Natural Capital is a phrase that we come across increasingly regularly in the media today. But what does it mean and how does it affect you and me? In many ways Natural Capital is all about going back to basics and considering how we interact with nature. It is about recognising the inherent value in such fundamental resources as geology, soil, water and air, how we manage these to benefit our economy, the environment and our wider society.
In October this year the UK will host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow. While the overarching focus will be on tackling climate change and reducing carbon emissions worldwide, the principles of Natural Capital and how these can be incorporated into business decision making will also be on the agenda.
As interest in the concept of Natural Capital grows, greater emphasis will be placed on how business benefits from and impacts on nature. It will mean business placing a value on nature in a way that it has not done before. Recent events have only sharpened that focus. During the COVID-19 pandemic, the public`s appreciation of the great outdoors has risen significantly and people are much more keenly aware of the benefits outdoor space can provide to our health and general wellbeing. This in turn is prompting greater public interest in how both rural and urban land is – and can be – used. Along with the conventional benefits such as clean air, water, and food that we all derive from nature, issues such as climate regulation, flood prevention and recreational use should all be taken into consideration when looking at Natural Capital and the value it provides to society as a whole.
How we go about assessing the Natural Capital value of land is an area very much under development. While thinking about the concept of Natural Capital and how to harness and benefit from it is still at an early stage, there are various tools available to land owners and managers to help evaluate the Natural Capital of their land. In 2016 the Natural Capital Coalition issued a Natural Capital Protocol intended for use by all businesses. The Protocol is a framework that enables businesses to measure and place a value on Natural Capital with a view to establishing a set of manageable actions and best practice rules they can apply to their business to maximise this value. It is hoped that by using the protocol, business in general will be better placed to identify modifications needed to current practice as well as ways of creating alternative income streams to compliment core business activity.
The Scottish Forum on Natural Capital has been working with a number of organisations to trial the Natural Capital Protocol and other approaches that can be applied to both land based business and the marine environment. These have included working with those involved in farm management, woodland creation, moorland management, agro forestry, renewable energy and wildlife management. All of these offer ways for land based businesses to develop new capital streams.
The interaction, and indeed reliance, between business and nature will only continue to strengthen and present opportunities for businesses to monetise initiatives that will also benefit the natural world. In a new, fast moving and developing area, we would encourage clients, as many have already done, to explore and participate in this increasingly important topic. Some of the areas in which we are already seeing progress include peatland management, forestry and woodland creation, wildlife preservation and tourism.
We’ll share updates in these and other areas over the coming months alongside any legal points that should be considered as part of harnessing the potential of Natural Capital for your business.
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