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

Discussion?