There is a stronger economic case for global action to protect the natural world than for tackling climate change. This is expected to be the stark conclusion of the next UN report on biodiversity.
Of course, some of the root issues are the same, whether you are talking about climate change or protecting the natural world. But the report, which is timed to come out for the UN convention on biological diversity in Japan later this year, will place emphasis on the value of saving natural goods and services that we are finding it increasingly difficult to take for granted – such as pollination, medicines, clean soil, water and air.
The report is being led by economist Pavan Sukhdev, former head of global markets for Asia Pacific at Deutsche Bank, who is now a special adviser to UNEP’s Green Economy Initiative.
According to leaks of the recommendations contained in the forthcoming report, the UN will urge governments to limit what companies can take from the environment using taxes and/or fines. Businesses will be asked to publish more detail on their use of natural resources, alongside financial reports.
Industries in agriculture, fisheries, energy and transport could see crucial government subsidies reviewed.
The report, The Economics of Ecosystems and Biodiversity, will show that the long-term payback of such measures will be worth the pain. The ratio of the costs of conserving ecosystems to the economic benefits is in the range 1:10 to 1:100.
The writing has been on the wall for a bit. Recently the international investor coalition, Principles for Responsible Investment (PRI), wrote to 86 large companies urging them to honour the reporting requirements of the United Nations Global Compact, the world’s biggest voluntary corporate responsibility initiative.
The companies in the PRI’s black book had previously joined the UN initiative but failed to produce their mandatory annual report on how they put the initiative’s 10 principles into action.
The PRI and the United Nations Environment Programme (UNEP) subsequently jointly ordered a report into the activities of the 3,000 biggest public companies in the world.
The study, conducted by London-based consultancy Trucost and due to be published later in the summer, has already found that an estimated combined damage worth $2.2trn was caused by the companies in 2008.
If the companies were forced to pay it back the figure would equate to 6% to 7% of their combined turnover, or an average of one-third of their profits – though some businesses would be much harder hit than others.
What’s all this got to do with insurers? The UN is talking about putting a value on what has always been considered free: nature. When value needs protecting the insurance industry steps in. Not only will there be new liabilities to consider but there will also be opportunities linked to the new technologies and markets necessary for a transition.
Plus, when your grandchildren ask what you did to save the natural world, you won’t have to change the subject.