Valuing Nature
How can companies with landholdings benefit from and share the value of the natural resources they own?
Nature provides us with things that are essential for businesses to function. Such as:
- regulating the global climate,
- giving us clean air and
- providing food and water sources.
The value of this ‘natural capital’ is estimated to be £95 trillion per year worldwide, and is thought to be declining by around £3.5 trillion per year.
Natural capital […] is thought to be declining by around £3.5 trillion per year.
The business case for valuing natural capital
Using cutting edge environmental economics, AECOM and National Grid developed a methodology for recognising the value of ‘services’ provided by natural resources.
These services can be anything from trees that are used for visual screening or noise reduction, to vegetation that is sequestering carbon, to environments that enhance ecosystems or provide recreational space for communities.
By recognising natural capital value and integrating it into investment decision-making, we are able to take a more long term approach to natural resource management.
By placing a monetary value on natural assets, their environmental benefits are translated into a language that everyone can engage with, from operational sites to the boardroom. This allows the natural environment to be viewed as a valuable asset that should be preserved or enhanced for the benefit of business and society.
The natural enviroment [is] a valuable asset that should be preserved or enhanced for the benefit of business and society.
We’re using this approach to produce future management scenarios that can enhance and share the natural capital value on our sites. It’s part of a bigger picture of businesses being able to create shared value with local communities and wider society, whilst still benefitting the bottom line.
By working in partnership with local stakeholders and environmental groups, we’re delivering projects that take a long-term and locally-informed approach to natural asset management and we’re better informed to make the right decisions that preserve and enhance natural resources and the benefits they provide.
This also means that we’re more able to spot opportunities to innovate as well as to manage the risks associated with our assets and business operations, such as those relating to natural hazards, supply chains or site security.
By including this value within investment decision making, the approach also helps us to find cost savings.
We are currently taking this approach on almost 40 of our UK sites and are working towards a target of recognising and enhancing the value of natural assets on 50 sites by 2020.
By valuing the natural capital across our estates, we are better informed to make the right decisions.
By working with AECOM, we have found that by valuing the natural capital across our estates, we are better informed to make the right decisions that optimise social, environmental and economic outcomes.
So far, it has been found that for every pound (GBP) invested in the enhancement of natural resources on site, six pounds (GBP) of natural capital benefits can be found.
This is shared value that benefits the business’ bottom line, but also provides valuable services for communities and society as a whole.
An example of this approach at Ambergate, Derbyshire
Ambergate in Derbyshire is one of our Gas Pipeline Maintenance Centres. It consists of 77 acres of operational and non-operational land.
Part of this site had been identified as a Local Nature Reserve and was recently designated by Natural England as part of a new Site of Special Scientific Interest (SSSI) called Crich Chase.
We decided that existing management arrangements weren’t enough to adequately protect and preserve the important ecological value of the site.
We worked with stakeholders, including Derbyshire Wildlife Trust (DWT), farmers, Natural England and community representatives and developed a five year management plan that enabled the site’s long term enhancement, encouraged public access and provided wider information around the landscape’s value within a regional context.
Actions have led to an increase in species diversity, associated biodiversity across the site and an improvement in the condition of the SSSI unit.
Mark Taylor from Natural England said,
“This project with National Grid and the Wildlife Trust is an example of a partnership delivering the environmental outcomes we are all working towards. This is a great success and will protect the site well into the future”.
Through collaboration our calculations project an increase of natural capital value of around £255k over 30 years, over the current baseline of £365k.
We recognise that there is a long way to go in order to slow the decrease in natural capital value that is occurring as a result of population growth and increasing demand for natural resources.
There is a long way to go in order to slow the decrease in natural capital value that is occurring as a result of population growth and increasing demand for natural resources.
We endorse the Natural Capital Protocol and are committed to measuring, recognising and enhancing the natural capital value on our sites.
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