Transcript Natural Capital Management for 2020

International Symposium on Natural Capital
Management
Ministry of Environment, Japan
17th February 2014
Natural Capital Management for 2020:
Proposals for Japan
Pavan Sukhdev
UNEP Goodwill Ambassador
Founder & CEO, GIST Advisory
Reflecting Natural Capital in National
Accounts: WAVES
WAVES
Moving from Macro-Policy Reform
to Micro-Policy Reform
‘Green Economy’ is not possible
without greening the Private Sector
U.S. Gross Value Added
7.1%
5.5%
12.5%
Private Business
Households
74.9%
Nonprofit institutions
serving households
Government
Total = GDP (US$14,526.5 billion)
2010 data. Source: U.S. Bureau of
Economic Analysis
Negative Corporate Externalities …..
Top 3,000
Listed
Companies
Negative
Externalities
USD 2.15
Trillion p.a.
(3.5% of
World GDP)
Source: Trucost for
UNPRI, 2010.
Negative Corporate Externalities …..
Top 3,000
Listed
Companies
Source: Trucost for
UNPRI, 2010.
….. Pushing Planetary Boundaries
Greenhou
se Gases
Natural
Resources
Greenhou
se Gases
Natural
Resources
Natural
Resources
Water
Abstractio
n
Sustainable Development, Green
Economy & Corporation 2020…
“Green Economy” is the right
economic vehicle to achieve
Sustainable Development
www.unep.org/greeneconomy
“Corporation 2020” is the right
economic agent to achieve a
Green Economy
www.corp2020.com
@corp2020
What will get Corporations to Change ?
Source:
www.corp2020.com
What will get Corporations to Change ?
o Four planks of change to achieve ‘Corporation 2020’
• Resource Taxation…
• Limited Leverage….
• Accountable Advertising….
• Disclosing Externalities…
o Each of these is an “outside-in” change
o For each change there is a Relevant Regulator
Resource Taxation
• Replacing Corporation Tax (profits tax) gradually with Taxes
on Resource Use & Extraction
• Resource Taxation on materials and energy efficiency aims to
rewire corporations to use fewer resources to deliver the
same or higher levels of products/ services.
• Resource taxation is about “taxing the bads, rather than
taxing the goods.”
• Fiscal gap management need not be affected by this change,
as these taxes could be made revenue neutral by replacing
corporation taxes or income taxes.
• Relevant Regulators: Finance Ministries
Source:
www.corp2020.com
Resource Taxation Example
“Taxing the Bads” in Ireland
• Ireland implemented several new taxes:
• carbon taxes on fossil fuels used by homes, offices,
vehicles, farms
• purchase taxes & yearly registration fees on automobiles
• per-weight taxes on residential garbage.
• A big change for the country… “We are not saints like those
Scandinavians — we were lapping up fossil fuels, buying bigger
cars and homes, very American.” – Eamon Ryan, Energy
Minister (2007-11)
• Results
• Reduction in emissions by 15 percent since 2008.
• Raised almost $1.3 billion in new revenue.
• IMF recommended (Aug 2012) that Ireland expand the tax
to increase tax revenue.
Limiting Leverage
• There are many Tools for Limiting Leverage:
– Reserve Requirements for Banks
– Capital adequacy ratios for “TBTF” corporations
– Consortium banking (info sharing between banks)
– Segregate lending/clearing institutions from investment/
insurance (re-visit Glass-Steagall?)
– Limit tax-deductibility of interest beyond caps
– Constrain leverage from M&As
– Re-align performance bonus systems
• Relevant Regulators: Central Banks
Source:
www.corp2020.com
Accountable Advertising
• Two principles
– Treat all consumers equally, irrespective of market
– Improved Disclosure of advertising practices
• Annual “Accountable Advertising Report”
• Four strategies
1.
2.
3.
4.
Disclose life span of product on packaging and in ads
Disclose countries of origin
Recommend how to dispose of product
Disclose product footprint on advertisements, products, website
• Relevant Regulators: Advertising Associations
Source:
www.corp2020.com
Disclosing Externalities
• Forward-thinking consumers and investors are aware that there is
too little information available about the environmental and
social performance of companies in terms
• Many would like the choice between Coke or Pepsi; Apple or
Samsung; Lego or Playmobil to be based on more than just
aesthetics and branding.
• Since companies are not currently required to measure (let alone
disclose) their footprint, they are able to veil most of the
information about how their products are produced.
• Relevant Regulators: Accountancy Regulators
Source:
www.corp2020.com
Externalities Assessment Scope
Example: GIST 360o TM
Natural Capital
Externalities
Human Capital
Externalities
Social Capital
Externalities
Disclosing Externalities : PUMA
PUMA Press Release, November2011
Measuring & Disclosing Human Capital
Externalities : INFOSYS
Corporation as “Institute”
World-class Training for 30,000 p.a.
INFOSYS Campus, Mysore, India
Externalities Disclosure
Example: Infosys
Y/e March 2012
Source: Annual Report, 2011-12
Social Capital Externalities
Example: Measuring & Disclosing Impacts from the
CSR Driver
• For a company which has five distinct CSR programs, they have created “social
impacts” in the following manner, and as a result, company management gained a
better understanding of the value of their programs and a replicable annual measure
of social performance and social return on capital.
• Whilst SROI is calculated for each program, there are other metrics available together
with program-wise SROI, which gave the company a more holistic view of the Social
Capital impacts of their CSR.
A
B
C
D
E
56
64
68
82
54
0
10
20
30
40
50
60
Weighted SROI Score
70
80
90
100
THANK YOU
Pavan Sukhdev
www.gistadvisory.com
www.corp2020.com