TheNaturalCapitalProtocol:ANewComprehensiveFrameworkforManaging

NaturalCapital

Michelle LapinskiNatural Capital Coalition

@m_ellelapinski

@NatCapCoalition #NatCapProtocol

Michelle Lapinski@m_ellelapinski@EarthGenome

The Natural Capital Protocol: A Comprehensive New Framework for

Managing Natural Capital

New Metrics BostonNovember 15, 2016

vDecision we wanted to influence: vCorporate and country and local partner investment

vBusiness application:vValue of shorelines to business and local economies

vEstimate total value and/or net impact

vImpacts and dependencies:vClimate change

vNatural Capital (land, water, soil, runoff)vBiodiversityvDevelopment

vInfrastructure: stormwater runoff & shoreline management

vDecision we wanted to influence: vUse of internal carbon price for screening capex decisions

vBusiness application:vEstimate natural and social capital for Tata companies vApplied across core extractive businesses: steel, ore

vResultvUsed to engage Board, C-suite and key non-sustainability influencers

vDecision we wanted to influence: vEnhance the business model for Indian sugar production

vBusiness application:vCompare optionsvAssess impacts on stakeholdersvEstimate total value and/or net impact

vResultvFarmer productivity h28%vWater use i28 billion litres

vDecision we wanted to influence: vProduct & process innovation vSupply chain (sourcing, location and logistics)

vBusiness application:vCompare optionsvAssess impacts on stakeholdersvEstimate total value and net impactvCommunicate internally and externally

vBusiness boundaries:vWhole value chain considered (supply chain, manufacturing, distribution, use, end of life)vCorporate vProduct

vResultv2013 EP&L: R$ 132m vConsumer use phase: R$ 455m

The Natural Capital Protocol is a

standardized framework for business

to identify, measure and value its direct

and indirect impacts and dependencies

on natural capital

Introducing the Protocol

The Protocol is a framework designed to help business generate trusted, credible, and actionable information for

business managers to inform decisions

For business to make better decisions

What are the natural capital risks and

opportunities in your business?

• Operational• Legal and regulatory• Financing• Reputational and marketing• Societal

vEfficiency is Insufficient

vNatural capital assets are typically business critical – but not on the balance sheet

vSilo’d approaches have unintended consequences

vNeed to demonstrate value in $’s and business metrics.

Why Natural Capital?

8 Adoption Factors

- Accessible- Flexible- Aligned

- Credibility- Relevance

- Comparable- Decision-useful- Unlocks value

6 Primary Uses

- Strategic planning and decision making

- Supply chain risk-assessment

- Capital allocation

- Investment decision making

- Operational decision making

- External reporting

4 Benefits

- Improved risk management

- Better decision making

- Increased competitive advantage

- Balanced and comparable reporting

Establish a clear framework that is…

...that conveys…

...and drives meaningful results…

80+ businesses from 15 sectors and all geographic regions

We asked business what they needed

Developed the Protocol Developed the sector guides, and managed the business

engagement and pilot testing

A unique collaborative process

The Coalition is hosted by ICAEW.

Over 50 businesses contributed to the Protocol piloting program

Deep Dives

Piloted the entire

Protocol

Piloting companies

Piloted different

steps of the Protocol

Leading companies tested the draft Protocol

Get started: Conceptual model

Get started: Conceptual model

Get started: Conceptual model

The Natural Capital Protocol Framework

Example materiality matrix from the food and beverage sector guide

PotentialWetlands

GIST– GreenInfrastructureSupportTool

SustainabilityPerformance

RiskManagementProductivity

OperationalizingNaturalCapitalAttheStrategy,ProgramandProjectLevel

CreatingaCompellingBusinessCase IntegratingintoStrategyandPrograms

Coca-Cola Sustainability Programs

Business Value

Ecosystem Services

Coca-ColaValueChain

1

2

3

4

Impacts & Dependencies

ProgramUpgrades and

Extensions

Business ValueOf Program Upgrades

Risks & Opportunities

21

Can nature deliver $1B in NPV? We think so!

www.naturalcapitalcoalition.org