Renewable by nature: Ensuring resources for today and tomorrow
The Alliance for Beverage Cartons and the Environment (ACE) UK CEO Richard Hands considers the concept of natural capital and the value business should be placing on it
Created to ensure that government has a better-informed understanding of the value of natural capital, and reporting to the Economic Affairs Committee (chaired by the Chancellor of the Exchequer), the Natural Capital Committee has the opportunity to truly influence the economic policy of the UK for the good of the natural environment.
But what is natural capital? Natural capital refers to the indispensable resources which occur naturally in our ecosystem. These are critical for human survival, and there are four basic categories which are generally recognised: air, water, land (including soil, space and landscape) and habitats (including ecosystems, flora and fauna).
From this, the model of natural capital accounting has developed, which places a monetary value on our environmental resources. As an alternative to the traditional production-focused GDP, natural capital accounting values natural resources as accurately as possible so that the costs and benefits of conserving or destroying them can be included in national accounts.
This system of accounting acknowledges the value natural assets bring to people, and the adverse effect when assets are reduced, damaged or lost. It is a recognition that the pursuit of economic growth must not come at the expense of future growth potential.
There's a business imperative too. Our environment provides us with $72 trillion worth of 'free' goods and services each year, but its degradation costs us roughly the equivalent of 8% of GDP. With our natural resources being impacted by a range of pressures, such as damaging climate change and biodiversity loss, proponents of natural capital accounting argue that preserving these assets must become an explicit, accountable, and implemented element of policy to protect our future wealth and wellbeing.
The concept of natural capital therefore holds significant interest for all businesses. Placing a monetary value on these resources can help us understand the true worth of our economic sustainability.
The growing importance of natural capital accounting is evidenced by its discussion at Rio+20 last June and the UK Government's promise to reform its national accounts to reflect natural wealth by 2020. Even the World Bank, hardly known as an environmental champion, acknowledged in a report that current growth patterns are unsustainable because of the accompanying environmental degradation and advocated placing a monetary value on ecosystems.
The report highlighted efforts by the Thai government to place a value on its mangrove swamps. It found that removing the mangrove to create a shrimp farm might generate nearly $10,000 per hectare, but if the mangrove swamps are retained, and their importance in providing a barrier against floods is taken into account, they could be valued at more than $16,000 per hectare.
One industry where natural capital accounting might drive change most significantly, particularly as global population growth continues to put pressure on finite natural resources, is retail, which is heavily reliant on natural assets for food products, packaging, refrigeration and transport. As the market becomes increasingly competitive, it will be interesting to see how this issue plays out amongst the large grocery retailers and food manufacturers.
In the case of packaging, natural resources, and the species which rely heavily on them, do not have to be sacrificed in order for retailers to make economically sustainable decisions. Natural renewable materials, such as wood fibre from responsibly managed forests, offer a sustainable way of benefiting from natural assets while also maintaining them - and they can even contribute to biodiversity protection.
A recent study by the Royal Society for the Protection of Birds (RSPB), commissioned by ACE UK, showed that certified, well-managed forestry can help support a range of biodiversity, which wouldn't be present if forests were planted as large monocultures and not managed appropriately. For example, the study found that clearfell and replant as a forest cycle increases biodiversity in forests through the provision of temporary open space, with either an increase in the number of species, or abundance after clearfelling.
Meanwhile, the presence of small open spaces within forests has a positive effect on all groups of biodiversity except mosses and woodland plants. The main factor influencing the size of this effect is the amount of light reaching the ground within these small open spaces, therefore wider roads and rides, as well as larger glades are recommended to maximise biodiversity gains.
In Nordic countries, where the vast majority of wood fibre for ACE UK members' (Tetra Pak, SIG Combibloc and Elopak) beverage cartons originates, foresters take a number of measures to maintain biodiversity:
- Planning logging routes and preparing the ground with dead and harvested branches to avoid unnecessary damage to the soil from machinery
- Leaving buffer zones around water courses to ensure soil and debris from the banks do not fall into streams
- Leaving dead wood, a number of high tree stumps (approximately three 3m stumps per hectare are required for FSC certification) and retention trees to benefit wildlife
- Leaving forest set-asides (5% is required for FSC certification)
- Maintaining and enhancing the mixture of tree species
- Using GPS to help manage planning and 'site-adapted forestry' techniques with far greater precision
Plus, many beverage carton manufacturers and their paperboard suppliers have put rigorous traceability systems in place so that they can trace fibre back to the forest area it came from. These systems are independently verified and certified annually according to 'Chain of Custody' (CoC) standards set by the Forest Stewardship Council (FSC) and/or Programme for the Endorsement of Forest Certification (PEFC).
By scrutinising its own business practices, the beverage carton industry helps retailers and manufacturers to assure consumers that paper-based packaging using sustainably-sourced fibre is a responsible choice, which means that forests, and the species that depend on them, will thrive.
As the concept of natural capital takes hold, the grocery sector has the opportunity to get ahead by prioritising certified wood fibre and other natural renewable materials within its supply chains.