12.4 Concluding remarks

A starting point for the research project was the observation of a market failure in the market for information products on corporate behaviour regarding BES, where supply and demand do not match. This topic can be studied from different angles. This chapter has provided an overview of the state of the market for BES information products and has discussed barriers and opportunities for further development. One type of market failure is the lack of a market. Based on the research it was concluded that there is a market, but that it is (still) at an immature stage. Information is being traded, but the market is limited to niche investors with an ethical orientation. Generally, the information that is purchased focuses on the impact of corporate behaviour on BES. Information on the dependence relationship is close to non-existent. A well-functioning market for BES information products can also help to correct failures in other types of markets. A common form of market failure is the problem of externalisation, i.e. when not all impacts (positive and negative) are incorporated into transaction prices, hence resulting in the circulation of false information in the market. A negative impact of corporate activities on BES is a typical example of costs which are borne by society, instead of by the company causing the impact. Ultimately, in a perfect market, such costs would have to be borne by the consumers buying the products produced by such company. The inclusion of information on BES performance could be the starting point for the correction of this market failure, which is currently the case in many markets for commodities and services. 'Perfect markets' need perfect information for all actors, hence including BES-related information. Currently, this information is not available and not integrated in ultimate prices. Finally, it was emphasised that the development of a strong business case for understanding and minimising dependence on ecosystem services would have to go hand in hand with strengthening legislation that protects biodiversity (e.g. by increasing legal penalties or requiring offsets), helps to establish a (monetary) value for BES, and stimulates corporate disclosure on BES.

Apart from the identification of various barriers, a more important conclusion derived from the research is that there is potential for growth in the BES information market. ESG Agencies and investors have indicated that especially the dependency relationship between companies and BES is considered necessary to strengthen the business and the investment case, which — in their view — is needed for the integration of BES information in investment decision-making. Asset managers and institutional investors would be interested in purchasing more information from ESG Agencies. There are already various initiatives (in progress or being developed) with the intention of filling existing gaps. Linking these initiatives and bundling efforts is important to create a catalysing effect for the development of the market. Furthermore, increased involvement by market parties is essential to get the basic mechanism of demand and supply going.

Collaborative action was the subject of the last part of this chapter. The suggestions for certain joint action initiatives proposed by the research team were tested in a workshop with participants representing different stakeholder groups. Process-wise, for action researchers, valuable lessons are: (i) the need to carefully select the participants to meet the ambitions, but at the same time to adjust the programme and the ambitions to the people actually participating in the workshop; (ii) to communicate realistic expectations, and to realise that the participants participate in the actual outcomes of the workshop; (iii) it can be valuable to communicate the results of the workshop with each of the participants some time after the workshop in order to generate feedback and reinforce their intentions to undertake action; and (iv) to facilitate and support collaborative initiatives to develop change process. Conditions can be created to allow change processes to take place, but the changes cannot be enforced and will need time to materialise, as well as resources to facilitate emerging collaboration.