17 Jun 2016

The Natural Capital Coalition (the Coalition) is an international grouping of leaders from business, government and NGOs that is seeking to bring together different stakeholders with a shared vision of 'a world where business conserves and enhances natural capital'.  Natural capital is 'the stock of renewable and non-renewable natural resources (e.g. plants, animals, air, water, soils, and minerals) that combine to yield a flow of benefits to people'. Working from the premise that there is a compelling economic case for the conservation of natural capital, the Coalition has worked to create a general framework tool to analyse this in an individual business context. The Coalition anticipates resource scarcity as a critical business risk and, with this in mind, is about to launch the tool it has developed to help promote a shift in corporate behaviour by assisting companies in valuing and accounting for natural capital in a systematic way.

The Natural Capital Protocol (the Protocol) has been developed to provide a standardised framework for businesses, whether at corporate, project or product level, to identify, measure and value their direct and indirect impacts and dependencies (positive and negative) on natural capital. This information can be used to support the integration of relationships with natural resources into strategy and operations.

The Protocol has been developed by the Coalition in collaboration between 38 organisations, bringing together many existing approaches already available through a survey of 200-plus coalition organisations involved in developing, piloting or applying numerous natural capital valuation, modelling and mapping techniques.

How might the Protocol assist business?

The Protocol is supported by some sector specific guides, for example for apparel and food & beverage. Individual companies will refine the Protocol according to their own needs. It is expected that the Protocol will explain how businesses can get started on understanding the relationship between natural capital and their business. It will then set out step-by-step guidelines on how a natural capital assessment can be conducted. Running through the steps will be practical suggestions on the incorporation of the Protocol into business.

Stewardship of natural capital has the potential to bring a range of environmental, social and bottom-line benefits to landowners, whether private, public or third sector. The Protocol will explain the benefits of developing a business natural capital strategy, involving organisational agility and managing compliance with environmental legislation and future changes in regulatory frameworks. It is expected that direct cost savings will be made by implementing natural capital strategies. An improved understanding of natural assets also has the potential to help protect business continuity and mitigate threats before they affect business operations.

While each business will have its own unique range of opportunities and threats, key to developing a strategy will be to forge links between finance, sustainability and asset teams.

What happens next?

The launch of the Protocol is expected to take place on the 13 July 2016. There have been signs that the natural capital agenda is gaining traction within the UK. For example, DEFRA has signalled that it is likely to be an important part of future UK policy and may be within DEFRA's 25-year Environment Plan, which is expected before the end of 2016 (unless a vote to leave the EU prevents this). Referendum aside, DEFRA's Environment Plan may mark an important milestone in the journey towards a future in which principles for natural capital valuation and accounting become generally accepted.

The Coalition expects a high number of companies around the world to express an interest in understanding how the Protocol can help them when it is released on 13 July 2016. With the prospect of budget constraints and a growing need for efficiency savings, the opportunities offered by natural capital valuation may see the Protocol move onto or up the agenda of many organisations.

Find out more about the Coalition and the Protocol here.