Whether it’s the production of food and drink, clothing, shelter, transportation or personal communications and computing devices – world economies and societies ultimately depend on the health and integrity of Earth’s ecosystems and the natural resources and services they provide. The headlong quest for economic growth and unprecedented expansion of the human population has increasingly put that health and integrity at risk, threatening the sustainability not only of businesses and economies, but that of modern societies in their entirety.
Increasing natural resource scarcity — agricultural, water, energy and mineral — and the negative impacts of economic activities on fundamental ecosystems services and biodiversity is a reality that societies and business executives are increasingly being forced to confront. So is a fundamental flaw in economic theory – the failure to fully integrate environmental and social externalities into the determination and accounting of business costs or into management decision-making.
A holistic framework for economic and business decision-making that internalizes externalities and addresses these issues is emerging in the form of natural capital accounting and management, an attempt to factor the value of ecosystems services and biodiversity into business accounting and the decision-making calculus, however.
What value can be placed on natural grasslands, wetlands, forests, mangroves or coral reefs?
What’s lost and sacrificed, and what risks and vulnerabilities are increased, when mangroves or coral reefs are degraded or destroyed to make way for coastal real estate development? When old growth forests are cleared to make way for agriculture, housing or commercial properties? When fragile high mountain ecosystems, including their water resources, are disrupted and threatened by mining? When the quantity, health and vitality of soils are degraded by application of synthetic fertilizers, herbicides and pesticides?
These are vexing questions and issues that economists have traditionally considered externalities and conveniently shunted aside. They’re precisely the questions and challenges proponents of natural capital are now striving to address and resolve.
For the past 18 months, executives from leading European and international businesses have been working together with the Cambridge Programme for Sustainability Leadership (CPSL) under the banner of the University of Cambridge Natural Capital Leaders Platform to develop a web-based “toolkit” that will enable businesses of all kinds to systematically incorporate natural capital metrics and methods throughout their organizations.
Dubbed E.Valu.A.Te, Cambridge Natural Capital Leaders Platform members, including Anglo American, Olam International, SAB Miller and CPSL, launched the online natural capital toolkit at an event – Second Nature: Embedding the Platform’s Shared Innovation into Business – hosted by The Royal Society in London, November 26 in the wake of the inaugural World Natural Capital Forum, which took place in Edinburgh, Scotland November 21-22.
Polly Courtice, LVO and director of the Cambridge Natural Capital Leaders Platform (CNCLP) succinctly explains natural capital’s conceptual underpinning and how businesses can use E.Valu.U.A.Te to make the concept work for them and all stakeholders, from investors to the communities in which they operate.
Many of the goods and services provided by nature are currently not paid for, nor are the impacts of business operations compensated for; this leads to inefficiency and over-use. By translating the environmental impacts of business activities into a monetary value, the scale of the issues and the return on investment becomes evident; this enables the trade-offs required to protect natural capital to be more easily assessed.
“By understanding the relationship between natural capital and business performance, companies can conceive of strategies to minimize and mitigate risks, while generating value through improved resource efficiency, reputation and sustainability based innovation.”
The variety, and scale of operations, of CNCLP members speaks to the fundamental importance ecosystems, biodiversity and natural capital provide to their businesses, not to mention human society as a whole. In addition to Anglo American, Olam International and SAB Miller, Anglian Water, ASDA Stores Ltd; Grupo Andre Maggi, Kingfisher, Ingredion Inc., Mondelez International, Mars Inc., Nestle S.A., and Volac International also participated in developing the web-based natural capital toolkit.
Incorporating natural capital concepts and tools into management of agricultural value chains has been a focal point for Platform members. As Nestlé executive vice president Jose Lopez explained,
The greatest challenges are in reducing the impact of our complex value chains, helping farmers to make agricultural production more efficient while preserving the natural capital that delivers the ecosystem services we all rely on…In CPSL we have found a network of like‐minded companies and thought leaders through which we are committed to contribute to this defining challenge of the 21st century.”
SAB Miller senior vice president, Andy Wales, elaborated on the motivations driving the Natural Capital Leaders Platform initiative forward.
“The inter-connectedness of all resources means that issues such as water scarcity, food and energy security cannot be addressed in silos. As global populations continue to grow, managing the relationships between water, food and energy is only going to become more critical,” Wales was quoted in a press release.
Added Martin Roberts, director of the University of Cambridge Natural Capital Leaders Platform,
“The tools we are launching today are the culmination of 18 months of collaboration between companies, business experts and academics. They are designed to advance businesses’ understanding of the growing pressures on global natural resources and enable companies to respond to resource challenges with approaches that mutually benefit the environment, business and other stakeholders.”