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“The Natural Capital Protocol Provides Clear Structure to Help Companies Understand & Report Business & Financial Performance Risks”

July 04, 2017 |

This interview was originally published in full on Mercados de Medio Ambiente

“Humberto Delgado Rosa is the Director for Natural CapitalDG Environment, European Commission. Previously he was Director for Mainstreaming Adaptation and Low Carbon Technology in DG Climate Action. He is experienced in European and international environmental policy, particularly in biodiversity and climate change issues. He served as Secretary of State for Environment of the Portuguese Government from March 2005 to June 2011. Between 1995 and 2002 he was an advisor for environmental matters to the Prime Minister of Portugal.

“…MMA.- Members of the B@B initiative will work during the next three years to consolidate a critical mass of companies committed to mainstreaming natural capital into their corporate strategies within the EU. What role will play in this mission the Natural Capital Protocol, a framework designed by the Natural Capital Coalition to help generate trusted, credible, and actionable information for business managers to inform decision?

HDR.- Frameworks such as the Natural Capital Protocol provide a clear structure for understanding and reporting these risks. It is a framework from business for business – and the EU Business and Biodiversity platform and its members are contributing to its further development. The protocol itself is complemented by sectorial guides addressing specific needs and cross cutting supplements under development. There we wish to actively contribute. Notably the draft supplement to the Natural Capital Protocol for the finance sector, as well as a supplement to refine the assessment methodology for biodiversity impacts and dependencies, will be central to our cooperation.

MMA.- Metrics that most companies use to measure success prioritize profitability and not the ability to protect or enhance nature. How to reverse this approach?

HDR.- I think that metric – to measure and prioritize profitability – is what businesses always have been doing and will have to continue to do, there is no point in changing that. However, it is precisely because every business wants to create greater value, be more efficient and make better decisions, that it is so important to include natural capital into their decision making. In fact if you are not already incorporating natural capital into your decision making, you are very likely to be missing significant risks and opportunities for your business.

The Natural Capital Protocol to help businesses to do just that. All companies impact and depend in their activities in some way or another on natural capital and biodiversity. The Natural Capital Protocol offers a standardised framework to identify, measure, and value these impacts and dependencies on natural capital, and thereby helps the management to reduce raw material cost, reduce risk of interruption of supply, realise efficiency gains, reduce financing cost and improve access to finance attracting investors.

MMA.- Why is it so complicated to convince the business sector that investing in natural capital conservation is also profitable and beneficial not only from an economic point of view but also with regard environmental and social perspectives? Is it a communication?, or is it about finding the business case?

HDR.- I do not think it is that complicated to explain. Think of a water supplier or beverage company that obviously depends on clean water from nature. Would you invest in it if the company had not credibly assessed, managed and secured the sustained availably of their clean high quality drinking water for the decades to come and reported on it?

Or think of companies in the food or apparel industry: their supply chains often begin in another continent; upstream they depend on sustainable production and supply directly related to agro-ecosystems; while downstream their marketing and sales depend on the trust and reputation among consumers in the ecological and social dimensions of production. The tourism sector depending on the quality of the environment and landscape or the rubber industry for tyres are further obvious examples, among many. Not managing the ecosystem services and their related supply chain risks in an integrated way endangers access to investors and bears direct financial risk.

Hence, the problem I see is not the lack of recognition of these links, which are vital for the sustained profitability, but rather the wide application and acceptance of standardised methodologies for the assessment and quantification of such dependencies. That is why I see so much value in the work of the Natural Capital Coalition, with entities such as the World Business Council for Sustainable Development and the International Union for Conservation of Nature as founding members, and the Natural Capital Protocol as such a standardised framework…”

Read the full interview at: Mercados de Medio Ambiente.

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