Nature vs. Capitalism? Why not both?
Redefining growth with impact investment
When it comes to the planet and banking on its future resources, we have been terrible accountants. It’s no surprise that the balance is nothing short of disastrous. This year, besides surprising ourselves with no flying cars and unsophisticated hover boards, we also discovered that we fell tragically short of achieving the Millennium Development Goals (MDGs). On 18 August, we arrived at Earth Overshoot Day, marking the day at which humanity starts clocking ecological debt for the year.
Capitalism has long been touted as the main culprit, with big industries and businesses stuck in the enemy camp against all things represented by Mother Nature — natural resources, beautiful wild places and wildlife, and diverse ways of human life and cultures. At the other end of this spectrum, Nature is exploited, over-used, often pictured as victimized and powerless.
This simplistic way of pitting Nature against capitalism has proven ineffective. If we are to win the fight for sustainable development, the status quo of Nature versus Capitalism cannot continue.
Watch this pitch for Nature!
Natural Capital — Valuing Nature
The new Sustainable Development Goals (SDGs) are now our flags and guideposts, and 2030 will be humanity’s next checkpoint. With five of seventeen of the Goals related to protecting our ecosystems for all societies and our children, compared to just one in the MDG, there is definitely a stronger recognition that humans really do depend on Nature to thrive and grow. Natural Capital encapsulates this perspective.
Natural capital refers to the world’s stocks of natural assets which include geology, soil, air, water and all living things. It is from this Natural Capital that humans derive a wide range of services, often called ecosystem services, which make human life possible. Naturally, it also sustains everything that humans have created — including and especially capital markets.
Increasingly, natural capital is being valued and included in financial markets. Innovative new mechanisms for valuing Nature have been developed, in order to rigorously measure and value the ecosystem services that Nature provides to humans and markets. Proper valuation enables the market to put a price to ‘environmental externalities’ that are often unaccounted for by businesses. In fact, it is now estimated that the world’s primary production and processing sectors are responsible for ‘environmental externality’ costs totaling a staggering US$7.3 trillion annually.
Venturing into the wild with Natural Capital
When it comes to saving the world, the price tag can be planetary. An estimated $300 billion is needed each year to meet the world’s environmental conservation challenges, according to the Global Canopy Program. Impact Investing has played a critical role in financing the environment’s recovery and rehabilitation, where the conservation impact investing market totaled $23 billion from 2009 to 2013 and is expected to increase to $37.1 billion over the next five years.
Getting to the SDGs in time, before we use up the world’s resources, is going to take a lot more than business-as-usual. Through impact investing, conservation can raise capital to unlock the potential for scaling conservation efforts and achieve environmental and social returns in a way that has never been done before. At the same time, it incentivizes investors with investment opportunities that offer both financial return and conservation impact. As the home of Asia’s first public and private platform for impact investing, IIX works with impact enterprises that set out to scale positive social and environmental returns to raise capital efficiently.
One of the Impact Enterprises that IIX has worked with to scale its positive environmental returns is Double Helix, an innovative enterprise that aims to combat illegal logging and mitigate supply-chain risk by applying forest genetics — using DNA-testing to identify timber source. With IIX’s technical assistance and support in capital raise, Double Helix secured investments to scale its impact.
To achieve holistic conservation outcomes, impact investing must reach into a wide variety of sectors which can include agriculture, forestry, energy, water, fisheries and aquaculture, and many more. Investing in Nature has strong and long-lasting impact on people, profits, and planet, allowing us to create lasting jobs and community wealth, while using natural resources responsibly.
Article by
Lim Jia Ling
Advocacy, IIX
Originally published at impactquarterly.asiaiix.com.
