1. International Symposium on Natural Capital Management Ministry of Environment, Japan 17 th February 2014 Pavan Sukhdev UNEP Goodwill Ambassador Founder & CEO, GIST Advisory Natural Capital Management for 2020: Proposals for Japan

2. Reflecting Natural Capital in National Accounts: WAVES

3. WAVES

4. Moving from Macro-Policy Reform to Micro-Policy Reform

5. ‘Green Economy’ is not possible without greening the Private Sector 2010 data. Source: U.S. Bureau of Economic Analysis

6. Source: Trucost for UNPRI, 2010. Top 3,000 Listed Companies Negative Externalities USD 2.15 Trillion p.a. (3.5% of World GDP) Negative Corporate Externalities …..

7. Source: Trucost for UNPRI, 2010. Top 3,000 Listed Companies Negative Corporate Externalities …..

8. Water Abstractio n Greenhou se Gases Natural Resources ….. Pushing Planetary Boundaries

9. “Green Economy” is the right economic vehicle to achieve Sustainable Development www.unep.org/greeneconomy “Corporation 2020” is the right economic agent to achieve a Green Economy www.corp2020.com @corp2020 Sustainable Development, Green Economy & Corporation 2020…

10. What will get Corporations to Change ? www.corp2020.com Source:

11. o Four planks of change to achieve ‘Corporation 2020’ Resource Taxation… Limited Leverage…. Accountable Advertising…. Disclosing Externalities… o Each of these is an “outside-in” change o For each change there is a Relevant Regulator What will get Corporations to Change ?

12. Resource Taxation Replacing Corporation Tax (profits tax) gradually with Taxes on Resource Use & Extraction Resource Taxation on materials and energy efficiency aims to rewire corporations to use fewer resources to deliver the same or higher levels of products/ services. Resource taxation is about “taxing the bads, rather than taxing the goods.” Fiscal gap management need not be affected by this change, as these taxes could be made revenue neutral by replacing corporation taxes or income taxes. Relevant Regulators: Finance Ministries www.corp2020.com Source:

13. Resource Taxation Example “Taxing the Bads” in Ireland Ireland implemented several new taxes: carbon taxes on fossil fuels used by homes, offices, vehicles, farms purchase taxes & yearly registration fees on automobiles per-weight taxes on residential garbage. A big change for the country… “We are not saints like those Scandinavians — we were lapping up fossil fuels, buying bigger cars and homes, very American.” – Eamon Ryan, Energy Minister (2007-11) Results Reduction in emissions by 15 percent since 2008. Raised almost $1.3 billion in new revenue. IMF recommended (Aug 2012) that Ireland expand the tax to increase tax revenue.

14. Limiting Leverage There are many Tools for Limiting Leverage: –Reserve Requirements for Banks –Capital adequacy ratios for “TBTF” corporations –Consortium banking (info sharing between banks) –Segregate lending/clearing institutions from investment/ insurance (re-visit Glass-Steagall?) –Limit tax-deductibility of interest beyond caps –Constrain leverage from M&As –Re-align performance bonus systems Relevant Regulators: Central Banks www.corp2020.com Source:

15. Accountable Advertising Two principles –Treat all consumers equally, irrespective of market –Improved Disclosure of advertising practices Annual “Accountable Advertising Report” Four strategies 1.Disclose life span of product on packaging and in ads 2.Disclose countries of origin 3.Recommend how to dispose of product 4.Disclose product footprint on advertisements, products, website Relevant Regulators: Advertising Associations www.corp2020.com Source:

16. Disclosing Externalities Forward-thinking consumers and investors are aware that there is too little information available about the environmental and social performance of companies in terms Many would like the choice between Coke or Pepsi; Apple or Samsung; Lego or Playmobil to be based on more than just aesthetics and branding. Since companies are not currently required to measure (let alone disclose) their footprint, they are able to veil most of the information about how their products are produced. Relevant Regulators: Accountancy Regulators www.corp2020.com Source:

17. Externalities Assessment Scope Example: GIST 360 o TM

18. Disclosing Externalities : PUMA PUMA Press Release, November2011

19. Corporation as “Institute” World-class Training for 30,000 p.a. Measuring & Disclosing Human Capital Externalities : INFOSYS INFOSYS Campus, Mysore, India

20. Externalities Disclosure Example: Infosys Y/e March 2012 Source: Annual Report, 2011-12

21. Social Capital Externalities Example: Measuring & Disclosing Impacts from the CSR Driver A B C D E For a company which has five distinct CSR programs, they have created “social impacts” in the following manner, and as a result, company management gained a better understanding of the value of their programs and a replicable annual measure of social performance and social return on capital. Whilst SROI is calculated for each program, there are other metrics available together with program-wise SROI, which gave the company a more holistic view of the Social Capital impacts of their CSR.

22. THANK YOU Pavan Sukhdev www.gistadvisory.com www.corp2020.com