Trillion-dollar nature needs boardroom seat, says U.N. economist
SINGAPORE/OSLO (Reuters) - Nature lacks a seat in the boardrooms of most big companies even though it provides valuable resources that should have a price tag, one of world's most influential green economists said.
Ignoring nature's value risks "mayhem" for corporations and mankind in the rush for profits and finite resources, Pavan Sukhdev, formerly of Deutsche Bank and a United Nations goodwill ambassador told Reuters.
Sukhdev said water, clean air, coral reefs, forests and rivers provide natural services worth trillions of dollars, yet these are made use of for free.
Putting a price on nature's services would change how firms think about the planet and their quest for profits.
"There is going to be mayhem if they don't get this right," said Sukhdev, founder and author of Corporation2020, a new program and book on changing corporations.
So far, only companies whose turnover makes up less than 5 percent of the world economy have put in place ways to calculate the damage to nature by assessing the effects of waste, energy, water or greenhouse gas emissions, he said.
"This is still too little. We are talking about a small fraction of the total economy," he said.
Sukhdev leads a global push involving governments and the U.N. to put nature on balance sheets. The idea is to treat the planet like a company, which would "charge" big corporations trillions of dollars a year for using its resources and for the pollution they cause. Environmental benefits such as cutting emissions or restoring forests would also be taken into account.
All companies should have an environmental profit and loss account -- even though initially this would only show the damage to and use of nature's services, rather than oblige them to pay compensation.
"Today, no one would not disclose the directors' bonuses ... or your accountants, your auditors would take you apart," he said in a phone interview from an environment conference in Jeju, South Korea.
Nature needed a bigger say at every level, from the factory floor to the boardroom, he said.
He praised groups such as German sportswear maker Puma, Indian software services provider Infosys or Brazil's cosmetics group Natura as pioneers.
Some countries also impose charges, for instance, for carbon dioxide emissions. But he said little had been done to remove $1 trillion in annual subsidies for fossil fuel use, agriculture and fisheries, cash that locked in unsustainable practices.
Scientists have long said that the planet's resources are being used up faster than they can recover. The International Union for Conservation of Nature says about 40 percent of amphibians, a third of reef-building corals, a quarter of mammals and 13 percent of birds are threatened with extinction.
But there are some hopeful signs.
At the Rio+20 environment summit in June, companies with total turnover of between $2 trillion and $3 trillion supported greener accounting. Although that is less than 5 percent of the $65 trillion global economy.
Puma has created an annual environmental profit and loss account that costed its impacts at 145 million euros in 2010, or more than half total 2011 net earnings. Last November, the firm said 51 million euros came from land use, air pollution and waste and 94 million from greenhouse gases and water.
Sukhdev said companies were key to saving the planet, with 75 percent of the U.S. economy in the private sector.
"Today's corporations are determining what governments do. At the end of the day they are the drivers of jobs, of employment, they are the driver of GDP growth. And their taxes bridge fiscal deficits."
(Editing by Jane Merriman)