Understanding a Business’ Impacts, Dependencies on the Natural World
Last month, the Natural Capital Protocol launched to great fanfare at Chartered Accountants Hall in London. The Protocol is a standardized framework for business to identify, measure, and value their direct and indirect impacts and dependencies on natural capital. That is, the earth’s stock of resources (e.g., plants, animals, air, water, soils, and minerals) that combine to yield a flow of benefits to businesses and individuals.
Understanding where a business’s most significant impacts and dependencies on the natural world lie allows for the inclusion of this information into operational and strategic decisions, and can lead to a wide range of potential benefits for businesses as well as the environment.
For example, Yorkshire Water, a water supply and treatment utility company in the UK, which piloted the draft version of the Protocol, reported that the largest benefit they experienced was in assessing options for new investments. They found that having estimates of the monetary value of different services delivered by a site can be a highly empowering internal and external engagement tool.
Such assessments could allow an organization like Yorkshire Water to invest in geographies where relevant ecosystem services, for instance services that provide fresh water or those that purify it, are robust and secure. This relieves pressure on sites where services are degraded, and minimizes any shocks that Yorkshire Water may experience if these types of local services are impaired or disappear completely. As Liz Barber, Group Director of Finance and Regulation for Yorkshire Water put it, “We have a huge dependency on, and impact on, the local environment; that’s why we support the Natural Capital Protocol.”
The decisions that the Protocol guides businesses toward cover a vast range of potential opportunities, both internal and external to a given business. For instance, Nespresso used the Protocol to explore the costs of externalities associated with coffee production, and Natura applied the Protocol to measure the benefits that their choice of sustainable ingredients had when compared to a business-as-usual scenario. In this way, the Protocol can be used to communicate positive results, as well as to identify opportunities and overcome challenges. The decisions that this information will influence will vary widely from business to business, and rely on a host of context-specific factors, such as size, industry, geography, and organizational goals.
Insights and applications of the Protocol from businesses that have piloted the draft version have been compiled into a report by the Cambridge Institute for Sustainability Leadership (CISL), on behalf of the Natural Capital Coalition.
While these insights point to promising conclusions, the true success of the Protocol will be determined by the number of businesses that adopt it, and share the benefits and challenges that it has highlighted in their organizations. Initial signs are encouraging—the Protocol has been downloaded more than 2,800 times by a hugely diverse range of organizations since its launch in July.
The Protocol provides businesses with a one-stop shop to natural capital approaches by harmonizing the numerous valuation, assessment, and modelling tools that are already available on the market. It then guides organizations toward the tools that they need in order to generate trusted, credible, and actionable information around their relationships with the natural world.
Although the Protocol simplifies this complex and often bewildering market, businesses that have little experience in carrying out these types of projects may require additional assistance in applying the Protocol, setting the right goals, or communicating potential benefits within their organizations. With this in mind, the Coalition has launched a Protocol Application Program, which will be delivered by the CISL. The aim of the Program is to build an effective, cooperative group of businesses that use the Protocol, and provide feedback and guidance on content, application, and best practice.
The Coalition will additionally be directing businesses that wish to apply the Protocol toward trainers and technical advisors who are part of the Coalition, and well placed to provide support, with many contributing to the Protocol’s development process.
As part of this drive, the Coalition has also partnered with the World Business Council on Sustainable Development to develop a Natural Capital Protocol Toolkit. The Toolkit will grow as an interactive database of relevant methodologies, tools, and approaches that can help a user to carry out a natural capital assessment, mapped against the Protocol framework. The project will build on existing efforts, such as those by Eco4Biz, Taking Stock, and BSR’s Making the Invisible Visible.
The Protocol marks a significant step toward including natural capital in global businesses’ decision making, and we’re excited to see how the space develops in the coming months and years, and thrilled to be in the middle of such an exciting movement.