When we talk about ‘value’ in the context of business and economics, we have traditionally been talking about one form of value: financial value. Attempts to maximize this form of value have driven economic decision making for hundreds of years.
But we all intuitively understand that there are many forms of value, and that even the creation of financial value is underpinned by complex and interconnected systems like nature, society, and community.
These other stores of value; nature, culture, trust and the relationships we hold, underpin the success of businesses, nations and global financial markets, as well as the wealth, health, happiness and identity of all people.
By making decisions based solely on a desire to deliver financial value, we have in large part created the triple crises we now face; climate change, accelerating nature loss, and persistent social inequity.
We must expand the way that we understand the concept of economic value itself if we are to bring the system back into balance. A capitals approach can help us to achieve this by enabling us to understand the flow of value that we receive from all forms of capital (natural capital, social capital, human capital and produced capital).
Through this holistic lens, organizations and businesses can recognize how their success is underpinned not just by a flow of financial capital, but also by the health and resilience of communities, species, and natural systems which they may never have considered in a business context before. This understanding empowers organizations to make decisions that offer the greatest value for nature, people, and society, alongside their businesses and the broader economy.
At COP15, the recent UN Biodiversity Conference, we saw a clear recognition from governments that business as usual destroys value across the capitals and a desire at the multilateral level to deliver action to transform the global economy and bring it back into harmony with the natural world.
This desire for a global paradigm shift was reflected across many of the 23 targets agreed at COP15 by 196 Parties in the Global Biodiversity Framework, an ambitious agreement that aims to catalyse action to reverse nature loss through contributions and implementation from across society and the global economy.
Businesses and financial institutions around the world are increasingly recognising their fundamental dependence on the value they receive from nature, and the framework aims to cement this understanding among businesses and financial institutions around the world.
Through the adoption of the framework’s Target 15 - which was backed by unprecedented support from businesses - governments will require large businesses and financial institutions to assess and disclose their impacts and dependencies on nature by 2030. Crucially, this will apply across their operations, supply and value chains and portfolios.
Governments have never made such clear direction to business action on nature at this scale or in a multilateral agreement. This commitment will accelerate the transition of our economic system and deliver benefits for nature and people.
In the months leading up to and across COP15, the unified voice of leading businesses, coordinated by Business for Nature, was essential in fostering momentum and leadership, and many companies attended to call on governments for an ambitious Paris-style agreement on nature.
While often accused of attending these meetings to water down ambition, such a large delegation fighting to raise it was a new development. CBD Executive Secretary, Elizabeth Mrema, herself noted that this development was shifting the narrative around how we understand the role of business in these types of negotiations.
Now that we have a 2030 milestone to aim towards, businesses will need clear guidance and a journey through the tools, frameworks and initiatives available to enable them to transform their business models and ultimately our economies.
We have partnered with Businesses for Nature, WBCSD, TNFD, Science Based Targets Network and WEF to develop high-level actions on nature for companies, known as the ACT-D framework and are committed to work closely together on its implementation across 2023 and beyond.
Many of the tools and frameworks needed by businesses already exist or are in development. The Coalition has already published the Natural Capital Protocol and the Social and Human Capital Protocol to help businesses to identify, measure and value their impacts and dependencies on natural, social and human capital.
Transforming our understanding of value is critical to unlocking solutions to collective global challenges. 2022 was a seminal year in the mainstreaming of this idea. More people and organizations are exploring this approach than ever before and in many ways the paradigm has already shifted. What we need now is action and collaboration at a global scale to reset the rules of the economic game and to harness the value of nature, people, and society to deliver a fairer, just, and more sustainable world.