What can business do to incorporate the cost of biodiversity loss into its accounting procedures?
This is an enormous question and one that I am slightly nervous about tackling. As with all issues relating to sustainability, the task at hand often seems so incredibly large that many of us falter before we have taken our first step. One of the things that sustainability specialists need to work hard at achieving, is demystify these enormous challenges, so that the initial small steps can seem a little easier to address and from then onwards the corporate sustainability work can gather pace.
At the beginning of February, Prof Sir Partha Dasgupta’s review on biodiversity and economic prosperity called for a “transformational change in our economic approach to nature”. The impact of this 600-page report will have far ranging effects, but as Government works it magic and begins developing strategies (!) it falls to Businesses to step up and develop methodologies for incorporating the value of biodiversity into accounting systems.
Without a doubt, our climate emergency and biodiversity loss need to be addressed simultaneously. Businesses are already feeling the impact of climate change, with insurance premiums climbing, banks staring at stranded assets and supply change resilience being called into question. Alongside this, we see our oceans polluted, fisheries compromised and air quality in many cities being attributed to disease and death. This is only the beginning.
There are a number of ways that Business can begin to account for nature, or rather “natural capital”. A very obvious and basic measure would be to put a value on natural resources and then feed this usage back into the race to net zero. Tree planting, land reclamation and sequestration, seagrass investment are but a few. Corporate Social Responsibility professionals might address issues that impact local society or look at their impact further afield and consider investments that might aid populations displaced by climate change, or perhaps develop a strategy to reduce a Business’ impact on water use in drought-plagued countries. You see where I am going with this.
Another way might be investment in technological advancements that directly reduce the impact on biodiversity. We have seen recently with the rapid development of vaccines during the pandemic, that human ingenuity and creativity is phenomenal when we are pushed to the wire. The possibilities are endless.
Work has already begun on attributing a value to nature. But there are problems. Accountancy procedures typically value assets using quantitative measures. This ignores the qualitative value that we receive from the natural world. Our feelings of happiness and contentment when we are in green spaces surrounded by clean air – certainly something that many of us have appreciated over the last 12 months. It will also be challenging to put a price on the loss of natural capital felt by future generations, something that Roman Krznaric focused on in his book “The Good Ancestor” – definitely worth a read.
As a sustainability specialist, my view would be that key to any pre-empting of a Government-driven pricing of “natural capital”, would be an approach whereby each and every business must take account of its impact and usage of and on our natural world. Reducing and eliminating its impact where possible and paying back its “natural capital debt” where it is not. How to do this is not an easy task, but it is an essential one. We rely on our world’s biodiversity bank to live and function on our planet, be it as a business, a country, a society or an individual. Without it, we literally have nothing.