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Framework launched to help firms value natural capital

A unique protocol designed to help businesses make more sustainable decisions by including how they interact with nature has been launched by a global multi-stakeholder collaboration.

A unique protocol designed to help businesses make more sustainable decisions by including how they interact with nature has been launched by a global multi-stakeholder collaboration.

The free-to-use Natural Capital Protocol helps businesses to incorporate ‘natural capital’ into their decision-making to give them a better idea of the risks and opportunities related to their use and dependence on natural resources.

The framework has been developed by the Natural Capital Coalition, a unique group of nearly 200 organisations, industry leaders and initiatives such as Arup, Coca Cola Enterprises, Nestle, the Food and Drink Federation and the World Bank. 

Natural capital

Natural capital is another term for the stock of renewable and non-renewable natural resources that businesses and wider society depend on. 

It is largely excluded from business decision-making and even when included has been mostly an internal measure that cannot be applied across different businesses. 

According to the Natural Capital Coalition, without natural capital on its balance sheet a company has no visibility of the resources that underpin their success and will be less likely to identify problems with resource security further down the line. 

Benefits

The protocol is applicable to any business sector, in any region and at any size, and is suitable for businesses that are new to the concept.

It helps companies to measure, value and integrate natural capital into their existing business processes and everyday decision-making through a standard framework. 

Benefits of applying the protocol may include:

  • Operational: reduce raw material costs and risk of interruption to supply from extreme weather; realise efficiency gains
  • Legal and Regulatory: identify future legislation; reduce compliance costs and risks of fines
  • Financing: reduce financing costs and increase margins; improve access to finance and attract investors
  • Reputational and Marketing: identify new revenue streams; attract and retain employees and customers
  • Societal: identify benefits and negative impacts to local communities; support a ‘social license’ to operate.

The framework is applicable to all decision makers but is particularly useful for managers in sustainability, environment, health and safety, procurement and operations departments.

Early adopters

The protocol has been piloted by more than 50 leading businesses to date.

Ian Ellison, sustainability manager at Jaguar Land Rover, said it had helped “to set clear priorities for interventions in the highest impact value chains”.

Mark Weick, director of sustainability programmes at The Dow Chemical Company, said that it was “helpful in evaluating approaches to valuation and alternatives for a secure fresh water supply”.

Peter Bakker, president and chief executive of the World Business Council for Sustainable Development, said natural capital will soon become commonplace for leading companies.

“As we move to fulfil the Paris Agreement and achieve the Sustainable Development Goals, business will need to take an holistic view and start including information on natural and social capital in the definition of performance”, he said.