Pavan Sukhdev presents his theory of sustainable entrepreneurship at Deutsche Bank

Sukhdev’s key demand: Natural capital must no longer be free of charge. Taxation must target resource use, not profits. Sukhdev explains the options that banks have for taking action and their responsibility for promoting a “green economy”.

Pavan Sukhdev


Pavan Sukhdev, formerly the Head of the Green Economy Initiative of the UNEP (United Nations Environment Programme), has redefined the gross domestic product (GDP): “For many years I have been concerned that we are not recognizing the value that nature delivers to our economies and our societies. It struck me as strange that we wanted to measure something as complex as our economy with something as simple as one number called GDP. That is what brought me to reworking the GDP: by taking into account adjustments for lost nature, adjustments for created human capital – aspects that have all been invisible up to now, both to the accounts of society as well as to the profits of corporations.” Consequentially he demands: natural capital must no longer be free of charge. Taxation must target resource use, not profits.

At the invitation of Deutsche Bank, Sukhdev presented his theory of sustainable entrepreneurship, which was also published recently as a book entitled “Corporation 2020: Transforming Business for Tomorrow’s World” . Managermagazin writes that the book could become the “bible of sustainable entrepreneurship”. The reasons that Sukhdev gives for something that sounds radical are purely economic: if the economy continues to operate as it has in the past, it will not only reach planetary boundaries soon, but it will also expose its balance sheets and profit-and-loss statements to greater risks. Therefore, he calls for new regulations according to which companies will have to calculate, disclose and also manage their impacts on the environment. In his opinion, banks in particular can make a substantial contribution towards promoting a “green economy” by recognizing the value that can be created in sustainable sectors and by supporting those sectors with appropriate credit limits and lending: “Furthermore, in our risk systems we need to understand that our value at risk is not only from credit risk and market-price risk and operational risk or reputational risk, it is also from ecological risk. Ecological value at risk is an idea, and its time has come.”

Watch the interview.

“Ecological value at risk is an idea, and its time has come.”

Pavan Sukhdev

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