10 th December :00-16:30

Transcription

1 Natural Capital Incentives and Support Mechanisms for Business & the Financial Sector Workshop Defra, TEEB for Business Coalition & Natural Capital Declaration 10 th December :00-16:30

2 Workshop Agenda Timings Speaker Description 10:00-10:10 Oliver Greenfield, Convenor, Green Economy Coalition Introduction to the day: Natural Capital incentives and support mechanisms for business 10:10-10:30 Keynote: Ian Cheshire, CEO, Kingfisher Group Natural Capital: the perspective from the Ecosystem Markets Task Force 10:30-10:40 Lord De Mauley, Parliamentary Under Secretary of State for natural environment and science, Defra Natural Capital and Ecosystem Services: The Government perspective 10:40-11:15 Dr. Dorothy Maxwell, Director TEEB for Business Coalition Business and Natural Capital - Developing the Natural Capital Protocol 11:15-11:35 Tea & Coffee Networking 11:35-12:00 Andrew Mitchell and Liesel van Ast, Natural Capital Declaration The Financial Sector and Natural Capital - The Natural Capital Declaration 12:00-12:10 Christian del Valle, Managing Partner, Althelia Investing in Natural Capital an international perspective 12:10-12:30 Zoe Knight, Director Climate Change Strategy, HSBC Bank Natural Capital implications for economies and investors 12:30-12:40 Nick Barter, Head of the Natural Capital Committee Secretariat, Defra 12:40-12:55 Helen Dunn, Senior Economic Advisor, Defra / secondee to TEEB for Business Coalition Introduction to the Natural Capital Committees work to integrate natural capital into decision making Developing the UK roadmap for business accounting for nature linking Natural Capital Protocol, NCD and Defra activities 13:00-13:45 Lunch (buffet lunch provided), tea and coffee Networking 13:45-13:55 Oliver Greenfield Introduction to 2 nd half of the day. 13:55-14:25 Roundtable 1: Establishing the end point. Develop a vision for the end point of the roadmap. 14:25-14:40 Feedback from Roundtable 1 14:40-15:05 Roundtable 2: Where are we now & what actions are needed to support business integration of natural capital? 15:05-15:20 Feedback from Roundtable 2 15:20 15:30 Break Networking 15:30-16:05 Roundtable 3: Developing and delivering the roadmap 16:05-16:20 Feedback from Roundtable 3 16:20-16:30 Conclusions and wrap up The next steps and closing remarks from the hosts. 2

3 Ian Cheshire 10 th December 2013

4 Why business needs to change Take, make, dispose

5 Why natural capital is important to business

6 Net Positive Working closely with the timber industry 6

7 7 Changes and developments witnessed Puma s Triple bottom line Net Positive movement Closing the loop Nike s re-used trainer M&S coat BIS CR consultation Neonicotinoids Businesses adopting precautionary principle Government s Green Paper on Biodiversity offsetting 22 recommendations within the Eco Systems Market Taskforce report

8 Direction of travel

9 Concluding thoughts

10 Lord de Mauley Parliamentary Under Secretary of State for natural environment and science 10

11 NATURAL CAPITAL IN BUSINESS Natural Capital Incentives and Supports, 10 Dec 2013, London Dr. Dorothy Maxwell Executive Director TEEB for Business Coalition

12 BUSINESS POLICY & INTERNATIONAL BUSINESS SUPPORT NGOs & Research

13 SCOPE: NATURAL CAPITAL Biodiversity & Ecosystem Services Environmental Impacts VALUE Financial Non Financial Externalities Positive & Negative Risks & Opportunities Source: Natural Capital at Risk Top 100 Externalities of Business, Trucost for TEEB for Business Coalition, 15 April 2013,

14 BUSINESS APPLICATIONS

15 MAINSTREAMING SUPPORTS INCENTIVES

16 NATURAL CAPITAL PROTOCOL AIMS & DELIVERABLES Valuing & Accounting for Natural Capital Why & How Business applications Two sector guides Road test Awareness raising & capacity building

17 Here PROJECT TASKS Mapping the Existing Natural Capital Initiatives Draft framework & 2 sector guides Independent Technical Author Stakeholder Consultation Peer Review & update Independent Peer Review panel Road test Case examples Revise & peer review Publish framework, sector guides with case examples Consultation workshops & webinars (throughout process)

18 GOVERNANCE & CONSULTATION INVITATION TO PARTICIPATE IN KIND VISIBLE PROMOTION OF PARTICIPATION website & publications ROAD TESTING

19 PROJECT PART 1: MAPPING EXISTING NATURAL CAPITAL INITIATIVES IN BUSINESS

20 Mapping NC Initiatives in Business AIM Mapping the initiatives Valuation methodologies, tools etc.. Applications in business and investors Links with policy initiatives Inform Draft Straw man Value add, fill gaps Users Feedback Today Image copyright BSR (2013) Review of the emerging domain of ecosystems services tools

21 Mapping - Existing Status NC Impacts & Dependencies Valuation Business Applications Data Business Engagement Policy Finance Applications

22 Examples of Existing Status VALUATION

23 Business Engagement

24 Methodologies, guides & tools for business ekpis

25 Developing methodologies, guides, tools

26 Policy initiatives accounting metrics & new markets

27 Data/Databases Existing e.g. Ecosystem Service Valuation Database (TEEB) Environmental Valuation Reference Inventory Business Applications Filling data gaps, access & quality norms Technology Innovations

28 Examples of Existing Activities BUSINESS APPLICATIONS FOR NATURAL CAPITAL

29 Strategy Image copyright CIMA, IFAC, PWC (March 2013) Business Model Background paper for Integrated Reporting Value Creation, Net Positive Integrated Thinking/Reporting 6 types of Capital how natural integrates Business Models

30 Sustainability Management Organisation Product / Supply Chain Toolkit well established, standards & tools Biodiversity & Ecosystem Services are gap Standards /Guides: Measuring and Managing Environmental Impacts in Business ISO 14040/44 Life cycle Assessment (all environmental impacts) ISO Carbon footprint (GHG emissions only) ISO14064 Water Footprint (draft) (water) EU Product Environmental Footprint (PEF) Guide (all environmental impacts ) EU Organisational Environmental Footprint (OEF) Guide (all environmental impacts of an organization) WRI/ WBCSD GHG product supply chain standard (GHG emissions) Carbon Disclosure Project corporate disclosure on climate (GHG emissions), water and forests

31 Product/Supply Chain Bridge gaps Indicators Classification Environmental Impact Categories (LCA) Global Warming Potential (GWP) (IPCC 2007) Water eutrophication (ReCIPe 2008/CML 2002) Marine eutrophication (ReCIPe 2008) Acidification (ReCIPe 2008) Operational and embodied water use (water footprint) Waste Non renewable resources depletion (EDIP 97(2004) Aquatic toxicity (Usetox) Land Use and Land Use Change (IPCC EFDB)

32 Example - LCA impact indicators for Ecosystem Services?

33 Corporate Reporting & Disclosure Natural Capital in reporting

34 Financial Accounts/Reporting/Disclosure GAAP & IFRS Full Cost Accounting & Life Cycle Costing Materiality

35 Investor decisions on natural capital

36 Natural Capital Protocol STRAWMAN

37 Feedback : Natural Capital Protocol Aim: Why, What & How Business language & consistency Applications Focus Scope : Natural, Social & Human Capital links Harmonise Format: More than one deliverable C-Level Guide Why and How (high level) Protocol for practitioners business, policy, consulting, research

38 C-level guide Straw man (business) Business Case Why & what is the business value add Risks & Opportunities Users CFO, CEO, Sustainability, Operations, Procurement, etc... Big Picture Business Models Natural Capital links with 5 other types of Capital Applying Valuing Nat Capital in Business Route map Using key questions/uses business are likely to have in practice Examples to illustrate applications

39 Protocol Straw man Definitions & Scope Measuring Natural Capital Impacts & Dependencies Classifications (e.g. FEGCS, Industry and trade consistency) Links to national environmental accounting metrics (UNSEEA) as suitable Natural Capital Impacts and Dependencies- Indicators Bridging Biodiversity & Ecosystem Services indicator gaps in Life Cycle Assessment Determining materiality per sector (sector guide) Valuing Natural Capital - Business Applications How To Which technique & tool(s) for which application & how fitness for purpose Clarity on inputs required and outputs expected Clarity on benefits, limitations, trade offs Clarity on uncertainty of valuations relative vs. absolute Illustrate with examples (anonymized or real) Valuing Natural Capital - Financial Institution Applications How To (linking with NCD project) Incentives required e.g. Payments for Ecosystem Services, Water Funds Tools and Databases Filling gaps and access Criteria and quality norms required for consistency Standalone/ adding to LCA databases and tools e Using technology innovations in monitoring

40 NEXT STEPS Feedback today Mapping & Straw man Consultation draft early 2014 Participate in Natural Capital Protocol

41 VALUATION TECHNIQUES

42 Total Economic Value Framework

43 Tea & Coffee Break 11:15-11:35 43

44 The Natural Capital Declaration and Roadmap Andrew Mitchell, Founder & Executive Director, Global Canopy Programme Liesel van Ast, Programme Manager, Natural Capital Declaration

45 What does implementation mean in practice? About the NCD and Roadmap Why is natural capital relevant? Work plans for Working Groups Proposed pilot projects Signatories and supporters

46

47

48 Source: PRI/UNEP FI, Universal Ownership Links between natural capital and finance Financial capital Insurance Investment Banking

49 The business case for financial institutions to consider natural capital Over-exploitation of natural capital will cause price volatility and business constraints across the economy. Growing need to address exposure to indirect risks from natural resource constraints and pollution issues embedded in loans, investments and insurance. Position portfolios for adjustments in price signals that aim to address depletion linked to market failure.

50 Engaging financial institutions

51 About the NCD and Roadmap Finance-led, CEO-endorsed initiative to mainstream natural capital in loans, bonds, equities and insurance, as well as accounting & reporting. Focus on the global financial sector: banks, institutional investors, fund managers, insurance firms. The NCD is building capacity for financial institutions to develop structured approaches to address challenges. Signatory financial institutions working with supporter organisations to strengthen management of risks and opportunities to increase resilience and protect returns. Project jointly managed by UNEP FI and Global Canopy Programme.

52 Recent signatories and supporters FMO (Dutch development bank) First Green Bank (U.S.) Yes Bank (India) Abrapp TEEB for Business Coalition Convention on Biological Diversity (CBD) Association for Sustainable & Responsible Investment in Asia (ASrIA) World Business Council for Sustainable Development (WBCSD) Climate Disclosure Standards Board (CDSB)

53 NCD signatories (December 2013)

54 NCD supporters (September 2013)

55 Governance NCD NCD Steering Committee IFC Chair in 2013/14 WG Chairs, Supporters Secretariat UNEF FI, GCP Multidisciplinary knowledge and expertise across signatories, supporters and advisory network. NCD Advisory Network Academics and industry experts in natural resources, finance, accounting, science WG 1: Understanding Impacts/Dependencies Chair: Rabobank WG 2: Embedding NC in financial products Chair: Banorte WG 3: NC accounting Chair: National Australia Bank WG 4: Natural capital disclosure/reporting Chair: Nedbank Project Manager GCP Project Manager NVI/FFI Project Manager KPMG Australia Project Manager CDP

56 NCD Roadmap and Business Plan Objectives for implementation Build capabilities for signatory financial institutions to implement NCD commitments to understand, embed, account for and report on natural capital factors. Develop practical tools, guidance, methodologies, frameworks and indicators for financial institutions. Increase signatories in key areas (e.g. asset owners, fund managers, insurers, development/ banks, innovative and leading FIs) to address NC challenges across asset classes and financial products.

57 Working groups for 4 commitments by 2020 Working Group NCD commitment 1. Understand Build understanding of risks and opportunities linked to impacts and dependencies on natural capital through operations, supply chains and portfolios. 2. Embed Support the development of methodologies to integrate natural capital considerations into financial products and services 3. Account Work towards integration of natural capital into private sector accounting 4. Report Develop guidance for natural capital disclosure and reporting using an integrated approach.

58 Work plans for Working Group 1 Chair: Lara Yacob, Rabobank (Netherlands); Project Manager: Global Canopy Programme 1. Map direct and indirect impacts and dependencies through loans and investments 2. Develop capabilities to evaluate natural capital risk. 3. Pilot project(s) to create and test methodology to understand exposure to financial risk linked to natural capital. Output: Methodology and guidance

59 Work plans for Working Group 2 Chair: Marcos Mancini, Banorte (Mexico); Project Manager, Natural Value Initiative 1. Focus on corporate banking (lending, project finance) and investment (public and private equities, fixed income). 2. Food & agriculture, energy and electric utilities; forest/timber and mining work streams: (1) Risk management in existing products and (2) New opportunities, such as impact and thematic investment products.

60 Draft work plan for Working Group 3 Chair: Rosemary Bissett, National Australia Bank Project Manager: KPMG Australia 1. Scoping to identify opportunities and barriers to quantify and account for NC in finance. 2. Work towards developing methodologies to quantify and evaluate materiality of NC across portfolios. 3. Develop and test methods for financial institutions to account for natural capital in financial reports. Aligned with TEEB4B Protocol for companies.

61 Draft work plan for Working Group 4 Chair: Vicky Beukes, Nedbank (South Africa) Project Manager: CDP Work stream 1: Disclosure R&D to enable disclosure by financial institutions on exposure to NC through financial activities/portfolios. Develop disclosure programme with questionnaire and guidance on natural capital reporting. Work stream 2: NC in Integrated Reporting by FIs CDSB to help develop guidance for financial institutions to include material natural capital information in primary reports in an integrated way.

62 Pipeline of NCD Pilot Projects To develop and test methodologies under WGs. NCD Pilot Project 1 Develop evidence of natural capital as a material risk for financial institutions through portfolios. Develop practical ways to integrate material factors for natural capital-adjusted credit risk assessments. Figure 1. NCD Work Package/Pilot Project 1 Understanding natural capital risks for financial institutions and embedding them in credit risk assessment Phase 1 (under Working Group 1) Developing and testing a methodology for mapping of impacts and dependencies across FIs portfolios Phase 2 (under Working Group 2) Develop methodology/ guidance to embed natural capital considerations into credit risk assessment Work stream 1: Commercial banks and development finance institutions Work stream 2: Institutional Investors

63 Pipeline of NCD Pilot Projects. NCD Pilot Project 1 Evaluate lending, advisory and investment risk policies in relation to sustainable production and consumption of soft agricultural forest-risk commodities. Identify good practice and opportunities to strengthen policies. Figure 2. NCD Work package/pilot Project 2 Guidance to address deforestation risk in soft commodities policies Develop guidance to address deforestation and forest degradation caused by agricultural production (i.e. oil palm, soy, beef) through lending, advisory and investment risk policies. Partners UN-REDD Programme UNEP

64 Thank you.

65 Christian De Valle, Managing Partner Althelia Ecosphere 65

66 Zoe Knight Director, Climate Change Strategy HSBC PLC 66

67 Nick Barter, NCC Secretariat

68 Natural Capital Committee A new independent Natural Capital Committee, to put the value of England s natural capital at the heart of our economic thinking reporting to the Economics Affairs Committee chaired by the Chancellor. The chairman of the NCC, Dieter Helm, was appointed in early 2012 with seven members added through

69 Natural Capital Committee 69

70 Natural Capital Committee Defra Secretary of State: What is clear is that we need to avoid growth that erodes our natural capital, and therefore our ability to grow in the future, but encourage growth which conserves or enhances our natural capital. I do not, however, just want to maintain our natural assets; I want to improve them. I want us to derive the greatest possible benefit from them, while ensuring that they are available for generations to come. This is what the NCC s innovative work is geared towards. 70

71 Natural Capital Committee 1. provide advice on when, where and how natural assets are being used unsustainably. For example, in a way that takes us beyond some acceptability limits or non linearity thresholds, or in a way that diminishes some measure of comprehensive wealth; 2. advise the Government on how it should prioritise action to protect and improve natural capital, so that public and private activity is focused where it will have greatest impact on improving wellbeing in our society. This will include advising the Government on tools and methodologies to ensure that the value of natural capital is fully taken into account in policy decisions and in economic planning; 3. advise the Government on research priorities to improve future advice and decisions on protecting and enhancing natural capital. The Committee s advice in this area will reflect consultations with the Research Councils and the academic community. 71

72 Natural Capital Committee Focus 1: Producing annual State of Natural Capital reports (first was April 2013). Providing information for Gov t on whether our natural capital is being used sustainably. Working with Defra and the Office for National Statistics to ensure the timely development of experimental natural capital national accounts. Focus 2: Working with a few businesses (including major land owners and managers) to pilot the development of corporate natural capital accounting. Working with academics and the Research Councils to identify research priorities that will improve future advice on managing our natural assets. Providing ad-hoc advice to ministers CAP reform, forestry, offsetting etc. 72

73 Natural Capital Committee SoNC 1: the 2013 report set out a framework for what the NCC thought was needed. Basically this was: to measure and value our natural capital in order to better manage it. SoNC 2: the 2014 report will build on this and start to answer the first of the NCC s terms of reference outlining the assets which are at risk and suggest a generational framework for improving nature in a step towards its second ToR. SoNC 3: the 2015 report will bring it all together (including its corporate accounting work) and provide more concrete advice on its second terms of reference how to prioritise public and private activity to protect and improve natural capital. 73

74 Natural Capital Committee A single overarching 25 year framework (starting in 2015) that: identifies where natural assets are not being used sustainably and/or are at risk; brings together existing policies and strategies for protecting and improving NC and identifies gaps in order to maximise impact and effectiveness; ensures existing and future public and private activity is focussed where it will have greatest impact on improving wellbeing in our society. 74

75 Natural Capital Committee The NCC is tasked with providing advice to the Government that is relevant to public and private activity (as part of its second ToR). This, combined with the fact that businesses own and impact on much of our natural capital, is why the NCC also has a corporate focus. 75

76 Natural Capital Committee The NCC is working with its major landowners group to pilot experimental natural capital accounts. The NCC, working with its consultants (eftec, RSPB and PWC), will: produce a methodology by late January; work with a small group of land-owning organisations to pilot accounts by summer 2014; use the lessons learned from the pilots to produce a generic accounting framework with accompanying guidance for other interested businesses to use by late It will then report on this work in its third State of Natural Capital report (early 2015) and will consider whether it has a role in a 25 YP. 76

77 Natural Capital Committee It is about working with them to develop and encourage the take up of NC accounts. We hope that it will be in their interest to account for the natural capital they own. For example: To obtain a picture of what is happening to their assets over time, documenting changes on which more informed management decisions can be made; To help make the case for securing wider revenue streams, from having a better understanding of the non-commercial value of their assets (benefits they provide to society); and To demonstrate value added to society CSR type reasons. 77

78 Joint Workshop hosted by TEEB for Business Coalition, Natural Capital Declaration and Defra Developing the UK roadmap for business accounting for nature Helen Dunn, Senior Economic Adviser, Defra 10 th December 2013

79 Introduction Background to roadmap initiative - EMTF on business accounting for nature (recommendation 21) Why a roadmap? What could be the potential benefits? Links to policy initiatives for accounting for natural capital Scope and timetable for Roadmap

80 Background to roadmap initiative: Ecosystem Markets Taskforce Report Ecosystem Markets Task Force Report (March 2013) set out a high level narrative of the importance for business to integrate the real value of nature into its thinking. Benefits for companies include greater resilience and managing risk more effectively. EMTF identified need for support including new measures and standards to support awareness of how businesses depends and impacts directly or indirectly on natural ecosystems. EMTF also recommended that Government review incentive structures surrounding standards and metrics to see if these create specific barriers to take up We need better tools and metrics to understand the role nature plays in our businesses: tools and metrics that will integrate financial, environmental, social and governance information in a concise, consistent and comparable format

81 Background to roadmap commitment: EMTF recommendation 21 The commitment to develop a roadmap was set out in the Government s response to the EMTF recommendation 21 on business accounting for nature at: In particular: 1. reviewing incentive structures to ensure they support the uptake of ecosystem standards and metrics by business. As part of this work Defra will support the TEEB for Business Coalition to lead a workshop focussed on the topic; 2. working with business to produce and publish a roadmap in Spring 2014 that builds on the workshop with the TEEB for Business Coalition.

82 Why a roadmap? What are benefits? Key part of roadmap work to review incentives and barriers to business uptake of ecosystem standards and metrics seen as a gap Opportunity to engage with initiatives encouraging business and finance sector accounting for natural capital including TEEB for Business Coalition and NCD (+ many others) Roadmap could help to support this agenda towards consistent effort to embed natural capital in business decision making and develop a longer term strategy to incentivise uptake. Source: NCD roadmap

83 Policy initiatives - accounting for natural capital Policy appraisal micro level: High level guidance on identifying and valuing impacts in policy appraisal Tracking natural capital at national level: ONS/Defra ecosystem accounting roadmap to 2020: to make more visible on the nation s balance sheet

84 Developing metrics for environmental reporting and business investment in natural capital

85 What is in scope for roadmap? Reviewing the incentives and barriers for uptake Focus at a national (UK) level, but be developed with strong understanding of the international context and at what level actions need to be driven Highlighting opportunities for progress over the short, medium and longer term including mapping key points of opportunity over time whether UK based or internationally - to further increase uptake To be drawn up with key partners TEEB4BC and NCD via consultation with businesses, advisory committees such as the Natural Capital Committee, NGOs and Government. Identifying actions needed across different stakeholder groups

86 What business, finance and policy drivers might accelerate the demand for uptake of standards and metrics? Developing the business case & case studies Harmonising metrics and tools, filling gaps Reviewing current barriers to uptake? - Organisation level (relevance, measurement, priority, integration) - Macro (lack of various pressures including from government, customers and investors) Build on existing roadmaps e.g. NCD roadmap

87 Indicative timetable and milestones for roadmap Summary paper on outputs of Joint TEEB4BC/NCD/Defra Workshop Jan 2014 Follow on discussions/ working groups held to build on workshop outputs early 2014 Drafting with key partners TEEB4BC, NCD and stakeholders of roadmap including incentives review and timeline for action developed for comment, March 2014 Final version of Roadmap agreed and published Spring 2014

88 Thank you Background to business accounting for nature roadmap see Ecosystem markets taskforce report and government response at: For further information on Roadmap and interest in becoming involved please contact Geoff Richards (policy lead) or myself at:

89 Lunch Break 13:00-13:45 89

90 Part 2: Workshop Sessions Roundtable 1 Establishing the end point. Developing a vision for the end point of the road map. What will integration of natural capital look like in an ideal world? 30 mins. discussion Table facilitators will feed back to the group your top three priorities. 90

91 Part 2: Workshop Sessions Roundtable 2 Where are we now & what actions are needed to support business integration of natural capital? Based on the straw man presented by TEEB on harmonised Natural Capital Protocol. 30 mins. discussion Table facilitators will feed back to the group your top three priorities. 91

92 Feedback : Natural Capital Protocol Aim: Why, What & How Business language & consistency Applications Focus Scope : Natural, Social & Human Capital links Harmonise Format: More than one deliverable C-Level Guide Why and How (high level) Protocol for practitioners business, policy, consulting, research

93 C-level guide Straw man (business) Business Case Why & what is the business value add Risks & Opportunities Users CFO, CEO, Sustainability, Operations, Procurement, etc... Big Picture Business Models Natural Capital links with 5 other types of Capital Applying Valuing Nat Capital in Business Route map Using key questions/uses business are likely to have in practice Examples to illustrate applications

94 Protocol Straw man Definitions & Scope Measuring Natural Capital Impacts & Dependencies Classifications (e.g. FEGCS, Industry and trade consistency) Links to national environmental accounting metrics (UNSEEA) as suitable Natural Capital Impacts and Dependencies- Indicators Bridging Biodiversity & Ecosystem Services indicator gaps in Life Cycle Assessment Determining materiality per sector (sector guide) Valuing Natural Capital - Business Applications How To Which technique & tool(s) for which application & how fitness for purpose Clarity on inputs required and outputs expected Clarity on benefits, limitations, trade offs Clarity on uncertainty of valuations relative vs. absolute Illustrate with examples (anonymized or real) Valuing Natural Capital - Financial Institution Applications How To (linking with NCD project) Incentives required e.g. Payments for Ecosystem Services, Water Funds Tools and Databases Filling gaps and access Criteria and quality norms required for consistency Standalone/ adding to LCA databases and tools e Using technology innovations in monitoring

95 Part 2: Workshop Sessions Roundtable 3 Developing and delivering the roadmap Session aims to gain consensus on where the roadmap can add the most value to organisations, how they can contribute to its development, and mapping its key componements. 30 mins. discussion Table facilitators will feed back to the group your top three priorities. 95