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The Capitals Approach is Integral to Transforming Decision-Making

May 25, 2022 |

This op-ed was written by Capitals Coalition CEO Mark Gough, and was originally published by InTent.

We live within a complex and deeply interconnected global system. At the heart of this system sits the natural world, and around it, the structures we’ve created to organize our lives and make sense of complexity. Our social and economic systems. Each of us is dependent on the value that we receive from these systems.

Flourishing communities, strong and resilient social institutions, thriving natural ecosystems and a stable climate underpin the success of businesses, nations, and global financial markets, as well as the wealth, health, happiness and identity of all people.

However, for too long, we’ve witnessed decisions made being through the lens of economic value alone. This tunnel vision has in part created the crises we now face: climate change, environmental destruction and persistent social inequity.

The Capitals Coalition was formed to establish and mainstream a consistent way for organisations to understand how their success is directly or indirectly underpinned by the value that flows from all capitals (natural, social, human and produced), empowering them to make decisions that offer the greatest value for nature and for society, alongside businesses and the economy.

When organizations are provided with the tools they need to identify and measure the value they receive from all capitals, they are able to better understand their impacts and dependencies across the global system.

This can be a watershed moment for many, who realize that issues they may have never considered, from pollinating insect populations to the local cost of childcare, may in fact influence or even directly underpin their growth or continued success.

This ‘bird’s eye view’ can change how an organization sees their activities and provides them with a framework to invest in the global system itself, offering resilience, efficiency and innovation to themselves, as well as broad benefits for people and for the natural world.

The capitals approach moves beyond corporate social responsibility and sustainability in important ways.

It focuses on only on our impacts but also highlights how we are dependent on the capitals. This shift in mindset contextualises these relationships and clearly illustrates a business case for the protection of and investment in their health and resilience.

Capitals thinking also moves beyond measurement to include valuation. Understanding the value provided to us by the capitals further highlights the significance of our dependencies, reinforcing the business case for investing in the health of the capitals and enabling us to include their value in decision-making.

The value illuminated by a capitals approach can be economic, social, environmental, cultural or spiritual, and can be expressed in qualitative, quantitative or monetary terms.

A systems approach sits at the core of the capitals approach. Actions taken in one part of the system cannot be understood in isolation. In order to reduce unsustainable impacts on the capitals and secure a flow of value from those that we are dependent on, organizations need a holistic picture of the system that they operate within, and this approach provides them with that lens.

The Natural Capital Protocol and the Social & Human Capital Protocol  provides the internationally accepted frameworks for businesses to apply a capitals approach. This is a well-trodden path and is supported by specific guidance, tools and many other resources. The Protocols are now being integrated into a single overarching Capitals Protocol which will be available towards the end of 2022.

As business adoption increases, we are also seeing a push to develop science-based targets for business and taskforces on financial disclosure for climate, nature and inequality are underway. Each is applying the capitals approach to provide clearer understandings of the risk faced by organizations and how we they can effectively mitigate this exposure and deliver system resilience.

We are also seeing high levels of interest from organizations in developing new systems to manage, analyze and interpret the flow of non-financial sustainability data that is crucial to the successful adoption of a capitals approach. The Coalition is now leading projects to digitize the flow of non-financial sustainability data and set clear rules and secure open access to this information that can be used by organizations around the world.

So, how can you get involved? The first step is for your organization to join the Capitals Coalition. Your organization will become part of a dynamic global community of leaders and leading organizations who have united around our shared ambition.

As an individual, you can join our online community to connect with leaders and practitioners from around the world, explore challenges and opportunities with peers and identify opportunities for partnership and collaboration.

If you’re interested in this approach but don’t know where to start, you can sign up for our free online business training course which provides an overview of the fundamental aspects of the capitals approach and guidance on where to start when adopting the approach within an organization.

The solution to our collective challenges is within our grasp. By recognizing that the health of nature, of people, of society and of the economy are one, we can deliver an equitable, nature-positive and carbon neutral world, for ourselves and for future generations.

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