Coalition Backs Natural Capital Framework

by | Jun 4, 2014

NCCThe Natural Capital Coalition — a multi-stakeholder coalition whose business signatories include Coca Cola, Kingfisher and Dow Chemical — is seeking to create a framework to standardize how the economic value of natural resources is accounted for and valued.

The Natural Capital Protocol is supported by, among others, the United Nations Environment Programme, the World Bank’s International Finance Corporation, and the accountancy profession represented by the Chartered Institute of Management Accountants, EY, the Institute of Chartered Accountants in England and Wales, the International Federation of Accountants and Accounting for Sustainability.

During 2014 and throughout 2015, the coalition will develop and pilot test the Natural Capital Protocol. Other business partners include FMO, IDB, Patagonia, Perrigot and National Australia Bank.

According to report released by Chartered Institute of Management Accountants we are using 50 percent more natural capital each year than the earth can replenish.

Accounting for natural capital: The elephant in the boardroom also estimates that by 2030, we will need the natural capital equivalent to two planets to sustain ourselves. Yet, most businesses, which are significant users of this natural capital, do not account for the resource depletion in their financial growth plans.

There are, however, some notable exceptions mentioned in the report:

In April 2011 sportswear company Puma announced it would to publish the world’s first environmental profit and loss statement for all its operations. The initial results, which were released in May 2011, valued the greenhouse gas and water consumption impacts of the company’s operations and supply chain at €94.4 million ($133.5 million). The company continues to quantify its environmental impacts in this way, the report says.

Coca-Cola has a 2020 target of replenishing all water used in its finished beverages as it, in common with many other companies,  sees water scarcity as a key business risk. The company missed a 2010 goal to return to the environment all water used in its manufacturing process in, but remained track to improve its water use ratio 20 percent by 2012, according to figures released in 2011. 

Dow Chemical Company is analyzing its impacts and dependencies on ecosystems at its joint venture production site in Santa Vitória, Brazil. The company is using the the pilot project to test how it can weigh how best to value economic services it receives from nature, the report says.

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