More than ever, the relationship between business, the environment and society is being questioned. Investopedia describes sustainability as, ‘meeting the needs of the present without compromising the ability of future generations to meet their needs’.
The ecological definition of sustainability originated with the Brundtland Report in 1987, which describes sustainable development as a means of development that satisfies the needs of the present without adversely affecting conditions for future generations.
ESG is a rising theme in investment management with 360 new funds launched last year in Europe alone. A record year for inflows into sustainable funds saw assets reach €668 in 2019 in Europe. Initiatives like the Taskforce for Climate Related Financial Disclosures have gained traction.
So where does business play its part in this ecosystem?
The complexity of nature-based systems make them highly challenging to quantify and to measure, as studies like the insightful forthcoming Dasgupta Review on The Economics of Biodiversity reveal. A complex mix of population growth, pressure on natural habitats, transport and supply chain networks accompany the day to day realities of running a business – or a country. Like scope 3 carbon metrics, the lifecycle of impact is far-reaching. But there are elements that can and must be accelerated.
First, robust data & science-based evidence matters.
We can no longer ignore the science. Underpinning our analysis, science-based frameworks partnered with more accurate data and transparency from both business and government will be key. Building on the success of TCFD, disclosures to encourage an uplift in baseline data can make a meaningful contribution.
Secondly, technology will support our efforts if used wisely.
The rise of spatial data, blockchain-based record keeping and AI-based data gathering to capture quantitative data points and aggregate them with more power than ever before means that connecting our activities and their impacts can finally be revealed.
Finally, positive results are possible, and necessary.
Whilst the outcome of many of today’s events remain unknown, we can say with some confidence that the implications of this global reset on shaping the responsible business practises of the future – learnings, threats and opportunities – will no doubt be a part of the discussion for business tomorrow.
Those that honour their commitment to the environment, alongside society, should be rewarded with capital flows.