Pavan Sukhdev: Valuing Natural Capital – What Next and Why?

06/24/2014
truereturns

As part of a blog series produced by The Huffington Post and The B Team, Pavan Sukhdev recounts the progress that the movement for valuing natural capital has made over the past four years, but prefaces this with some concern about the the end goal for a new norm in corporate reporting.

Valuing natural capital, is of course the idea that a company should measure the value of the inputs of the natural resources it uses, much like Puma did when it became the first company to release an environmental profit and loss statement, in which it integrated both its financial, and environmental bottom line in a single profit and loss report.

Sukhdev goes on to explain his worry that Natural Capital in its current state seems to be more of a buzzword than a mainstream concept. Second, he explains that the idea behind valuing natural capital was not only to unearth the value of natural capital itself for a business, but more fundamentally to address the inadequacies of today’s standard reporting models in order to report the impacts of companies on the types of capital that are not owned directly by shareholders, but by all stakeholders.

In other words, businesses systemically focus on financial reporting, ignoring how their business actions effect social, environmental, human, and other forms of capital, at a cost to society, but also potentially to the companies themselves.

Sukhdev’s vision is that those organisations and businesses working in redefining capital are successful at fully redefining success; that a new generation of business leaders and accounting regulators are successful in putting a new definition of corporate performance into practice, and that measuring the business impacts on natural capital is not the end-goal, but the beginning of systemic change. 

To read the full blog post click here.

This blog post is part of a series produced by The Huffington Post and The B Team community to help articulate a Plan B for Business. To see other posts in the series, click here.

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