Business giants launch new natural capital metric

The Healthy Ecosystem Metric concept, from the Natural Capital Impact Group, aims to help companies across all sectors improve their long-term sustainability efforts by assigning value to natural resources such as water and clean air.

Applicable to any industry, the initiative will be focused at a business decision-making level and can be implemented across global supply chains, complementing existing approaches that organisations use to evaluate climate risks and economic opportunities.

The framework, convened by the Cambridge Institute for Sustainability Leadership (CISL), is aimed at increasing the number of corporations factoring a natural capital approach into their long-term sustainability strategies.

“The Healthy Ecosystem Metric will, for the first time, provide companies with an indication of the magnitude of the impact they are having and where there are opportunities to reduce their impact through their operational decision making,” CISL’s director, Gemma Cranston, said.

“This is only possible by helping them to understand the connections between natural resources, their supply chain, consumer demand and the future value of their business.”

Previously, several think tanks concluded that the natural capital concept can be combined with conservation approaches to align business actions and environmental protection.

The Healthy Ecosystem Metric will be split into four pillars, helping companies measure their impacts on biodiversity and natural resources in supply chains and identify high-risk locations for negative impacts such as deforestation, soil pollution and high emissions.

The framework will help companies collect data on their impact with a view for this information to be factored it into future decisions on targets and KPIs. The data can also be used to help firms develop response strategies to safeguard the environment and drive improved business performance.

Measuring up

The new framework from CISL comes two years after the launch of the Natural Capital Protocol, which has a similar layout and aims, led by the Natural Capital Coalition.

Since then, most of the Coalition’s near-250 members, such as retail giant Marks and Spencer (M&S), home improvement firm Kingfisher and luxury group Kering, have either committed to using the Protocol or have created their own model.

Meanwhile, CISL last year revealed a standalone metric to create criteria that links and communicates analysis of ecosystem impacts with investment portfolio risks, so that investors could analyse the impacts of their portfolios through an environmental lens.

Despite this rising interest in natural capital concepts, not everyone is in agreement on the impacts the approach can have on business. For example, Richard Carter, head of sustainability and finance at UK brewer Adnams, claimed that natural capital accounting can be a “disaster” for sustainability professionals and is not an effective way of engaging the finance community with environmental issues.

Sarah George