This article was written by André Hoffmann, the Chairperson of our Board.
All the capitals
As a businessman, environmentalist and philanthropist, I firmly believe in business as a force for good. Its purpose is not simply for profit but, more importantly, to serve community and satisfy societal needs sustainably.
For too long our economic systems have obsessively prioritised short-term financial gain at the expense of people and the planet. To transform business for the better, the ways in which business activities impact and depend on all forms of capital – natural, social, human and produced – must be understood and form the foundation of decision making.
That is why I am delighted to take up my position as Chair of the Supervisory Board of the Capitals Coalition in support of its mission to revolutionize decision-making norms and transform our understanding of the value provided by nature, people and society.
The devastating impacts of the global COVID-19 pandemic are a clear demonstration of the consequences of unhindered degradation of natural, social and human capital.
Nature is in freefall and there is now no doubt that its destruction makes us increasingly vulnerable to new infectious diseases, while structural inequality has eroded society’s resilience to such “shocks”. This is putting trillions of dollars of economic value at risk, undermining sustainable growth, and perpetuating an unjust, nature-depleted economic model.
In the post-COVID recovery, we cannot go back to business as usual. Instead, we must recognise the opportunity to heal our broken relationship with nature and shape a better future built on inclusivity, justice and equity.
Governments and the private sector have a choice – continue propping up outdated, polluting industries, or seize the opportunity to invest in low-carbon technologies, nature-based solutions and community development.
A green recovery will deliver superior returns over traditional fiscal stimuli, creating 3 million more jobs in Europe and the US alone by 2024 and – by investing in the natural world that underpins all wealth, health and happiness – building a positive feedback loop which will generate value across the capitals.
Some decision-makers in business and government recognise the opportunity but, for a truly sustainable recovery, many more must embrace it. The Capitals Coalition will help them open their eyes and make better choices. Its recently released guidance for the food system, for example, will help shape a sustainable sector by enabling actors along the whole food value chain to identify, measure and value their dependencies and impacts on natural, social and human capital.
The global food system depends on healthy natural ecosystems and yet land conversion for agriculture has caused 70% of global biodiversity loss and half of all tree cover loss, affecting not only agri-businesses but also workers, local communities, food security, public health, and the climate.
It’s no exaggeration to say that transforming the food system is the lynchpin in creating a sustainable future. Positive interventions here have the ability to generate benefits that cascade through nature, society and the economy.
Setting the stage
By identifying the true breadth of value that exists within an economy, sector, or company supply chain, a capitals approach sets the foundation for the adoption of other complementary tools and initiatives.
For example, science-based targets, climate- and nature-related financial disclosure, and principles on business and human rights are all needed to drive the overall transition to circular and regenerative economies.
A capitals approach can also help to inform how we should address other contemporary challenges, understand the connections between them, and identify opportunities for win-win solutions.
Whether that’s supporting poverty alleviation and tackling deforestation, or recognising the rights, knowledge and stewardship of Indigenous Peoples and local communities – something which must be a fundamental part of a new global agreement on nature, and which is integral to all the conservation that my family supports through the MAVA Foundation – capitals can help us recognise trade-offs and synergies.
What matters most
My own experience tells me there is a strong business case for integrating capitals into decision-making. In my family’s business, Roche Pharmaceuticals, our purpose is “doing today what the patient needs tomorrow”, and through my work with InTent and the World Economic Forum, I continue to promote business as a force for good.
But is the wider business community ready to accept that it is not economic prosperity but prosperity across all capitals that matters?
Last years’s unprecedented call on world leaders to reverse nature loss made by more than 560 global businesses with combined revenues of $4 trillion through Business for Nature (co-founded by the Capitals Coalition), as well as the promises made in response by over 70 political leaders through the Leaders Pledge for Nature, (of which the Capitals Coalition are one of several non-state partners) are cause for hope. These calls must now be translated into clear action.
Citizens and customers also expect change. The vast majority of people want to see a fairer and more sustainable world post-COVID, and given the right incentives and guidance, are willing to make healthy, more sustainable choices. Enabling them to do so is an enormous opportunity for purpose-driven brands to build trust, loyalty and market share, while helping solve environmental and social challenges.
Prosperity for all
Today, enterprise without purpose and societal benefit, without respect for and investment in capitals, is not just foolhardy – it is inexcusable.
We must find ways to meet our needs and aspirations within the bounds of one planet, transforming our economic and governance systems to enhance societal wellbeing, and changing the rules of the game that fuel our unchecked pursuit of growth and ever-increasing consumption.
By championing the value of natural and social systems in our economic, financial and policy decision-making, the Capitals Coalition will begin to change these rules. And if we can change the rules, the system will follow. Understanding and investing in all capitals will give us at least a fighting chance of delivering the UN defined agenda 2030 by realising the promise of the Sustainable Development Goals – prosperity for all on a healthy planet.