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What is Natural Capital? Prioritizing it can benefit your business

Any business depends on nature to succeed. It is the obvious case of industries and other segments that use natural resources as raw material, and not so obvious, as in the case of the third sector. The relationship is not always clear, apparently financial institutions and offices rely less on natural capital (means) but, even so, use paper made from cellulose, water for everyday purposes, energy generated in hydroelectric plants, etc.

This shows that, in cases ofnatural resource crisis, everyone is harmed. A clear example of this situation was the recent Brazilian electricity crisis, caused by the severe drought that hit the southeast of the country, and that threatened the supply of companies, implying productive losses and even the availability of drinking water for the population.

Unfortunately, until recently, the general population and large corporations did not have the perception ofconsequences of the unrestrained use of natural resources. It was always thought that the resources would be there, given free of charge by nature and which could be used according to our will.

Today we are affected by the impacts caused to our way of life, due to misuse of these resources: we lost land with agricultural potential for desertification; we lost hydroelectric potential due to water scarcity and siltation; cities have huge losses due to flooding and landslides; among others.

Thus, from this legacy of intergenerational debt with thenature and society, that threatens our own model of life, it is necessary to rethink the way companies and the population deal with natural resources. Aiming to adapt the representation of nature to a world based on capital, a new social arrangement was developed, environmental and economic for interaction with nature: OCapital Natural.

Understand what Natural Capital is and – believe – your business will thank you!

What is Natural Capital?

It is a concept that sees, from the perspective of production costs, Ovalue of natural resources in relation to a product or service. The idea is to stop considering such inputs as free assets and start doing a kind of valuation/pricing of them, treating them as capital, along the same lines as we treat economic resources.

If a company depends on nature for its success, she must think about thesenatural assets as part of its capital. after all, an eventual shortage of these resources will directly affect the productivity and financial health of the businesses, also entailing risks for investors.

Why You Should Care About Natural Capital?

Using the concept ofCapital Natural and the tools available today, it's possible:

  • Anticipate future difficulties, as in the absence of a certain natural resource, for example;
  • Develop opportunities to optimize the use of natural assets in order to save costs and attract more investments;
  • Understand which features are essential for your business and prioritize them;
  • Know which resources are most impacted by your company's operations;
  • Understand the risks that the eventual scarcity of resources can bring to your business;
  • Generate a report with objective data and results of possible financial impacts, social and environmental, improving analysis at decision-making time.

What are the challenges of Natural Capital?

It is a concept that has gained weight in recent years and can help the integration of natural resources in the process of evaluating companies' investments and operations, helping to involve sectors that traditionally did not have this concern, such as the finance department and the top management of companies.

In the past there was only an approach aimed almost exclusively atecological aspect. It seemed that taking care of nature was something for environmentalists and governments, through conservation units. Such an approach did not reflect the real needs of a corporation., being overlooked in decision-making moments, since its results did not generate practical information for the company.

It was fundamental, therefore, develop a methodology that proves the impact ofmismanagement of natural assets in the company's capital, without diminishing the importance of its ecological aspect., in order to reach top management and capture the attention of leaders and decision makers.

Aiming to break this barrier once and for all, a group of renowned international institutions, gathered in a coalition –Natural Capital Coalition, worked on the elaboration of the Natural Capital Protocol.

What is the Natural Capital Protocol

The Natural Capital Protocolis a standardization document that helps business managers to have a reliable reference in order to help them reliably stipulate their own reports.. Such records take into account important points for the insertion of theCapital Natural as part of the company's productive logic.

Each business has its particularities in relation to the environmental and social impacts it generates in the community in which it operates., as well as having its own political relevance and positioning itself in a unique way in the society in which it operates..

Thus, it was important to elaborate astandard report that can be reused by different entities in order toidentify risks related to natural resources, as well as growth opportunities through these assets..

The steps of the Protocol are:

  1. Why or because": it's no use making the report empty. Therefore, ask yourself: “Why do you need a natural capital assessment?
  2. Whator what": understand how the assessment of natural capital is done and discover concepts such as: risk relationships, dependencies, impacts and opportunities arising from their analysis;
  3. How or "how": the time has come to put the protocol into practice., measuring and financially evaluating the concepts defined in step "what”, as risks, impacts and opportunities;
  4. What Next or "what comes next": it is the preparation of the action plan based on the data collected in order to insert natural capital into the company's production.

OCapital Natural is still a concept that is gaining traction, and truth, but it is becoming more and more palatable for businesses of all sizes. E, over time, the need to rethink thenatural resource management becomes more evident.

The Protocol can be accessed for freeon here, but it's interesting that you have a consultant who specializes inSustainable development to facilitate your understanding of the subject.

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