All posts by Eric

What is the Natural Capital Finance Alliance?

The Natural Capital Finance Alliance (NCFA previously NCD – Natural Capital Declaration) is a finance sector initiative, endorsed at CEO-level, to integrate natural capital considerations into loans, equity, fixed income and insurance products, as well as in accounting, disclosure and reporting frameworks.

The NCFA is an initiative that goes beyond ‘sustainability’. It is about the materiality of natural capital to the health of financial institutions.

To achieve this, signatory financial institutions are working alongside supporter organisations to develop metrics and tools to help financial institutions to take natural capital considerations into account in future investment and lending decisions.

How is Natural Capital relevant to the Finance Sector?

As increasing global pressures chip away at stocks of natural capital, businesses face growing challenges. These can come in the form of legal liability, credit risk, volatility, unexpected falls in cash flows, and reputational, regulatory and portfolio risks, each presenting different financial pressures requiring additional mitigating measures. For example, the EU Environmental Liability Directive (ELD) makes companies directly liable for impacts on water resources, fauna, flora and natural habitats. Operators of risky or potentially damaging activities can therefore be held liable for the preventative and remedial costs of environmental damage. In these cases an investor may be left exposed to any litigious action against the operating company which could adversely affect returns.

At the same time, for industries dependent on natural capital, continued erosion of the global resource base presents additional operational challenges. Surging demand in the past decade alone has reversed a 100 year decline in resource prices. Increased demands on agricultural production, as well as associated water and energy requirements from feeding an additional billion people by 2030, will put upward pressure on the price of global soft commodities. These predicted increases will fall well within the investment horizon of pension funds and many loans, and represent supply chain challenges for many downstream businesses. A 2011 report by McKinsey found that 29% of profit warnings from companies in the FTSE were due to increases in the cost of raw materials. For large financial institutions, the exact level of exposure to this financial risk linked to natural capital is often not fully understood. This was highlighted in a recent EY study, which revealed that environmental externalities can equate up to 50% of company earnings in a standard equity portfolio.

Source and more info :

A GDP that does not integrate natural capital, does that make sense? – 2nd of June 2015

From the latest interview with Thomas Piketty in Reporterre.

“Public debt is a false problem. Not so long ago we already have known high public debts, reaching 200 % of GDP in 1945 and inflation has swept them away.

Today the financial capital and assets owned by merchants and households grow much more strongly than the public debt has ever increased.

However, if one increases of the temperature of the planet by 2°C disrupting the entire climate we have nothing at hand to solve the problem of the cost to the natural capital.

The real debt we have is the debt to our natural capital.”

What is ocean acidification?

This video actually provides a good answer on why we need to speak about Global Change instead of Global Warming.

Ocean acidification is the ongoing decrease in the pH of the Earth’s oceans, caused by the uptake of carbon dioxide from the atmosphere.  An estimated 30–40% of the carbon dioxide released by humans into the atmosphere dissolves into oceans, rivers and lakes.

Increasing acidity is thought to have a range of possibly harmful consequences, such as depressing metabolic rates and immune responses in some organisms, and causing coral bleaching.

The acidification of the oceans is not a new phenomenon but it is mainly the rate at which it is occurring that worries scientists.

Source: California Academy of Science

What are ecosystem services?

Ecosystem services are the direct and indirect benefits that societies obtain from nature, such as: climate regulation, water purification, soil formation, pollination, etc. They can be categorised in four categories: provisioning, regulating, cultural and supporting services. They support our quality of life and even our survival. Their assessment and valuation is therefore crucial to address the challenges of sustainable management.

Source: EU Environment

Did you hear about the Natural Capital Protocol?

What’s the natural capital protocol?

At present there’s a growing number of fragmented activities underway with regards to the valuation of natural capital in business and public sector applications. One of the challenges in scaling uptake in business is the lack of a harmonised approach to enable natural capital valuation to be practically used in applications e.g. internal management, reporting and disclosure.  This has changed since the 13th of July with the publication of the brand new Natural Capital Protocol!

The Project

The Natural Capital Protocol Project responds to this challenge. The overall vision of the Natural Capital Protocol (NCP) is to transform the way business operates through understanding and incorporating their impacts and dependencies on natural capital.

The aim of the NCP is to enable business to assess and better manage their direct & indirect interactions with the natural capital, in particular through:

  • increasing knowledge and awareness to generate & deliver greater consistency
  • equipping project managers to effectively link and embed the outputs directly into business (operations, accounting, etc.)
  • stimulating action

The Natural Capital Protocol is a product of the Natural Capital Coalition. The latter has brought together the world’s leading institutions from business, accountancy, consultancy, financial institutions and NGOs to develop the Natural Capital Protocol. Some of these institutions are: Carbon Disclosure Standards Board, University of Cambridge Institute for Sustainable Leadership, Naturalogic’s partner Trucost, Conservation International, EY, FAO, GIST Advisory, Imperial College London, Integrated Sustainability Services, IUCN, Natural Capital Project, The Nature Conservancy, The Sustainable Fashion Academy, PwC, WBCSD, World Resources Institute and WWF.


De Tijd is also picking up on the natural capital concept – 28th of February 2015

logo de tijdEnd of February yet another article has been published on the value of nature.  Good to see the subject is receiving media coverage.  Here, De Tijd explains what Nature is doing for us. You can read the full article following this link : Artikel De Tijd – Hoe de natuur voor ons werk en wij tegenwerken

For even more examples we recommend Tony Juniper’s book : “What has nature ever done for us? How money really does grow on trees!”