Executive Summary:

  • This study describes how business leaders can strategize and implement changes in organizational behavior related to valuing natural capital in their company. It is based on the practices of 26 pioneering companies (60% of them with US$10 Billion+ revenues each) across nine industry sectors.
  • Natural capital valuation is being implemented in pioneering companies as an organizational and behavioral innovation called natural capital management (NCM). NCM is rapidly becoming the new frontier for business leadership.
  • NCM refers to the sustainable management of a company’s demand for natural resources and other ecosystems services, as well as the business value chain’s impacts on their future supply. This includes evaluating and mitigating the public aspects of these impacts (externalities) that are usually unrecognized.
  • Pioneering companies are moving forward aggressively with NCM and expect to build it deeply into their business within the next 3 years. They will be much better positioned than other companies to prepare for and thrive in an increasingly resource-constrained world.
  • A strategic action plan can enable companies to overcome four key organizational barriers to change: relevance, measurement, priority, and integration. The action plan consists of four key stages that can be sequenced or pursued simultaneously: recognition, evaluation, adoption, and leadership.
  • The relationship between the strategic action plan and the implementation barriers is the strongest for measurement. Without measurement of natural capital in place, implementation success is significantly reduced because the crucial stage of evaluation gets compromised.
  • The pioneering companies implement the strategic action plan through consistent operational patterns of activities and levels of implementation.
  • These operational patterns include a top-down effort by C-level executives to get NCM recognized in the company, a top-down effort from the enterprise level to evaluate NCM, a business unit-driven effort to adopt NCM-related projects and policies for business growth, and a top-down effort to build NCM into the business. These efforts are mostly undertaken internally before being extended to the supply/demand chains.
  • Delaying NCM implementation carries the great risk for companies of losing competitively as more astute competitors use NCM to thrive in a resourceconstrained world that is already here and will hit business hard in 3-5 years.

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