The new study “How business values natural capital” published by the Global Nature Fund (GNF) shows that companies increasingly consider including natural capital into their accounts. Driven by internal sustainability and risk management, more and more businesses review and value their environmental impacts.Bonn, 30 June 2014
In the scope of the study, the Global Nature Fund interviewed pioneering companies about their motives to deal with natural capital and economic valuation.
The study shows that for companies, risk management and reputation are the key drivers in the assessment of corporate environmental costs. "They use natural capital accounting, to identify sustainability-hotspots in their supply chains and therewith be able to better address and reduce risk factors in the management of the company”, says Tobias Hartmann, Programme Manager at the GNF and author of the study.
When the Otto Group analyzed their supply chain in 2013, it showed that the external environmental costs add up to approximately 10% of the company’s total revenue. With this insight, sustainability initiatives can be launched, where they are most needed and most efficient. Similarly, shortages and risks in the supply chain which are due to increased impairment of ecosystems can be identified and resolved early on.
Especially in times of rising environmental and sustainable consciousness, environmental damages easily become a reputational risk for companies. Economic valuation facilitates the inclusion of the environmental perspective on the same level like financial considerations in the comparison of different production and management options. Consequently, it easily becomes obvious which product causes higher environmental costs. Thanks to this increased transparency, a company can differentiate itself from others and therewith gain a competitive advantage from sustainable economic behavior.
Especially in industries with a particularly strong direct influences on the environment, like for example mining, positive results can be used to improve the acceptance of the company in the society.
In spite of some challenges (e.g. concerning availability and quality of data), more and more companies express their commitment to address the issue of natural capital accounting in the future. Current examples of practical implementation as well as further information can be found in the study, which is freely available to download here:
The project "Economic valuation of natural capital from a business perspective – An instrument to internalize corporate environmental impact” is funded by the German Federal Environmental Agency and the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety.
For the cost of postage, hard copies of the study can be ordered from the Global Nature Fund (email@example.com).