reSee.it Video Transcript AI Summary
Speaker 0: We tend to think about capital as only financial capital—cash and financial assets—but that is not the only value our economies depend on. Every aspect of the economy is fundamentally dependent on nature: the air we breathe, the water we drink, the soil, the oceans for the food we consume, and the minerals needed for technology and infrastructure. Without these forms of natural capital, economies wouldn’t exist; they are the fundamental building blocks.
Yet the ways we have grown our economies and our models of economic development have been incredibly successful for global prosperity. But the unintended consequences of current growth models are not sustainable on a finite planet. The resources we draw from Earth and the pollution and waste we emit—greenhouse gas emissions, sewage, plastics into the ocean—are beyond the Earth’s carrying capacity. This is leading to significant direct impacts on society and substantial financial costs for the economy. Macro-level calculations show these costs, and they’re also showing up in practical ways as we breach environmental boundaries and undermine nature.
These breaches translate into financial risks for institutions: lack of water disrupts operations and supply chains where water is an essential input for manufacturing or power production; soil degradation reduces agricultural yields; the decline of pollinator species affects agriculture. All of this leads to direct financial risks for organizations, for businesses, and ultimately for investors.
The root cause is that decision-making within businesses and financial institutions currently relies on financial data and metrics that do not factor in nature. Nature is treated within the economy as though it is unlimited and predominantly free, and the risks and harms are not costed in financial terms. While macro-level costs can be calculated, they are not integrated into day-to-day decision making.
The consequence is that our economies are placed at fundamental risk. We cannot do business on a dead planet. To protect natural systems, one solution is to bring nature onto the balance sheet—bring nature into the ways decisions are made within business, allocate a value to it, and integrate it into accounting and financial mechanisms.