Dr. Richard Mattison, the Chief Executive Officer of Trucost, calls the outcomes of their assessment worrisome. Apparently, the natural capital cost created by the largest global companies exceeds their income by a 100 percent. Especially the increased production of agricultural commodities and the environmental issues occurring therefrom, e.g. pollution of water by fertilizer and pesticides, are causing the increase. To be precise, the natural capital cost of the top 1,200 companies exceeded $4.1 trillion. Much of this cost (79 percent) is embedded in the supply chains.
On the other hand, the index also reports some desirable developments. Corporate carbon emissions are decreasing due to companies switching to cleaner fuels, the global waste and water-use management was enhanced and apparently more companies are disclosing environmental effects of their supply chain. The company’s knowledge about their supply chain is outstandingly important, since averagely 79 % of their environmental impact is created by their purchased goods and services.
More Companies engage in Natural Capital Activities
"Natural capital refers to the limited stock of the Earth’s natural resources upon which people and businesses depend for prosperity, security and well-being." The true cost created by the production of goods and services by a company is not included in the market price. Natural capital, e.g. clean water, fresh air or biodiversity, is taken without being paid for. By using natural capital valuation methods, companies are able to understand and communicate their impact on the environment and corporate risks can be reduced. These methods also allow the translation of environmental impacts into monetary terms, so that they can even be included into business and investment decisions. The researchers found, that in 2016 the number of businesses taking part in natural capital initiatives was three times higher than in 2012, while the amount of companies disclosing their natural capital cost stayed more or less the same, by around 40 % globally.
10 trends to be pursued by sustainability professionals
Nevertheless, companies still need to increase their commitment and efforts. Ideas are stated in the form of 10 trends annually published by the GreenBiz editorial team, defining measures they think of as important to be pursued by sustainability professionals in the next year:
- 1.
- "ESG moves from the margins to the mainstream" - Investment firms widen their focus to the environmental, social and governance performance (ESG) of publicly traded companies, supported and nourished by the European Union.
2.
- "Companies set science-based targets for emission-reductions" - which are aiming at keeping the global temperature increase below 2°C.
3.
- Green Finance (GreenFin), including instruments like Green bonds, fund the sustainability transition.
4.
- "Rethinking carbon for the new economy" - dealing with difficulties like developing a low carbon future while being a big data economy.
5.
- "Economic inclusion becomes a sustainability imperative" – in the matter of opening pathways of leadership to marginalized members of society.
6.
- "Energy storage charges forward" – investments in advanced battery chemistries and alternative energy storage approaches boom.
7.
- "Cities mobilize to avert ‘peak delivery’ congestion" – different ideas and solutions are being developed and discussed.
8.
- "Artificial intelligence gets smarter" – already being involved into your personal life on a daily basis, sometimes unknown. Even more companies are planning on using it by the end of 2018.
9.
- „Enter the electrification of everything" – replacing technologies running on combustion, changing sectors like mobility and heating.
10.
- "Synthetic biology hacks the code for sustainability" – on the one hand, synthetic biology can be seen as a method to overcome problems arising from climate change and the growing world population. For instance, the increasing demand of food could be supplied without needing additionally animals but rather using their biological code. On the other hand, there are also critical voices, warning that nature’s biological and ecological systems might be harmed and consequences are unforeseeable.
You can download the State of Green Business 2018 Report
here.