[With Video] How natural capital drives business value while protecting our environment
July 08, 2022
Natural capital integration increases sustainability, minimizes environmental impact, and contributes to economies of scale and quality
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When you step outside, everywhere you turn you’ll find natural capital.
From a beautiful palm beach bordering crystal clear water to the expanse of a grassland prairie and riverine corridor. From a neighborhood park full of trees to a mountain range teeming with wildlife, the world is full of valuable natural assets.
As companies and investors begin to prioritize environmental, social, and governance (ESG) goals, the awareness of natural capital is growing. Simply put, natural capital is the world’s renewable and nonrenewable resources that provide a flow of goods and service to all living things. Natural capital underpins our quality of life.
Superstorm Sandy was devasting to the Prime Hook National Wildlife Refuge. How did Nature-based Solutions help with the restoration?
Natural capital includes all natural life. It can create value. When referring to non-renewables, natural capital includes things like gold and silver, oil and gas, lithium and cobalt, aggregates, and coal. For the non-renewable resources, value can be unlocked by extracting, developing, harvesting, and bringing it to market.
Renewable resources include air, land, and water and everything that lives in it. The value for renewable resources is primarily its ecosystem services. However, it’s hard to measure these values as natural capital “markets” for ecosystem services are few.
Natural capital and achieving ESG and net zero emissions goals
One of the key steps in beginning to unlock the potential value of natural capital is its integration into project decision making. Understanding the natural capital available to support project goals can lead to:
- Spotting opportunities for economies of scale
- Finding occasions to achieve sustainability
- Enhancing and restoring ecosystems
- Increasing carbon sequestration
- Protecting biodiversity and contributing to quality of life
An aerial view of the completed Prime Hook National Wildlife Refuge Marsh Restoration and Shoreline Resiliency Project.
By using Nature-based Solutions (NbS), in efforts like managing stormwater (which increases natural capital), we can offset a carbon footprint through more carbon sequestration. This is a natural and self-sustaining way to reduce carbon emissions and generate additional ecosystem services at the same time. At a time when companies are working to achieve net zero emissions, natural capital and NbS strategies offer creative and beneficial options to reach this goal. These include habitat creation and expansion, increased resiliency, and reduced impacts to infrastructure, while enhancing air and water quality. All these benefits are heightened by nature’s ability to capture and store carbon.
In the case of the Clifton Wastewater Treatment Works, carbon reduction was achieved through a targeted NbS—the addition of more than 20,000 plants. The South Yorkshire treatment plant saw a 79% carbon savings following the project.
Natural capital has the potential to generate value in multiple ways that provide direct financial impact while enhancing our ecosystem.
In addition to carbon capture, NbS and ecosystem restoration offer many communities another way to address the impact of climate change. The restoration of marshes, wetlands, and coastal shorelines reduces the risks of flooding due to sea level rise and natural disasters. The area provides habitats for fish and birds, enhances water quality, increases in natural capital, and sustains the quality of life for a myriad of living things, including humans. It also protects watersheds and secures water resources into the future.
An example of a highly successful integration of NbS is the Prime Hook National Wildlife Refuge project. This project restores this vital ecosystem following the impact of Hurricane Sandy. It also supports the protection against future hurricanes and storm events. It included more than 2 miles of beach, 38 miles of dredged tidal wetland channels, and restored more than 5,000 acres of salt marsh. Following completion of the project, the refuge continues to heal as the vegetation is rapidly expanding and providing a strong, resilient habitat in this Delaware community.
Natural capital drives value to your bottom line
Natural capital has the potential to generate value in multiple ways that provide a direct fiscal impact while enhancing our ecosystems.
- Reducing unnecessary mitigation efforts and costs. Viewing the natural capital contained within a project and measuring the ecosystem services allows us to know the project area’s baseline and determine a project’s impact. This also supports scaling of targeted mitigation to offset project impacts, including carbon footprints.
Natural capital includes renewable and non-renewable resources that provide a flow of goods and services to all living things.
- Demonstrating sustainability achievements. Documenting the increase in natural capital and ecosystem services through a NbS shows environmental sustainability. For instance, improvements to water quality enhance habitats for aquatic life. This aligns with the UN’s Sustainable Development Goal (SDG) 14: Life Below Water. These achievements can enhance an organization’s reputation as it demonstrates active commitment to these important efforts.
- Increasing biodiversity. Quantifying the natural capital and ecosystem services can support biodiversity. Integrating those services into a project can prevent no net loss and help the short- and long-term protection of biodiversity. This demonstrates achievement of the UN’s SDG 15: Life on Land and sustainment of life.
- Reducing potential environmental liabilities. It’s vital to ensure the project will not create additional negative impacts so integrating the changes can play a key role. Simply put, we want to make sure the cure is not worse than the disease. By linking natural capital and the conceptual site model to remedial requirements, we can select the right action that manages risks into the future and will not generate additional impacts to ecosystems.
- Generating value to transfer back to shareholders. Having a positive environmental stewardship reputation is essential to preserving the social license to operate. A strong reputation may influence stock values and profit and loss statements. It also supports sustainable business operations. The potential to manage day-to-day operations through targeted NbS may reduce short- and-long term costs while leading to the added benefit of meeting corporate sustainability and ESG goals.
There are many ways that the natural capital that exists within a portfolio can positively impact the bottom line. Through smart choices and integration of your natural capital, your business can achieve balancing economic generation and environmental protection.