COSTING STANDARD A BOON FOR ECO INDUSTRY
An item in the Business pages of South Australia's daily newspaper The Advertiser on Wednesday 20 October 1999 carried the headings used here. The journalist, Meredith Booth, asked the rhetorical question "How much is a bilby worth?" and gave the answer, "About $5000, according to accounting standard to be adopted by companies within two years."
She went on the explain the new standard (SAGARA) being adopted by the investment industry.
The issue of placing an economic value on ecosystem 'goods' and 'services' such as natural flora, fauna and resources like water is canvassed in Environmental Issues published by Cambridge University Press (chapter 2). The concepts of 'natural capital' and 'green accounting' have gain extra credence from this latest decision. One must be aware that some believe that some people in the business are more concerned about attracting investors and making money than whether 'green accounting' will actually save species. The major benefit expected by the industry is increased investment so that works of conservation can be expanded and undertaken more quickly. Some believe that in the longer term it may enhance the chance of borrowing.
As always one must investigate the vested interests of all parties involved. This is particularly true when stocks and shares are concerned as it is sometimes possible that the emphasis is placed on company value and share trading rather than the efficacy of the prime work of a firm, in this case promoting the welfare of a natural good or service.
Ms Booth, using the example of one very active eco-company the Earth Sancturies Ltd (ESL), explains what they believe are the benefits of the new "self generating and regenerating assets" (SAGARA) AASB 1037 standard.
The "self generating and regenerating assets" (SAGARA) AASB 1037 standard will dictate "living assets" be included on the balance sheet as from June 30, 2001 which will greatly benefit forestry, viticulture and aquaculture enterprises. .............., Dr John Wamsley's eco-company, the Adelaide-based Earth Sanctuaries Ltd (ESL), has become one of the first to use the standard to value Australian fauna on the balance sheet, lifting annual profit from $160,000 in 1998 to $1.15 million to June 30, 1999. Thanks to SAGARA, fauna ranging from threatened hairy-nosed wombats, rare yellow-footed rock wallabies and endangered stick-nest rats are worth between $1250 and $5000, depending on their rarity. ESL increased its population of 14 rare species across its parks by 256, which was valued at $844,750.
The "self generating and regenerating assets" (SAGARA) AASB 1037 standard will dictate "living assets" be included on the balance sheet as from June 30, 2001 which will greatly benefit forestry, viticulture and aquaculture enterprises.
.............., Dr John Wamsley's eco-company, the Adelaide-based Earth Sanctuaries Ltd (ESL), has become one of the first to use the standard to value Australian fauna on the balance sheet, lifting annual profit from $160,000 in 1998 to $1.15 million to June 30, 1999.
Thanks to SAGARA, fauna ranging from threatened hairy-nosed wombats, rare yellow-footed rock wallabies and endangered stick-nest rats are worth between $1250 and $5000, depending on their rarity.
ESL increased its population of 14 rare species across its parks by 256, which was valued at $844,750.
What the new SAGARA standard might mean for an eco-company such as Earth Sanctuaries Ltd (ESL) was suggested by some of the office holders of that group.
The company is about to release a prospectus for listing on the Australian Stock Exchange in December, a move first flagged by managing director Dr Wamsley in February, 1997. ESL's chairman, Dr Don Stammer, said the new standard would help conservation companies such as Earth Sanctuaries attract equity capital. ESL accountant and Horwath Adelaide Partnership partner, Mr Peter Gregg, said the standard would more accurately inform shareholders about the company's value but would not increase borrowing power. "Banks won't lend against it and for most people that invest in the float there won't be a great dividend growth out of it," Mr Gregg said yesterday. "But if we're going to protect the wildlife, unless we start to put a value on it, we'11 never get a chance to save them." He said a number of institutions, including Rothschild Australia's green fund and Australian Ethical Trusts, were seeking rising asset values and positive share price climbs for its investors that ESL could now offer thanks to SAGARA.
The company is about to release a prospectus for listing on the Australian Stock Exchange in December, a move first flagged by managing director Dr Wamsley in February, 1997.
ESL's chairman, Dr Don Stammer, said the new standard would help conservation companies such as Earth Sanctuaries attract equity capital.
ESL accountant and Horwath Adelaide Partnership partner, Mr Peter Gregg, said the standard would more accurately inform shareholders about the company's value but would not increase borrowing power.
"Banks won't lend against it and for most people that invest in the float there won't be a great dividend growth out of it," Mr Gregg said yesterday.
"But if we're going to protect the wildlife, unless we start to put a value on it, we'11 never get a chance to save them."
He said a number of institutions, including Rothschild Australia's green fund and Australian Ethical Trusts, were seeking rising asset values and positive share price climbs for its investors that ESL could now offer thanks to SAGARA.
The Advertiser, Wednesday, 20 October, 1999 (Business) page 43
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