This article was originally published on KKS Advisors.
“Good management of resources critically depends on our ability to measure and value these resources. Both organizations and capital markets depend on information about the value of those resources in making capital allocation decisions. But in this decision making process we have missed one important resource: nature. According to estimates, $125-$145 trillion is missing from our collective balance sheets. That’s the estimated value of the chemical, biological and physical processes, or “ecosystem services” delivered by Earth to its inhabitants annually.This is by no means trivial as it represents more than 50% of the total assets of all publicly listed companies. Because of that blind spot it is now estimated that the unpriced externalities of business practices in land use, water consumption, GHG emissions, air, land and water pollution, and waste generate costs to society of some $4.7 trillion per year. Lacking the means to measure the value of ecosystem services, corporations and society have treated them as free inputs. It’s easy to see how and why they could be mismanaged…
…The Natural Capital Project, deeply grounded in its academic roots of Stanford University and University of Minnesota, uses rigorous environmental science to create practical tools for private sector, public sector, and investment organizations to make better decisions. Both the Natural Capital Coalition and the Sustainability Accounting Standards Board focus on the role of accounting for natural capital in organizations. While the Natural Capital Coalition concentrates on enabling leaders of companies to measure natural capital and integrate these measurements in their operating and strategic decision making, the Sustainability Accounting Standards Board (SASB) focuses on developing industry-specific standards for reliable and comparable disclosure to investors of the financially material environmental, social and governance metrics, to meet investor demand for such information.
Through its grant, and as a subset of its larger mission, the Principles for Responsible Investment (PRI) is working to empower mediators of the capital market flows from investors to public and private sector organizations – credit rating agencies – to take into account natural capital in credit ratings and to enable broader financing of environmentally-aligned investing.
Grants to CERES and Climate Bonds Initiative help mobilize investors on climate and water, empowering allocation of capital and improving its alignment with environmental development. CERES is working with equity and fixed income investors to develop a practical tool that enables investors to take into account water risks and opportunities in making decisions. The Climate Bonds Initiative is developing The Climate Bonds Standard and Certification Scheme, which is designed as an easy-to-use tool for investors that assists them in prioritizing investments that truly contribute to addressing climate change.
None of these organizations alone can solve the problems The Foundation seeks to address through Revalue Ecosystems, but their collective work is forming new systems and infrastructure needed – by corporations and the societies they serve – to evolve and even thrive in a world of finite resources, strained by global megatrends.
The market is ready for their solutions…”
Read on at: KKS Advisors.