Environmental marketing – and monetization

The group Business for Social Responsibility has identified a key intangible asset – environmental marketing:

How much are well-functioning environmental services like flood control and climate regulation worth to a company’s bottom line? BSR has released a new Environmental Markets Trends Report in conjunction with launching an initiative that will help companies assess the risks and opportunities of emerging markets in carbon, water quality and biodiversity. Companies taking the lead in this field are seeing increased real estate value, consistent and high-quality supplies of raw materials, more cost-effective environmental management, cheaper cost of compliance and regulatory “goodwill.”

This is not just feel-good advertising, or even brand protection (see the Christian Science Monitor story Stopping the outcry before it starts). BSR is referring to the increasing monetization of environmental services:

The emergence of market mechanisms to protect environmental services promises new business approaches to these issues. Efforts already underway are pricing environmental services, based upon the value they represent to corporations, communities and individuals. Environmental market mechanisms, already a success story in the U.S. in the 1990s, are evolving and are now trading in environmental services.
. . .
As hard, tangible value is assigned to environmental services, companies will be well served by exploring potential investments, as well as their exposures associated with them. Some companies are beginning to see increased value for their real estate, a new ability to ensure consistent and high-quality supplies of raw materials, more cost-effective environmental management, cheaper cost of compliance and regulatory “goodwill.” It is likely that in the foreseeable future, attention to these services will become similar to the attention companies give to other corporate assets, such as infrastructure. In this case, the “infrastructure” is the environmental services upon which the company relies.
(Emphasis in original)

Assigning a tangible value to intangible assets is the key. Monetization is one way of doing this (and something that Athena Alliance is looking more closely at). Non-financial reporting requirements is another (see our working paper, Reporting Intangibles). The combination should give us better tools for managing intangibles and the I-Cubed Economy.

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