Natural, Social, Financial and Economic Capital
Be local. Think Global.
INVESTMENT THEMES
•Decarbonization: Investing in technologies and practices that reduce carbon emissions: Renewable energy
•Circular Economy: Focusing on resource efficiency, recycling, and waste reduction; waste management, Sustainable packaging solutions
•Biodiversity Conservation: Supporting projects that protect ecosystems and species: Sustainable forestry and agriculture
•Climate Resilience: Investments to mitigate climate risks (e.g., floods, storms): Carbon
NATURAL CAPITAL
SOCIAL CAPITAL
• Education: Investing in educational institutions, programs, and initiatives.
• Healthcare: Supporting healthcare infrastructure and services.
• Community Development: Investments that enhance social cohesion, infrastructure, and well-being.
• Workforce Development: Focusing on skills training, job creation, and labour force participation.
• Social Impact Bonds: Innovative financing mechanisms tied to achieving social outcomes.
Intersections of natural capital with social capital and the Sustainable Development Goals (SDGs) are significant and multidimensional. Specifically, for Natural Capital
Sustainable Development Goals (SDGs)
SDG 14 (Life Below Water)and 15 (Life On Land) specifically aim to conserve and sustainably use terrestrial, freshwater and marine natural capital.
Natural capital underpins SDG 2 (Zero Hunger).
SDG 6 (Clean Water & Sanitation)
SDG 7 (Affordable & Clean Energy)
Climate action (SDG 13) is closely tied to managing natural carbon sinks like forests and oceans
SDG 12 (Responsible Production & Consumption) links to sustainable use of natural resources
SDG 1 (No Poverty)
SDG 8 (Decent Work & Economic Growth) intersects natural capital through nature-based livelihoods. - Protecting biodiversity and natural capital is an enabler for many other SDGs.
Many ecosystem services provided by natural capital, like clean air, water, food production, directly impact human health and well-being which are components of social capital
Sustainable management of natural resources requires effective social institutions, good governance, and stakeholder engagement
Indigenous communities often have deep socio-cultural connections and traditional knowledge systems related to natural capital stewardship.
Access to and distribution of benefits from natural capital can impact social equity, human rights and capabilities
Nature-based tourism and recreation contribute to social relations and cultural values.
The natural capital concept is fundamentally an anthropocentric frame on an understanding that aspects of nature, in certain forms and functions, underpin human well-being becoming a central concern for sustainable development. Actions towards the SDGs need to consider their impacts, trade-offs and synergies with natural and social capital together for holistic sustainable development.
A. BCR (Benefit-to-cost ratio) the ratio of the increase in the value of the natural capital stock to the present value of the expenditures required to achieve that increase where:
Key Performance Indicators
Natural capital is a natural asset that generates goods and services that have economic value including geology, soil, air, water and all living things.The value of natural capital is measured as the discounted sum of the value of the rents generated over its lifetime. Implementing the Sustainable Development Goals (SDGs) requires an understanding of the interdependencies and trade-offs between the economy and environment. Natural capital accounting (NCA) can aid the design of integrated policies and the monitoring of the SDGs. The System of Environmental and Economic Accounts (SEEA), an international statistical standard, provides a methodology for compiling physical and monetary accounts for a range of resources, including minerals, water, energy and timber, and linking these to information in the economy, in particular to GDP and policies for the distribution of benefits to different parts of society.
Natural capital gap is a quantitative indicator of how much natural capital would have to be increased from the current levels to meet the relevant SDG targets.
Step 1 - Assess Opportunities and Risks: Identify the material sustainability strategies for the sector and the company, using SASB or GRI as guides. For example, a specific sustainability strategy for an auto manufacturer may be to improve waste management.
Step 2 - Identify Associated Strategies: For each sustainability strategy, identify the material changes in business practice. For example, a practice to improve waste management for automakers is to recycle paint and solvents.
Step 3 - Determine Expected Benefits: Determine the potential and realized financial and societal benefits of these practices, through the lens of the mediating factors of financial performance (innovation, operational efficiency, supplier loyalty, etc.). For example, recycling paint and solvents (A) reduces purchase of the product, (B) reduces waste disposal costs, and (C) brings in revenue through selling excess recycled material.
Step 4 - Quantify Results of Benefits: For example, identify the % of manufacturing waste that is recovered and reused.Step 5: Monetize the Benefits: Apply a monetization process to calculate monetary values for the intangible and tangible benefits. For example, weighted average unit cost of recovered materials versus the cost of reused materials and upfront investment, with the net being the return on investment.
Step 5 - Monetize the Benefits: Apply a monetization process to calculate monetary values for the intangible and tangible benefits. For example, weighted average unit cost of recovered materials versus the cost of reused materials and upfront investment, with the net being the return on investment.