Be a leader and reap the benefits or be a laggard and suffer disastrous consequences. This is the stark choice offered to the corporate world by Ian Cheshire, chief executive of the DIY chain Kingfisher, after unveiling the results of a business-led taskforce set up at the request of the government to look at the opportunities from valuing nature.
Cheshire, who chaired the Ecosystem Markets Task Force, believes that a progressive response to the continuing degradation of ecosystems and loss of biodiversity could help the UK become a global leader in measuring natural capital. Companies could gain a significant competitive advantage by becoming resource efficient through the development of a cradle to cradle approach to manufacturing, he thinks.
But he warns that if corporates and politicians continue to bury their heads in the sand, then the UK risks a bleak future, including major flooding in London and a further loss of business competitiveness.
Cheshire says business would do well to be ahead of the curve because they will be forced to respond in the years ahead as commodity prices continue to surge and politicians recognise they have to introduce tougher regulations to price in externalities to protect nature.
Referring to the dangers ahead if significant action is not taken, Cheshire told Guardian Sustainable Business: “I think we’d see serious and repeated flood damage, which is much more of a threat across the entire country than people seem to understand at the moment. That can apply particularly to London, which seems to be assuming that everything’s always fine here, but major flooding damage will happen without some form of serious water catchment management.
“You will see the further degradation of woodland, and there will be a major loss of green habitat in general. The third impact will be sharp rises in prices. There is massive inbuilt price inflation unless we rethink the resource implications of our actions, and I think that will show up in people’s everyday life in all sorts of areas.”
Cheshire is aware that a message of only doom and gloom may force business executives to go even further into denial, which is why the report focuses on the benefits of early action: making companies more resilient, helping them to better manage risk, as well as strengthening their reputations.
Already a few business leaders are factoring in natural capital valuation, and Cheshire says they are providing air cover for others to follow. He refers to leaders such as Puma, Nike and Patagonia and picks out Paul Polman of Unilever in particular because “if the CEO of Unilever is doing it, it can’t be completely hippy.”
Recognising that the dominant narrative of capitalism is still so prevalent and that change will not come quickly, Cheshire hopes the ecosystem report at the very least will help companies to recognise that they cannot succeed unless the natural world is preserved.
Cheshire says one reason most companies have not yet shifted their awareness is because company impacts are often buried in their supply chains.
He gives the example of Jaguar LandRover, which was a member of the taskforce. At first it saw little connection between the production of cars and the environment until it looked and saw that around 140,000 litres of water are used to create each vehicle. Suddenly, threats of water scarcity become relevant.
Rather than broad recommendations, the taskforce focused on five areas of change. These include biodiversity offsetting, bio-energy and anaerobic digestion on farms, sustainable local woodfuel, nature-based certification and labelling, and water cycle catchment management.
Beyond practical improvements, the taskforce says the knowledge economy will also get a boost from developing the expertise to value nature. It says consultancy is the most immediate opportunity, along with technical standards, legal and financial services, and training. Opportunities include opening up export markets to more environmentally vulnerable countries, and more effective ways of using business to deliver national and international aid programmes.
One key challenge that needs to be overcome is that financial measures have been developed for over 500 years and are well understood, whereas standards for nature are at the financial equivalent of the 14th century, before the development of double-entry bookkeeping.
“Those that figure out the new model quicker will definitely do better,” says Cheshire “and I think the opportunity for the UK is, looking at a western Europe that’s got no obvious signs of growth, that this is going to be a real burst of innovation and I think a competitive advantage if we can get the UK further down the track than the rest.”
Cheshire, who admits to becoming more deeply connected to the natural world as a result of immersing himself in the work of the taskforce, says he learnt three key lessons.
“One was I hadn’t really understood how water underpinned so much of everything else,” he says. “I hadn’t understood the systemic nature of it.
“We’ve seen large parts of the UK flooded and you’re thinking, this is by definition going to happen more, and the answer can’t be to build bloody great bits of concrete everywhere. You’ve actually got to go back to rethink the total catchment and the use of the surrounding countryside.
“Secondly was the impact of Ian Bateman’s work on ecosystem assessment. I thought it was all very theoretical, and then he shows it’s possible to measure the value of green space by how often it’s visited and measuring house price differences by their accessibility to nature, and even down to estimating the health benefits of nature. We have an intuitive feeling for nature, but he takes it down to a level of calculation and modelling.
“Thirdly, was the degree of learning around some of our current frameworks and systems. For example, how the Common Agricultural Policy has created perverse subsidies. We talked to the farming stakeholders and it was a group of people who want to do the right thing but the system is rewarding them to do the opposite.”
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