Posted 01 October 2021
WWF France and the AgroParisTech ecological accounting chair have just created the “Natural Capital Lab”. With large groups such as LVMH, Michelin or the Yves Rocher group, this new initiative aims to help integrate the services provided by nature and the degradation of ecosystems such as debt in company accounts. Work that could help transform the business model of companies.
The services rendered by nature to the economy are for the moment free. What if we started paying them? An initiative by WWF France and the Ecological Accounting Chair of AgroParisTech precisely aims to include the impact of a company’s economic activity on nature directly in its accounts, not to pay for the services rendered but to restore the biodiversity. Called the “Natural Capital Lab”, it has in its ranks five companies volunteering to work on the subject, Carrefour, GRDF, the Bel group, the Yves Rocher group, Michelin and LVMH, as well as observer members including the Ministry of Ecological transition. Launched just before the first part of the COP 15 on nature, the first work of which starts in October, the initiative hopes to attract other companies.
The ambition of the project is to scientifically measure the impact of a company on its ecosystem, then translate it into company accounts. The stakes are high: according to a study by the World Economic Forum, nearly half of the world’s GDP depends directly or indirectly on nature. The risks of biodiversity loss are therefore major. “Nature is the foundation of our economies, yet at this stage, companies do not have the tools to take it into account. In addition to decarbonisation targets, it is vital that companies integrate biodiversity targets and trajectories“, says Véronique Andrieux, Director General of WWF.
The Lab hopes to connect the necessary tools for businesses. It thus wants to work together the Science-Based Target on Nature system, which aims to measure these impacts and define actions to remedy them, and the Care method (Accounting adapted to the renewal of the environment), developed by the Accounting chair. Ecological from the AgroParisTech engineering school.
Pay off the ecological debt
This accounting model aims to put financial capital on an equal footing with other types of capital from which the company derives its resources, such as natural capital, climate capital or even human capital. On nature, for example, society must then include among its debts what biodiversity brings to it and any damage caused to the environment and ecosystems. The company must therefore repay this debt, like the one it would have contracted with a bank. A change of mindset that can sometimes be difficult for companies to accept.
“This translates into a real drop in profitability, confirms Alexandre Rambaud, co-head of the AgroParisTech Ecological Accounting Chair. But by realizing this, companies can then take action to reduce their ecological debt by setting up a dashboard to track its improvement.“About twenty companies, including large groups such as LVMH or the Yves Rocher group, but also SMEs, have chosen to take part in the exercise in order to equip themselves to measure their real action against climate change or conservation. of biodiversity.
The objective of the Natural Capital Lab is to provide the Care method with scientific data on the measurement of impacts on nature and on the means to restore it, and therefore to repay its debt. Work still needed, given the lack of information and methodologies on the issue. “We do not yet know what scientifically means the good restoration of a natural ecosystem.“, remarks Alexandre Rambaud.
This approach should normally lead the companies that follow it to transform their business model in order to get out of debt. A step that is undoubtedly difficult for many companies to take. “As part of our work, we are proposing a first brick which would be an integrated performance declaration, making the link between financial and extra-financial information.“, says Alexandre Rambaud.
Arnaud Dumas, @ ADumas5
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