Natural Capital Protocol Standard presentation deck Nat Cap

Natural Capital Protocol Standard presentation deck @Nat. Cap. Coalition #Nat. Cap. Protocol

2 How to use this slide deck – Delete this slide • This slide deck has been produced to support workshops and presentations by Coalition Organizations about the Natural Capital Protocol and accompanying sector guides. • Slides can be deleted and reordered to be suitable for your presentation • More information is available on the Coalition website - http: //www. naturalcapitalcoalition. org If you have questions about the slides or have improvement then please let us know at info@naturalcapitalcoalition. org

3 NATURAL CAPITAL COALITION

Who makes up the Coalition? The Coalition is purpose driven, bringing together a wide range of stakeholders who agree to collaborate on activities to help create a world where business conserves and enhances natural capital. S S ta di et nd sc te a lo rs rd su & re ce an n Fi S c ac ien ad ce em a n ia d B u si n es s C bo on di se es r v & at N io G n O s P ol ic y M O e rg m an be iz rs at h io ip n s Putting the puzzle together 4

5 WHAT IS NATURAL CAPITAL?

What is natural capital? Natural Capital is the stock of renewable and non-renewable natural resources, (e. g. plants, animals, air water, soils, minerals) that combine to yield a flow of benefits to people 6

7 What are the other capitals? Financial capital There are several commonly recognized forms of capital. It is natural capital that supports all of the other forms of capital and underpins thriving societies and prosperous economies. All capitals are interconnected and it is impossible to completely separate any one form of capital from the others. Manufactured capital Intellectual capital Human capital Social and relationship capital Natural capital The <IR> capitals framework

8 NATURAL CAPITAL PROTOCOL AND SECTOR GUIDE DEVELOPMENT

Harmonization There are many different approaches to natural capital and a lot of work has been carried out already. The Natural Capital Protocol standardizes this into a single global framework 9

We asked business what they needed 10 80+ businesses from 15 sectors and all geographic regions 8 Adoption Factors Establish a clear framework that is… - Accessible Flexible Aligned. . . that conveys… - Credibility Relevance. . . and drives meaningful results… - Comparable Decision-useful Unlocks value 6 Primary Uses - Strategic planning and decision making - Supply chain riskassessment - 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

A unique collaborative process Developed the Protocol Developed the sector guides, and managed the business engagement and pilot testing The Coalition is hosted by ICAEW. 11

Leading companies tested the draft Protocol Over 50 businesses contributed to the Protocol piloting program Deep Dives Piloted the entire Protocol Piloting companies Piloted different steps of the Protocol 12

Consultation Draft Protocol and sector guides released in November 2015 for consultation v 3, 230 comments v 453 individuals v 143 organizations v 5 continents covered v 22 countries covered The consultation was carried out using the online collaboration tool Collaborase 13

14 NATURAL CAPITAL PROTOCOL

Introducing There are many existing approaches that businesses will be using to measure and value their impacts 15 and dependencies, inform their decision the Protocolmaking and strategy, and engage with stakeholders. The Natural Capital Protocol is complementary to all of these and provides a standardized framework to help include natural capital in decisionmaking.

Introducing There are many existing approaches that businesses will be using to measure and value their impacts 16 and dependencies, inform their decision the Protocolmaking and strategy, and engage with stakeholders. The Natural Capital Protocol is complementary to all of these and provides a standardized framework to help include natural capital in decisionmaking. While there are national level accounting initiatives such as the UN System of Environmental Economic Accounting (SEEA) implemented by governments, through for example, the World Bank led Wealth Accounting and Valuation of Ecosystem Services (WAVES) global partnership, the Natural Capital Protocol is focused at a business decision-making level and can be implemented across boundaries.

Introducing the Protocol 17 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

18 For business to make better decisions The Protocol is a framework designed to help business generate trusted, credible, and actionable information for business managers to inform decisions What are the natural capital risks and opportunities in your business? • • • Operational Legal and regulatory Financing Reputational and marketing Societal

19 What the Protocol does and does not do The Protocol… The Protocol does not… ü Builds on existing tools, guides, methods and techniques Seek to create new tools and methods ü Focuses on improving internal management decision making Provide a framework for external financial reporting ü Provides a standardized process that is also flexible Explicitly promote specific tools, methodologies or approaches ü Provides a process to internally standardize the approach that you take Necessarily produce results that are comparable within or between different businesses or applications

20 Definitions 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 The stock of renewable and non-renewable natural resources (e. g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people

21 Definitions 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 Internationally applicable across all business sectors, geographies and scopes; leverages existing approaches

22 Definitions 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 Aimed at informing business decision making with trusted, credible and actionable information

23 Definitions 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 • • To measure: determine the amounts, extent and condition of natural capital, in physical terms, e. g. m 3, tons To value: estimate the relative importance, worth, or usefulness of natural capital to people / business, in a particular context. Can be qualitative, quantitative or monetary

24 Definitions The Natural Capital Protocol is a standardized framework for business to measure and value its direct and indirect impacts and dependencies on natural capital • Impact: negative or positive effect of business activity on natural capital • Dependency: A business reliance on or use of natural capital

25 The Natural Capital Protocol Framework

26 The Stages are connected and iterative

27 The Protocol is underpinned by Principles Relevance Rigor Ensure that you consider the most relevant issues throughout your natural capital assessment including the impacts and/or dependencies that are most material for the business and its stakeholders Use technically robust (from a scientific and economic perspective) information, data, and methods that are also fit for purpose. Replicability Consistency Ensure that all assumptions, data, caveats, and methods used are transparent, traceable, fully documented, and repeatable. This allows for eventual verification or audit, as required Ensure the data and methods used for an assessment are compatible with each other and with the scope of analysis, which depends on the overall objective and expected application

28 Get started: Conceptual model

29 Get started: Conceptual model

30 Get started: Conceptual model

31 IMPACT AND DEPENDENCY PATHWAYS

Impact pathway 32

Impact pathway 33

Impact pathway 34

35 v v v Dependency pathway

v v Dependency pathway 36

Dependency pathway 37

38 SECTOR GUIDES

39 Which sectors? The Coalition will develop new guides in partnership with sector initiatives and associations Protocol Food & Beverage Apparel Under development: • Real Estate • Finance • Water

How do the sector guides support the Protocol? The sector guides… ü Provide context on why natural capital is relevant to businesses operating in the sector and how they benefit from it ü Develop the business case for natural capital assessments ü Identify natural capital impacts and dependencies relevant to businesses operating in the sector ü Use practical examples to demonstrate sector-specific business applications of the Protocol 40

41 What does this look like in practice? v The sector guides follow the Protocol framework exactly and do not introduce any additional Stages or Steps v The sector guides provide additional guidance on the actions within each Step that are most relevant to the sector v As such, the sector guides should be used alongside the Protocol rather than in isolation

Example materiality matrix from the food and beverage sector guide 42

43 PRIMER

44 Primer v A short introduction to the Natural Capital Protocol and sector guides v Sets out why applying the Protocol and including natural capital in your considerations will improve decision making

The business case 45

46 CASE STUDIES AND EXAMPLES

Include your own example here v Decision we wanted to influence: v v Business application: v v Impacts and dependencies: v v Business boundaries: v v Material issues: v v Methodological approach: v v Result: v v Integration in the business: v 47

48 v Decision we wanted to influence: v Enhance the business model for Indian sugar production v Business application: v Compare options v Assess impacts on stakeholders v Estimate total value and/or net impact v Impacts and dependencies: v v Climate change Natural Capital (land, water, soil) Farmers Sugar mill v Business boundaries: v Product v Material issues: v v Productivity Water Soil Temperature v Methodological approach v Quantitative, qualitative and monetary v Result v Farmer productivity h 28% v Water use i 28 billion litres v Integrated in the business

49 v Decision we wanted to influence: v Product & process innovation v Supply chain (sourcing, location and logistics) v Business application: v v Compare options Assess impacts on stakeholders Estimate total value and net impact Communicate internally and externally v Impacts and dependencies: v Impacts v Business boundaries: v Whole value chain considered (supply chain, manufacturing, distribution, use, end of life) v Corporate v Product v Material issues: v GHG v Water pollution v Air pollution v Land use v Water consumption v Solid waste v Methodological approach v Pw. C EP&L Methodology - External societal costs of production and products use v Result v 2013 EP&L: R$ 132 m v Consumer use phase: R$ 455 m v Integration in the business v Roll out to the performance management processes v 2020: ESP&L / 2050: Positive Impact

50 v Business boundaries: v Corporate – the entire business v Material issues: v Decision we wanted to influence: v Operational decision-making on process and materials within our Group v Business application: Assess risks and opportunities Compare options Assess impacts on stakeholders Estimate total value and/or net impact v Communicate internally or externally v v v Impacts and dependencies: Impacts Dependencies v v v Carbon emission Water use Water pollution Land use Air pollution Waste v Methodological approach v Align our existing EP&L approach to the NCP through collaborative engagement & open-sourcing v Result v Implementation of EP&L analytics has supported our brands decisionmaking methods v Integration in the business v Group-wide approach including standardized EP&L system and analytics v Supporting our brands with EP&L analysis on demand

51 SUPPORTING THE PROTOCOL

Natural Capital Hub • • Providing a link to everything natural capital Searchable database of events, case studies, news stories and much, much more. 52

53 Future work of the Coalition Natural Capital Data Framework guidelines, developed through collaboration, on how to navigate the complex world of natural capital data and information Enabling Environment A regional workshops program that builds on the business and country pilots Protocol Application Program to support the use of the protocol, with mentoring, support services, workshops and an annual conference Sector Guides Developing further sector specific guidance to support the application of the Protocol

54 Protocol Application Program The Program aims to encourage the uptake of the Protocol by business, providing support, materials and shared learning to those applying it To join the Protocol Application Program go to http: //eepurl. com/b 4 Yj. N 1 The Protocol Application Program will be led by CISL on behalf of the Coalition

55 www. naturalcapitalcoalition. org