New business model, assessment tools for valuing nature

New business model, assessment tools for valuing nature

Over the past few years, Conservation International (CI) has had the good fortune to work with — and ultimately bring onto our board — natural capital thought leader Pavan Sukhdev. Our relationship with Pavan initially centered around his efforts as lead author on “The Economics of Ecosystems and Biodiversity (TEEB)” study, but has quickly developed into much more.

For those of you not familiar with TEEB, I would describe it as the Rosetta Stone for natural capital — the key to understanding the benefits and services that biodiversity and ecosystems provide to people. TEEB is a tool that finally has enabled the environmental and the financial communities to start speaking the same language about how to value nature — an increasingly important issue that stands to affect every person on this planet.  

CI was so inspired by the findings of the initial TEEB report that we began working with the United Nations Environment Programme World Conservation Monitoring Centre and PricewaterhouseCoopers on what ultimately became “TEEB for Business Brazil,” which, like the earlier reports, examines the reliance of key sectors on natural capital with the aim of establishing monetary values for the public goods used in these sectors. With Brazil on the fast track to massive development, a tool like the TEEB report is invaluable to the country’s national and local governments and the companies they engage.

In his recently released book, Corporation 2020,” Sukhdev takes his efforts a step further by calling on companies to end the 20th century “profit maximization at the cost of everything else” approach, and instead consider how they can measure and value the natural and societal contributions that have enabled them to thrive.

To change what we value, we need to change what we measure. This is essentially the mantra to get us to this new way of thinking. Historically, companies have not measured the costs of public or “‘free” goods to their businesses.  Benefits such as pollination, clean water supplies, healthy soils and other natural resources all have been provided at little or no cost. 

One of the key points of “Corporation 2020,” however, is that the benefits that nature provides are far from free, and by not considering these externalities, the global corporate community is headed down an unsustainable path. Sukhdev effectively argues that businesses must measure and value those “free” services; otherwise, they will not survive.  This is also one of the reasons CI has joined the TEEB for Business Coalition.  Led by the Institute of Chartered Accountants of England and Wales, the aim of the coalition is to build into accounting standards the value of these externalities.  

Recently, someone asked me why the environmental community is focusing so much on quantifying these “ecosystem services.” Isn’t knowing what you are using and then improving management of these resources sufficient? Why are we calculating the actual financial value for a cubic meter of water or the value of a mangrove for flood control?

Quite simply, the answer is that voluntary action by well-meaning companies alone is insufficient. No matter how strong the corporate social responsibility (CSR) ethos is within a company, the CFO will always have the stronger voice. When we can quantify the value of nature’s contributions and the associated costs of using (and losing) them, the will to act will no longer be voluntary. What once was CSR becomes embedded in a company’s DNA.

But this is a long journey, and there are incremental steps that can be taken before we get to full valuation of ecosystem services. For example, the NGO community, working with key stakeholders, has begun to develop tools and approaches that can help advance the global push toward calculating the value of nature. 

One such tool is the Vital Signs Monitoring System. Launched earlier this year by CI and our partners, it collects near real-time ecological and social data to guide agricultural development decisions in Africa and monitor their outcomes. Vital Signs is addressing a critical yet unmet need for integrated, holistic measurements of agriculture, ecosystem services and human well-being — and contributing to the effort of providing a dollar value on nature’s assets. 

On the marine front, the recently launched Ocean Health Index represents the first comprehensive global measurement of ocean health, scientifically aggregating all dimensions of ocean health — biological, physical, economic and social — in order to generate an objective and accurate snapshot of the health of the ocean controlled by every coastal country. 

Given the enormity of the issues facing the health of our planet, all sectors must do what they can to measure the value of natural assets that were once taken for granted. Sukhdev’s new book — and the ingenuity that has emerged from the NGO sector — offer a hopeful view of not only the business model, but for sustainable development in the not-too-distant-future.

Image of barcode tree by Bruce Rolff via Shutterstock