Study warns of 'significant risk' to businesses not managing natural capital

The economic value and conservation of natural resources must be integrated more closely into global business models, according to a study.

In order to ensure economic viability in the face of biodiversity loss, deforestation and the depletion of other natural capital, a new study released by The Economics of Ecosystems and Biodiversity (TEEB) for Business coalition, promotes Natural Capital Management (NCM) as a solution for businesses.

The study, Organisational Change for Natural Capital Management: Strategy and Implementation, is based on data from 26 businesses across nine industrial sectors - 60% of which have revenues of over $10bn (£6.6bn) - that are implementing behavioural and organisational changes to promote NCM.

The results revealed that a small but significant group of pioneering companies are moving NCM forward and expect to build it deeply into their business within the next 3 years. These companies hope to become better positioned to manage and thrive in a resource-constrained world that could have serious implications for business in three to five years.

In addition, the study found that delaying the measurement and management of natural capital carries a significant business risk for companies regarding the availability of key raw materials and maintaining competitive advantage.

In particular, the availability of freshwater, renewable energy, climate regulation, fibre and food were identified as the most important natural capital risks in the next three to five years.

According to TEEB for Business, the world is currently experiencing an unprecedented depletion of this type of natural capital.

The organisation claims the main reason for this is the economic invisibility of most of nature's services, and their resulting exclusion from most policy and business decision making.

The report singled out a number of barriers standing in the way of the implementation of NCM, including the lack of Government regulation and customer demand.

Conductor of the study, Innovastat's CEO Ram Nidumolu said: "The study highlights the activities, barriers and challenges business face in natural capital management. The data concludes that measurement is the most clear-cut challenge companies face as a barrier to development."

Conor McGlone


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