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Putting a value on Natural Capital: the why and how

The scale of valuing Natural Capital as part of a sustainability reporting process could range from thinking about the suppliers selected to a structured accounting approach that seeks to quantify non-financial impacts with the same rigour as financial impacts. Using either approach, these assessments should feed into a high-level strategy of engraining sustainability in the operations, products and geographies of the business. Puma’s Environmental Profit & Loss (E P&L) Report is a high profile example of the financial accountancy approach to valuing Natural Capital[1].

What is Natural Capital and how does it link to materiality?

A recent study by PwC revealed that only two of the UK's 100 largest listed companies mentioned "Natural Capital" in their annual reports^[1]. There are a number of definitions of Natural Capital.  Some distinguish between ecosystems, ecosystem services, biodiversity and natural resources but broadly a consensus forms around it being an aspect of the natural environment that provides value to people.

What you need to know about techniques for monetising Natural Capital

As well as Natural Capital becoming an important part of your sustainability reporting, there is a practical approach for organisations to integrate Natural Capital into financial accounting. Using a robust monetary valuable, when market prices are obtained from exiting market structures, can be used to determine the economic value of an environmental benefit. 

An introduction to Natural Capital

Some 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 

eBook Download: “Beyond CSR Reporting: How to Value Natural Capital”

While a typical approach to reporting involves reviewing performance over the last year and assessing the next few years to set targets and goals, organisations need to take a longer term approach to ensure continued success.