Introduction
Accounting Figures and the Role of Quantification
Quantification in Contemporary Society
Decision-Making and Communication with Numbers
Data and Research Method
Case Study Setting
Peat Production in Finland
The Case Company and Its New Mission: We are Better than Our Reputation
Our case organisation is well known in Finland, and its activities receive wide publicity on a regular basis. The appointment of its new CEO was not overlooked by the business press. An interview in the press with the CEO highlighted the harsh criticism to which the company had been subject in the previous winter (Talouselämä, 23/2011). The article made it clear that the CEO had come to the organisation with the aim of improving its environmental record and reputation. According to the interview, he was there ‘to green the organisation, even though he thinks that the greenwashing of peat is a waste of energy’. (ibid.). At this stage, there was plenty of talk describing the company to be better than its reputation, but very little was offered in terms of tangible decisions or changes in operating practices. A similar message was also included in the press release that announced the appointment of the new CCO:The case company is in my view better than its reputation, and my goal is to take the company a few metres further in a greener direction, not only in terms of our activities, but also in the public domain and on an emotional level.... I want to make all stakeholders proud of the possibilities forest energy and peat have. (CEO in case company’s press release 9.9.2010)1
It is worth noting, however, that this was not the first time such attempts had been launched by the company. Preceding the period we focus on here, between 2008 and 2010, the case organisation had sought to improve its reputation with several large-scale advertisement campaigns. The claims the company had made regarding the nature of peat and the environmental impacts of peat extraction had received criticism, specifically from environmental NGOs. It had, on separate occasions, been accused of running a ‘national diversion campaign’ (Finnish Association for Nature Conservation [FANC] 19.12.2008), of ‘distorting of peat information’ (Chairman of FANC in Helsingin Sanomat 18.4.2010), and of using a massive advertisement campaign to ‘greenwash peat’ (Vihreä Lanka 14.10.2010; see Lempinen 2013). The case company’s former CEO had denied any accusations concerning greenwashing and ascertained that ‘peat promotion is based on facts, and any claims of disinformation are unfounded’ (Former CEO in Helsingin Sanomat 20.4.2010). Nonetheless, it was from this basis that the new top management began its work.[The case company] is much greener and more responsible than its reputation suggests, but our targets are set way higher, also in these areas. (CCO in case company’s press release 1.4.2011)
Bringing Numbers to the Fore: Religion or Calculations?
On this note, it is clear that the organisation’s chief communication officer made deliberate choices in terms of how the message would be put across better.The significance of environmental responsibility has changed really strongly, especially when it comes to peat. We have also received bad press, and I acknowledge that at least some part of that has been well-deserved. [Production Manager]
Based on the empirical material, we concluded that different types of quantifications, comparative settings and numbers were to play a key role in the attempts to reposition the case organisation’s environmental activities. In all this, there is also a strong overarching emphasis on how the organisation would be the expert in this area, and that it would be basing all its communication on facts. Simultaneously, this included positioning those challenging the organisation as outsiders, who would be advancing their cause ideologically or without having proper knowledge.I have got pretty far with my goals, if [the editor of Finland’s second largest newspaper] sees our report and says that wow, they are talking about what they have not done. And perhaps writes a column asking whether something has actually changed. (…) So I somehow need to get our reports to their attention. (CCO)
It should be noted here that in earlier years there had also been numbers and quantified information in the organisation’s disclosures. For instance, stand-alone CSR reports published during 2004–2007 followed the GRI guidelines and included physical metrics on, say, emissions, discharges and energy use. There is, however, a remarkable difference in where the numbers and quantified environmental information are reported and how they are presented. Instead of being offered as supplementary information in a separate report or on the website, we argue that the new top management brought quantified environmental information to the core of the organisation’s communication, and relied upon it in seeking to reposition the organisation in the midst of the intensifying social debate.Religion or calculations? (…) Based on math classes, peat is good for Finland, and without a strong belief in something yet unknown, it would be hard to replace it. (CCO blog entry on company website, 2012)
Findings: The Role of Quantification in Corporate Environmental Communication
Accounting Figures as Environmental Information
The environmental issues were hence raised in importance from a nuisance to a key strategic question. The statement listed various measures through which it appears the organisation sought to convince the public that it was sincere in its measures to improve its future environmental performance. As much of the public criticism had targeted the pollution of watersheds downstream of the peat production sites, the core of the new environmental programme included a revised approach to water protection. In addition to making commitments regarding transparency and more intensive self-monitoring, the organisation promised to invest in building more advanced water protection systems:We are currently going through major cost cuts, which force us to revise our general level of investments, but we will not allow this general cost hunt to hinder our responsibility programme, which has been prepared since the summer of 2011. (Case company’s press release 16.12.2011)
From this point onwards, the organisation began to emphasise voluntary commitments, while failing to mention regulatory requirements. While tax increases for peat and the indispensable environmental investments had previously been blamed, by mid-February the CEO was presenting environmental responsibility as a ‘very significant strategic change in the organisation’s activities’. Furthermore:During the next three years we will significantly increase our investments in water protection. By the end of 2014 all production sites, which can have harmful impacts on the watersheds downstream, will be equipped with the best water treatment techniques.... This additional investment will cost approximately six million euros. On the whole, during the next three years we will invest 29 million euros to improve the efficiency of water protection facilities. Areas that cannot be equipped with [the best available techniques] and which cause undue impacts on the watersheds will be removed from production. (Case company’s press release 16.12.2011)
The statement also reiterated the earlier total amount of environmental investments published: ‘In December we announced a programme for the next three years according to which we will invest 30 million euros to improve the efficiency of water protection facilities’. (Case Company’s press release 17.2.2012)Even though we are facing major financial challenges and we need to forego many growth investments, we have made the decision that we are not compromising our environmental investments. On the contrary. The published financial statement includes an additional provision of almost six million euros, which we will put towards the restoration of former production sites. (Case company’s press release 17.2.2012)
The function of the accounting numbers here seems to be related to signalling trust (Porter 1992) in the fact that the company is serious about environmental actions. At the same time, it narrows the debate to the measurable (Mennicken and Espeland 2019). The next section takes a closer look at these decisions, and discusses the organisation’s actions in light of other documentary evidence as well as the views presented by the case organisation’s employees.[The CEO] highlights that [the company] invests huge amounts of money in water protection facilities. Moreover, it is doing so voluntarily, since it is according to the spirit of the times and the demands of society. (Case company’s stakeholder newsletter 4/2012)
Comparison, Commensuration and Scales
On this note, it became evident that the organisation and its personnel were unhappy about how the peat industry was blamed for any incidents in which the water quality of a particular lake had worsened. The interviewees recalled various occasions on which a story published in the media had claimed that extensive discharges from some peat production site had caused the water of a previously clear lake to turn cloudy, although it was unclear whether there were any peat production sites located upstream of the lake in question. It was clear that in the case organisation there was a strong belief that the peat industry was undeservingly getting blamed for other industries’ actions.We have specifically used resources in measuring and attempting to find out where all those discharges originate and how big a share of those does peat production really cause. It would naturally be important to understand the big picture, that is how much of those originate from agriculture, how much from forestry, and how much from peat. (Development Director)
Such comparisons also featured prominently in the organisation’s communication when it attempted to reposition itself in environmental matters during our research period. The environmental reports include diagrams emphasising how the peat industry causes less than 1% of the inflows to watersheds, with the rest originating from agriculture, forestry and other types of land use. Such calculations are uncertain, however, since while the peat industry has to monitor its production sites due to environmental permit requirements, the situation is different with the other industries. Still, these comparative scales are used in the public domain:In reality the peat industry is not a major sinner here. For instance, the dykes forest companies dig in the swamplands as well as agriculture in general are tens of times, hundreds of times worse here. (Business Line Manager)
These figures, however, are strongly contested by environmental groups, with the Finnish Association for Nature Conservation, for instance, referring to the organisation’s claims as the “great Finnish discharge hoax” (FANC 2012, 2014). The key point here is to acknowledge that producing any exact measures of water outflows over a vast geographical area is bound to be complex. Despite this, the organisation took a strong position in its communication, emphasising how they were unjustly getting the blame for problems that were in fact caused by others. For this purpose, estimated aggregate figures seemed to serve the purpose, as such numbers appear to be based on measurements and a steady methodology, thus providing more credibility for the claims. Still, when dealing with water discharges, it would be relevant to distinguish the aggregate figures from something taking place on the local level, as also noted by an interviewee:If we cause over 1 per cent of this, we must be held responsible. But this must apply to everyone else as well. (CCO in a Letter to the Editor, Helsingin Sanomat, March 2012)
Here, the company made use of aggregated measures of water discharges that were compared with the often dissimilar discharges of other industries, creating a comparison of different entities according to a common metric (Espeland and Stevens 1998). This type of commensuration, while implicating what gets noticed and what is relevant (Mennicken and Espeland 2019), also establishes an implicit ranking of water polluters that highlights the relatively small scale of the case company’s discharges. Other types of comparative scales are also evident in our empirical material. In communicating its environmental activities our case organisation often makes use of various metaphorical comparisons, which relate to the scale of things. These comparisons are often very mundane, which seemingly attempt to make things understandable or easier for the audience to comprehend. At the same time, however, they can also be seen as attempts to use comparative quantitative settings to portray a favourable representation of the organisation. One such area would be the organisation’s environmental impacts, which are represented as miniscule through quantified metaphors.The water discharges of the peat industry account for about 1–2 per cent of all discharges. So from that perspective it is not a major issue. However, when we get to the local level, you may have a trench or three flowing off each swamp, and as all these flow to the same lake nearby, the questions of water quality do come up differently. (Environmental Manager)
Such a statement, further reinforced with visual imagery of four small flies, conveys the idea that the environmental impact would be negligible. Metaphorically, small flies are very mundane and familiar to all Finns, and are therefore something the reader can easily relate to and associate with something small. Still, it would require considerable expertise to know whether or not this type of sediment flow is of significance:The amount of sediments flowing within each litre of water leaving a peat production site weigh about the same as four flies would. (Company brochure, 2012)
In addition to the environmental impacts, the organisation similarly uses quantitative scales to represent the relative significance of peat production in Finland. Again, the comparisons are set in such a way that they would be easy for most citizens to relate to.We have reported facts, like how much sediment, nitrogen or phosphorus there is. And probably then that grandma out there in the village will get lost, when I get beyond mere hectares and kilograms. We talk of grams per litre and all those things, so how would they know whether it is a lot or just a little. And then after all, when someone is standing in the lake next to her summer cottage, with brownish water between her toes, the impression she has is definitely of a certain kind. And here we are dealing with the most holy of things, it’s your own summer place, and your feet are soaking in that brown stuff, so it is very easy to make a connection and ask what on earth is causing this. (Business Line Manager)
Finland is using less than one per cent of all its peat resources … peat will never be finished. (Chair of Board in a Letter to the Editor, Aamulehti, October 2013)
As was discussed above, it is not that these claims would not be based on facts and actual statistics. Finland is a sparsely populated and geographically large country, in which there are wide areas of unpopulated natural landscape. At the same time, what is omitted in making these comparisons is the fact that most of those swamps would not have any economic value in peat production. Moreover, the cost structure of peat production is such that the peat used for combustion at power plants cannot be economically brought in from very far. As such, most of the peat production sites are located in certain regions of Finland, implying that while the above comparisons of the scale of peat production are factually correct on the whole, on a regional and local level the situation can be substantially different. As was the case with the previously discussed type of quantification, the comparisons with other industries, in its communication the organisation here takes advantage of the opportunity to scale things in a way that represents its activities in a favourable light.In Finland there is more than a hectare of swamp for each Finn. (CCO in a Letter to the Editor, Helsingin Sanomat, March 2012)
Best Available Techniques—By What Measure?
Importantly, while avoiding a direct comparison with other firms in absolute terms, the BAT measure nevertheless establishes implicit scales that an observer could use to establish a relative position of the case company in comparison to some unnamed others. Firstly, the very notion of best suggests that the organisation would do everything in its power to diminish the environmental impacts that its production is causing. Secondly, given the large number of production sites the organisation is associated with, the programme of taking such techniques to the sites provides an opportunity to represent the rapid progress in the implementation as a remarkable achievement. While both of these facts clearly hold water and can be seen as clear signs of improvement in the organisation’s comparative environmental position, neither of them is as straightforward as they might seem in the first instance.In 2011 we published an ambitious environmental programme. We always operate in line with current regulations and environmental permitting requirements. We have now set our aims higher, however. In three years, we will be basing the water treatment at all our production sites on best available techniques. We will stop producing peat at sites where the best techniques cannot be applied. (CEO in Corporate Brochure, 2012)[The company’s] new environmental responsibility becomes real through actions. The company will invest 30 million euros in more efficient water protection facilities by the end of 2014. With this amount, we will be able to equip all our production sites with the best possible water treatment facilities. Those production sites where more efficient water treatment facilities cannot be constructed will be removed from use. (Environmental Director in a Letter to the Editor, Keskisuomalainen, August 2012)
Evaluating something and establishing its worth always assumes classification and categorisation, i.e. establishing the group into which the valued items belong. By focusing on the ideas of best possible and best available, the BAT -measure creates an implicit classification system, where meaningful discussion takes place only within the category ‘peat production’. As Power (2004, p. 767) notes, such categories are intended to ignore ‘inessential’ differences and reduce complexity. From this it follows that the type of activity the company is performing (environmental investments) should not be questioned, as it is only a matter of how they do it. Obviously, it should not be expected that an organisation would openly contemplate in its reporting that the entire industry will be wiped out in the not-so-distant future. However, it is worth noting that the comparisons are not only about the entire industry, but also deal with decisions concerning peat production in particular swamps, watersheds and regions. Once opened for peat production, a site can be utilised for an extended period of time, and it can be helpful to justify the operations by referring to all actions being as good as possible.In the future, peat production will be responsible, which means that we will not only follow the law, but use the best available techniques and have the best possible attitude. (Chair of Board in a Letter to the Editor, Aamulehti, October 2013)
In the above, the potential negative outcomes the CEO refers to can be interpreted to relate to the various operational uncertainties which can arise in situations where the organisation does not know how the regulator is about to interpret the legislation, or that the requirements are implemented in different ways over time and in different places. As often noted, such regulatory uncertainty can easily cause higher costs and may for instance delay new investments, as organisations can be hesitant to use resources on initiatives or actions which can subsequently be hindered by a new regulatory interpretation.Speaking of this best available technology, which is demanded everywhere: It is mentioned in the regulatory standards, but there is really no such thing. It is totally impossible to define here, but it is still mentioned in the requirements. (…) And as it is not defined, it can turn into a grey area. Absolutely. And having more grey areas between the actors and the regulators is obviously not a positive thing. (CEO)
These environmental investments, well, they can of course also be voluntary, but usually we just have to do something in order to fulfil the environmental permit requirements in the future. (Business Controller)
Environmental expenditures show that the demands set out in environmental permits have become stricter.... There are all kinds of things which are constantly added to the requirements. (Environmental Manager)
All in all, establishing the BAT –measure implies that a category of measurement and a scale must be established. The established category or classification scheme pertains to peat production and limits other issues as irrelevant for discussion. Quantification is also used in this way to establish relevant topics of analysis (Power 2004), which in this case relate to how small the environmental impact of the case company’s operations have, especially when compared to forestry and agriculture. As this information is quantified, it appears accurate and convincing (see Porter 1995), implying that such information has the potential to be used flexibly to advantage the organisation’s cause. The assumptions underlying such comparisons or other forms of quantification are, however, left implicit, and as such the origins of the figures, scales or comparisons become black-boxed (see Mau 2019; Carlsson-Wall et al. 2016). Thus, quantification is an act of communication (Espeland and Stevens 2008) that reflects the values of the measurer, and it has therefore an ethical dimension. Our next section will discuss the implications of these issues in more detail.If we have bad [environmental] results, and the current measures are not working well enough, we pretty much automatically know on the spot that renewing the environmental permit requires us to invest. That is a clear signal. (Production Manager)
Ethics of Quantification
The group’s environmental investments were nine million euros ([compared to] nine million [in 2009]) and consisted mainly of water protection facilities at peat production sites. (Case company’s Annual Report 2011, p. 32)
Based on the annual reports, it thus appears that the organisation had used a total of 28 million euros for environmental investments during the 3 years preceding the entrance of the new top management. Most of these investments were used to improve water protection facilities at peat production sites—the same target the vaunted 30 million euros was to be used for. Hence, it appears that the 30 million euros was not a new phenomenon, but a continuation of the organisation’s previous activities. Here, quantified disclosures were put to use in signalling rational behaviour and trust (Porter 1992, 1995). Nevertheless, these accounting-based figures appeared to be accurate and gave the impression that the company had made a major commitment to environmental protection (see Craig and Amernic 2004; Tinker and Neimark 1987):The group’s environmental investments were 9.8 million euros. (Case company’s Annual Report 2009, p. 41)
Our company wanted to give the impression of a financially solid company, and succeeded. At the same time, it managed to give the impression of a financially solid company that is reluctant to invest in environmental protection. And now I would like to wake people up to the reality that it’s the other way around; that is, we are not so financially solid [a company] but are still willing [to invest]. (CCO).
Such comments embody a key ethical aspect of quantification: the ontological stance of measurability, i.e. what is measured is ‘real’ (Desrosieres 2001) and that numbers, especially accounting numbers, should be trusted (Porter 1992). The reports are invested with a logic, according to which since the numbers show rising investment figures, environmental aspects have likely improved.Peat has a pretty bleak reputation in Finland... so we have to have figures that show we have indeed put this many euros into these issues so that we try to show our stakeholders that we are not just passive and guilty of everything we are blamed for. (Financial Manager)
Internally, the management seemed to highlight the reflexive nature of quantification (Espeland and Stevens 2008), where being subjected to measurements and giving quantified accounts drive organisational actions. Relating to this, the CFO continued:I am at odds with the idea that we would produce reports because we would like to show the world how great we are. In my opinion, it is not the starting point. This means that reporting is a good tool for making things work inside the firm. (CFO)
While the CCO of our case company juxtaposed the company’s ‘scientific’ facts with environmentalists’ mythical arguments, discussions with the CEO and the CFO hint at the reflexive nature of quantification: numbers are mobilised to create new realities. This is purposeful action that has profoundly ethical underpinnings (Espeland and Stevens 2008).My job is to make sure that our house is clean. And I can affect this by measuring it, I can come up with targets. So an environmental strategy cannot have vague statements which are not tied to relevant measures that have to be achieved in a specific time frame, and compared to measurements of where we are now…[…]… that is the only way. (CFO)
Thus, quantified measures can be used to establish accountabilities and signal ethical obligations (Power 2004; Espeland and Stevens 2008), such as environmental investments. However, at least initially, some of the accounting personnel who had served the company for years appeared to be suspicious of the new emphasis on reporting brought about by the recently appointed managers. For instance, the group controller who had a long career in the company commented:So an organisation goes and gets this kind of fuzzy BAT in all locations. I mean, not all sites are ideal locations, you just cannot create a biological wetland next to your production site, or there might be some buildings or someone else might own the land next to it, so you do what you can, but you go and get this kind of fuzzy BAT in all the locations. Thereafter the organisation, whatever its industry may be, gets a right to speak. (CCO)
Some of the interviewees were actually willing to question the need for quantified environmental reporting. For instance, a business controller noted that:We simply need to wait for some time to see whether this is just talk or are we actually going to do something. (Group Controller)
By discussing reports as buying a clear conscience, the business controller seems to hint that numbers may have qualities to which people may feel emotionally attached. In the literature an often cited example of this would be a rise or fall in rankings (Espeland and Sauder 2016). In our empirical material, this is illustrated by the CCO:It seems to be more like a matter of conscience, they may be kind of buying themselves a clear conscience with this, to argue that we are monitoring these things and doing something. (Business Controller)
Numbers illustrating finance-related environmental actions seem to provoke similar reactions. However, while numbers are rarely enough to convince anyone to change their mind about issues to which they are emotionally attached, we nevertheless maintain that quantification is mobilised here as a powerful tool in seeking to navigate the organisation within mounting social pressures and financial challenges. In this quest, the seemingly exact figures of environmental investments and other types of quantified information served well to create an appearance of rationality and objectivity, thus increasing the trustworthiness of the decisions the organisation emphasised in presenting its forthcoming intentions.So people have a feeling that there is too much dirty water. If I produce an Excel sheet proving that their feeling is wrong …[…]… If I tell them that 90 per cent of all the things are OK and the (environmental) report concentrates on everything we have done so far, the people will still concentrate on the 10 per cent. (CCO)