There is a growing interest in managing costs, reducing exposure to risk and creating commercial opportunities through strategies that enhance natural capital.
Businesses are increasingly aware of their dependencies upon nature’s goods (also known as natural capital) and the flow of services they provide. However, this has tended to focus on impacts on aspects such as water usage and carbon emissions, often neglecting the other critical aspects of natural capital such as ecosystems and biodiversity.
Biodiversity represents the variety of all life on Earth: it is vital to the functioning of our ecosystems and provides a wealth of benefits such as regulating water flows, increasing soil fertility and providing pollination. Biodiversity underpins the benefits that businesses derive from natural capital and supports the key ecosystem functions that ensure the delivery of business operations and productivity.
There is growing understanding across sectors of the dependency upon the natural environment and biodiversity for productivity and resilience in production systems. Progressive companies recognise the tangible link between biodiversity and production of their raw materials – eg leather, cotton, cocoa and coffee. While there is a recognition of this dependency, there is still a dearth of practical approaches for business to measure their impacts in such a way that they underpin strategies to enhance, restore and protect natural capital.
Kering has pioneered the development of corporate natural capital accounting through its Environmental Profit & Loss (EP&L) account. This has proved to be an effective and powerful tool to help the company understand the environmental impacts of its business and supply chains. Importantly, it has enabled the design and implementation of new business models that support natural capital. Kering is currently mainstreaming the EP&L as an internal decisionmaking tool across its brands. Kering is now seeking to improve the EP&L representation of biodiversity and ecosystem services as well as improve the underlying data used to predict ecosystem impacts.
The methodology to measure corporate impacts on biodiversity and ecosystem services in the context of natural capital accounting was explored during a two-day workshop hosted by the University of Cambridge Institute for Sustainability Leadership (CISL) and Kering. Experts from conservation, academia and industry came together to explore how improved metrics and methodology can be developed, tested and then disseminated more broadly for use in investment and corporate sectors.
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