Natural capital is defined as the earth’s stock of natural assets. These assets can be renewable and non-renewable resources, including; air, soil, forests, and water, to name a few. The benefits people derive from the combined flow of natural capital have been coined ecosystem services.
Some companies have begun tracking natural capital on their balance sheet or as part of their corporate sustainability reporting strategy. There are many more companies that want to take on a similar initiative, but don’t have access to the appropriate tools to do so.
On July 13, 2016 the Natural Capital Coalition (NCC) released the Natural Capital Protocol. The protocol was developed for businesses that want to include natural capital reporting into their business strategy but don’t know where to begin. It aims to help businesses identify, track and measure their impacts and dependencies on natural capital in a systematic and credible way.
Most environmental reporting schemes focus on the impacts a company may have on the natural environment. While this is justified and important in its own right, it’s only half of the equation. As the world becomes more populated, the natural resources businesses depend on to make the products we consume become more scarce. Businesses must mitigate the risks associated with resource scarcity to ensure their businesses can continue production long into the future. By ignoring their dependence on a healthy ecosystem, future supply chains may become more expensive or they may not exist at all. Identifying these risks and opportunities early on will lead to more informed strategic planning decisions. Early adoption can also identify data gaps that can be filled with future research initiatives to ensure the company is on a sustainable path.
There is an abundance of natural capital accounting and ecosystem service quantification research available, but there is still an underlying confusion on how the private sector can implement it in a meaningful way. The protocol attempts to address this issue by applying a systematic approach to help identify where natural capital accounting can fit into the business. The overall goal is to increase awareness of how the business is dependent on healthy ecosystems and gain trust and buy-in throughout the organization.
50 different companies, spanning all sectors (food & beverage, apparel, etc.) were part of the protocol pilot test, including Coca-Cola, Nestle, Shell and Dow Chemical. Immediate uptake from these pilot users generated interest from many more businesses not originally included.
The protocol has given a starting point to the many companies that feel overwhelmed with the idea of implementing a natural capital reporting scheme. It’s created an efficient and standardized approach to addressing natural capital in a way the private sector has not yet seen before. The pilot proved there is an immediate need for this type of accounting and companies are eager to get involved.
The protocol is free to download and it is anticipated that it will help bring the importance of natural capital reporting and healthy ecosystems to the forefront of business planning conversations. Healthy ecosystems are important for many reasons. Forests supply timber and wood fiber, purify rivers and streams, and yield genetic resources. River systems provide freshwater, power, and recreation. Coastal wetlands filter waste, mitigate floods, and serve as nurseries for commercial fisheries. Ultimately the protocol will help businesses around the world better value nature in their decision-making which is a win-win for everyone.
For more information on how Silvacom can help your company utilize the Natural Capital Protocol to start a natural capital reporting program or how we can assist with incorporating ecosystem services into your sustainability reporting contact us today.