The European Parliament’s ENVI committee is seeking to push through new requirements from member states on sustainability data reporting.
The EU is debating whether and how to put a monetary value on its natural ecosystems as the bloc updates existing regulation on environmental economic accounting which could provide country-by-country ecosystems data on biodiversity protection and climate mitigation and adaptation.
There is emerging interest on putting monetary valuations on sustainability data from groups such as the Taskforce on Nature Markets and the Impact-Weighted Accounts Initiative. Canadian asset manager Manulife has called on governments to establish nature and natural capital within national accounting systems, saying it would help make nature “an investible thesis”.
Brian Kernohan, Chief Sustainability Officer, Private Markets at Manulife, told ESG Investor that with sufficient data, the value of natural capital could also become an indicator for the health of an economy akin to GDP.
The European Environmental Economic Accounts (EEEA) provides open-source data to monitor and evaluate environmental policies and understand the relationship between the economy and the environment.
The EEEA system currently collects data from member states on criteria such as air emissions and environmentally related taxes.
Monetary values amendments
Draft regulation introduced by the Commission is sitting with the European Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) with its chair MEP Pascal Canfin as rapporteur.
ENVI has made several amendments to the regulation, Regulation (EU) No 691/2011, including adding ten new environmental economic account modules from which data would be collected on from member states.
These data modules include water accounts, waste accounts, circular material use rate, protection and restoration of biodiversity and ecosystems, resource management expenditure accounts, including critical raw materials and climate mitigation and adaptation.
ENVI highlights in amendments to the regulation that further data sharing from member states is needed “to ensure a collective and systemic European response to the US Inflation Reduction Act that is challenging Europe’s industry competitiveness, in particular regarding the global emerging competition for the location of value chains for green industries”.
ENVI also introduces an amendment to the regulation that each environmental economic account module should include reporting on monetary values. It also said that a year after the amendment to the regulation comes into force, the Commission should publish a methodological and feasibility study on the monetary valuation of ecosystem services.
The amendments will be negotiated by ENVI this summer, with a vote scheduled in October, with a European Parliament plenary vote in November. After which the European Parliament will enter negotiations with the European Council.
ENVI held its first debate on the draft regulation last week where Green MEP Bas Eickhout suggested the biggest discussion during the debates would be on ecosystem accounting and monetary valuation. While he agreed action was needed, he also said the activity was “politically sensitive” and would be challenging to do in practice.
Canfin acknowledged that it would be challenging but said if a value was not put on sustainability criteria such as nature or climate, it would be difficult to build a rational business case to protect it.
The UK and US are also working on national natural capital accounting as reported by ESG Investor last year.