Here I bring you highlights from today’s papers presentations that are useful in extending theoretical observation into the practical application of accounting to enact corporate behavioral change.
Our second day starts with a research paper on biodiversity accounting and conservation, elegantly delivered by fellow CSEAR member Delphine Gibassier (Toulouse Business School) where she asks: Can accounting Save Nature? The case of endangered species.
Currently from the 79,837 species assessed in the IUCN Red List more than 23,250 are threatened, suggesting that the extinction rate is faster than originally thought:
“Between 1970 and 2012, half of the vertebrates on Earth disappeared (WWF, 2014).
There are 22,413 endangered species in the world (IUCN, 2014), and over 10,000 species become extinct each year, a rate that is estimated to be between 1,000 and 10,000 times higher than the natural extinction rate (WWF, 2017). As such, we are now facing the sixth period of mass extinction of species” (Ceballos et al., 2015).
Why does this matter?
Although environmental issues are seen as separate from financial and social domains, it is in fact important to consider that 40% of the world’s economy and 80% of the needs of the poorest people are derived from biological resources, the example given by Delphine is of the disappearance of bees that is estimated to affect 1.4 billion jobs (you can also read an excellent book about bee decline and corporate responsibility written by my supervisor Prof. Jill Atkins). Funding conservation efforts for this face a big need of cashflow. An estimation of how much it would take to save the species is currently assessed at 1.1.5 billion dollars ( to put that in context, the WWF for example only has a budget of 7 billion).
The key to attracting investors is to be able to measure conservation performance and quantify a return on investment. Zoos and other conservation institutions will need to be able to prove that conservation will be successful as well as profitable. The conservation community is at the forefront of the fight for the protection of biodiversity, but they lack resources. Faced with this challenge, some conservationists decided to demonstrate to society and financiers that their work matters.
How can accounting save nature?
Because investors now see biodiversity as a possible critical asset – and a potentially profitable one – asset owners now want to finance conservation projects – a field of finance known as ‘conservation finance’ (WWF, 2014).
Delphine’s project examines one performance index tool that can help measure this. Biodiversity accounting can contribute to measuring the impact of the index on the field of conservation. Conservation is defined as the persistence of wild habitats, flora and fauna, while biodiversity accounting refers to the “impact and reporting on actions taken to enhance and protect biodiversity ” (Jones and Solomon 2003).
How can we measure conservation performance?
- An indirect method that assesses the threats affecting a system, then measuring the ability of conservation efforts to reduce those threats.
- Another methods is to count species, but it doesn’t estimate how or whether conservation interventions affect species numbers.
Financialization has become the only way to save nature, and has gradually become the only envisioned way to govern our societies.
An interesting modality examined in this project is visual representation used by the conservation trust who wanted their visuals to be telling a story. However, the need to select the species to save is an admission of failure, speciesism and refusal of questioning ourselves.
A wonderful paper from Dr Jayme Walenta (University of Texas) presents a pragmatic analysis of a development of a tool to create accountability in companies in relation to carbon emissions.
Aligning Economic Growth & Environmental Protection: Jayme investigates the historical context behind the development of the corporate carbon footprint and focuses on how the tool in fact designates emissions ownership and responsibility. The purpose of the talk today was to delineate a history behind the tool’s development to explicitly discuss the ethics invoked in equating climate protection with economic incentive.
Context for Climate Policy
Human activities releases 40 billion tonnes of C02 annually. Companies’ response to this crisis centres on marker based tools that price C02 into exchanges. The atmosphere must be privatized: the corporate carbon footprint links atmospheric emissions to those who produce them. Boundaries establish ownership and responsibility in legal terms. It also helps to determine which emitting activities belong to which emitters through practice of scoping or ranking. e.g. Walmart has 3 different scopes: 1 – headquarters 2 – energy sources and a third broader scope that includes indirect emissions:
With the framing of climate change as an environmental problem, companies moved to invest in this. For example, BP in 1999, before there were any tools in place to track C02 emissions, experimented with carbon footprinting. They developed two emission classification scheme – direct and indirect emissions. BP’s efforts were followed up by the World Research Institute (WRI) who considered how to measure environmental impacts and use of metrics to drive operational improvements. e.g. Green Ledgers (1995), Measuring up (1997), and Sustainability Rulers (1998). Evolving from this was the concept of pollutant responsibility level.
WRI and the World Business Council for Sustainable Development (WBCSD) comprised the Protocol Steering Committee that developed a tool that would standardize carbon emission accounting to (1) get companies to manage emissions, not simply measure, and (2) facilitate transparent public reporting of emissions. A coalition was formed with actors like EPA, General Motors, British Petroleum, KPMG, WWF, Tokyo Electric, etc. It was interesting that Climate Scientists were absent from the coalition, as well as developing nations representatives. Each member brought their own interests: while environment stakeholders want broad notion of emission ownership to capture wider climate change, business stakeholders want narrow notion of emission ownership to align with financial accounting principles and protect legal interests.
The committee wanted the protocol to be the main tool companies turn to when they design their activities. It was then decided that companies would report on emissions from scope 1 and scope 2 (emissions from the headquarters and electricity sources), leaving scope 3 as optional to be reported on. Companies get points for reducing scope 1 and scope 2 but not for scope 3. Therefore, companies have incentive to report and reduce emissions for scope 1 and 2, but not to manage emissions for scope 3. The motivation to obtain high scores is to be perceived as a leading company in mitigating climate change, contributing to reputation risk management.
The wider purpose of this project is to re-open the discussion on the Protocol’s development to assert that its structure was the product of authorships that were negotiated and contested. Doing this acknowledges prospect to dialogue on tool redesign on the boundary issue (scopes). Much is at stake, particularly as climate finance and climate justice are concerned.
A question that was discussed that I found particularly interesting with regard to carbon emissions was: Is there too much science? What are the political stakes for not having more precise accounting acting as a barrier for political change? Would more precise accounting for carbon is a barrier for deeper fictionalization of greenhouse gasses, creating a carbon market? Would better science lead to better accounting, to better solutions for carbon emissions? All accounting are conventions and we need conventions to act.
In the evening we are invited to a conference dinner. Taking a walk through the city, Christmas lights decorate many buildings and main boulevards and tinkle in stark contrast to our efforts in the last two days.
Over the three-course meal (vegan! Thank you Phillip for organising this!) we have a chance to continue discussing each others’ projects. Claudia Vitel was telling us more about her project in Brazil on deforestation and the contention and conflict that arises between government, industry, and indigenous communities in the Amazon. While Claudia describes her experience in the forests, meeting new and interesting animals, I reflect about my own disconnect with nature and how few diverse animals (insects, reptiles) I’ve met. This reflexion makes me think of my own ‘natural poverty’, having been living in a particular geography, lands impoverished and empty of life. I can count (on one hand) the number of encounters I had with wild snakes when walking in (managed) woods, or the times I saw a hedgehog, or hares. Even when I did see them, standing quietly in a respectful distance, it is striking how these animals are pushed to the sidelines of human-occupying spaces. I think how fortunate Claudia and other people living in the Amazon are, who encounter so many wonderful beings and how devastating human industrial activity is not only to nonhuman beings, but also to humans who are robbed from these encounters.
Tomorrow, the last day of the conference will be looking into insurance and models for natural disasters. As a response to environmental crisis, we will also hear a talk about a working paper investigating futurists’ calculating for climate risk investment and insurance.