Terra Carta: Magna Carta for our Times

Robert McGarvey
January 15, 2021

The Prince of Wales has thrown down the gauntlet: inviting business leaders to sign “Terra Carta”, an Environmental Charter that will unite business leaders around harnessing “the irreplaceable power of nature”.

The references to Magna Carta (1215 AD) are obvious and intended. Magna Carta established the modern principle that naked power alone would not rule. From that point forward (at least in theory) political power would be subservient to society and the law. 

In practice Magna Carta set the Anglo world in motion; slowly, over many centuries, political rights, then rights of property and other human, civil and social rights started expanding into all sectors and classes of society and backed by Magna Carta these rights became solid enough to withstand sudden changes in the political landscape. 

If Terra Carta achieves a fraction of the authority of Magna Carta it will - likewise - set the world in motion, this time elevating environmental rights equally, aligning corporate investment behind sustaining a healthy living planet for all.

Terra Carta will, of course, be criticised as ‘just a piece of paper’, but then so was the original ‘Magna Carta’. But, if this document is to attract the $7 billion in new investments, it needs to be more than simply a grand gesture, it needs to include a mechanism to change the system - and given that time is short, words are not enough. 

The implementation of normative economic and accounting principles will be needed to provide the institutional authority to reverse present corporate incentives so they align behind the achievement of Terra Carta’s honourable goals. Indeed, normative principles can be a golden thread that runs through the 'how' to implement and accelerate Terra Carta's Statement of Intent. 

Rethinking Capital’s innovations in normative accounting for intangibles will collateralise intangible assets thereby opening new capital market channels to the innovations needed to be scaled to enable the transition in parallel. 

In tandem with the unique carbon liability accounting, normative systems will allow investment to flow seamlessly towards “low greenhouse gas emissions, climate-resilient development and Natural Capital/biodiversity restoration (on land and below water)”.

Normative accounting’s specialised technology-based intangible asset collateralisation strategies could help ‘oxygenate’ the SME sector, financing the new technological wonders that will be needed to “achieve the transition to net zero and biodiversity/Natural Capital restoration.”

Perhaps most importantly of all, normative governance is rooted in the concept of ‘stewardship’, not market determinism. This tectonic shift in priorities provides the means to fundamentally alter corporate values and in partnership with accounting changes, to financially reward investments in socially desirable goals - reversing present trends. 

Taken together the normative revolution will help Prince Charles achieve his goals and ennoble his mission. Then this document will join the annals of history and electrify his ambitions.  "As we strive to imagine the next 800 years of human progress, the fundamental rights and value of nature must represent a step-change in our 'future of industry' and 'future of economy' approach."

Robert McGarvey

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