Overcoming the ‘accountability trap’ in climate and nature action
We often appeal to the scientific urgency of the climate and nature crisis – or the moral obligation to do something about it – when we are trying to convince someone to act. And this is an angle we find compelling: when we hear about the consequences of climate change on our children’s futures and our own, it stirs us to act.
Often I see organisations and sustainability leaders applying the same moral logics in their businesses, a tactic which is unfortunately doomed to failure; expecting companies to care intrinsically about nature and the climate is at odds with how business decisions are made.
And while it is true that every business depends on nature, from a commercial perspective that fact alone is not enough to motivate a change in behaviour.
Why it has proven difficult to achieve long-term investment into nature
As any embattled CSO knows, decision-making in most organisations boils down to whether a given course of action will make the business more money (by enticing more clients or revenue) or save it money (by reducing costs or risks). The ‘return’ has to be swift, since investment and planning time-horizons are usually a maximum of three to five years long.
As we have seen this week, a given UK government is not much longer-lived. Since the Paris Agreement was signed in December 2015 the UK has had six Prime Ministers, and with the announcement this week of the resignation of Keir Starmer, we will soon have a seventh in ten years. Since the resignation of David Cameron in 2016, the average UK Prime Minister has lasted a mere 2 years and 2 months in office.
The result is an accountability trap. The true benefits of restoring ecosystems, rebuilding biodiversity and stabilising the climate often accrue over decades. But the people in both public life and in the private sector making today's investment decisions are rarely the same people who will be in post when those benefits arrive.
Responding to the accountability trap
We are left asking ourselves: where does accountability come from? Who is responsible for safeguarding the long term, when every incentive is pulling attention towards the next quarter, the next annual report or the next election cycle?
The answer is that we must stop treating climate and nature action solely as a long-term issue or a moral obligation and start recognising it as what it is: an immediate business issue.
To mobilise investment into climate and nature, we need to demonstrate that climate change and nature loss are already creating material financial consequences for businesses today. We have two arguments we can make – that:
- Climate change and nature loss are costing businesses money today.
- Investing in climate and nature solutions today is a path to greater revenue.
Fortunately for us, both of these arguments are true.
Businesses are now able to see the impacts in financial terms
The findings of our recent Climate Commitments Report, conducted by Ecologi and BusinessGreen, suggest UK businesses are increasingly able to identify direct commercial impacts arising from climate change and nature loss.
Among the 84% of businesses that could identify at least one way climate and nature impacts had affected them in the previous two years, 70% reported impacts equivalent to at least 1% of annual turnover. More strikingly, 40% reported impacts exceeding 6% of turnover (n = 1,384).
These are not marginal effects. For businesses operating on tight margins, in an economy already battered by ever-rising costs, these levels of impact are hugely significant. For context, Bank of England data recently suggested that the effect on the British economy caused by Brexit had been a loss of 6%.
For businesses, climate costs are showing up through disrupted supply chains, resource scarcity, increased insurance premiums (or uninsurability), operational interruptions, damage to assets, impacts on employee health and productivity, and costs driven by growing regulatory pressures.
Importantly, businesses are also recognising the other side of the equation. Most see investment in climate action and nature restoration as a positive: critical to strengthening long-term resilience, securing future supply chains, protecting access to resources and maintaining competitiveness in a rapidly changing economy.
What this means for the future of nature finance
For many years, nature loss was often framed only as an environmental issue with long-term social and economic consequences. Then, we started to make the argument that to change business behaviour we’d need to make the business case.
That business case has arrived, and it is urgent. UK businesses are now equipped to identify how climate change is causing immediate commercial challenges to their profitability, and they are able to tell us that they understand the ways in which their commercial success is contingent on the stable climate and nature conditions which no longer exist.
Given this, our role as CSOs is to provide this evidence to decision-makers. Businesses increasingly view climate stability and healthy ecosystems as conditions that support their own performance and resilience, and this makes investment in nature easy to justify to the board.
In that sense, the future of nature finance may depend not only on demonstrating why nature matters to society, but also on demonstrating why it matters to business. We don’t need businesses to start loving and appreciating nature – that’s what people are for. We just need businesses to understand the truth: that their success depends on it.
The key to mobilising private sector finance into nature isn't going to be in convincing companies of the scientific or moral arguments for why they've got to pay to save nature. It's going to be proving to them that saving nature is the only way to save themselves.
Sam Jackson, Director of Climate Science and Impact at Ecologi
Ecologi is the UK's most trusted climate action platform for every step of your climate journey. Speak with one of their climate experts today at ecologi.com
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