JEJU, South Korea (AlertNet) - Changing climate patterns and heightened awareness of their potential impact are working together to force companies large and small to take note of their impact on the environment and in some instances take corrective measures, experts say.
Experts attending the World Conservation Congress, organised by the International Union for Conservation of Nature (IUCN) in Jeju, South Korea, told AlertNet that companies have shown an increased willingness to look at putting a monetary value on their impact on nature.
"The stark warnings (of changing weather patterns) coupled with the increased awareness that there is nature which we need to take care of are now leading to a risk management approach of putting a value on what is a company's impact on natural capital," said Peter Bakker, the president of the World Business Council for Sustainable Development (WBCSD).
Bakker said that a decade back businesses often pointed at arguments for and against acting on climate change, but now many have had to face extreme weather conditions first hand.
‘IT IS HAPPENING’
"The debate is no longer about the (climate) model, the debate is about the drought in North America, the drought in India, the Arctic ice melting. It is not a model, it is happening," Bakker said.
The idea of putting a value on natural capital or more carefully assessing a company's impact on the environment is slowly taking root. Puma, the global footwear giant, started a process last year to analyse and value the company's impact on the environment and look at how it might be degrading ecosystems.
Puma officials said that the initial assessment put the company’s overall impact at around $180 million per year. The largest component was around $60 million from water use and greenhouse gas emissions.
Based on the valuation, the company now has established a target of using 100 percent sustainable packaging and reducing its production of carbon dioxide and its use of energy and water by 25 percent by 2015.
Company official Holy Dublin said in Jeju that since the Rio+20 summit in June, Puma has see a surge in inquiries on its environmental profit and loss account measuring system.
But individual companies making such changes will not be enough to make a telling impact globally, according Pavan Sukhdev, the former head of the UN Environment Programme (UNEP)'s Green Global Initiative.
Sukhdev argues for regulatory changes that modify accounting standards to take into account economic impacts on nature.
"The regulations have to be changed, so that the accountancy bodies need to be telling the companies they have to report natural capital impact," said the author of the forthcoming book Corporation 2020 - Transforming Business for Tomorrow's World. In the book Sukhdev estimates the global top 3,000 listed companies' impact on nature to be around $2.15 trillion a year.
Achim Steiner, the UNEP executive director also supports a change in the regulatory framework but says governments need to make similar modifications.
"To ask the private sector to lead change in the absence of corresponding public policy is not going to work,"he said.
NEED FOR REGULATION
Steiner told AlertNet that it was too much to expect companies, ever mindful of the bottom line, to put the environment as their top priority. But if laws are put in place mandating natural capital accounting, the companies and people will follow, he said.
He cited the example of Brazil, where over 90 percent of aluminium cans are now recycled after a federal waste management law was passed in 2010.
WBCSD's Bakker told AlertNet that regulation would be vital to change company practices across the board, particularly because such changes will have costs.
He said many businesses were looking at innovative ways of reducing their environmental impact. Reliance India, which runs a variety of businesses, was funding the reforestation of a over 24 square kilometers around its refinery in the state of Gujarat while the Brazilian company Vale was funding conservation work reaching up to over 1.4m hectares, he said.
Steiner warned that putting a value on natural systems – including things such systems provide like predictable rainfall and clean water - will be a big change for the business community.
Today “much of the natural capital has zero value. In our economic system if you put zero value on something it is misused,” he said.
But the UNEP official said it was now more vital than ever to get businesses to recognise and change their impact on nature given a near global stalemate among governments on how to act on climate change.
"Over 75 percent of all business activity takes place outside the public sector. Clearly (businesses) are central to the solution,” Steiner said.
Amantha Perera is a freelance writer based in Sri Lanka.