SBC ExecutiveDirector Penny Nelson recently attended the World Forum on Natural Capital in Edinburgh last month. TheForum brought togetherleading thinkers on how business and the natural environment interact.

SBC Executive Director Penny Nelson recently attended the World Forum on Natural Capital.

The World Forum on Natural Capital event held in Edinburgh in November brought together leading thinkers on how business and the natural environment interact. It was an opportunity to compare and contrast progress and to hear the latest ideas.Leading countries have progressed quickly over the past two years:

• There’s now a much greater focus on natural capital as an economic issue
• The Natural Capital Protocol is emerging as an important framework for incorporating natural capital thinking. It builds on existing tools and frameworks to provide a standardised approach to natural capital management
• Integrated thinking and reporting is becoming increasingly important at governance level and among accountants and the finance and insurance sectors
• Natural capital measurements are leading to hard business decisions on where and how to do business
• Boards will be increasingly important in asking CEOs about strategy in this area and in particular key risks and opportunities around reputation, resource limits, and the value of natural capital to the company
• Increasing pressure for rules and pricing of natural capital to create a level playing field between the current and future generations.

Natural capital is an economic issue

Through out the conference the message was clear that the focus is now firmly on natural capital being measureable and accountable. WBCSD President Peter Bakker told the Forum business needs to be measured by its true profit and true value,which includes financial, social and natural capital. And Professor DieterHelm, Head of the UK Natural Capital Committee, spoke about the importance of having a framework that measures and accounts for natural capital. He believes natural capital maintenance needs to be at the centre of economic policy and countries need to have a balance sheet of all capitals – just like a company should. It also means dealing with the country assets that are at risk and identifying what the safe thresholds are.

How other countries and businesses are using natural capital frameworks:   

• The UK has a 25 year plan to enhance natural capital focusing on river catchments, urban areas and landscape.
• Scotland has revised its economic strategy to include recognition that protecting natural capital is critical. It is one of the first places in the world to have a natural capital index.
• The Netherlands is working with business on practical tools to measure impacts on natural capital.
• Interface Carpets is an example of a company accounting for natural capital in business decisions. After conducting a damage/cost analysis for carbon and water it determined that the cost is $1 per square metre of carpet or $40 million per year. It is now looking at regional cost differences (for example, the natural capital costs of water in China and the US are different), to work out where to manufacture carpets in the future.

The Natural Capital Protocol

The Natural Capital Coalition has launched the Natural Capital Protocol – a set of generic principles applicable across all sectors and a frame work with sector guides for food/beverage and apparel for consultation. It’s the first standardised framework for business to measure and value natural capital impacts and dependencies. 

A range of companies now testing the Protocol include Shell, Tata and Nestle. They are applying it through shadow pricing for carbon, sourcing, procurement, and scenario planning.

The New Zealand context  

SBC has along-running partnership with the Department of Conservation to help businesses better understand their impact and dependencies on natural capital. SBC worked with Aotearoa Fisheries Ltd, AECOM, Contact, Fonterra and Landcare Research to use the Ecosystems Services Review tool to assist their thinking.

In the future,SBC’s work programme will continue to focus on encouraging business to understand and manage their natural capital.

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