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The commercial logic to measuring natural capital

June 2017 – The launch of the Natural Capital Protocol has led businesses to become more aware of their impacts and dependencies upon the natural environment. However, a need has been identified to link to commercial drivers to these impacts and dependencies across businesses. Simple metrics and key performance indicators that relate these two could be a next step to embedding natural capital into business operations and strategies. This working paper sets out the outcomes of a small piece of qualitative research. It explores the use of different metrics for standard business processes by sustainability professionals and their relationship to natural capital measures.

Download the working paper. 

Commercial logicPublication date

June 2017

Key findings

  • There is a lack of consistency across natural capital impacts and dependencies measurements tracked by businesses; this is most marked for dependencies.
  • Context is often not considered within natural capital measures. 
  • The metrics that companies currently use do not link well to commercial drivers; they are more aligned with compliance based approaches than commercial opportunities.
  • There is only limited guidance available to help companies link natural capital metrics to commercial drivers in business.
  • There is a need for simple metrics that enables companies to demonstrate their progress on securing natural capital that then link to commercial business decisions.

Abstract

This report reflects the outcomes of a piece of qualitative research focusing upon the use of different metrics for standard business processes by sustainability professionals and their relationship to measures relating to natural capital.

The results of our analysis shows that the linking of environmental metrics to commercial metrics is still an area that has not fully been developed for internal business decision-making or investment purposes. The need for metrics that link to commercial objectives is illustrated well in the conservation finance community; but investors are often faced with a lack of standardised and consistent metrics.

Sustainability professionals may face similar issues in relation to the lack of standardised natural capital metrics and their misalignment to the commercial drivers that they are supporting. For companies and investors alike, buy-in across departments is needed for natural capital projects to be successful; they must be able to show a solid business case for action based on financial savings and/or new revenue streams and link these to relevant natural capital metrics.

This report highlights the challenges that sustainability professionals face to link current commercial metrics to changes in the status of natural capital. 

Author

Dr Stephanie Hime, Little Blue Research, Ltd

Citation

Hime, S. & Cranston, G., (2017), ‘The commercial logic to measuring Natural Capital’, University of Cambridge Institute for Sustainability Leadership (CISL), Working Paper 03/2017

About our working papers

Working papers are circulated for discussion purposes only. Their contents should be considered preliminary and are not to be quoted without the authors' permission. All views expressed are those of the author.

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