The Nature Conservancy and its CEO Mark Tercek have seized on the story of
natural capital to make a pragmatic argument to business – that the global
economy depends on the preservation of natural resources and, therefore, smart
companies will get behind the environmental movement. Traditionally,
conservationists have argued that we must protect nature from people; Tercek and
his colleagues at the conservancy say we need to protect nature for people. In
his 2013 book, Nature's Fortune: How Business and Society Thrive by Investing
in Nature, Tercek, a former Goldman Sachs banker, argues that
concepts such as maximizing returns, investing in your assets, managing your
risks, diversifying and promoting innovation, in the common parlance of
business, can be usefully applied to nature.
A three-year-old partnership between The Nature Conservancy and Dow
Chemical demonstrates how valuing natural capital can benefit
business and the environment. At a big Dow facility in south Texas, the company,
with the help of environmental scientists, has figured out that investing in
natural resources such as marshes and mangroves can deliver environmental and
financial benefits that are equal to or better than those generated by
conventional pollution controls.
On the corporate level, natural capital takes the form of an exercise known
as "environmental profit and loss accounting", which requires measuring the
environmental impacts of the firm, and perhaps its supply chain as well, and
then expressing them in monetary terms. To what end, you ask?
Kering, a collection of luxury and sport brands that include Gucci, Saint
Laurent, Brioni and Puma, and an early adopter of the idea, says its EP-and-L
"serves as tool for deeper understanding and better decision-making" in three
ways: it helps direct sustainability investments to places where they matter
most, it provides an early warning of emerging risks and it enables greater
transparency. Led by its PUMA unit, Kering is rolling out EP-and-L analyses
across its business units to be published … in 2016. The company has been
talking about its EP-and-L since 2011,
a year of after Puma
pioneered the idea, and learned that its biggest impacts were created by its raw
materials, notably leather – hardly an eye-opening discovery.
But at least Trucost and Kering take the idea of natural capital seriously
enough to try to attach dollar values to corporate impacts, By contrast, the Natural
Capital Business Hub defines the concept so loosely that it lists
examples including voluntary tree-planting projects by Marriott and Enterprise,
HanesBrand decision to blend flax fibers into its cotton socks (which reduces
pressures on water) and a Lockheed Martin initiative to reduce electronic waste.
Worthwhile these may be, but if they are examples of valuing natural capital,
the concept is so broad that it risks becoming meaningless