Economic Valution of Natural Capital

 
 

Official Project Titel:

 

 

Project Duration:

 

Supported by:

Economic Valution of Natural Capital – A Tool to Internalize Corporate Ecosystem Impacts?

 

April 2013 – June 2014

 

German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), German Federal Environmental Agency (UBA)

 

Background

Because of its nature of a common public good, the conservation of biodiversity and ecosystem services is especially seen as a governmental task. Usually, enterprises don’t pay for their consumption of biodiversity and ecosystem services due to their normal economic activity. Accordingly these factors don’t go down in their entrepreneurial accounting and there are only a few efforts to assess environmental impacts of enterprises or the possession of natural capital.

 

Since 2011, interest on the “worth of natural capital” is growing and there has been a lot of movement in the world of business. The World Business Council for Sustainable Development (WBCSD) published the Guide to Corporate Ecosystem Valuation, a guideline how enterprises should proceed by evaluating ecosystem services. Afterwards, in may 2011, the fashion- and shoe-producer PUMA from Herzogenaurach media effectively published its ecological profit and loss account to present itself as an environmental-economic pioneer.

 

During previous approaches of enterprises to enhance the ecological worth, two different procedures can be recognised. First, an environmental-economic evaluation can be used to find support in an internal decision-making. The range of application reaches at the moment from Holcim, a construction materials group that made an ecological cost benefit calculation for the enlargement and subsequent renaturation of a mining site to AkzoNobel, a chemical industry which could compare two different fabrication methods with the monetary evaluation of environmental impacts.

 

Otherwise a case like PUMA and the parent group PPR can show that the whole ecological performance of an enterprise can be properly focused. The sustainability of a brand can, on the basis of environmental ecological evaluation criterions, either be proven or rebutted and can prospectively be compared with the performance of competitors.

 

In its ecological cost benefit calculation PUMA observed the five subjectively most relevant environmental indicators: Greenhouse gas emissions, water consumption, land consumption, air pollution and waste generation. Not only the Bavarian headquarter but all stages of the value chain were observed, even till the production of the raw materials like cotton and leather in South America and Asia.

Goals

  • Companies get sensitised for the fundamental advantages and disadvantages of the monetary exploitation of biodiversity and ecosystem services as well as for the accessible methods and know how to use this instrument for their entrepreneurial decision-making.

  • Authorities and representatives get informed about the topic too and receive concrete recommendations about which measures can be taken by politics to integrate incentives for a responsible evaluation and validation of nature capital inside the management of companies.

  • Through raising awareness for the topic a contribution to see nature not only as a free factor of production but as an elementary basis of life and economy is made. This needs to be protected from the entrepreneurial view and to be integrated in the economic system of financial control

Project activities

The economic assessment of natural capital has the potential to motivate companies for sustainable growth and to integrate external environmental costs. But the few practical examples show that many hurdes have yet to be overcome. Especially there’s no standardized method so it’s unclear for interested companies which approach they should chose. This leads to a huge variety of results that make a comparison of single results impossible.

  • Within the framework of the project, consisting examples of assessments of nature capital are evaluated, advantages and disadvantages of the methods are analysed and recommendations are made. Additionally , policy-recommendations are developed to present the legal framework which is necessary to support the application of economical evaluation tools.

  • Technical discussion:

    In a technical discussion experts from different sectors shall gather to discuss the advantages and disadvantages as well as the furture perspective of the economical evaluation. For this, selected representatives from the academic sector, which are working scientifically with this topic as well as representatives of companies, which have gathered relevant experience or have otherwise been pioneers in the sector of sustainability management, are involved. Complementary accountants and auditors are invited to implement experts on the integration of natural capital in entrepreneurial systems of financial control as “translators”. The results are published as a workshop documentary and implemented in the study and the policy paper. This happens in the first half-year of the project.

  • Presentation of results and media work:

    A special publication in a renowned business magazine is planned, as well as continuous media work and the presentation of the results at relevant Events.

Contact

Stefan Hörmann

Global Nature Fund - Office Bonn

Phone: +49 - (0) 228 - 184 86 94 - 11

E-mail: hoermann@globalnature.org

 Study: How Business Values Natural Capital

Supported by:

 Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) as well as Federal Environmental Agency (UBA)