How businesses are banking on natural capital

How businesses are banking on natural capital

As I travel around Rio de Janeiro as part of the Rio+20 U.N. Conference on Sustainable Development, the term “natural capital” is ever-present; this alone is a sign of progress.

Quite simply, natural capital is the limited stock of natural resources left on Earth that we vitally depend on for our prosperity, security, health and cultural traditions. And while it’s easy to understand the value in the natural capital we consume directly — such as food, animal protein and water — much of the ‘dividend’ that society receives from natural capital remains economically invisible. Often overlooked are nature’s renewable ecosystem services such as pollination and water purification— this is common ground we can all agree on here at Rio.

Preserving renewable natural capital is not a fringe issue for environmentalists. Just ask the 86 CEOs who have agreed to develop natural capital accounting methodologies to inform business decisions. In a landmark show of support for valuing nature, these companies, joined by 57 countries (so far), including the United States, agreed to place a value on, and account for, the services nature provides. This effort will change the way companies and countries evaluate their own financial health and enable them to understand the nature-based risks and opportunities from within their supply chains and national economies.

Natural capital accounting will find these previously hidden costs and enable companies to be more cognizant of the nature-based risk. These risks if not addressed will impact long-term financial health.  As Unilever CEO and sustainability champion Paul Polman said earlier this week, “We must move from a negative footprint, to a positive hand-print.” Natural capital accounting is absolutely critical to achieving this goal.

And nowhere is the issue of natural capital more important than in Africa. Since the vast majority of Africans rely directly on nature for their survival, and the continent will see an estimated one billion people adding to its population in the next four decades, preserving natural capital is fundamental to people’s health and well-being. Recognizing this, last month, in Gaborone, Botswana, CI convened a group of CEOs, civil society organizations and public agencies, with 10 leaders of African nations in Gaborone, Botswana. The result was the landmark, Gaborone Declaration, which voluntarily commits the nations and companies present such as Nestle, Wal-mart, and ArcelorMittal, to adopt five key actions, including the incorporation and reporting of natural capital accounting standards.

Photo of businessman looking at dollar tree by ScottChan via Shutterstock.

But making changes to corporate (and national) accounting is only the first step on the journey to a positive hand-print.  Conservation International believes that the next generation of corporate environmental leadership, or as economist and UNEP adviser Pavan Sukhdev says the “corporation 2020” will be those companies and industries which do the most to promote climate stability, food security, clean water, abundant biodiversity and other ecosystem services while also supporting field-level conservation and ensuring economic benefits to local communities.

To this end, CI engages partners around the world to empower and learn from smallholders (fishers, farmers and pastoralists) in a way that increases yields, protects ecosystem assets and strengthens livelihoods. Here in Brazil, the coastal residents have made a living fishing in the Abrolhos region for centuries, but now face threats from destructive activities such as industrial shrimp farming, oil drilling and dredging. CI and a grassroots network of partners demonstrated how valuing the natural capital that sustains communities can pay dividends. By creating the Corumbau Extractive Reserve with both no-take zones and areas that allow fishing, the fish populations not only recovered, they thrived — and as the fish from the no-take zones spilled over into the fishable waters, local fisherman saw an increase in fish abundance of 300% for some commercially important species.

Helping smallholders move toward long-term sustainability through improved management— such as conservation agriculture, agroforestry, holistic rangeland management and ecological aquaculture — can increase production while generating additional benefits, including enhanced carbon storage and improved ocean health.  These small interventions make substantial impact on communities and economies. In the midst of the discussions and debates over the final outcomes and impacts of this milestone summit, which we will more fully appreciate in the years and decades to come, I think it’s important to also call out the increasingly unified voice of support for valuing nature that is emerging. This will help us all turn our footprints into positive hand-prints.