Valuing Natural Capital – A Double Edged Sword

I was in London last week and attended a very stimulating Green Monday evening that got me thinking about the term ‘value.’   Value can be defined as both:

  • The regard that something is held to deserve
  • The monetary worth of something

In a roundtable session after the presentations I joined a discussion about valuing natural capital. I hold natural capital in high regard. Natural capital has a monetary worth for sure. But it has an intrinsic value in its own right –to our own and to future generations — that potentially goes beyond its monetary worth as set by today’s marketplace.

One can hold natural capital in high regard and value it in a monetary sense as a mechanism to maintain its usage at sustainable levels.  For example, by compensating the owner of the asset for not using it or by the level of charge set for its usage.

However, one can also hold natural capital in lower regard and value it in a monetary sense as a mechanism to enable its usage, demonstrate asset value and maxizimise revenue in the here and now.

Sustainability requires us to balance those two notions of value to deliver societal prosperity while ensuring natural capital is shared fairly today and preserved for future generations.

We need to remain cognizant that once we give something a monetary value we are inviting its usage for anyone willing to pay the price.  In our rush to make the business case for sustainability, let’s not get hoisted by our own petard and find that in valuing natural capital we have not accelerated its exploitation beyond sustainable levels.

For a related discussion take a look at this opinion piece I wrote for the CRO Magazine on the relationship between the roles of the CSO and the CFO.

 

 


  1. Comments 2

  2. Jim Woods 1:34 pm on December 17, 2012

    Hi Kevin, you got me thinking. Putting a value on sustainability is often the poor cousin of celebrating the environment, but is it the point when the CFO engages? Is the the difference between purity and pragmatism? Jim


  3. KevinMoss 1:47 pm on December 19, 2012

    Hi Jim, I think putting value on sustainability and celebrating the environment can be complementary as long as the value is set with the right objectives in mind. Then we can engage the CFO and protect the environment.


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