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Book review: Transparency will be our saviour

Eric Archambeau, author of Costing the Earth: How to Fix Finance to Save the Planet, sets out his vision on how we can befriend our earth again.

By Daniel Flatt

Eric Archambeau, planet, finance
Compelling companies to report their impact on people and the planet will allow entrepreneurs to thrive, writes investor and author Eric Archambeau. (Image by BrianAJackson via iStock)
  • Eric Archambeau’s Costing the Earth: How to Fix Finance to Save the Planet details how incorporating the cost of using up our natural resources must be accounted for.
  • The book delivers a digestible and sometimes depressing review of how far we’ve come in ignoring our planet and the affect it is now having.
  • Plenty of exciting start-ups are attempting to change the narrative, but is this enough to make a difference?

If you were to pick something that symbolises our progress towards a more sustainable lifestyle, the meat-free soya-based burger might be considered a good one. Plant-based food has become synonymous with the environmentally conscious consumer: you can still have as much of what you want and it’s good for the planet too. Win-win, right?

Think again, says Eric Archambeau, venture capitalist in the agri-food sector and author of Costing the Earth: How to Fix Finance to Save the Planet. The former Silicon Valley tech entrepreneur and early-stage investor in the likes of Spotify and App Annie (now called Data.ai) says if you were to start counting the environmental cost of the intensive soya farming in the Amazon required to satisfy our new love for plant burgers, you would not feel so good about your shift away from the cow.

Archambeau writes: “To produce soya at the price that European importers are willing to pay today, Brazil has not only allowed deforestation of the Amazon at scale, but in order to increase the yield they are also using enormous quantities of fertilisers and pesticides that stay in the land and water supply long after the soya is harvested.”   

The point is: if you were to include the cost of the above in the manufacture of such products, it seems likely such companies wouldn’t be making any money, let alone be supporting a more sustainable world. The question is, how does one “price” this into the balance sheet?

Broken accounting

Archambeau argues the existing standard of financial accounting is both “dishonest” and “broken”, an archaic reporting system that poorly reflects the impact a business has on the earth and our societies. It is one, he says, that perpetuates an economic model that wilfully ignores such costs and pushes us further away from our link with nature. 

In its stead, he proposes a model in keeping with the principles raised in the mid-1990s by entrepreneur John Elkington, that of the triple bottom line: reporting on profit, people (how socially responsible an organisation is) and planet (a measure of environmental responsibility).

In short, with greater insight into the social and environmental impact a business has throughout the lifecycle of what it produces, the easier it is for governments to penalise those that cause more damage, for entrepreneurs to detect and try to solve real-world problems, and for investors to pick future leaders.

A tall order, no doubt, but Archambeau believes we now have more political and social will, far superior technology, and vast amounts of accessible data than ever before. Achieving Elkington’s vision has never been easier.

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Better data leads to better decisions. Simples

Archambeau’s central plank is predicated on the fact investors need better information, driven by greater transparency, to make more informed decisions. Between 2006 and 2011, the venture capital industry invested around $25bn into the cleantech sector and lost almost half of it. If we are to make a serious effort at saving the planet from ourselves, we need more solid foundations upon which to succeed.

Also woven into the argument is the need to take a fresh look at both why and how we invest. It’s not good enough to see the full picture; it’s what we do with it.

Take philanthropy, for example. Archambeau argues that even this charitable corner of investing is entrenched in the “status quo” of sloppy, short-term economic thinking. In what is a striking remark, he says a former colleague had estimated that of around $1trn in endowments made by grant-making foundations in the US in 2017, a mere 3% was aligned with the mission of those foundations. What the other 97% aligned with is anyone’s guess.

The case he makes in this book is compelling, well researched and deeply distressing at times. Ripe with insights about the damaging impact our most successful global industries have on the world, he coherently argues how our insistence on ignoring “nature’s balance sheet” is a zero-sum game. Earth is coming for us with a very big invoice and she wants paying.

Start-ups can change the world

As you might expect from an investor, Archambeau is an optimist. By setting our horizons further away than the next quarterly financial report and by supporting some of the most exciting start-ups set on solving these challenges, we can change our unhealthy dependence on over-farming and habit of wasting what we produce. According to the UN Environment Programme, nearly half of all fruit and vegetables produced globally are wasted, but plenty of entrepreneurs are on their way to fixing this.

But asking whether Archambeau will succeed in “fixing finance”, as the title of the book promises, is possibly being a little too hopeful.

More data, more transparency and, frankly, more compassion, will certainly make a huge difference. But the world of finance is far bigger and more entrenched in old ways of thinking than the nimble venture capital sector Archambeau knows well. Whether the Citis and JP Morgans of this world will easily let go of an economic model that has served them exceptionally well for decades without a fight is a matter of fierce debate.

And, at the end of the day, many of us don’t want to know how our meat-free burger was put together. We would rather convince ourselves we’re doing a good thing even when we aren’t. The traditional world of finance is not necessarily any different. Maybe we need more people like Archambeau to remind us otherwise.

  • Costing the Earth: How to Fix Finance to Save the Planet by Eric Archambeau is available through Whitefox Publishing.

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