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November 27, 2015

Bringing natural capital into the metrics of growth

By Franchesca Hashemi

Edinburgh/London, UK. The World Forum on Natural Capital held its second ever conference earlier this week, but as large businesses and multinationals pledge their commitment to nature, protestors outside the forum question their motives.

Natural capital (NC) is an umbrella term used by leaders of big businesses and environmentalists who want to place "value" on the planet’s ecosystems, delegates at the second World Forum on Natural Capital have learned.

The global gathering, of which sustainability directors at EY, KPMG, and PwC were in attendance, ran from the 23rd until 24th November and attracted 500 people from financial and environmental backgrounds to discuss the business case for valuing natural resources.

Opening the conference via video link, the Prince of Wales stressed that society is facing a "cataclysm" of environmental events which "pose a real threat to our survival".

"The value of the planet’s ecosystems and biodiversity has not been taken into account fully and consistently in our decision-making systems", he said.

A series of presentations filled the two-day Edinburgh-based forum, of which speakers and delegates alike stressed a different way of thinking is needed to mitigate environmental crises. Among the forum’s speakers were representatives from Nestlé, John Lewis, Unilever, and the World Bank.

The environmental-economic case Chief economist at the United Nations Environment Programme (UNEP) Pushpam Kumar told the conference that Earth’s many ecosystems had an estimated economic worth of $125-145trn USD in 2007 alone.

"Bringing natural capital into the metrics of growth helps with resource allocation, efficiency, innovation, and achieving a high frontier of economic development with the same quantum of resources", he added.

An UNEP coordinate study valued the loss of global "ecoservices" in 1997 at $4.3trn. Yet by 2011, this figure rocketed to $20.3trn.

The jump is due in part to an 11% increase in global population, (from 5.8bn in 1997 to 7bn in 2011), and a more comprehensive value unit applied in the latter year’s analysis. This meant taking ito account non-traditional metrics, such as deforestation in Kenya outweighing the financial gains received from logging, and the quality of water impacting global population’s well being.

Pushpam emphasised the need for conference delegates to organise a accounting and evaluation processes. But, he continued, the impact these measurements have on environmental damage remains at "a basic level" of understanding.

"Green accounting, inclusive wealth, comprehensive wealth, ecosystem accounting, and natural capital accounting: there are hundreds of jargons", he observed. "But, number one is, people don’t actually know how to do it. And secondly, even when they do it what is the answer?", Pushpam conceded.

As part of his presentation to the conference, the UN’s chief economist suggested that a Valuation & Accounting of Natural Capital for Green Economy ( VANTGAE) framework could provide the private sector and governments economic perspectives for ecosystem management, including macroeconomic policies that can be implemented regionally and nationally.

"The operational approach is to move beyond GDP and link natural capital with other structures," Pushpam concluded.

The Natural Factor Issues such as human capital, social capital, inclusive wealth (which considers social, economic and environmental issues affecting the overall productivity of a nation’s well-being), and investment risks were dominant themes throughout the World Forum on Natural Capital.

But while there was no easy answer as to what exactly can and should be done to limit damage caused by climate change and big business, it was agreed by many speakers that financial institutions are ready to take action.

Moreover, many of the presentations given during the two day event in Edinburgh connected the UN climate change conference in Paris next month with natural capital accounting.

Professor Dieter Helm, chair of the Natural Capital Committee, told the World Forum’s audience that economics and ecology is the best means forward: "Anyone who damages the natural world should compensate for it".

CriticismDieter’s words resonate, perhaps unintentionally, with protestors who gathered outside the forum on its opening day. Their main accusation of "greenwashing" had been directed at Dows Chemical Company, whose director of environmental remediation and restoration is featured as part of the speaker line-up.

Dows Company has declined this magazine’s offer to respond to their critics.

Dows Chemical Company, associated infamously with the 1984 gas leak at a site in Bhopal India, states on its website: "Although Dow never owned nor operated the plant, we – along with the rest of the chemical industry – have learned from this tragic event, and we have tried to do all we can to assure that similar incidents never happen again."

Prior to the 23rd of November, an open letter signed by the leaders of 14 campaign groups, including International Campaign for Justice in Bhopal and European Work Hazards Network, called on the Natural Capital World Forum’s organisers to demand that speakers and their company’s "clean up their environmental destruction before lecturing on how to make ecosystem protection compatible with their corporate profiteering."

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