Michael Walker

I read this article with some concern as I have always believed that renewables will become an ever increasing part of our energy mix. The article cites the closure of Siemans' solar division as proof that renewables are in decline. Yet from what I can gather, the primary reason for the failure of its division is due to the decline in costs for photovoltaic panels. 

The idea behind a net positive strategy is simple: businesses have both positive and negative impacts on society and the environment and in order to be net positive the negatives must be smaller than the positives. As with all policy ideas however, the devil is in the detail.

How will impacts be measured and how can they be independently verified?

Measuring impact is difficult. Whether environmental or social, there are many alternative methods of accounting for impact, all of which are subject to people's judgement.

However, even if businesses only focus on being net positive in small, easily measurable areas of their business to begin with, that's a start and something that can be built upon until best practice and industry standards are developed.

Whilst studying for my recent accountancy exams, I have naturally spent too much time thinking about tax. One question that has been puzzling me is why the rate of capital gains tax is less than income tax.

Capital gains tax is designed to reward and incentivise those who make a positive contribution to society by, for example, starting up a new business. However, the main benefactors of a low capital gains tax are land speculators. (And, in any case, there are specific reliefs designed to reward true entrepreneurs.)

Great article discussing the perils of investing in companies that are not recognising how the world's energy mix is changing.

Established in May 2012 as an advisor to the Government, the Natural Capital Committee’s (“NCC”) remit is to “...help Government understand how natural capital affects the economy and ensure that England’s “natural wealth” is managed efficiently and sustainably.” A few days ago it published its first white paper outlining a framework to help natural capital become “... hardwired into the economic decision making in this country”.

I am interested in how the NCC suggests businesses account for natural capital in their accounts. Its recommendation is:

“Business groups, leading companies, accounting bodies, land owners and managers, as well as Government should collaborate to develop and test guidance on best practice in corporate natural capital accounting.”

The white paper provides an example of accounting for the impact of Chalara (a disease which affects ash trees). It provides two methods of accounting for this impact. The first, by evaluating (future) benefits lost as a result of the disease and secondly by looking at the cost of replacing the stock of ash trees. Both methods have their issues but the a replacement cost model looks to me like a pragmatic approach that could be implemented. This is encouraging but there is clearly a long way to go before businesses can start applying this type of methodology to produce a natural capital adjusted profit. 

The paper makes clear that it is certainly easier and cheaper to preserve and maintain the natural capital assets that we have than it is to replace them. As the paper states, “...the accounting clock can not be turned back, [but] this is a useful signal about policy”. The section concludes that the NCC will engage with corporate stakeholders to promote corporate natural capital accounting. I believe that until corporate accounts accurately reflect their “free” use of natural capital we will not be in a position to move towards a more sustainable model of capitalism.