Boards of Directors Hear the Call of the Wild

In the dominant business paradigm, nature is seen as a “free provider” of resources and services. It is precisely because of this short-sighted vision, which considers nature as a resource at no cost, that our demands continue to exceed the limits of sustainable management of the climate and natural resources. But nature is a central cog in the processes of corporate value creation and in the engine of the global economy. According to an analysis by S&P Global Sustainable1, as many as 85% of the largest companies in the S&P Global 1200 Index show a significant reliance on nature for their operations. Climate regulation, raw materials, water cycles, pollination: $58 trillion of the world's GDP depend directly on nature.

To take climate change seriously and promote the regeneration of ecosystems in business strategies and decision-making processes, a radical change of perspective is needed. Businesses need to stop seeing nature as an entity to be exploited and start seeing it as a stakeholder whose rights and wellbeing deserve the same attention as investors, consumers, employees and other 'human' stakeholders. Including nature among the stakeholders of a company means recognizing its rights, its intrinsic value and providing fair remuneration for its contribution to business processes according to a regenerative and "nature-positive" approach.

Some pioneering companies, such as Patagonia, Alstria and Faith-in-Nature, have begun to adopt this practice. Initiatives such as the "green dividend" or assigning a vote to nature on Boards of Directors represent innovative approaches to give a voice to a stakeholder that – despite having a fundamental role in the business world – has so far remained silent. 

This is also the spirit of new disclosure rules, such as the European Sustainability Reporting Standards (ESRS) and the IFRS sustainability standards (IFRS S1 and S2), which aim to improve transparency on how companies assess and communicate their environmental and climate impacts and risks. However, the adoption of specific standards and metrics for ESG issues risks fragmenting the rationale, separating the economic-financial dimension from environmental and social considerations. A more integrated approach is needed that considers nature, climate and economic results as interconnected elements, incorporating these dimensions and their tradeoffs into the evaluation of corporate performance and managerial decision-making processes.

To do so, through the "Calculating Sustainability" study conducted with Paolo Quattrone and Sarah Russo of the Alliance Manchester Business School, a new solution is being proposed and tested: the "Sustainable Value Table" (SVT). This is a new way of calculating the value generated and distributed by companies, linking it to the Sustainable Development Goals (SDGs). The SVT begins with a Value-Added Income Statement and includes nature among the stakeholders to be remunerated, allocating part of the value created by the company to a specific provision to "compensate" nature. The value assigned to nature is expressed in economic and financial terms and can therefore be compared with the value allocated to other stakeholders, such as employees and creditors, according to a concept of fairness. In this way, accounting gives nature visibility and a 'voice'. This allocation aims to repair any damage related to climate change and support the regeneration of ecosystems. 

Adopting a regenerative approach in business strategies is not just about avoiding harm or limiting negative impacts. It means actively contributing to the restoration of ecosystems and climate resilience. By integrating the 17 SDGs, the SVT helps business decisionmakers understand how to allocate the value created to restore and strengthen the resilience of ecosystems and socio-economic systems. Alperia represents a concrete case that demonstrates how this approach can be put into practice. 

The SVT is more than just an accounting tool: it is a proposal that invites a deeper reflection on the processes of value creation and distribution. As with nature, visibility and a voice should also be given to other emerging stakeholders – such as future generations – in corporate financial statements. This can be done by adopting a dynamic and inclusive vision of value generation and distribution processes that reflects the interdependencies between nature, climate and society and between past, present and future choices.