By integrating natural capital in its decision-making, a company can create additional value, manage risks and improve its reputation. Governments increasingly add natural capital criteria to tenders or require companies to disclose information. This goes both for companies that are dependent on natural capital as well as those that have a negative impact on natural capital.
Business benefits of valuing natural capital
By prioritizing natural capital in business planning and investments, companies stand to benefit in four mutually reinforcing ways:
- Reduce risk: e.g., threats to supply chains, facilities and workers in places vulnerable to extreme weather, flooding, drought, or resource scarcity;
- Cut costs: e.g., save money by reducing waste and recapturing valuable materials that otherwise could harm ecosystems;
- Enhanced brand reputation: e.g., differentiation from competitors by communicating superior purchasing, operating, or environmental practices; and
- Generate revenue: e.g., create new revenue opportunities through innovative product and service offerings that alleviate pressure on the environment or restore ecosystems.
More information on the website of the Natural Capital Coalition.
Strategic decision making
Integrating natural capital in decision making allows organisations to quantify their impacts on natural capital. Such information and knowledge enhances decision-making throughout an organisation in areas of risk management, innovation, reputation and strategy.
True Price, Deloitte, EY & PwC (2014), p. 6.
Benefits in tenders
Increasingly government tenders incorporate requirements on (sub-topics of) natural capital. For instance, the Dutch government agency Rijkswaterstaat – responsible for the design, construction, management and maintenance of the main infrastructure facilities – gives bonus points to suppliers that reduce their CO2 emissions.
Visit the website of Rijkswaterstaat for more information (in Dutch).
Disclosure legislation
For certain companies active in the European Economic Area the ‘Directive 2014/95/EU on disclosure of non-financial and diversity information’ requires disclosure of risks and outcomes regarding environmental matters and several other social topics.
Read more information on national and international policy and regulation on natural capital at “EU Directive on Non-Financial Information”.
