At the University of Jyväskylä, researchers are developing a biodiversity footprint for organizations similar to the commonly used carbon footprint. In the future, an organisation’s negative effects to climate and nature could be calculated based on financial accounting. Then turnover, result, profit and operating loss could be something quite different from the current practice, writes Doctoral Researcher Sami El Geneidy from Jyväskylä University School of Business and Economics.
Climate change and biodiversity loss raise discussion at different levels. People talk about global responsibility, the responsibility of states and cities, corporate and personal responsibility, system-level changes, and small everyday actions. In their report of last year, UNEP (United Nations Environment Programme) showed that the current national goals might lead to global warming by up to three degrees Celsius.
The objective of 1.5 degrees set out in the Paris Agreement seems a distant dream. Of the international objectives for biodiversity set for the past decade 2011-2020, none was fully achieved.
Why, then, have we still failed in implementing significant measures?
There are a million different viewpoints to this, but as a researcher of environmental management, I approach the issue from the perspective of companies and organisations, where carbon footprint is a well-known and widely used indicator. Carbon footprint describes, for instance, the negative climatic effects of a product, service, company, state or an individual.
To measure biodiversity loss, we are developing a similar indicator at the University of Jyväskylä.
Organisations that measure and report their carbon footprints often seem to refer to this aspect as a component separate from other operation. Climate actions are adjusted within the limits of the organisation’s present reality, which is often defined in terms of the financial situation. Adverse effects to climate and nature need to be brought closer to the heart of policy-making in the organisation, i.e. financial accounting.
Like Ruth D. Hines put it already in 1988, financial accounting does not only communicate an organisation’s state and indices but it sets the limits for organisations and constructs their reality. What if we changed and modified this reality?
What kind of an accounting model we wish to have in the future?
On a broader level beyond organisations, Kate Raworth has shaken our traditional paradigm of continuous economic growth. She developed the doughnut economics model, according to which our economy should be constructed under the terms of social and ecological sustainability. The recently published Dasgupta Review calls for a fundamental change in how we practice economics: Metrics of economic success should account for biodiversity impacts
In the same vein, we need to develop an accounting model for adverse effects to climate and nature and bring it alongside financial accounting or even to guide it.
The present model of financial accounting is no natural law. We need to consider what kind of an accounting model we wish to have in the future and to guide our actions, and what kind of reality we wish to construct.
In JYU.Wisdom and JSBE, we are developing a method where an organisation’s adverse effects to climate and nature are calculated and reported based on financial accounting.
In the future, turnover, result, profit and operating loss can be something quite different from their presently implied meanings.
In future – and hopefully also already existing – organisations, decision-making is based on reality communicated by holistic sustainability accounting.
Sami El Geneidy
The writer is Doctoral Researcher at Jyväskylä University School of Business and Economics (in Corporate Environmental Management) and a member of JYU.Wisdom, the JYU-based community for resource wisdom.
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