Nature's value to individuals can vary greatly, making it important to understand the diversity of perspectives.
Ecosystem services
Ken J. Wallace (2007, p. 236) described in his article how humans need to understand that their well-being and values are tied to the ecosystem, which requires understanding humans' place in the ecosystem. Ecosystem services are pursued by managing broad processes such as provisioning, regulation, and culture, which lead to end services that benefit organizations. However, classification terms and the ecosystem framework are not straightforward (Wallace, 2007, pp. 238-239).
Wallace (2007, p. 240) describes the challenging relationship between humans and ecosystem services. Humans obtain not only what is required to survive but also what is needed for their quality of life, which has no standard measure.
Let’s take the pulp and forestry industries as an example. Finland and Sweden are in a unique position in the EU. Unlike other EU countries, Finland and Sweden still have significant amounts of forest. Which is more valuable: to the nations or to the EU, to harvest the forest or to leave it untouched as a carbon sink? Which option has the highest value, and to whom?
Nature’s value to individuals can be very different. Using the Finnish forest example, as a private person and a summer house owner, the forest's value is related to the landscape and its ability to protect my privacy. As a private landowner, the forest's value is measured by the timber it can produce. We all obtain forest value differently at different stages of the value process.
My conclusion is that ecosystem services are becoming an increasingly popular notion among companies and policymakers in Finland as these organizations need to assess, manage, and report on their effect and place in the ecosystem. Organizations are part of the ecosystem, utilizing their assets for ecosystem services.
However, the ecosystem is changing due to climate change. Therefore, organizations need not only to plan and act towards sustainable business processes but also to predict and prepare for its impacts on ecosystem services.
Challenges and impacts of financializing ecosystems
According to my rationalization, financialization in the context of corporate sustainability involves estimating and calculating the value of something that was previously free and had no price. Nature has never had a quantifiable value until the financialization of nature transformed the way humans consider its value, drawing objects and things into the financial system.
In the "Banking Nature" documentary (2015), biodiversity is referred to as a form of natural capital. It describes how insects, animals, landscapes—essentially anything and anywhere where there is demand for nature—can obtain financial value. Even land with preserved insects is seen as an investment opportunity for banks, making nature portable by selling shares for businesses to offset CO2 emissions.
According to the documentary, the unintended consequences of the financialization of nature interfere with nature’s power system. If something has higher financial value than others, those others might suffer. The one with the highest return, such as a particular animal species, development project, or land, will receive care while others do not, even though their value might be higher to another group of people. The value of nature is speculative.
Evaluating the value of something that has no price, but high value attracts many. Something meant to be beneficial, such as planting trees without understanding local biodiversity, can eventually harm local nature by depleting the soil. It can also cause conflicts between local communities regarding what is beneficial for them and what draws financial profit from a particular ecosystem area.
Regulations
The regulatory landscape for the financialization of nature is lagging behind market developments. Financial markets for nature have existed for years, with financial companies harvesting green products that are eventually hard to track within financial markets.
Bracking (2019) describes how science-based calculations for carbon are still not reliable, as the ecological system is complex and changing. Whose figures can one trust: those from an outside evaluator, directly from the company, or through a third party?
Last, I want to close this article with two questions: Understanding the Value of Nature: Challenges and Impacts of Financializing Ecosystems
Do we actually know the impact of the financialization of nature, and is it the only way to get people to value nature?
What your thoughts?
References:
Via Découvertes, & Delestrac D. and Feydel S. (2015). Banking Nature [documentary film]. France: ARTE France.
Ken J. (2007), Classification of ecosystem services: problems and solutions. Biological conservation 139, no. 3-4.
Bracking, S. (2019), Financialisation, climate finance, and the calculative challenges of managing environmental change. Antipode, 51(3).
This article is written based on authors assignment on Corporate Sustainability course from 2023. Image created with Adobe Firefly.
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