Natural capital catching on

Corporate awareness of natural capital is growing, with four companies in the FTSE 100 now using the term in their latest annual reports, compared with only two a year ago, according to consultancy PwC.

It also reports that more than a quarter of the FTSE 100 mention biodiversity or ecosystems in their reports, but rarely with a view to potential value creation or value at risk.

The number of companies that include information on natural capital in sustainability reports is higher than in annual accounts; seven refer to it specifically and nearly half mention biodiversity or ecosystems. But even among these, recognition of natural capital as a vital business asset is rare, says Will Evison assistant director of environmental economics at PwC.

To raise the number of firms reporting on these issues, a framework and guidance on corporate natural capital accounting has been developed by PwC, together with eftec and the RSPB, and is being promoted by the Natural Capital Committee (NCC). The tool helps businesses to identify the natural capital assets that are the most important to its operations; how much of the value of an organisation relies on natural capital; and how much it might change in the future.

Meanwhile, in its third and final report before its abolition, the NCC calls on the government to demonstrate how it plans to fund its ambition to leave the natural environment in a better state than it inherited, and suggests dividing responsibilities between the private and public sectors. “Government controls many of the levers, be they taxes, subsidies or legislation, and will therefore be instrumental in ensuring the right incentives are in place. However, the private sector and civil society also have a significant part to play because they own or are ultimately responsible for the majority of natural assets,” the report states.