«Natural capital approach allows to streamline operations, conduct more effective risk assessments and enhance business capability to make robust long term decisions»

Mark Gough, Executive Director of the Natural Capital Coalition, assumed his post in March 2015, both with enthusiasm and with a collaborative focus. Both traits would prove crucial in achieving success in the development of the Natural Capital Protocol; a standardized framework for businesses to measure and value their direct and indirect impacts and dependencies on natural capital.

 

"It's important to remember though that giving monetary values to natural capital, is not an end in itself, but rather it is a tool that enables informed and robust decision making", affirms Mark Gough, Executive Director of the Natural Capital Coalition.

The Coalition (formerly ‘TEEB for Business’) – currently made up of over 200 organizations worldwide – brings together leading initiatives and organizations under a common vision of a world where business conserves and enhances natural capital.

The global launch of the Natural Capital Protocol and two sector guides, (Apparel and Food & Beverage), will take place this July 13th. In this interview, Mark talks about the origin of the Coalition, and speaks on why is it so crucial for companies to include natural capital considerations in their core operational strategies, he describes the main challenges of scaling up this approach up until now, and how the Protocol addresses these challenges. Versión en español.

Mercados de Medio Ambiente.- Why did the idea of creating the Natural Capital Coalition arise? How many companies are currently part of this global initiative?

Mark Gough.- Building upon the great success of the TEEB (The Economics of Ecosystems and Biodiversity) Report, we recognized that business needed to be engaged and so formed what was then called ‘TEEB for business’ and later became the Natural Capital Coalition. Bringing together international leaders in November 2012 for its launch, we developed collaborative approach that brought together all parts of society behind a common purpose and vision of a world where business conserves and enhances natural capital.

The Coalition has continued to grow and now over 200 organizations from conservation, science and academia, business, associations, standard setting, Finance and accountancy, and policy, are collaborating on activities through the Natural Capital Coalition.

MMA.- What are the main challenges of scaling natural capital?

MG.- One of the main challenges thus far has been that the natural capital space has been quite disjointed. There are numerous methodologies, techniques and approaches, and this lack of a harmonization has been a challenge for business practitioners. The Natural Capital Protocol has been specifically designed to bridge this gap, by providing a standardized framework to measure and value direct and indirect impacts and dependencies on natural capital in business.

MMA.- Why should organizations be interested in measuring and valuing their impacts and dependencies on natural capital. To what extent does addressing natural capital benefit them?

MG.- There are many possible ways to answer this. Firstly, on a fundamental level, identifying what is necessary to keep your businesses’ operations successful (identifying what you operations are dependent on), and assessing how you are impacting on these stocks, is just common business sense and should be uncontroversial. Just understanding this alone is enough to streamline operations, conduct more effective risk assessments and enhance your capability to make robust long term decisions.

Imagine that you’re a food retailer; your direct natural capital dependencies, through your supply chain, are likely to be on fresh water, fertile soil, pollinating insects etc. It’s quite clear that without access to water, soil or pollination, the produce that you sell will not be available, and without products, your business will fail. What the Natural Capital Protocol does is to guide you through how to identify these dependencies, scope an assessment, measure and value the what this means to your business and to society, and then how to apply this and inform your decisions in this area. For example, excessive pesticide use may damage populations of the pollinating insects that you are dependent on to fertilise your crops. The Protocol highlights such relationships, and allows you to make decisions, for instance to use less pesticides in certain areas or during certain times of the year, as a way to protect your operations whilst minimising environmental damage. Of course it’s often much more complex than this and every business will have different challenges, but by having a standardized approach to follow provides consistency for businesses doing this.

It is important to note though that the Protocol is not a disclosure framework, but instead a decision making framework. Therefore at this time it does not provide consistency between different companies and sectors. Improving decisions should be the first action and then reporting the results of this change comes at a later date.

MMA.-. Some critics argue that it is impossible to put a price on that which is priceless. What do you think about this?

MG.- I totally agree that some things are priceless. It’s important to remember though that giving monetary values to natural capital, is not an end in itself, but rather it is a tool that enables informed and robust decision making. The Protocol encourages users to start by identifying the decision that they want to inform. From this they are then guided in gathering the right information to inform that decision. In some cases this will be monetary, in others it may be qualified or quantified information. For example, an operational decision about a new technology that can save water, might be informed by simply knowing the amount of water you use with no need to monetize it, whereas an investment decision to build a new factory, might require monetary figures which are comparable to the other costs and benefits you are considering. Ultimately it is not about the number, it is about improving decisions and if we keep this in mind then we are not pricing the priceless.

MMA.-. The Paris Agreement on Climate Change has been recently signed by more than 175 Parties of the UN Convention on Climate Change, which is a quite extraordinary step towards a more sustainable and decarbonized world. Among the international efforts that will be implemented to meet the agreed commitments, specific actions for the protection of the natural resources are decisive. In which way can natural capital help in this transition?

There are numerous methodologies, techniques and approaches, and this lack of a harmonization has been a challenge for business  practitioners. The Natural Capital Protocol has been specifically designed to bridge this gap framework to measure and value direct and indirect impacts and dependencies on natural capital in business

 

MG.- Natural capital underpins all environmental issues, including water, waste, energy, biodiversity and carbon. It is a process to bring them all together, compare them and understand their individual relevance to your business. It is a systems lens approach. Natural capital also provides many opportunities for tackling climate change and its effects. While many strategies around climate change boil down to reducing emissions, (and of course reducing emissions is hugely important), an understanding of natural capital allows us to take a much wider and more effective approach. Any strategy surrounding emissions should not only consider reductions, but should also consider how to manage natural capital to increase naturally occurring carbon sequestration. This can be achieved by intelligently managing forests & encouraging reforestation, by protecting and enhancing wetland and peat bog environments, by engaging in urban forestry and by protecting our oceans, among others. A recent example of this is the Dow Chemical Company’s decision to reduce air pollution around a Texas factory by planting a 1,000 acre forest. Dow identified that this would provide a financial saving, and provide many environmental co-benefits for free. By taking this multifaceted approach, and tackling the problem from multiple angles, we are far more likely to be successful in reaching our global emissions targets.

MMA.- We usually ask these following questions to all our interviewees because they are directly related to our business.

What is your opinion regarding the use of innovative market-based tools for the conservation of the environment?

MG.- Innovative market-based tools already play a significant role in addressing the environmental challenges we face. If these are designed and implemented through a collaborative approach that understands the needs of all of the different stakeholders, they stand a much greater chance of succeeding and getting to scale quickly.

MMA.- What do you think about private initiatives such as our information platform Mercados de Medio Ambiente, which is focused on researching and providing tools for integrating environmental conservation in the economy?

MG.- At the Coalition, we believe that creating the right enabling environment is fundamental for the success of new ideas, initiatives and projects. We wholeheartedly support platforms that provide this and who help to spread good ideas and give people access to the right information.

MMA.- Are you already subscribed to our newsletter?

MG.- Yes!

 

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