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By Stephan Schmidheiny, Federico J .L. Zorraquin
The World Business Council for Sustainable Development

The MIT Press, 211 pages, $22.50

Review by Alexander A. H. Bohtling, CPA, retired
from Deloitte & Touche LLP

Authors Stephen Schmidheiny and Federico Zorraquin are concerned about the ability of the world's financial markets to sustain development and human progress over the long-term. They are concerned whether the markets properly reflect the abuses and misuses of the environment and the wealth or lack of it of the world's population. In their own words, they ask the question, "Do the financial markets encourage a short-termist, profits-only mentality that ignores much human and environmental reality?" They see polluters going unpunished and a world's population that will grow unchecked to 11 billion sometime in the next century.

Their answer is in part the idea of eco-efficiency: increasing value added while decreasing pollution and resource use. The very simple answer will begin to emerge when the financial community rewards eco-efficiency for purely financial reasons.

While financial standards and reporting differ from country to country, special attention is given by the authors to financial reporting in the U.S. The attention is given to accounting for environmental effects so that there is the potential for rewarding those that seek to recognize the effects of environmental issues in their reporting to financial markets. The subjects of hazardous waste, including pollution damage claims related to the asbestos situation, are discussed.

While the subject of environmental pollution expenses and liabilities are reported to stockholders of U.S. corporations and in some countries abroad, this book mentions that the SEC requires additional disclosure of such liabilities in the management discussion and analysis of any "trend, commitments, event, or uncertainty that is known, cannot be determined, to not reasonably likely to occur." The book consists of 10 chapters: the game, eco-efficiency and financial markets, financial markets and development process, the company leaders, the investors and analysts, the bankers, the insurers, the accountants, the raters, and the scorecard.

Regarding the authors, Stephan Schmidheiny is chairman of ANOVO, Ltd. and is founder of the Business Council for Sustainable Development; Federico J.L. Zorraquin is chairman of the S.A. Garovaglio y Zorraquin group of companies and with The World Business Council for Sustainable Development.

In the concluding chapter--the scorecard--the authors give their opinion as to whether the financial markets are giving proper consideration to the issues of sustainable development. They conclude that if somehow they do not, "an unsustainable human population will descend toward poverty and chaos."

In your reviewer's opinion, the subject of Financing Change demands serious attention by any with a concern for the economic vitality of this global village in the years to come. The issues are enormous. *

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