Sure, it’s priceless - but how much is nature actually worth?
"A fool is someone who knows the price of everything and the value of nothing" | Oscar Wilde.
How much is a butterfly worth? Or a blackbird? Or… a slug?
These feel like crazy questions — how could you ever put a price on the beauty of a butterfly’s wings, or the blackbird’s song, or the slug’s… well, each to their own. Every day however, the question of how we financially value nature is one that more and more businesses and governments are trying to answer.
We all know the mantra ‘what gets measured, gets managed’. The logic follows that measuring an organisation’s environmental footprint ensures it gets managed, and when it comes to businesses in particular, what more intuitive measurement could there be than financial value?
Environmental Profit and Loss as a measure of nature’s value
Last month Stella McCartney released its latest impact report, attempting to answer the questions about their own impact on nature. Since 2013, they have used Environmental Profit and Loss accounting based on a methodology developed and open-sourced by Kering and PwC. It is a methodology they have continually refined over the past 5 years and considers things like water and land use, pollution, carbon emissions, and natural resource use. All that gets turned into a dollar amount. In Stella McCartney’s case, it valued its impact on nature in 2021 as -$3.1m (meaning they’re in the red when it comes to nature). They are ahead of many organisations in thinking about this, but not alone, with some other big players like Philips have created their own versions of EP&L accounting.
It feels not only like a welcome step that businesses measure and manage their impact on nature, but an absolute imperative. It does also start to throw up some significant questions.
“Conservationists should take note: Martin Luther King had a dream, not a cost-benefit analysis”
Defenders of accounting frameworks like EP&L or concepts like natural capital make the case that an economic system that effectively values nature at $0 leaves the door open to continuous exploitation and damage. Rather than focusing on nature’s value to humans, they argue these frameworks help us understand the systemic nature of ecosystems – and ecology is firmly at the centre.
As the Stella McCartney report sets out: “By measuring and monetising the impacts associated with our direct operations and supply chain, we can identify and prioritise key actions to reduce our overall impact and track our sustainability progress.”1
But there are some who completely reject the idea of putting a monetary price on nature at all. Framing nature as a commodity in service to humanity, they argue, is unethical, and worse still —reinforces the thinking that got us into a biodiversity and climate crisis in the first place. Some even argue that it is counterproductive for engaging the public, pointing to research commissioned by WWF that showed people were more inclined to protect nature when they were reminded of it’s intrinsic value, rather than when it was framed as a financial asset.2 As Tom Crompton at the Common Cause Foundation, which carried out the research, warned: “Conservationists should take note: Martin Luther King had a dream, not a cost-benefit analysis.”
Towards a more objective and universal approach
Regardless of what side of the argument you sit on, current EP&L reports force us to consider some fundamental questions such as; how exactly should we value nature, who sets the price, and… who pays and who gets paid?
The key challenge is in a system where no-one agrees, companies that want to take a positive step are forced to arbitrarily set a price (and bad actors escape meaningful challenge). But whose price is right and can you just change it when it suits you (even with good intentions, constant iteration can make benchmarking impossible)? The market has so far failed to effectively penalise those who do the most damage or reward those who have the most positive impact (or at least take steps to limit their negative impacts). So if the market isn’t working, what can?
As we’ve seen in the climate space, the answer might lie in collective networks of business and governments such as the Science Based Targets Network (SBTN) rather than individual businesses trying to go it alone. SBTN has created a network of organisations focused on biodiversity aimed at creating alignment on impact measurement and sharing best practice on action. While it does not answer every question, what it does provide is an opportunity to create a shared set of benchmarks and approaches that allow measurement and management to happen at a more universal scale, which after all, is the scale that nature operates at.
And there are some very real pressures for businesses to deal with these issues – beyond the esoteric questions about nature’s intrinsic value.
Biodiversity loss is increasingly being viewed in same way as climate change; a source of risk on a number of fronts.
If you continue to damage the systems you rely on, then you can expect the resources that flow from those systems to become far harder and more expensive to obtain… or in some cases impossible. So reckless was the cotton industry in its operations in central Asia 50 years ago that the entire Aral Sea, the world’s forth biggest lake, was reduced to a tiny fraction of its original size.
Industry’s answer back then was to simply move on to extract the resources of other regions, without changing behaviour. Now, the scale of reputational, regulatory, financial and physical risk could finally be tipping the balance back in favour of a system that finally agrees that nature is too valuable to waste – even if it can’t quite answer what that looks like in dollars and cents.
This post was written by Ross Findon, who I had the pleasure to work with at the Ellen MacArthur Foundation. After five years at the Foundation and a stint as Chief Communications Officer at the circular economy clothing brand Teemill, he recently joined us at BPCM. as Global Editorial and Insights Director. So who better to invite for this first guest post on Curb Your Sustainability.
https://www.stellamccartney.com/bg/en/sustainability/stella-mccartney-impact-report-2021.html
https://commoncausefoundation.org/resources/CCF_report_no_cause_is_an_island.pdf
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