Green Business: Helping Business Tally Their True Costs

Pay your fair share.

You broke it, you bought it.

Simple enough concepts.

But until recently, natural resource costs and environmental impacts haven’t made it into a business’ bottom line.

Things like: how much do you owe to restore contaminated drinking water sources from your factory’s chemical run-off?

Or: what should you budget to maintain air quality for people who live near your factory?

What’s a forest worth? What’s the value of logging it versus keeping it intact? For whose benefit?

We know how to figure these costs out. It’s called Natural Capital Accounting.

And we really need to start using it. Because we’re running out of Natural Capital left and right. (To be clear, I’m talking about clean air, land and water.) founder Joel Makower lays out the stark realities & challenges ahead here and in the newly released State of Green Business 2013 report.

He has a wowza of a topline finding:

If the global private sector had to pay outright the true cost of their companies’ environmental impacts, it would cut profits by 40 to 50 percent.

Let that one sink in for a second. Half of a company’s profits. contributor Heather Clancy goes over the report in more detail.


The Case for Natural Capital Accounting

Few companies today account in their financial statements for the value of natural capital — resources such as clean water, tillable soil, breathable air and other resources that are often taken for granted or assumed to be free.

But if those costs were tallied globally, the liability would be considerably more than $1 trillion, according to a new index included in the sixth annual State of Green Business report published on Tuesday. Total natural capital costs related to U.S. firms are approximately $351.6 billion.

As an unrepentant optimist, I can’t help seeing the silver lining in this mess.

Natural Capital Accounting gives us a fuller, richer picture of what our actions cost, in terms of dollars, environmental impact, and how our choices hurt or help other people.

I like to believe that when people know better, they do better.

When you can’t afford not to do better, you figure out a way to do better.

Since we must do better, we will.


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