Leaders from governments, business and civil society gathered in Rio de Janeiro for the United Nations summit Rio+20 to address the slow pace of change on sustainable development and to determine the best path moving forward.
Instead of looking to solutions of science, and technology, Peter Bakker, President of the World business Council for Sustainable Development believes the world needs better accounting mechanisms. He said. “accountants are going to save the world.” (Not the one above, from the movie Drive Angry).
To tackle sustainable development, leaders have long recommended the need to account for externalities - which are the effects of services, products or production on third parties not involved in the buyer / seller relationship. Leaders argue that by calculating the value of what nature provides to make the things we buy and measure the harm a product has on the environment, we stand to gain a more realistic understanding of the costs of goods and services. It's with knowledge like this that leads to massive changes in the way we lead our lives. And just by that, it could lead us on a path to sustainable development.
The only problem is that there isn't an accepted accounting framework to do so - which means, how do we measure the value of water (in water footprints) to make a table, phone, even a tshirt for example to the value of clean air versus polluted air. And if we can calculate all of this, who will pay for it?
In Rio, Puma's CEO Jochen Zeitz explained how the EP&L (environmental profit and loss statement) had contributed his own understanding to how the company has its impact. With that format, he has been able to ascertain that 6% of the company's environmental impact comes from the firm's operations and the rest happens up and down the value chain outside the company. By learning where externalities come from, businesses can change in that manner.
There were also a lot of other companies over at the Rio+20 summit, where companies like Nike, Unliver agreed to develop a methodology to assign value to the world's forests, freshwater and marine systems.
37 CEOs of financial institutions announced the Natural Capital Declaration to demonstrate commitment towards integrating natural capital considerations into financial products and services.
And while we continue to look forward to science, technology and other innovations in other areas of work, accountants could be the ones to help us get a new model on developing one to ensure we have enough resources to use for now and worry for later. Compelling argument indeed.