Why is an investment banker trying to save nature?
Unlike many conservationists, especially leaders of environmental nonprofits, I didn’t spend my childhood in the late 1960s and early 1970s roaming the great outdoors. I wasn’t a backpacker, hiker, kayaker, tree climber, or bug collector. I didn’t bale hay or herd sheep. I was a city boy. Born and raised in a working-class area of Cleveland, I spent plenty of time outside — shooting baskets, delivering the Cleveland Plain Dealer, shoveling snow, mowing lawns — but not in contemplating “nature” in the grand sense of the word.
After I began my career on Wall Street, I started asking the same questions about ecology as my MBA training had taught me to apply to corporate finance: What is nature’s value? Who invests in it, when and why? What rates of return can an investment in nature produce? When is protecting nature a good investment? Isn’t conservation really about building natural capital?
Putting a value on nature is a tricky and even controversial task. Environmentalists tend to love nature for its own sake, love being outdoors, and believe their children and generations beyond should inherit a world as vibrant and as diverse as the one they experienced. These are all enormously important reasons to protect nature. A business perspective, however, reveals other, perhaps less lofty but no less important reasons to do so — for example, securing the clean water nature provides, and the timber people need to manufacture houses and furniture. Valuing nature does not mean replacing one set of compelling arguments for conservation with another, but it provides an additional and important rationale for supporting the environment.
I began to think systematically about business, business principles, and what nature really means. People generally also consider nature as something separate from themselves — something distant, out there in national parks and in the wilderness.
But bringing nature back into how people organize society, run businesses, design cities, and even how we live our daily lives can give us reason to hope.
Thinking about the value of nature leads to other ways of thinking familiar to business analysts. For example, concepts such as maximize returns, invest in your assets, manage your risks, diversify, and promote innovation are the common parlance of business and banking. These are rarely applied to nature, but they should be.
Viewing nature through these basic business principles focuses more attention on the benefits of conservation. You may not become a conservationist, but you will realize that conservation – protection of nature — is a central and important driver of economic activity, every bit as important as manufacturing, finance, agriculture and so on.
Some environmentalists can be quick to criticize organizations such as The Nature Conservancy when they build alliances with companies. They sometimes see such collaborations as consorting with the enemy. Nevertheless, in my view, seizing the opportunity to work with companies as they pursue environmental strategies to strengthen their business provides the chance to create significant conservation gains.
Companies can be good partners for environmentalists in other ways as well. Large businesses control huge amounts of natural resources, often more than governments. Contrary to popular opinion, companies can be better at making long-term plans for those resources than governments, which often get hamstrung by political divides and the short-term thinking driven by the next election cycle. Companies that have short time-horizons and neglect long term planning and investing generally lose out in the marketplace.
Most companies also do a good job of dealing with reality. For example, they tend to accept rather than deny the conclusions of science; otherwise, again, they get punished in the marketplace. There are exceptions – some bad actors in the business community seek to exploit loopholes, break regulations or mislead the public – usually in misguided pursuit of short-term gain. But in an era of increasing transparency, more companies understand that it is ultimately going to be in their own best interest to follow the rules and to try to do the right thing. They also increasingly understand that investments in nature can produce big financial returns.
Still, nothing is free from risk. Critics sometimes challenge me –– “Are you sure working with business will produce environmental benefits?” Of course I’m not sure. But I believe the stakes are too high not to try.
Mark Tercek is president and CEO of The Nature Conservancy and co-author of “Nature’s Fortune: How Business and Society Thrive by Investing in Nature” from which this article is adapted.