17 Jul 14

An introduction to Natural Capital

Natural CapitalSome people might just see the term ‘Natural Capital’ as another bit of jargon making it’s way into the world of sustainability reporting. But actually, as a concept, it has an important role to play in supporting an organisation’s understanding of the broader environmental cost and impact of business.

We’ve recently published a new eBook ‘Beyond CSR Reporting: How to Value Natural Capital”, which takes an in-depth look at the role it has in helping organisations understand the broader environmental cost of their business.

Defining Natural Capital 

The term itself has a number of definitions. Some of these definitions differentiate between ecosystems, biodiversity and natural resources. But it is broadly used to describe the parts of the natural environment that provide value to people. At a top-level overview, it incorporates a number of terms and impact:

  • Environmental Assets

  • Natural Resources

  • Ecosystem Services

  • Ecosystems

  • Biodiversity 

Understanding the impact on business

Whilst most organisations typically reflect on sustainability performance over the previous 12 months and maybe look a few years into the future in terms of setting goals, securing long-term success in regards can mean looking and planning for the long-term. Given the significant environmental and economic benefits that can be had from effective and efficient management of Natural Capital, the long-term commitment can be seen as desirable and worthwhile. 

For some businesses, their interaction and dependency on the natural environment is far down the supply chain and therefore doesn’t seem as much their responsibility. But for other businesses, the link is much more direct to raw materials, natural resources and ecosystem impacts. Constraints on resources could become a significant risk to some businesses as the resources they need become scarce.

It can be a complicated process to map the dependencies and then accurately quantify business impacts in a relevant way for stakeholders. But it is an important factor to take into account when reporting and making business decisions. As global pressures on natural resources and ecosystems surge, a strong business model that recognises and takes into account these impacts, will become increasingly important.

To find out more download our ‘Beyond CSR Reporting: How to Value Natural Capital’ eBook:

Natural Capital eBook

 

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