Sustainability as a Moral Imperative—But at What Cost?
For many companies, sustainability is a moral obligation. Yet, it often results in higher production costs. Organic farms, in particular, employ environmentally friendly practices that may not immediately pay off financially. So how can ecological commitment lead to long-term economic viability?
Farms operating under organic principles deliver clear benefits for the environment and the climate. They avoid synthetic pesticides, preserve soil health through low-intensity cultivation, and promote biodiversity and animal welfare. Long-standing supplier relationships are also a hallmark of the sector. However, these practices come with challenges: lower yields per hectare, sometimes increased manual labor due to limited machinery use—and, ultimately, financial drawbacks. In short: what benefits the environment can weigh heavily on the balance sheet.
Accounting for Nature: A Novel Financial Approach
Tobias Bandel from the Landbanking Group introduced a forward-thinking solution: natural capital can be recorded as assets on a company’s balance sheet—not just as costs. If a farm can demonstrate that its practices yield measurable ecological value, those contributions can be entered as assets. This approach not only strengthens equity but also improves the company’s creditworthiness.
