Draft legislation, announced on 21 July, signalled the government’s intention to move the basis on which the tax on trading profits of sole traders, partnerships and…
Published earlier this year the Dasgupta Review will hopefully fulfil and more its billing as being as important and influential as the Stern Review in 2006. I say “and more” as I hope our enactment of change in reaction to Dasgupta Review is quicker and more extensive than it has been to date with the Stern Review.
In summary both reviews look at the economics of action and inaction on two interacting issues:
- Climate change (Stern)
- Biodiversity (Dasgupta)
I cannot hope to do justice to Dasgupta Review in an 800-word blog. The full text of the review is c600 pages and the abridged version is over 100 pages long. However, I will try to give a flavour of the report’s main findings and its implications for businesses.
Abridged and full copies of the Dasgupta Review can be found via link
Dasgupta Review – main findings
The headline messages are a powerful and evocative summary of the Review. These include:
- Our economies, livelihoods and well-being all depend on our most precious asset: Nature
- We have collectively failed to engage with Nature sustainably, to the extent that our demands far exceed its capacity to supply us with the goods and services we all rely on
- Our unsustainable engagement with Nature is endangering the prosperity of current and future generations
- At the heart of the problem lies deep-rooted, widespread institutional failure
- The solution starts with understanding and accepting a simple truth: our economies are embedded within Nature, not external to it
- We need to change how we think, act and measure success
For some context, “Biodiversity is declining faster than at any time in human history. Current extinction rates, for example, are around 100 to 1,000 times higher than the baseline rate, and they are increasing. Such declines are undermining Nature’s productivity, resilience and adaptability, and are in turn fuelling extreme risk and uncertainty for our economies and well-being. The devastating impacts of COVID-19 and other emerging infectious diseases – of which land-use change and species exploitation are major drivers – could prove to be just the tip of the iceberg if we continue on our current path.”
Dasgupta Review – implications for business
In the abridged report itself there are interesting passages on Pricing (19.2.3) and Measuring Economic Progress (20) and The Global Financial System (22), all of which refer to matters that would have a direct impact on businesses in accounting for and/ or measuring the impact of business, including:
- Businesses and financial institutions could be obliged to integrate nature related considerations with their other objectives. The idea ultimately is to have them assess and disclose their use of natural capital. The Task Force on Nature-related Financial Disclosures, established in 2020, is a step in that direction.
- There is growing evidence that individual investors want investment providers to consider sustainability and nature in their investment decisions
There is also a section on Empowered Citizenship (23) which looks at the role that we, as citizens, can play to bring about change – and this of course has implications for businesses in our role as consumers and customers. For example the report advocates that “We can [bring about change], for example, by insisting that financiers invest our money sustainably, that firms disclose environmental conditions along their supply chains (product labelling is a partial method for doing that), even boycotting products that do not meet standards. Reputation matters, and that can be exploited by citizens.”
PKF Francis Clark – join us for our webinar
We have organised an event that looks to draw businesses’ attention to this pressing matter, also providing practical examples of how businesses are engaging with nature and support for those businesses starting out on this essential journey.
The online event, in conjunction with Exeter University, is on 26 May 2021 and details and registration can be found at link.
On the wider issue of sustainability and business performance it is encouraging to note our Financial Planning team are seeing that companies with a focus on Environmental, Social and Governance (ESG) factors, stewardship and sustainability, can generate better returns for our clients, as well as proving more resilient to market shocks. How embedded the issue of biodiversity is in ESG at the moment, I am unsure but given the implications of the Dasgupta Review if it is not fully embedded now it surely must be soon!