Biodiversity at the heart of accounting for natural capital: the key to credibility
Human society across the globe ultimately depends on goods and services provided and replenished by the natural environment. Today it is widely recognised that average global consumption of this ‘natural capital’ far outstrips its natural ability to regenerate.
The Natural Capital Protocol sets out guidelines for businesses to help better understand, measure, and value their inter-dependencies with natural capital and use the results for better management. However, one of the key challenges the Protocol highlights is how to incorporate ‘biodiversity’.
Biodiversity, the diversity of all living things, is a fundamental component of natural capital that underpins or influences almost every product or service we value, as well as having value in and of itself.
Its importance is often missed by organisations looking to understand and mitigate their impacts on the natural environment. Instead, biodiversity is frequently listed as just one of many concerns, alongside (and increasingly behind) greenhouse gas emissions or water consumption and other bene ts that ow from natural capital.
Biodiversity values tend to be missed or hidden in natural capital assessments, particularly when the focus is on current flows of benefits for the following reasons:
� While the values we attribute to our appreciation of nature are of fundamental importance to many, the economic techniques to quantify and monetise these values are inadequate to develop robust estimates. As a result these values tend to be missing.
� Biodiversity plays a fundamental role in ecosystem functioning and therefore underpins the delivery of all ecosystem benefits. Its role is hidden within a natural capital account, but not explicit, and therefore these values of biodiversity are not adequately visible.
� Biodiversity provides nature’s insurance, helping adapt to shocks and stresses, such as climatic change and disease. An assessment that only considers the ow of bene ts provided today will overlook the likelihood of benefits being supported into the future, and therefore these values are also missing.
� Information and data on biodiversity and its interdependencies with business also needs further investment and is often not easily available, which can also lead to values being missed.
Many of the problems of these hidden and missing values of biodiversity can be avoided by focussing on the stock of biodiversity as the asset which generates the bene ts, rather than the ow of benefits themselves. This also provides a less complex and more credible approach to thinking about biodiversity in the context of both natural capital accounting and consequent decision-making around the natural capital management.