There’s a rising tide of interest in the intersection of sustainability and money—and specifically accounting and finance. The Sustainability Accounting Standards Board (I serve on its board of advisors), which was formed to develop industry-specific sustainability accounting standards, has gained ANSI accreditation and reported out from its first Industry Working Group—Health Care. Some 29 global financial institutions (though still no US banks) signed on to the Natural Capital Declaration in Rio last year, while a comparable number of global companies pledged to follow Puma‘s lead in development of “environmental profit and loss statements” and balance sheets.

The management challenge is stark. CFOs are still relatively rare players in the sustainability game, yet their active participation is essential. Sustainability is still seen as a cost by so many people who should know better. And most companies are still flying blind. As my colleague R. Paul Herman of HIP Investor, observes, most executives would acknowledge that people—what we lately call “human capital”—are any company’s most valuable asset, but if they’re to be found on the balance sheet at all they’re listed as a liability—and as an expense on the income statement! “How can you manage what you don’t measure?” Herman asks, and the same question holds for the many “externalities”—both costs and benefits—that are still absent from the world of finance but are inescapably present in the physical and biological world on which all wealth and well-being depends.

Meanwhile, China has announced plans to institute a carbon tax (and still plans to reduce carbon intensity 40% by 2025). While the impact remains to be seen, it’s a bold move in contrast to US avoidance of the issue, and is another data point suggesting a growing shift in global leadership.

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