Business and biodiversity haven’t mixed well, historically. The confluence of several significant trends—population growth, natural resource and materials scarcity, ongoing ecosystems services degradation, loss of biodiversity and climate change, among them—has business leaders increasingly focused on sustainability not just in economic, but in ecological and social terms as well.
The key to such efforts is internalizing economic externalities in market prices, business costs, planning and accounting. The concept of natural capital, in turn, is seen as a key for businesses to incorporate and place a fair value on the public and access goods, such as clean air, water and other ecosystems services. It is also a way for both businesses and nations to economically value and account for the depletion of natural resource stocks and the impacts of pollution, as well as degradation of ecosystems and the services they provide.
Illustrating these points was an international event in Singapore on Nov. 7, in which business, government and non-government organization leaders gathered to officially launch TEEB (The Economics of Ecosystems and Biodiversity) for Business Coalition Headquarters, the aims of which are “to achieve a shift in corporate behavior to preserve and enhance, rather than deplete, the earth’s natural capital,” according to a press release.
Valuing and Accounting for Natural Capital
The founding members of the new TEEB for Business Coalition have been driving forward the international development of natural capital valuation and accounting, an effort which brings together science, industry and commerce. They’ve also been active globally in advocating for and promoting adoption in business and government. They now believe they have “a credible platform to take the business application of this forward.”
“The Coalition brings together global stakeholders to study and standardize methods for natural capital accounting to enable its valuation and reporting in business. This is the business application of the G8+5 and UNEP (United Nations Environment Programme) supported TEEB programme, led by Pavan Sukhdev, which provides a compelling economic case for the conservation of natural capital and is a cornerstone of the Green Economy,” TEEB explains in its press release.
Affording societies a basis for building and sustaining economic and social capital, maintaining healthy ecosystems and fair, equitable access to natural resources and ecosystems services and the benefits derived from them, are fundamental precepts for conceptual frameworks for sustainable business and development, as well as for intergovernmental treaties, such as the UN Convention on Biological Diversity (CBD). The problem is that their degradation and depletion are not valued or accounted for in business or national income accounts—they’re considered “externalities.”
The failure of business and government leaders to account for ongoing loss of biodiversity, degradation of ecosystems and depletion of natural resources is putting businesses and societies at risk, TEEB members emphasize.
“The invisibility of corporate externalities is a root cause of many errors of judgement across economics, ecology and governance,” elaborated Pavan Sukhdev, Study Leader of TEEB, and UNEP Goodwill Ambassador. “Solving this complex problem is a crucial challenge for sustainability, and it will need global collaboration and research expertise of significant scale. I am therefore delighted that so many leading global institutions, who are represented in this Coalition, are combining forces to address this challenge.”
The Institute of Chartered Accountants in England and Wales (ICAEW) has been a leader in formation of the TEEB for Business Coalition, hosting the new coalition during its setup phase. Standing up for the accounting profession and the role accountants can play in driving forward widespread, mainstream adoption of natural capital valuation and accounting, ICAEW chief executive Michael Izza stated,
“At Rio+20 we heard that it is accountants that will save the world. I believe it will not just be through the strategic vision and leadership of Chartered Accountants in business and public life worldwide, but also through the discipline accountancy can bring to the issues of valuation and quantification.”