Putting a Value on Natural Resources
Overnight the World Business Council for Sustainable Development launched the Natural Capital Protocol.
What does that mean for us here in New Zealand?
With 13 of our top 20 export commodities depending on natural resources and more than 70% of our export earnings, we are a nation heavily reliant on the products and services provided to us by nature.
The services nature provides – such as water purification, carbon sequestration, flood minimisation, pollination and so on - are unarguably highly valuable to business. But, businesses’ dependence on these services and thus their value is not accounted for on any balance sheet. And how can a business fully understand and respond to all risks or opportunities for its business if it isn't able to value this 'natural capital' it relies on.
The challenge for businesses is finding ways to usefully account for these important non-financial values. To date, there has been no generally accepted, structured way to include this information in board papers or to use it to inform management decisions.
And that's where the Natural Capital Protocol comes in. It provides a framework to enable businesses to value natural capital in consistent ways. And it's already been piloted by 50 companies worldwide.
As the regional partner of the WBCSD, SBC will be working with businesses to adapt and use this Protocol here. It builds on the Ecosystems Services Review method (ESR) which a number of New Zealand businesses have already used with SBC’s guidance and assistance.
A good example is Aotearoa Fisheries Limited which was concerned about mass die-off of kelp in the Marlborough Sounds. Up to 70% of kelp has gone, seriously threatening local pāua and other marine life which rely on the seaweed for food and habitat.
Aotearoa Fisheries completed an ESR of its local pāua fishery which revealed, among other threats to pāua, that sedimentation from land-based run-off in deforested hills around Marlborough Sounds was a severe impact affecting the kelp habitat. Whilst in other locations where coastal native forest remained intact, there were more productive pāua ?sheries.
As a result, the company is now working with the Department of Conservation, Crown Research Institutes and other primary industry businesses to inform decisions around how land use activities can address the issue of sedimentation.
SBC is proposing to work with at least 40 New Zealand companies over the next four years as exemplars for other businesses on how to improve business decision-making by taking a structured natural capital approach to scoping, measuring and valuing their dependencies and impacts on natural resources.
If this is an approach your business would benefit from, contact SBC through www.sbc.org.nz.
Sustainability :: Impact :: Strategy :: Transformation :: Regenerative Design :: Systems-thinking
8 年Great work. I look forward to seeing the Protocol in action and a new paradigm of integrated business thinking and design. It's a perfect fit with the Natural Step approach and just sing out if we can offer any support.
Broad spectrum strategy, planning, & holistic design at the intersection of natural, human & information systems ?? ?? ??
8 年Natural capital drives from components of the lithosphere, hydrosphere, biosphere, and atmosphere and includes systems such as geography and ecology. There is a tendency to exclude the lithosphere component which includes the "long-lived" commodities such as minerals, aggregates, coal, and petroleum including natural gas. Ideally natural capital is managed in a holistic fashion.
Partner @ KPMG New Zealand | Strategic Advisor | Transition Catalyst | Sustainability | Climate | Nature | Fellow @ IEMA | Chartered Environmentalist
8 年Nice post Abbie, couldn't agree more that New Zealand businesses need to better value the natural capital that it is reliant on both directly and indirectly (consider for example the impacts of hydropower generation) and integrate this value into better decision making. Better valuation of natural capital also ties in nicely with the Integrated Reporting (www.integratedreporting.org) framework that is getting more and more traction with investors who want to see that businesses have an understanding of the breadth of aspects that are contributing to their core value creation activities and have processes in place to manage the associated risks to these capitals. There's also a strong tie with climate resilience/adaptation given that these climate effects are likely to impact on the natural environment most strongly and most immediately. The study with Aotearoa Fisheries reminds me of a recent article highlighting that climate-related ocean acidification could mean that mussels are less able to grip onto rocks and rope, impacting on aquaculture (see ow.ly/mGgM301YswL).