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Symposium on Natural Capital: The Business Case and Relevance to Financial Institutions, Sofitel Hotel, BKC, Mumbai, 14 November 2014. Jointly organised by GIZ working on behalf of the Federal German Ministry for Economic Cooperation and Development (BMZ), UN Environment Programme Finance Initiative (UNEP FI) and YES Bank.
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The Sofitel, Mumbai, 14 November 2014
Prof Jeremy B WilliamsDirector, Asia Pacific Centre
for Sustainable Enterprise
@TheGreenMBA
The Case for Integration of Natural Capital … or How Accountants Can
Save the Planet
Symposium on Natural Capital:The business case and relevance to financial institutions
@TheGreenMBA
slideshare.net/jembwilliams
#NatCap
Some context…
3 recent reports that focus the mind
Politics or ideology must not get in the way of
sound planning
Risk data for 198 countries across 26 separate issues, including climate change vulnerability and food security, as well as emissions, ecosystem services, natural disasters and regulation
Echoes the findings of recent reports released by the Pentagon
The growth economies of Cambodia (12), India (13), Myanmar (19), Pakistan (24) and Mozambique (27) also feature in the ‘extreme risk’ category.
If these are the symptoms, what is
the cause?
The Earth
… is full
What is well-being?
How do we measure it?
Good or bad for GDP?
The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP... goals for ‘more’ growth should specify of what
and for what.’
Simon Kuznets (1962) … creator of GDP concept
Kubiszewski et al (2013: 63)
‘Capitalism, as practiced, is a financially profitable, non-sustainable aberration in human development. What might be called ‘industrial capitalism’ does not fully conform to its own accounting principles. It liquidates its capital and calls it income. It neglects to assign any value to the largest stocks of capital it employs – the natural resources and living systems, as well as the social and cultural systems that are the basis of human capital.’
Hawken, Lovins and Lovins (1999), Natural Capitalism, p. 5.
(2005)
The six capitals of Integrated
Reporting<IR>
Where is the
company’s value?
Introducing TEEB
G8 Environment Ministers Meeting Potsdam, March 2007
Pavan Sukhdev
Lead the TEEB study and CEO-Founder of
Ending the economic invisibility of nature
Can accountants save the planet?
(2012)
< 1/3 of responding ACCA members were familiar with the term ‘ecosystem services’
70% of ACCA members surveyed said they needed training on its potential impact on corporate value and performance
Pollination services from bees
in Britain would cost the UK £1.8
billion p/a
‘Eco-system engineers’
(Released 14 May 2014) Executive Summary:
‘Natural capital will become as prominent a business concern in the 21st Century as the provision of adequate financial capital was in the 20th Century ... We are already ‘drawing down’ on 50% more natural capital a year than the earth can replenish – and the rate of depletion is accelerating. All too soon, businesses will face a stark choice: adapt or fail.’
HRH Prince Charles
Richard Spencer Head of Sustainability
ICAEW
“Natural capital drives a completely different business model that redefines business success”
Valuing Our Life Support Systems Summit - Natural Capital Initiative6-7 November 2014 British Library, London
Links between natural capital and corporate value
Which of nature’s assets should your company be investing in?
September 2013
Follow up on Is Natural Capital a Material Issue?
• narrative reporting on strategy and management providing qualitative understanding of an organisation’s relationship to natural capital and the processes used to manage the various risks and opportunities; and
• performance reporting providing stakeholders with quantitative information on KPIs that can be used to track performance over time
CIMA (2014: 8)
Puma the world’s first major corporation to publish details of the cost of its impact on the environment
Motivation: to build a more “resilient and sustainable business model”
The USD1 trillion infrastructure gap
• Current spending on basic infrastructure is $2.7 trillion – needs to be $3.7 trillion
• $50 trillion in locked in pension funds, making low risk investments
• Companies need to demonstrate how they will create and preserve value over time
November 2013
What does investment in natural capital look like?
Year: 1986Population: 2.7 millionGreen Cover: 35.7%
Centre for Remote Imaging, Sensing and Processing (CRISP)
Year: 2007Population: 4.8 millionGreen Cover: 46.5%
Centre for Remote Imaging, Sensing and Processing (CRISP)
Cheonggyecheon, Seoul (BEFORE)
CheonggyecheonCheonggyecheon, Seoul (AFTER)
The goal:
Cityin a
Forest
World’s Most Liveable City for four years
running
Urban Landscapes Climate Adaptation$50 million 2010-2015
Cool the city by
4°C
Double canopy cover
Increase permeability
Increase green space
Increase stormwater harvesting
Human Health Public Realm & Environment
profjeremybwilliams
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