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“We rely on nature for many of the ingredients and raw materials that make up our products. We are working in partnership with others to explore how natural capital can be better integrated into business decision-making.”

“…Developing tools to integrate natural capital in decision-making

Agricultural raw materials account for about half of our raw material volumes. They are the fundamental ingredients for our food and refreshment products, as well as our personal care and home care products such as detergents and soaps.

The interest in bio-based materials for these product categories is likely to increase in the future, a phenomenon which is not unique to Unilever. Global food production is expected to increase by 70% by 2050 and demand for non-food agricultural products, including biofuels, wood products, and textiles, is also expected to increase, heightening competition for land and water. We believe that it will be increasingly important to manage the demands of competing uses for these resources and their impacts on the environment.

For these reasons, Unilever’s Safety and Environmental Assurance Centre contributed to a partnership with Stanford University and the University of Minnesota called the Natural Capital Project. Consumer goods companies often rely on life cycle assessments (LCA) to establish the potential consequences of design and sourcing decisions. This kind of assessment, while sophisticated, often lacks detail about how the products impact natural resources such as land, water and biodiversity.

The project resulted in a new kind of assessment to integrate these impacts in a more detailed way. Called ‘Land Use Change Improved Life Cycle Assessment’, the approach can help researchers and companies more accurately predict impacts of new designs and sourcing approaches and is especially helpful for Unilever in the context of our zero net deforestation commitment.

Working with others to advance best practice in natural capital management

Since the USLP was launched, there has been a wide ranging global conversation on how natural capital approaches can be improved and strengthened. Many now recognise the need to move beyond managing impacts on natural capital, and consider more holistically the management of stocks of natural capital, flows of natural capital within systems, and dependencies of organisations on natural capital.

We are working with others to understand more about how to do this. One of the principal developments has been the establishment of the Natural Capital Coalition, of which Unilever is a member. The Coalition is made up of organizations in many sectors including science, academia, business, finance and government. These organizations have united under a common vision of a world where business conserves and enhances natural capital.

One of the key outputs of the coalition has been the Natural Capital Protocol, launched in July 2016, which aims to guide businesses in the identification, measurement and management of natural capital impacts and dependencies. The development of the Protocol was led by the World Business Council for Sustainable Development as part of its ‘Redefining Value’ Programme. Unilever provided technical comments on the draft Protocol and have shared outputs of the Natural Capital Project with this group to encourage wider update of the methodology developed. In 2016 we carried out an internal review, mapping the Natural Capital Protocol to the USLP to highlight opportunities for further alignment.

Taking it further – valuation

We recognise that the world is in the early days of understanding and measuring natural capital in ways that can be systematically integrated into business decision making. Current approaches focus predominantly on impacts, and more can be done to understand flows, states and dependencies.

There are important questions about whether the valuation of natural capital will assist in the integration of natural capital decision-making, or whether it is preferable to understand the value of these resources independent of a monetary value being applied….”

Read on at: Unilever.