New toolkit reveals natural capital costs

Sensemaking / New toolkit reveals natural capital costs

Practical guide offers companies more information on how their operations affect natural capital.

By Futures Centre / 04 Dec 2013

The University of Cambridge Programme for Sustainability Leadership, in collaboration with Mars, Nestlé, Kingfisher and other business partners, has launched an online toolkit to make it easier for companies to measure and report their use of natural capital.

Taking the form of an interactive practical guide, the toolkit, which was devised by the Cambridge Natural Capital Leaders Platform (CNCLP), uses details of a company’s current operations to create scenarios illustrating how alternative strategies would affect natural resources. This should allow the company to reduce some of the costs associated with greenhouse gas emissions, for instance, or water consumption.

Whereas environmental profit and loss balance sheets, first used by Puma in 2011, help to identify environmental challenges – such as soil health, or the availability of fresh water – they fall down on informing companies about the scale of their impact and any associated risks. The E.Valu.A.Te toolkit aims to fill this gap.

The scenarios work by comparing a ‘business case’ with a ‘counterfactual’ use of natural resources. This allows businesses to assess different management options and the net impact of their activities, relative to an alternative strategy – the impact of the introduction of a new crop or seed variety, for example, or moving from handpicking to mechanical harvesting. Counterfactual scenarios can also include a forest or other natural habitat prior to its conversation into agricultural land, allowing the company to see what kind of eco-system the site would have supported had the conversion not taken place.

The CNCLP say that the solutions E.Valu.A.Te can prompt are beneficial to both the environment, the future of the business, and current stakeholders. “It [information on natural capital costs] can improve decision making, stabilise supply chains, save costs, capture new revenue streams and inform strategy”, says Eve Zabey, Natural Capital Manager at the World Business Council for Sustainable Development. “But knowing what to measure, manage and report is far from straight-forward.”

By helping companies to review and rethink strategies, E.Valu.A.Te could at least bring a standardised methodology to natural capital accounting, and encourage companies to manage the ecosystems and raw materials they are trading on more responsibly. The alternative, as Liz Murray, Head of Scottish Campaigns and Policy at the World Development Movement, puts it, “brings the complex processes of ecosystems into the market place and leaves them subjected to financial markets.”

Photo credit: Erika Mitchell/iStockphoto/Thinkstock

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