Accounting for nature is good business and everyone’s business
Following the launch of WWF’s landmark Global Futures Report into the economic impacts of nature loss, Olam Vice President of Corporate Responsibility & Sustainability, Chris Brown explains why such an approach is vital for business to better account for natural capital:
The economic modelling approach in this groundbreaking study is exactly what businesses like Olam need to define what good looks like and where the safe space exists for operating within planetary boundaries. At the heart of the report is a clear business case for moving towards a ‘Global Conservation’ (GC) scenario, where GDP is no longer the main metric for success but instead, value is derived from protecting the natural assets that underline our economic prosperity.
But as it stands, we as the agricultural sector are amongst the biggest contributors to the loss of these assets. We are also dependent on them. One in three bites of food requires a pollinator to be produced, yet a third of insect species are threatened with extinction. The knock-on impacts of eroding nature’s life-support systems – drought, wildfires, volatile weather patterns - are all too real, but just a taster of what will be in 2050 under a ‘business as usual’ scenario.
We know that incremental improvements are not enough to get us to where we need to be in the next 30 years. Instead, we need to re-imagine global agriculture and food systems so that we deliver prosperous farmers and farming systems, make the communities that these farmers are working in thrive, and regenerate the living world around them. It was with this purpose in mind that we launched our ‘net-positive’ ambition within Olam’s Living Landscapes Policy, which I am pleased to see aligns with the GC scenario defined in the report.
Crucially, our efforts to minimise and mitigate natural capital impacts have taken us beyond our own walls to drive real change at country-level, through cross-sector alliances. One example is the Sustainable Rice Landscapes Initiative (SRLI) – led by a broad coalition including the FAO, UN Environment, SRP, and WBCSD – is focussing on reducing GHGs under the Paris agreement. And with four straightforward solutions; including training farmers to efficiently manage their water we can cut emissions by up to 70%. Olam has been leading this model in Thailand with the support of GIZ and the Thai Government. And in what is shaping up to be a year when nature will take centre stage at the Convention on Biological Diversity and COP26, I’m pleased that influential organisations and forward-thinking businesses have come together in one global collaboration, Business for Nature, to demonstrate business action and call on governments to reverse nature loss by adopting five policy recommendations.
Arguably, the most important challenge facing Olam’s business is the need to rapidly increase customer and consumer demand of goods provided under the GC scenario. This is much more difficult and requires companies like us to better engage our customers on why this is important and how it can be done. This was why Olam created AtSource – a sustainable sourcing platform that gives our customers full traceability of their products from the source - which we hope will encourage partnerships to help us drive the triple positive outcomes in line with our purpose.
But to really move the needle on natural capital, it can’t be confined to the remit of sustainability teams, but put into hands of decision makers – this means policy leads, financial institutions and for businesses, the finance and risk teams. At Olam we have done just that by creating a new ‘Finance for Sustainability’ team to account for natural capital and work to incorporate it into the P&L and balance sheet, so the business can see the natural capital value they create, or erode, based on the decisions they take.
So far I believe we’ve failed to evidence and articulate the business case for nature in a way that cuts through the short-term, globalised financial system we operate in.
What excites me about the Global Futures report is the opportunity it provides to act as an enabler and accelerator to wake up and transform not just businesses in Olam’s sector but the approaches of policy makers and the financial system.
One of the next steps for Global Futures, which I am interested in exploring, is to see if we can downscale and adopt it in business. This could mean companies no longer having to spend their time and resources creating their own methodologies and tools, but instead creating a level playing field which allows us to compete for customers not just on price, but on the creation of value for nature.