Extinction Accounting: An Analysis of Petrobras' Voluntary Disclosure

Introduction

While profit-seeking motives often drive the intensified exploitation of available resources (Gupta et al., 2022), there is a mounting recognition of the imperative to acknowledge the escalating environmental repercussions on species and their habitats (Roberts et al., 2021). In response to this evolving context, the concept of extinction accounting is gaining prominence as a novel approach for companies to comprehensively assess and quantify the ecological impacts stemming from their operations (Roberts et al., 2021; Hassan et al., 2020). Simultaneously, it empowers stakeholders to gain a deeper understanding of the environmental footprint associated with a company's financial outcomes (Schaltegger et al., 2023). In this chapter, we propose to analyze how extinction accounting is included in the Integrated Report and in the Sustainability Report of an important Brazilian company, Petrobras.

Animals endure the loss of their natural habitats and disruptions in their food chains, often resulting in extinction. The Chico Mendes Institute for Biodiversity Conservation (ICMBio), and many other institutions like, the International Union for Conservation of Nature (IUCN), the Worldwide Fund for Nature (WWF), etc., maintains a list of endangered species. Nevertheless, the actual count of threatened species may surpass this figure, given the challenge of estimating the total number of existing species. Additionally, many species may have already gone extinct even before their discovery, as exemplified by the scientific survey “Mapping the Biosphere” (Wheeler et al., 2012).

The rising rates of species extinction have raised grave concerns among researchers. For instance, Ceballos et al. (2017) assert that planet Earth is currently grappling with a crisis of species extinction and a profound decline in populations, triggering a cascade of detrimental impacts on ecosystem functioning and essential societal services. While mass extinctions are a natural part of the planet's historical cycle, it is undeniable that the extent of extinction attributed to human activities - estimated to be approximately 1,000 to 10,000 times higher than previously recorded (World Wildlife Fund - WWF) - stands as an unprecedented event in human history and an anomaly in Earth's evolutionary record (Ceballos et al., 2015). In the past 65 million years, there has been no such accelerated decimation of fauna as witnessed today, sparking speculation that human overexploitation of the biosphere may trigger the planet's sixth mass extinction event (Barnosky et al., 2011; Ceballos et al., 2015; Jones, 2014; Kolbert, 2014).

Preserving ecosystems and promoting biodiversity are of paramount importance and should be treated as urgent matters. As highlighted by De Boer and Van Bergen (2012), ecosystem degradation ranks among the top ten anticipated challenges for the next two decades, underscoring the critical role that ecosystem preservation and biodiversity promotion play in ensuring the survival of both humanity and businesses. Furthermore, the report recommends that companies should increase their focus on assessing their reliance on natural resources.

Preventing extinction is a shared responsibility, and academia should utilize its resources to contribute to this effort. Extinction accounting has emerged as a burgeoning subject in accounting research, yet a singular concept to define it remains elusive. Atkins and Maroun (2018) describe it as an evolution of sustainability and biodiversity reporting, transcending the mere documentation of what a company consumes or achieves to encompass a deeper understanding of the ecological, economic, social, and ethical impacts stemming from its activities. Given that ecological losses may not always influence stakeholder decisions, it becomes imperative for companies to communicate the recognition that the absence of a particular species or ecosystem directly (or indirectly) affects their operations (Atkins & Maroun, 2018; Gaia & Jones, 2017; Russell et al., 2017).