BlackRock, an investment management firm managing around $8.7 trillion in assets, has increased its support for recognising and protecting “natural capital” and acting on companies not meeting ESG requirements.
In a report for their 2021 activity BlackRock has said “All companies rely on natural capital in some way and, as the world transitions to a low-carbon economy, we ask companies to demonstrate how they are minimizing their negative impacts on, and ideally enhancing the stock of, the natural capital on which their long-term financial performance depends.”
“Natural Capital” can be defined as “the world’s stocks of natural assets which include geology, soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.” (World Natural Capital Forum)
This comes as there is increasing evidence and awareness of the fundamental importance of the natural world for human life, and consequently any economic activity. Despite environmental ‘externalities’ traditionally being excluded from economic systems, the financial market and accompanying regulatory environment.
“Erosion of natural capital usually goes unrecorded in official economic statistics because Gross Domestic Product (GDP) does not record depreciation of capital assets.” (Dasgupta Review, 2021)
Now, global data has confirmed that the “economic benefits of protecting nature now outweigh those of exploiting it.” (findings published in the journal Nature Sustainability.)
As the financial market increasingly sees the incredible risks and opportunities of natural capital and the climate crisis, and major players accelerate their action, we can see a trend towards businesses increasingly needing to answer and address their impact on the natural world.
BlackRock ups focus on 'natural capital' ahead of AGM season https://www.reuters.com/article/us-blackrock-agm-nature-idUSKBN2BA0AS
Final Report - The Economics of Biodiversity: The Dasgupta Review https://www.gov.uk/government/publications/final-report-the-economics-of-biodiversity-the-dasgupta-review
Economic benefits of protecting nature now outweigh those of exploiting it, global data reveal https://www.eurekalert.org/pub_releases/2021-03/uoc-ebo030521.php
What is natural capital? https://naturalcapitalforum.com/about/
Why investors are putting biodiversity on the balance sheet | Greenbiz https://www.greenbiz.com/article/why-investors-are-putting-biodiversity-balance-sheet