Nature calls: Why business needs to take natural capital into account

Businesses are "sawing off the branch on which they stand" by failing to account for the natural capital impacts of their operations, a senior member of WWF-UK has said.

“Rather than living off our capital we should be living off our interest,” Hutchings said

“Rather than living off our capital we should be living off our interest,” Hutchings said

The charity's director of advocacy Trevor Hutchings, who is speaking about natural capital at this week’s Sustainability Leaders Forum in London, believes businesses that treat natural resources such as water, forests, and metals as 'infinite' are guilty of “extreme short-termism”.

Speaking exclusively to edie, Hutchings said: “Companies that haven’t escalated this issue to board level are basically burying their head in the sand,” he said.  “The progressive businesses have already factored in these risks and are prepared for the worst.”

Sustainability Leaders

Hutchings pointed to Coca-Cola – which has a goal to replenish all the water it uses by 2020 – and luxury goods firms Kering as leaders in this area.

“Coca-Cola has a clear need for water resources to make its products and by having a strong focus on water stewardship and by identifying water risk as a material threat to the business they are safeguarding their business model and supply chain,” he said.

Likewise, Kering - whose sustainability director will also be discussing natural capital at the Sustainability Leaders Forum - has implemented an ambitious environmental profit and loss (EP&L) programme which aims to assign an economic value to the environmental impacts of the group's entire supply chain.

These types of programmes are intended to secure a businesses’ long-term future, but Hutchings’ suggested they could also provide short term benefits if Governments start to incorporate natural capital accounting into legislation, as he expects.

“WWFs view is that there are some policy gaps we would expect Government to fill and accounting for natural capital at UK PLC level is one of them," Hutchings added. "That presents a significant policy risk for unsustainable business models.”

New business models

The Conservative election manifesto included a “25-year plan for nature”, while Environment Secretary Liz Truss recently valued the UK’s natural capital assets at £1.6trn in a move that suggested the Government is taking the agenda seriously.

But a report released earlier today by environmental coalition The Aldersgate Group calls on the Government to support businesses investing in natural capital by improving policy integration to reduce costs and promote growth.

“Current business models assume that natural capital is infinite and there will never be a day where we run out of these resources,” added Hutchings. “Of course we are seeing that that is wrong and we are already exceeding the environmental limits that one planet can sustain.

“Rather than living off our capital, we should be living off our interest.”

“The most important thing is that this information is in the hands of people making day-to-day decisions in our brands. It's a business tool not a sustainability tool." 

Trevor Hutchings at edie's Sustainability Leaders Forum

Hutchings is among the expert speakers at edie’s ninth annual Sustainability Leaders Forum which takes place on Thursday, 19 November at the Hotel Russel in London. 

He will be presenting a talk on the topic: 'Why business needs to take natural capital into accountand understanding reliance on Natural Capital to reduce business risk to climate change'.

Find out more about the Forum and register to attend here.

  Brad Allen


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