Natural Capital: Seeing The True Cost of Business
A potentially game changing new tool for business has been launched at the World Conservation Congress in Hawai‘i. It’s called the Natural Capital Protocol and was tested with over fifty companies including Coca-Cola, Dow, Nestlé, and Shell. For the first time, businesses and consumers can know the true costs of production.
“We are operating a global economy that is not sustainable.”
Peter Bakker is President of the World Business Council for Sustainable Development, which works with 200 of the world’s largest companies on sustainable development.
“If you look into that, it materializes itself in climate change, or biodiversity loss, or in species disappearing, but if you ask yourself what drives this? It’s basically the economic system that we currently operate. Companies can make a profit because they do not have to pay the environmental damage, or if there are social disruptions, they don’t pay for those. That’s a fundamental flaw in the system.”
Bakker’s organization, the World Business Council for Sustainable Development, WBCSD, has spent the last several years testing ideas with major companies like Coca Cola and Dow chemical. Several years ago, they developed a model for nine billion people living sustainably on this planet, and traced prerequisites for that world. One clear theme emerged: true costs and true value needed metrics. The WBCSD became part of a coalition of 38 organizations called the the Natural Capital Coalition, which developed the Natural Capital Protocol.
“There’s a tool being launched here in The World Conservation Congress called the Natural Capital Protocol, which is a tool companies, NGO’s, scientists, have produced over the last 3 or 4 years." Gerard Bos, is Director of the Global Business and Biodiversity Program of the IUCN. "It’s going to be a language that every company in the world can use to see “How does my business influence, impact nature?” What damages do we do? What benefits do we create? How do we measure these things? And once you can measure them, how can we manage them? That needs to come out in the reports of companies. How well do you do this? So a consumer can compare one company to another because we all use the same language.”
“We have developed so rapidly, and we have developed without really considering there are limits to the planet,” Bos continues. “But the World Business Council for Sustainable Development came out with a vision of 2050 about two or three years ago, and they identified there is a limit to growth. They came up with a vision of nine billion people living well within the limits of the planet. They then looked at what are some of the “must haves” in order to get there. What was very interesting was the theme of “true value, true cost” came out. What, really, the Natural Capital approaches are trying to do is make the invisible more visible to the economic world.”
When you think of it, nature underlies everything on the planet, and few of us have calculated our personal cost to the environment. “I would actually advocate that every single entity, individual, or organization should fall under that," says Bos. "Just take the air we breathe, the food we eat, the water we drink, these are all goods and services we are getting from nature and for them moment they are not valued at what they really bring to humanity.”
“It’s not about putting a price on nature, that I know is a big internal debate at IUCN. It is what kind of mechanisms do we have so that we can trigger the right changes.”
“Mother Nature is not sending invoices. It will have to come from government,” says Mr. Bakker, referring to incentives and possibly sanctions. Now, finally, there is a baseline for action. Natural Capital Protocols allow businesses to calculate their true costs and benefits to the environment, and Bakker contends this information should be equally as important to companies as their financial reports. They will be, as consumers evolve.
"Ultimately it’s making a decision on better information. Today you or I do not know enough about the products we use, or companies about the impacts that their businesses have on nature, to really know that all our decisions are consistent with what nature needs. Better information is the only way to sort that out, to compare, to shame the ones who are not yet good, to put the ones who are good in the spotlight for being great, and to then, move the system.”
You’re a business man, you’ve talked with hard nosed business people, is this a hard sell for their shareholders?
“Separating people out between I’m a shareholder, I’m a hard-nosed businessman, I'm from government, I’m in science, I’m an NGO, we should stop doing that. The concept at the end of the day is very simple.”
“We live on a spaceship and it’s called planet Earth. Our spaceship is not doing too well. There is more plastic in the ocean than there is fish. the atmosphere is being poisoned by the gases that we put up there. It’s all of us fishing in those oceans. We have to recognize only all of us working together can solve those issues.”
What’s going to make us realize that?
“There is a good chance that people will only wake up when something very bad happens that has never happened before. Whether we implement today or after the bad storm, we know what the better way of doing business will be. We know what we have to do.”
At the IUCN World Conservation Congress in Honolulu, Bos says he sees business looking to environmentalists for answers. In addition, he says some of the best work is being done on a small scale, at community levels. A closer examination of production and distribution could lead to far better systems of operation for all sorts of businesses, as well as unexpected opportunities.
“It will change,” says Bakker. “It’s a few years away and then children will be educated in a way they don’t buy products that are bad for them or bad for the planet anymore. And companies, if they don’t act out of moral leadership or because they think risks are real, they will react to consumer patterns.”
“Can we save the world? It’s a big question. Do we know enough to know there is a real urgency to try it? Yes. Absolutely we know enough. We don’t need to study anymore to know the planet is under pressure. We know everything we need to know to know the climate is changing and humans are changing it. So I think we know enough. We need to get on with it, and we will solve it.”
Global adoption of the natural capital protocol launched in Honolulu, will give business and people like us the opportunity to put nature at the heart of daily decisions.
Find out more through the Natural Capital Coalition or the World Business Council for Sustainable Development.