Natural Capital: The Shiny New Thing in Business

Editors’ Note: We’ve asked Mark Gough, Executive Director of the Natural Capital Coalition to share his perspectives on barriers and opportunities facing the incorporation of natural capital understanding into business decisions.

The Natural Capital Coalition brings together organizations to collaborate on activities that create a world where business conserves and enhances natural capital. NatCap and its two NGO partners—WWF and The Nature Conservancy—have been involved in the Coalition from the outset, and are among the over 250 members of the Coalition. NatCap was deeply involved in conceiving, developing, and reviewing the Natural Capital Protocol, including WWF’s work pilot testing it with The Coca Cola Company. The NatCap team is pioneering innovative new scientific approaches and tools for implementing the Protocol, for example with Kering and Unilever. And we believe that NatCap’s evolving Science and Technology Platform can play a key role in addressing the data challenges that the Coalition has identified face business in applying natural capital assessments in decisions.

The Coalition has evolved into a highly collaborative community, making great progress in harmonizing approaches and encouraging uptake of natural capital approaches by business. Emily McKenzie, on NatCap’s Leadership Team, is now part of the Coalition’s Advisory Panel. Through this, we are continuing to identify areas of collaboration, promote use of the Protocol, share ideas and best practices, and provide strategic advice. We are looking forward to further future collaboration, and encourage others to take part—by becoming members of the Coalition, applying the Protocol, and/or getting involved in other collaborative projects.

The concept of natural capital in the business community has been gaining momentum for a number of years, moving from a niche idea to the ‘shiny new thing’.

Natural capital is now entering the mainstream, and businesses around the world are realizing how crucial it is to understand their relationship with nature and natural systems.

The problem with ‘shiny new things’ though, is that, at least initially, many have no idea how to use them.

Take a piece of modern technology, for example. Imagine handing an iPod to someone who has never even used a computer. You can easily explain how useful it would be to “carry around all your music in your pocket”, but they may give you a blank stare when asked to transfer their music to the device.

Using the iPod necessitates knowledge of a number of other complex ideas, systems, and tools. This gap between conceptual understanding and practical proficiency, is that space in which natural capital currently finds itself (for the most part) in the private sector.

The Natural Capital Protocol was launched last year to help address this challenge. The Protocol was developed by a core team of 38 organizations, including the Natural Capital Project.  In the months since its release, it has captured the imagination of the private sector.

The Protocol harmonizes the many different natural capital approaches into a single global framework, specifically tailored for use among the business community. It helps businesses identify, measure, and value their direct and indirect impacts and dependencies on natural capital. The Protocol is designed to help generate trusted, credible, and actionable information to inform decisions and goes step-by-step through the process of doing this, without being prescriptive about specific assessment methods or valuation tools.

We were hoping that 1,000 organizations would download or acquire a hard copy of the Protocol in the first year. We now believe that close to 25,000 have done so already. Whilst some are using it to improve their existing work, many are coming to natural capital for the first time and are planning their first pilot of this way of thinking.

In order to cater for a growing demand for natural capital information and tools among this private sector audience, the World Business Council for Sustainable Development (a Coalition member organization) is collaboratively developing the Natural Capital Protocol Toolkit. As with the Protocol, this toolkit harmonizes the many different approaches, but takes this a step further by providing businesses with a resource to identify the tools they need to effectively apply the Protocol. This includes tools within the Natural Capital Project’s Science and Technology Platform: InVEST and OPAL. The work of the Natural Capital Project to develop and apply these tools with private sector decision-makers but also governments and communities, is a critical contribution to the Coalition’s mission.

Applying the Protocol and Toolkit is not without its challenges, though. Having the right internal skills, gaining internal buy-in, and working out how this fits into existing initiatives and strategies, for instance, can be a challenge to partners in the private sector.

To address these challenges, we partnered with the University of Cambridge Institute for Sustainability Leadership (CISL) to run a Protocol Application Program on behalf of the Coalition that supports businesses and helps to fill these gaps. CISL’s program walks participating organizations through the Stages and Steps of the Protocol, introduces them totrainers and technical advisors who can help provide necessary skills, and creates a community of practice, where experience and learning can be shared. We welcome all support from organizations with relevant expertise and capacity to be a trainer and technical advisor.

The first examples are now coming out of this program. Roche, a Swiss multinational health-care company and an early adopter of the Protocol, identified, quantified, and valued a wide range of both negative and positive impacts of natural capital in their operations. Based on the success of their pilot, Roche has determined a number of further areas where a natural capital assessment could be useful to their business, including improved understanding of the risks and opportunities related to water, food, green space, green infrastructure, and biodiversity.

In another application of the Protocol, Tata’s Jaguar Land Rover set clear priorities for interventions in their supply chains based on natural capital information. In this process, however, they also warned that natural capital assessments can involve a lot of data, not all of which is easily available or digestible at the outset. This data challenge is a common theme and one the natural capital community will need to address to be even more relevant to corporate partners moving forward.  This is one of the many places where organizations like the Natural Capital Project can continue to play a major role in reducing barriers to the uptake of natural capital information in decisions. Further improvements to the Natural Capital Project’s Science and Technology Platform will ease burdens of data gathering and analysis, which will address data barriers to uptake in business decisions. The Coalition with UNEP-WCMC and the WWF and Stanford University partners of NatCap are developing a new project to scope the data challenges facing those undertaking and using natural capital assessments for business decisions. Ultimately, we hope to co-develop guidance for business on how to overcome those challenges while making sure data providers, like the Natural Capital Project’s Science and Technology Platform, meet the needs of business.

Nature clearly shows us that everything is connected – that we cannot change one thing without affecting another. Natural capital puts this into a language that business can understand. It shows partners in the private sector how their actions are connected to the broader political and social system, to Planetary Boundaries, to the U.N. Sustainable Development Goals and Science Based Targets. I would argue that with the support and partnership of the business community, alongside that of organizations like the Natural Capital Project, we can ensure that, like the iPod, this ‘shiny new thing’ becomes ubiquitous in the global community in the months and years to come.

Sincerely,

Mark Gough
Executive Director
Natural Capital Coalition