Sustainable Business Strategies: Natural Capital

Natural Capital2012 was the year in which natural capital (also called biodiversity and ecosystems services) began to get on business’ radar. This is a theme that has real staying power.  

Advice for the Corporate Sustainability Champion:

  •  Stay up-to-date with this important, rapidly developing area of sustainability. It appeals to business executives because it is easier to grasp conceptually.
  • Show why natural capital matters to your company. The way to do so is through a pilot evaluation of its materiality to business.
  • Join the coalitions that are beginning to form in this area, such as the TEEB for Business Coalition and the EP&L Consortium.

Business began to recognize the vast scale of its impacts and dependencies on nature. Nature provides $72 trillion worth of free services to the global economy every year. Yet, we’ve now significantly degraded 60% of the earth’s ecosystems and lose about $6.6 trillion in natural assets every year due to water contamination, soil erosion, drought, deforestation, overfishing, and other impacts. This could jump to $28 trillion a year by 2050.

Well-publicized corporate actions included PUMA’s Environment P&L Coalition  (which focuses heavily on natural capital), Dow’s partnership with The Nature Conservancy to launch pilots on evaluating natural capital, Unilever’s supply chain initiatives around protecting biodiversity, and hundreds of other companies that initiated ecosystems services-related projects. The year also saw the establishment of the TEEB for Business Coalition to drive corporate action on natural capital.

Many organizations drove the natural capital agenda globally. WBCSD’s report on accelerating public policy initiatives around ecosystems services got attention. WRI came out with some good reports on integrating ecosystems services into business operations. BSR produced a report describing how corporate expectations around ecosystems services are evolving.

The Corporate Eco Forum (CEF) produced perhaps the best strategic report on how companies are deploying natural capital for reducing risks, cutting costs, enhancing the brand, and driving growth.

As corporate experience in this area expands, what is needed is a framework for corporate change that accelerates the adoption of natural capital in companies (Disclosure: I am leading a project in this area for TEEB for Business Coalition).