gas emissions, energy consumption, waste generation and water use. But more can be done, and more will need to be done, as the sustainability and environmental impact of organisations comes under increasing public and governmental scrutiny (see the financial issues around the Carbon Reduction Commitment Energy Efficiency Scheme). Indeed, it is wise that NHS organisations begin to prepare for the implementation of a much more rigorous sustainability regime. The NHS is the largest employer in Europe, and is a significant component of our regional and national economy. It has a huge carbon footprint because it not only is a vast procurer of goods and services, but also has an enormous energy intensive estate. Reducing NHS Greenhouse gas emissions is a legal requirement. However, at its current rate of emissions the NHS will fail to meet its legal targets and further action is required. NHS organisations need to consider how they can reduce their emissions and consequently become more sustainable. Sustainable Finances www.sdu.nhs.uk [2]
One way of doing this, highlighted in the NHS Carbon Reduction Strategy (produced by the NHS Sustainable Development Unit (Jan 2009)), is to include sustainability information in the annual reports of NHS bodies. Accounting for Sustainability is becoming increasingly relevant to the public sector, according to the Association of Chartered Certified Accountants. Foundation Trusts (FTs) already report widely on sustainability, and FTs are promoted by the government as an NHS ideal, and one to which all Trusts should aspire. Accounting for Sustainability is also highlighted by HM Treasury’s recent proposals to make changes to the Financial Reporting Manual (FReM). This may increase the scope and need for organisations to supply information about their sustainability impact (both financial and non-financial). The document includes a discussion of how these changes could affect the NHS. Currently, there are many data streams on which reporting occur, but there is also the possibility of cheaply and easily improving and increasing these data streams. Maintaining inputs from ERIC and other sources are crucial, if the NHS is to ensure it can fulfil all its legislative obligations and exploit all its financial opportunities. A great opportunity exists for organisations to use the reporting of sustainability to drive movement towards an NHS that is more sustainable both environmentally and financially. Making this data more widely known would have the added benefit of helping drive up quality and drive down cost. Although the current mandatory reporting burden for sustainability is relatively low, sustainability is rapidly becoming a more prominent issue in the minds of the public, politicians and institutions alike. Therefore, there is an opportunity to include sustainability in wider reporting processes. Sustainability interacts with many
NHS services, so referencing it in documents like Quality Accounts, for example, complements the intention to scrutinise and improve all NHS services. Scrutinising all services is important if an NHS organisation is considering reporting on sustainability. This might be through its approach to supply chain management, staff or patient transportation, recycling or otherwise extending the lifetimes of equipment. Important examples of public sector partnership, e.g. through procurement or working with the third sector, should be reported and the associated financial or quantitative value could be included in a sustainability report. A graphical representation of how much the Trust’s carbon footprint has been reduced, by changes to transport policies and other measures, can be presented alongside the costs or benefits of the measures chosen. Certainly, such reporting can go a long way to enhancing or consolidating the NHS’s reputation as a leader in the area of corporate and social responsibility. The NHS Sustainable Development Unit (SDU) provides the NHS with the guidance and tools to improve sustainability and reduce its carbon footprint. For example, the SDU has produced a series of graphs demonstrating the carbon emissions that could be reduced (and money that can be saved) through changes in either estates, working practices or by NHS suppliers. Reporting and Accounting for Sustainability is not meant to be an arduous process or one which increases your workload. In fact, it often builds on data already widely available. However, it does ask that by reporting and Accounting for Sustainability more widely, we can ensure the NHS becomes a leading low carbon, sustainable organisation. An NHS that is on a better financial footing, providing better healthcare and increasingly becoming fitter for the future.
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Background The NHS is one of the largest employers in the world. It is often the biggest single employer in each of the English regions and is always a significant component of the regional economy. As a large procurer of goods and services from local, national and international economies, and possessing a vast and energy intensive estate, the NHS has a significant carbon footprint. As one of the most prominent public sector organisations in the United Kingdom, the NHS is looked upon to set a positive example in many fields of activity. In February 2010 the Department of Health stated that “[p]ublic accountability is gained through the publication of honest, balanced… and meaningful information regarding quality of services into the public domain” 1. This observation applies equally to the manner in which services are delivered as is does to their outcomes. Consequently, as acceptance of the importance of sustainable behaviour has become more widespread, sustainability has become an arena in which the NHS is looked to as an important agent of change. A step towards addressing this expectation was taken in the NHS Carbon Reduction Strategy (CRS), published in January 2009, where one of the key action points was to include sustainability information in the annual reports of NHS bodies.
accounting for sustainability, and the International Accounting Standards Board is working on developing standards for emissions trading accounting. This increased expectation and emphasis, as it applies to the public sector in the UK, is underlined by HM Treasury’s recent proposals to make changes to the Financial Reporting Manual (FReM). The content of these changes, and the possible impact they will have on the NHS is discussed below. The devolved administrations are also advancing their own sustainability reporting initiatives, but these will not be discussed here as the focus of this paper is on the requirements and situation for the NHS in England. Reporting of sustainability information will also support the government’s stated aim of setting “new standards for transparency”. Indeed, swift reaction to an increased desire for sustainability reporting could be seen as an indicator of a successful organisation. Foundation Trusts are promoted by the government as the ideal to which the NHS should aspire, and therefore it is interesting that both Monitor and the Foundation Trusts Network have shown an interest in the reporting and measurement of sustainability 3.
Reporting of sustainability issues is currently in its infancy. Although many organisations produce social or environmental reports, the form, format and weight of these reports varies widely from entity to entity. In the NHS, Foundation Trusts (FTs) are already required to report on sustainability by their regulator, Monitor. A forthcoming publication from the Foundation Trust Network on sustainability accounting will illustrate the current position and trajectory of this group. Accounting for sustainability as a concept has become more advanced in recent years, both nationally and internationally. The Association of Chartered Certified Accountants expects that climate change disclosures will become more prominent in coming years, driven in part by the need for organisations to be transparent about their activities2 . The Chartered Institute of Public Finance and Accountancy have also addressed the need for wider debate and discussion of sustainability reporting. They commissioned a discussion paper in 2004 entitled “Advancing Sustainability Accounting and Reporting: An Agenda for Public Service Organisations”. Parallel to these discussions an International Integrated Reporting Committee has been established with the goal of developing a globally accepted framework for Sustainable Finances www.sdu.nhs.uk [4]
The Sustainability Agenda in the NHS amount of data gathering and reporting occurring, both for internal purposes and wider sector oversight. Moving from such gathering and analysing this data to a more public reporting and accounting of it presents a challenge that it is crucial that organisations meet. Some NHS organisations, particularly FTs, are more advanced in this than others, so there is the potential for organisations to benefit from shared experience and shorten the learning curve. An important risk is ensuring these data streams survive. Intelligence as provided by data stream such as ERIC are crucial if the NHS is to ensure it knows it is fulfilling all its legislative obligations and exploiting all its financial opportunities. A great opportunity exists for organisations to use the reporting of sustainability to drive movement towards an NHS that is more sustainable both environmentally and financially. For some time sustainability has been seen as a fringe activity, and has been of only peripheral concern. Recognition is now growing of the fact that the environmental sustainability agenda has some very clear, palpable financial implications, and therefore these disciplines of management have become more closely interlinked. So far discussion of sustainability in the NHS has focused on the NHS’s management of its carbon footprint. In “Saving Carbon, Improving Health” the now former Minister of State for Care Services, Phil Hope, and the NHS Chief Executive Sir David Nicholson both state the importance of this activity: “Carbon management is an increasingly important issue for all organisations. Taking sustainability and carbon emissions seriously is an integral part of a high quality health service.” Measurement of the carbon impact of organisations, and the actions being taken to reduce this impact, will have critical reputational and financial consequences for NHS organisations. With the implementation of the CRC Energy Efficiency Scheme, formerly known as the Carbon Reduction Commitment, a direct financial incentive now exists to drive carbon reduction within organisations. A mandatory external reporting framework accompanies this incentive. Sustainability is not only about carbon, however. Water use, equipment disposal, recycling, and waste management are all areas where the NHS can have a significant impact upon the sustainability agenda. These are all areas where there is already a substantial
The potential to highlight the benefits being achieved, many of which will be financial, is present in the annual reporting process. Taking such steps would be a declaration of the value an organisation placed on improving its sustainability position, and would deepen the association between the financial impact of a sustainability programme and the actions being taken to pursue it. In this way a virtuous circle of improving an organisation’s financial and environmental sustainability could develop. In this paper we will discuss: •
the current position of mandatory reporting of sustainability information as part of the financial statements of an organisation;
•
what other reporting burden the NHS currently bears, how this information can be used to meet the changing reporting requirements which the NHS faces, and how the results of this could be reported to additional interested parties; and
•
what other information could be gathered by NHS organisations about activity in the sustainable arena, the reporting of which could bolster or reaffirm the commitment to sustainability and good corporate citizenship within the NHS.
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Mandatory reporting Although the current mandatory reporting burden for sustainability is relatively low, and in most areas not prescriptive, this position is changing rapidly. Sustainability rapidly is becoming a more prominent issue in the minds of the public, politicians and institutions alike. CRC The first significant milestone on this path was the passing into law of the Climate Change Act (2008), which made the UK the first country in the world to have a legally binding long-term framework to cut carbon emissions. This legislation includes a legally binding target to reduce greenhouse gas emissions by at least 80% against the 1990 baseline by 2050, and by at least 34% by 2020. To achieve this goal the Carbon Reduction Commitment (recently renamed the CRC Energy Efficiency Scheme), a mandatory carbon emissions trading scheme to cover all organisations using more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000) was introduced, with the aim of incentivising organisations to reduce their greenhouse gas emissions. In order to conform to the requirements of this scheme, (which many NHS organisations will be required to participate in) accurate data about carbon emissions will need to be gathered, verified and reported. CRC is perhaps the area where the virtuous circle of financial and environmental sustainability is most clearly pronounced. As well as driving reduced costs through energy reduction the opportunity to improve an organisation’s finances either through trading spare allowances, or avoiding the need to buy additional allowances, gives a clear link between the two disciplines. Disseminating this information in the annual reports or financial statements of an organisation is an important and powerful step in the development of sustainability reporting. Benefits arising from this include the potential to reinforce the organisation’s reputation for sustainable behaviour at a corporate level, and an increased level of transparency for the community which the organisation serves. Auditors assessing the data would be asked to give an opinion on the consistency of the data with their understanding of the organisation. Therefore, providing that the data reported conform with the CRC return, the amount of additional audit burden generated, and extra work in monitoring or collation of data, will be minimal. ERIC Another area where information is gathered and reported in the NHS is for Estates Return Information Collection (ERIC). ERIC enables the analysis of Estates and Facilities information from NHS Trusts and PCTs in
England by the Department of Health, in order that the resilience of Estates and Facilities services in the NHS for the Department of Health can be assessed validly across the NHS and systematically and comparatively within the NHS. An important part of the ERIC process relates to sustainability information, from waste production to energy consumption. The collation of the information is mandatory. It is not a long leap to imagine turning this collation and reporting from an internal process into a public one. This reporting could go beyond the sustainability agenda into other areas of the ERIC data, especially given the increasing public and political appetite for disclosure and information freedom. It is therefore important for the NHS to preserve and develop the data streams that depend no this kind of accountability and transparency in order to drive up quality and drive down cost. ERIC is prime example of this. Quality Accounts Quality Accounts were introduced as a requirement by the Health Act of 2009. Foundation trusts had to produce quality reports for 2008-9, a requirement which was developed to include all providers or subcontractors of NHS services by July 2010. Primary care and community health services are to be included from 2011. The aim of Quality Accounts is to ensure that the NHS provides information to patients and the public about the quality of the services that its organisations deliver. The accounts should assure commissioners, patients and the public that trust boards are regularly scrutinising each and every one of their services 4. Although the current focus in the guidance framework relates to direct service delivery metrics or measurement, with little reference to sustainability there are is some overlap between the guidance and the sustainability agenda. It should also be noted that the sustainability agenda interacts with and overarches the entire NHS service delivery model, and so having a developed and robust sustainability plan in place complements the intention to scrutinise and improve all NHS services. The element of the National Quality Framework which interacts most clearly with the sustainability agenda is the component entitled:
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“Stay ahead – make best use of innovation and push forward not back.” Given the underdeveloped state of the sustainability agenda, business and patient pathway changes which explicitly and directly consider sustainability impacts and consequences could definitely be seen as a progress along the path to making the NHS more sustainable. According to the Quality Accounts Toolkit5 , an aim for Quality Accounts is to “improve organisational accountability to the public and engage boards (or their equivalents) in the quality improvement agenda for your organisation”. Sustainability has definite and demonstrable associations with a healthcare and preventative medicine agenda. For example, the House of Common’s Environmental Audit Committee noted that there “are additional costs to the NHS from respiratory hospital admissions triggered by air pollution”6 . It is estimated that fine particles have an impact on mortality equivalent to 4,267 deaths in London in 20087 and this impact will apply across the NHS as a whole. Any steps which the NHS makes which reduce emissions or induce a marginal change in air quality can be linked to metrics surrounding patient experience, as well as management of long term conditions (particularly respiratory) and avoidance of non-elective admissions. These areas are likely to be of great interest to both the clinicians, managers and patients alike, and therefore a link exists between a quality improvement agenda and a sustainability agenda. Looking ahead, the Foundation Trust Network highlighted in their review of quality accounts good practice ranging from community and patient engagement to encouraging new working practices or technology use through an award scheme. As the upper limit for declared priorities for quality improvement has now been removed it would seem possible for Trusts to include their sustainability plan and targets as a quality improvement priority in their Quality Accounts, and to use this medium for disseminating information on their progress, whilst strengthening the institutional commitment to sustainability. The Financial Reporting Manual (FReM) and Financial Statements The Financial Reporting Manual is the technical accounting guide that complements guidance on the handling of public funds published separately by the relevant authorities. It applies to all entities, and to funds, flows of income and expenditure and any other accounts that are prepared on an accruals basis and consolidated within Whole of Government Accounts.
Although it does not apply directly to NHS Trusts and Foundation Trusts, it is the basis for the manuals which determine how those bodies report. Reference to sustainability reporting is included in the current Financial Reporting Manual, at paragraph 5.2.9: “The preparation of Sustainability Reports to complement the Annual Report and Accounts is encouraged and where such a Report is already produced, the Management Commentary should cross refer to it. Further information on the kinds of information to be provided in the Management Commentary in respect of environmental and social and community issues can be found in the Practical Examples and Pro forma section of the FreM website (www.financial-reporting.gov.uk).” The lack of prescription in format and necessary detail for the reporting of sustainability has seen little attention paid to this requirement. However, with Treasury mooting steps towards a much more robust reporting requirement, this is sure to change. Although at the time of writing the changes have not been finalised, it is prudent to start taking steps now. It is likely that recommended changes will apply initially to central government bodies only, but the intention exists to expand these strictures until they apply to the entire public sector, following the early learning of the first wave of bodies. Foundation Trusts have already taken steps to report on sustainability, prompted by Monitor, and as more stringent reporting requirements are developed, these will continue to be reflected by this group, possibly acting as early adopters for the rest of the NHS. This activity is important for Trusts to consider in the context of the government’s goal for all Trusts to transition to FT status, as it means that monitoring of sustainability information is another area which requires consideration as part of the journey towards different organisational structures. Regardless of the position and trajectory of individual Trusts and organisations, an imperative exists for the health sector as a whole to begin to prepare itself for the implementation of a much more rigorous sustainability regime. Reporting on Sustainability The Department of Health and NHS SDU have produced a reporting framwework for the NHS. This is a framework for reporting sustainability information as part of the annual NHS financial reporting process. It will be used from 2011/12 onwards and will be part of the accounts direction issued by DH.8
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Forthcoming changes “Within a sustainability report to be included within the Management Commentary, performance against sustainability targets for greenhouse gas emissions, waste minimisation and management and the use of finite resources [should be measured].”9 Significant changes are coming to the FReM, which will ultimately impact upon the NHS. A change from the current position to the proposed phrasing above can be seen as a sea change in the way in which sustainability information is accounted for in the British public sector. The requirement is in three parts, these being: • • •
Greenhouse gas emissions Waste minimisation Management and use of finite resources.
In the current NHS Foundation Trust Annual Reporting Manual there is already a substantial requirement for Foundation Trusts to disclose their sustainability impact, using data collected for their Estates Returns (ERIC). As more Trusts aspire to Foundation status, and these organisations are held to be the commercial paragon for the NHS, then the direction of travel for the NHS is already in this direction. Although upon initial inspection, the changes incorporated in the FReM are not significantly more demanding than this existing base, as the NHS already monitors both waste management and use of finite resources, the guidance notes which underpin new draft requirements indicate that the reporting and assurance burden will be much more pronounced in the future. The reporting requirement will also fall into two categories – financial and non-financial information.
Financial Information “Organisations should report on gross expenditure directly attributable to the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), any expenditure on accredited offset purchases and total expenditure on official business travel as a minimum. Best practice reporting would also include a breakdown of expenditure between different types of travel and details of other expenditure directly related to emissions reduction projects or low emissions solutions. (paras 3.4 and 3.5 )”10 For NHS organisations with good financial and management systems in place, the requirement for reporting of financial information relating to sustainability should not generate a significant additional monitoring burden.” Apportioning expenditure by type within the accounting system, supported by basic adjustments or information from business planning systems, will in all likelihood cover the CRC related requirement. Business travel returns collated by HR, Payroll or Accounts Payable should form part of appropriate good governance arrangements over travel expenses, and as such this information should be readily available. Business case, sustainability planning and project management documents and systems will typically include financial values, which when combined with management accounts should fulfil the requirement related to emissions reduction. Maintaining a record of the accounting adjustments and assumptions made will be critical to enabling auditors to confirm the values reported.
Sustainable Finances www.sdu.nhs.uk [8]
Non-financial information Greenhouse gas emissions Reporting of non financial information for greenhouse gas emissions is an area where bodies will face significant challenges. This said, it will be possible to draw information from activities which are already being conducted and monitored in order to populate parts of the proposed reporting requirements. The current draft of the FReM guidance requires a statement of the overall gross emissions values for which organisations are responsible, though a separate disclosure of the net value in order to demonstrate sustainability actions is also permitted. To calculate this, accurate monitoring of energy consumption will be necessary. In larger organisations this requirement coincides with the CRC monitoring regime, but in smaller organisations a move to hourly metering could pay dividends: both to increase the ease and accuracy of reporting, but also to allow identification of waste and overspend in the increasingly costly area of power consumption. This is especially important to motivate staff to take the use of expensive resources seriously – often in a competitive and award stimulated way. The International Financial Reporting Standards (IFRS 8 - Operating Segments) offer a good basis for identifying segments of the business to report upon for sustainability purposes. Consistency between the two sections of the annual report could reduce the amount of work required to produce both. Waste minimisation The proposed requirement for reporting on the organisational efforts to reduce waste is significantly less burdensome than those related to greenhouse gas emissions. The minimum requirement currently included as part of the proposed option is a disclosure of the absolute volume of waste and financial costs associated with this. Some organisations in the health sector will already be monitoring and reporting waste data as part of the Sustainable Operations on the Government Estate (SOGE) commitment. This covers offices (buildings) and estate (land managed), though the principles may be applied to other categories. Once SOGE is replaced by Sustainable Development in Government (SDiG) there might be slight changes to this framework, but the basis is likely to remain constant. As changes to the SOCR and SDiG occur, and as the reporting framework becomes more stringent, it will be important for NHS Trusts to monitor whether they
are impacted. Although NHS Trusts are not currently within the scope of SOGE, and if they were, then much of their estates might remain outside of the ambit of the requirements, expansion of the sites which fall within this area of regulation could lead to NHS Trusts needing to react quickly. The NHS will also be monitoring more closely than most its hazardous waste production, particularly where decontamination is required. Importantly, the FReM discussion draft included the aspiration to include a breakdown by destination of waste, and three and five year trend data. This is a clear indication that HM Treasury are anticipating developing the sustainability reporting framework well beyond its current conception, and although it is probably not necessary to commence work on this area as yet, it is definitely worth considering as a future area of activity. Finite Resource Consumption Finite Resource consumption looks likely to be treated in three categories, one broad and two specific: water, energy and other. Given that water is included in NHS Carbon Reduction Strategy of 2009, that some water usage information is monitored for ERIC purposes, and that water consumption is measured and billed for based on consumption, this is an area where it is likely that convergence between the current reporting and monitoring activities of an NHS organisation and those in the future will be the least demanding. Reporting mechanisms for water were published by Phil Ashcroft at EFD DH Autumn 2009. Energy will need to be reported consistently with carbon emissions, and will draw on much of the same data. However, there will be some Trusts whose sustainability, energy and emissions agenda will have encompassed the use of renewable energies, either self generated or specifically purchased. Separate reporting of the amount and value of this could offer Trusts the opportunity to demonstrate their commitment to energy independence and resilience to sustainable operations. Finally, there is also a prospective requirement to include a consideration of the consumption of finite resources and their relative importance to the activities of the organisation. Some clinical areas, for example radiology, may be responsible for such consumption, and the degree of monitoring may need to be adjusted to accommodate financial disclosure.
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Additional Reporting In this paper there has been a discussion of much of the typical areas of the sustainability agenda, what the current reporting and monitoring regimes are in the NHS, and what changes might occur to these due to a central drive to increase visibility for sustainability information. NHS organisations often have significant activity in fields related to sustainability in addition to direct consumption. This might be through its approach to supply chain management, staff or patient transportation, recycling or otherwise extending the lifetimes of equipment, setting important examples of public sector partnership through procurement or working with the third sector etc. All of these have merit for reporting, and much activity has an associated financial or quantitative value that could be included in a sustainability report. A graphical representation of how much the Trust’s carbon footprint has been reduced by changes to transport policies and options can be presented, alongside the costs or benefits of the options chosen. Certainly, such reporting can go a long way to enhancing or consolidating the NHS’s reputation as a leader in the area of corporate and social responsibility. In the document “A Marginal Abatement Cost Curve for NHS England”, the Sustainable Development Unit attempted to demonstrate the scale of carbon emissions that could be reduced (and money that can be saved) through changes in the emissions of NHS suppliers. Of course, gathering information from suppliers, and influencing them to reduce their carbon emissions, has historically been seen as a daunting challenge for any single organisation NHS body. (Indeed, data on e.g. fuel and pharmaceuticals might be considered to be commercially sensitive, and therefore securing cooperation could be unlikely.) However, the proportion of carbon emissions related directly to the activities of the NHS, but created by third parties (e.g. further back
along the procurement supply chain), is extremely high. Whilst it might not yet be possible to conduct systematic, comprehensive and comparable reporting of this area in one leap, narrative accounts around the steps that are being taken to drive change are both useful to the users of the accounts, and act as a lever on organisations throughout the health economy. NHS organisations also possess many items which they will use on an ongoing basis. These assets will have socalled embedded carbon emissions. For example, X-Ray machines contain rare metals that require substantial industrial treatment to process. It is carbon intensive to mine and prepare such resources. These embedded examples of carbon in the asset, will increasingly need to be reflected through the reporting framework. Work has been already been done in the wider accounting and technical world on reporting the acquisition and consumption of these resources. Early best practice sees Embodied Carbon Emissions accounted for as an expense incurred on purchase. This seems counter intuitive when compared to the concepts of useful economic life and depreciating asset values, but is a step which is recommended to avoid the need to create inventories or balance sheets of Embodied or Consumed Carbon Emissions. Certainly, this type of reporting is far from being ready for widespread adoption, and is noted as being potentially expensive to pursue at this date. Progress on reporting the Embedding of Finite Resources in the asset base of bodies is even less pronounced. Here, if any consideration was given to this idea, a narrative approach is probably the most likely, useful and applicable at the current time. There are certainly areas where the NHS could offer insights and information to the users of its accounts, possibly in conjunction with the discussion of the consumption values for the same groups of resources.
Conclusions Overall, the position of sustainability reporting is in a state of flux. The NHS currently does very little public facing reporting of its sustainability position, and that which it does do does not have a mandated form. A lot of information is collected for other purposes and could be made available to the public and other stakeholders. This would go towards meeting new requirements, or expanding the discussion of what Trusts are doing to ensure their organisation is sustainable. These information gathering activities will also allow NHS Trusts to react to changes in the legislative and regulatory environment, as carbon reduction, energy independence and environmental impact become more politically important. It is still too early to say how the future reporting environment will look, but if the NHS can benefit from the virtuous cycle of reporting on sustainability to improve both their organisational effectiveness and their financial stability and diminish their environmental impact, then they will be well placed to face the challenges which will arise.
Sustainable Finances www.sdu.nhs.uk [10]
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NHS Sustainable Development Unit
The NHS Sustainable Development Unit develops organisations, people, tools, policy, and research to help the NHS in England fulfil its potential as a leading sustainable and low carbon organisation.
Victoria House, Capital Park Fulbourn, Cambridge CB21 5XB Tel: 01223 597 792 Fax: 01223 597 712 Web: www.sdu.nhs.uk
Published September 2010 Š NHS Sustainable Development Unit, 2010. All rights reserved. Sustainable Finances www.sdu.nhs.uk [12]