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How to integrate natural capital into business decision making
In this episode, EY’s Chris Hagler welcomes Mark Gough and Carter Ingram to discuss the integration of natural capital into corporate decision making.
Related topics
As society looks towards making decisions for the long-term prosperity of people, it is becoming more clear that organizations need a deeper understanding of the value of natural, social and human capital in order to have a stronger fact basis for decision making.
The Natural Capital Coalition brought together many competing initiatives to create one internationally accepted framework. Organizations can use this framework to incorporate the value of capitals into their everyday decision making.
Key Takeaways
- The use of capitals thinking can help businesses ensure that their decisions are not based strictly on financial figures, but include the important natural, social and human elements of their organization.
- Measuring and valuing capitals helps companies transition from big commitments and statements into day-to-day actions.
- A capitals approach should support decision making and underpin an organization’s business strategy, not compete with it.
- Stakeholder engagement is a key component of using the capitals approach effectively. The protocols are just the first step, bringing people together to discuss the issues together is where transformation begins to take hold.
For your convenience, full text transcript of this podcast is also available.
Chris Hagler
Welcome to Sustainability Matters, a podcast series of EY. My name is Chris Hagler. I’m one of the leaders of our Climate Change and Sustainability practice, and your host for this series. We designed this podcast series to provide leading trends and practical advice around environmental, social, and governance, or ESG issues, and opportunities facing business today.As we are recording this podcast today, individuals, companies and governments are dealing with a global pandemic caused by the coronavirus. In dealing with this pandemic we are all coming to the realization that we are dependent on people, society and nature. And as we look to make decisions for long-term prosperity of our people and institutions, we are more keenly aware of the need for deeper understanding of the value of human and natural capital and a stronger fact basis for better decision-making.
With me today is Mark Gough, Chief Executive of the Capitals Coalition, and my colleague Carter Ingram, who works in the Climate Change and Sustainability Services practice here at EY. Mark, can you give us a little bit about your background and your role at the Capitals Coalition?
Mark Gough
My name is Mark Gough. I’ve been with the Capitals Coalition now for five years. Originally, it was the Natural Capital Coalition, which has united natural, social and human together now as the Capitals Coalition. My background: I’ve spent 20 years in business working for large organizations helping them develop their strategy and approach to things, and through that I found that I needed a better way to help the businesses I was working for to understand their risks and opportunities and Capitals has provided that in a very simple, usable way to be able to do that. And I left a very good job, very good prospects, very good pension to come and work in this small organization, much to the chagrin of my wife, no doubt. But it feels like we’re really getting momentum now around some of this work. And it’s helping many organizations to change the way that they make decisions.And the next stage is to really look at how we can change the system. So, for this we need to have at national and international levels, we need to have — and local and regional levels — we need to have a way that this becomes the new normal. How does this build into day-to-day decision-making for all of these organizations? And if we have succeeded in changing the math, changing the conversation and changing the rules, we should lead to changing the system.
Hagler
Carter, thank you for being with us today. Can you tell us a little bit more about your background and your work at EY, and your work with the Capitals Coalition?Carter Ingram
Thanks, Chris. I’m Carter Ingram. I’m a senior manager in the Climate Change and Sustainability Services at EY with Chris. And I’ve been working with EY on natural capitals since coming to the organization about five years ago.When I first arrived at EY, EY was a part of the Natural Capital Coalition and was supporting the development of the Natural Capital Protocol at the time. And shortly after that, I worked with an EY team, and with Mark, and other organizations to pilot the Protocol in a developing country with the coffee sector to learn more about the applications and feasibility of applying natural capital frameworks and approaches in a developing country context.
And since then at EY, I’ve worked with a range of clients in different sectors to explore the barriers and opportunities to implementing natural capital approaches to support decision-making. That’s included identifying and managing natural capital risks through a business’s supply chain, identifying new opportunities presented by natural capital and integrating natural capital into sustainable sustainability planning and programming, including setting sustainability goals and targets, and tying those in to long-term business strategies.
And we’ve also more recently been working with the Natural Capital Coalition to develop a community in the US to exchange knowledge, learnings and experiences on using the capitals framework to support decision-making in business.
Hagler
Carter, you mentioned “protocol.” Is there a specific framework that Capital Coalition uses to help measure these natural, social and people capitals?Ingram
Yes, I think that has been one of the biggest and, I think, earliest contributions of the Natural Capital Coalition to develop this harmonized approach to measuring and assessing natural capital to support business decisions. And Mark, I’d love for you to talk about that a little bit because you led the coalition during the development of the Protocol, and you’ve been overseeing and supporting its use around the world.Gough
In 2012 at the Rio+20 Summit, we had a situation where there were already 35 to 36 different approaches that businesses were using on natural capital. I was actually working in a business at the time, and I looked through all of the other approaches and decided that they weren’t good enough. So, what I did was I created the 40th version of that, and then I came to my senses and realized we don’t need 40 different approaches. That’s the last thing we need is yet another approach. And the Coalition, Carter said then, that the most important thing is that we develop this guidance. And I think it is very important.The best thing about the coalition though has been the community that’s been created around it. And all of those organizations that have written those different approaches, those 40 different approaches — and whether it was from the big accounting firms like EY, or whether it was from the World Bank, or whether it was from individual companies and organizations — they all came together. They buried their egos, and they developed the Natural Capital Protocol, which is an internationally accepted framework to follow to apply the capitals.
This has now been followed by the Social and Human Capital Protocol, which follows exactly the same four stages, nine steps to take you through in a very logical way to be able to include capitals in your everyday decision-making in your organization. And this has now been supported by many different forms of guidance. So, we’ve done guidance for different sectors, such as the food and beverage sector, also for forestry and other issues like that. And we’ve also taken it out into supplementary information around, are we really capturing the impacts and dependencies around biodiversity? That’s a much harder issue than climate and water and various other issues to include.
So, we’ve done extra work on that. We’ve looked at how we connect this through to the financial sector on financial sector guidance, combining finance and natural capital. So, the financial sector is using the same language that we’re seeing the businesses are starting to use around capitals. So, this guidance has been downloaded from our website many thousands of times. We’ve got people all around the world applying it and the latest figures from our website, 95% of the countries of the world are now accessing information around capitals to be able to apply it in their organizations.
Hagler
I’m sure corporations are so happy that you’ve coalesced on one instead of 40 different protocols for measuring natural capital. If you could talk to the people that do ESG recording guidance and get them to coalesce around one that would be really helpful for our listeners as well.Gough
I think that’s a really important point there about ESG and about disclosure. What we’re doing with capitals is very much about the internal decision making.A lot of the work that’s gone on in the sustainability space has been about that disclosure, and we’ve been focusing on making sure that ESG disclosure is all progressing. It’s an extremely important part that we do report correctly, but if we haven’t got anything to report in the first place, if we hadn’t made those changes within the organization, if we haven’t used capitals thinking, we don’t have a change to actually report to our stakeholders in the financial community.
So, that’s where these two different parts — what we’re doing is we’re focusing on a bit that’s often been left out, actually, that internal management decision-making. Can we make sure that every decision you make doesn’t just base itself around financial figures, but also includes natural and people as well? And I when I get my board papers for the boards that I sit on, I get the papers and often it will tell me why we should make a decision based around the financial numbers. They’re extremely important.
Of course, they are. But there are lots of other things that help us trade off the way that we make those decisions. When we buy a coffee in the morning, we buy it because of the influence of our friends, and our colleagues, and various other things. And decisions in business are made the same way. It’s about the momentum, it’s about the way that people are feeling. It’s not just down to those financial numbers, no matter what we hear people say.
But there isn’t a structured way to include those other things in those board papers, and that’s what capital brings in. Capitals brings in this idea that we can make informed decisions that really live up to what we are trying to do on day-to-day basis as people within our business life.
Ingram
I’m so glad you said that, Mark, because often we say you can’t manage what you don’t measure, but you also can’t really measure what you don’t manage. And I think that’s exactly what you were touching on. That we really need to make sure we’re providing the right tools and approaches so that organizations can make those decisions that are so critical to the organization internally.Gough
I have to pick you up on that, Carter, though, I think. Because this saying that we say, “You measure something and then you manage it,” I actually disagree with that. And we’ve heard this for many, many years. I think if you measure something you get some nice numbers. And actually, those numbers very rarely actually change decisions. The bit that’s been missing out there is the context, what we would call value. And value doesn’t have to be money. Money is one form of value, but you can also have qualitative, quantitative and other forms of value there. Value is really what is important to us. The relative importance and worth.And what we should be saying is if you measure something, and then value it, you then can manage it. And you have to understand the context of those measurements. If you just measure, and say, a good example might be a thousand tons of carbon being produced by this building this year. The only reason you would act because of that thousands of tons of carbon might be because of compliance, you have to. It might be because of competition with your peers, or someone like one of the people probably on this podcast today or someone listening to it, standing up and saying, “I think we need to do something.” An advocate trying to change the system.
Now that isn’t enough really to make those changes, and that’s why we haven’t been able to embed this. What we need to do is have that context around it. Not just that thousand tons of carbon, but what is that actually doing? How is that affecting people’s lives? What is changing in the environment in that context, that value? If we get that, then it becomes an imperative to act.
Ingram
Yes, I a hundred percent agree with you. I think that’s so important.Hagler
And Mark, are you seeing more and more organizations take this up? And if so, why? What do you think is behind companies picking up this idea of valuing natural, social, human capital when the concept’s been around for a really long time, but they haven’t necessarily been doing it?Gough
Since we’ve brought everything together with the Natural Capital Protocol initially, we’ve been overwhelmed by the number of people that are interested in picking up this concept. So much so that we haven’t been able to be that proactive in going out and finding people. We’ve had so many people coming to us, and that’s a great place to be because doors tend to only open one way. And this is all opening positively towards this concept.And I think the reason why is that we’ve got lots of high-level statements, and there are so many commitments out there. There are so many agreements on how we’re going to deal with climate change or loss of nature or inequality that are out there and people are trying to apply, but that’s very much at a boardroom level, but getting that embedded into the organization is so difficult. We need a language. We need a way of thinking about it, and capitals provides that transition from those big statements that we make into day-to-day operational decisions.
And that’s why there’s been so much pick-up with this. We’ve seen it significantly in certain sectors. So, food and beverage, and apparel and clothing, we’ve seen significant pickup there where’s there’s a very obvious connection through to nature and through to people. Not so much in some of the service industry, and I think that’s starting to evolve a bit further now with more people coming forward.
There are some challenges with this though, and we see people coming to us with a real enthusiasm, but one of the biggest challenges is then going back into their organization and convincing the rest of their teams, their risk team, their CFO, their various other people in their organization about why this is important to them. There are still some challenges around that. We’ve got lots of piloting going on, lots of people testing this out. I think we’ve got some way to go before this is really becoming a mainstream approach, and I think there will be still be lots of people — maybe even listening to this podcast — that this may be even the first time they’re experiencing it.
I think the thing is, as well, is that lots of companies that are using it, aren’t necessarily going out there and reporting the results yet. So, a lot of them are using this for internal decision-making. And maybe an example might be if you’ve got a hole in your backyard you don’t go out and tell your investors, “I’ve got a massive hole in my backyard.” What you do is you work out a way to fill it first.
So, a lot of organizations are coming to this, a lot of businesses, and are saying, “I know that I’ve only got one week’s supply of sugar left,” if you’re a soft drinks company, “in my supply chain. I know that the COVID virus is going to affect supply chains. I know that all of these issues are on, but I don’t know how to necessarily embed that into my business.” So, they’re using capitals to do that on a day-to-day basis. They’re not necessarily disclosing this yet. So, we’ve got some way to go before this becomes common practice.
Ingram
And Mark, when you’re talking about that person who is trying to convince people within their company to take this approach, what are some of the business case components that you would encourage someone to think about as they try to convince their colleagues or engage their colleagues in taking a capitals approach?Gough
There are several things that really help individuals to explain this internally. First of all, I think this really does sit with the financial department and with the CFO. This is something we’ve seen again and again with organizations. And in fact, in several, recently, that have been doing this work for four or five years now, what they’ve been able to do is literally hand this over to their financial department. So, it’s no longer sitting in sustainability, this is running in the core of their business, and that’s where it should be.These are core decisions. These are business decisions. So, that’s the first thing. So, making sure we’re engaging with those. And we’ve got a whole program of work at the moment, We Value Nature, which brings together quite a lot of the coalition organizations to help to train up and skill up the right people, whether that’s in accountancy or whether that’s in finance departments or other departments within an organization.
The language skilling up people is extremely important. Some of the business case, as you say, about why this is going to be necessary. Several of the pilots that we’ve seen, and they’ve been done for a very limited amount of cost, might just look at one single product or project. And when they’ve able to do that, they’ve been able to show quite quickly some considerable insights that were not available before.
So, with a big car manufacturer that was using this work a little while back, they identified two materials that had fallen below their risk thresholds. So, previously they wouldn’t have shown up in a risk analysis. They showed up through a capitals assessment. That was significant. When they took that through to the finance department and said, “These two materials that are in there, one of them we should exchange out quite quickly; the other one is actually a significant impact upon the environment, and we should consider what other options we have.”
When they took that to the CFO, they took that with the idea that they might take two to three years to start embedding it in. The CFO turned around straightaway and said, “No, look, you’ve just made significant breakthroughs with this. We need to do this now.” And that automatically went through to some significant strategic decisions in the organization and became almost a de facto way of every decision they were making there is now including this concept around it. So, there are some good cases.
I would pick up just briefly, if I may, around a business case as well. When I worked in business for many years before coming to this organization, I was often asked for a business case only ever after the decision had been made. And I think we’ve got to be aware that we need to develop robust information. But decisions are not made just on the information on the page. Decisions are made by making sure you know your audience, you know the rest of the people that need to be engaged, talking to them — the stakeholders — and coming to that conclusion, and then having the evidence to back it up. So, a lot of it is not just made on evidence alone. We have to understand the complexity of how we make decisions, and that’s at the core of this.
Hagler
Carter, I know that you’ve worked with clients as well on using this information for decision-making. I really liked your example, Mark, where you were talking about the auto manufacturer that really found risk in their supply chain and addressed it. And Carter, I know you’ve worked with some clients like that as well, and maybe you can tell an example of where companies used natural capital or social capital to inform their decision-making?Ingram
Yeah, absolutely. So, similarly, we were working with a client a few years ago, a large agribusiness client. They were very focused on addressing water risk. That was one of their priority natural capital areas, their sustainability areas of focus. We worked with them to do a natural capital assessment across their supply chain to look at where the biggest risks were with respect to natural capital and tried to put a value on that. What were the unpriced risks that had they been valued would really create a risk to the company?And what we found is that, rather than it being water, as they had been focusing on, actually, land use was the biggest risk in the supply chain. So, that was really important and really interesting to see that using some of these natural assessment tools and approaches would help us really identify some of the previously undervalued risks that could pose a significant challenge to supply chain management.
Hagler
Armed with that information, how did their decision-making change at that organization?Ingram
Yeah, so, that informed a refresh of their sustainability strategy and a renewed focus on land use as well as water in their new sustainability strategy.Gough
I think that’s interesting, Carter, as well. Because what often we find with this is that you cannot do a circular economy approach, your overarching sustainability strategy. You need to have underpinning that a good understanding of your relationship with nature and people.So, capitals is not something that is in competition with whatever it is that these organizations have already got in place, whether they’re looking to deliver the sustainable development goals. Whether they’ve got their own business strategy that they’re trying to deliver, this is one of those tools that helps you to underpin that and give you the information that you’ll then see coming out more broadly in new targets, new approaches that they may be taking. It’s not something which is in competition or should be, “Oh, I won’t do a capitals approach because I’m already doing a circular economy one.” You can’t do that. You have to do both. You have to connect them up.
Ingram
Absolutely. I completely agree. And I would say every client that we’ve worked with in doing broader sustainability programming or ESG strategy development, in places where it’s been relevant, the natural capital tools and thinking have been an additional lens through which we think about the issues and the solutions that they may explore as part of their sustainability journey. And quite frankly, their long-term value journey, which is really important.And Mark, I think you were touching on this earlier. Natural capital, and human capital, and social capital aren’t just relevant to sustainability offices anymore, it’s part of the wider organization. It’s important to the CFO. It’s part of the full long-term value proposition of a company. So, linking it to the CFO’s office, to broader business strategy is really important, and I think these tools are helping organizations do that.
Gough
One of the things, if I may just add in there as well, is there are lots of tools that underpin this framework. So, the framework that we’ve got on capitals and whether you work with any individual firm and they have a different branding for it, it all falls underneath this international framework, which has been accepted.But there are lots of tools that you might find to value water, to value carbon emissions and how you might go about biodiversity or about people and living wage, etc. We’ve put all of those together as well to make this more simple for the users onto one system, the MIT SHIFT system, where you can find all of those tools and filter through them based around your questions to find the right tools for you. Because I know it can be confusing for people to see a wealth of different tools out there, even if they’ve understood the framework, to know which one might be right for them.
So, those tools are being simplified. We are getting coherence and harmonization around those as well by being able to bring them together all on one platform.
Hagler
Mark, it makes such good sense to me that this is information that is useful for a company in decision-making. Why wouldn’t you want to have a better understanding of the impacts that these capitals have on your organization when you are creating strategies, when you are looking at risks? But as you said, it’s becoming more popular, and what do you think the obstacles have been to make this a normal part of everybody’s decision-making and what can we do to overcome those obstacles?Gough
There are significant obstacles here, and I think they probably break down into four areas. The first of it is around the math. How do we actually add all of this up? How do we do the accounting bit? That’s often seen to be too complex, too difficult, and we hear that quite a bit. “Well, I can’t do a capitals assessment. It sounds too technical. I need to bring in external help.” It’s becoming simpler, and that’s because we, as humans, are very good at understanding complexity. It’s only complex until we understand it, and I think the communities that are coming together through the coalition and all around the world that are looking at this are able to simplify that. So, changing the math is the first thing.The second thing is changing the conversation. We’ve got here lots of different ways of talking about this, and we’ve already started to harmonize that work. In its first phase of rollout, we’ve been able to connect up some of those conversations, build communities like the local community that EY is helping to host in the US. And we’ve got those all around the world now being set up. In fact, we were running some webinars this morning in Uganda, in Africa, where there’s a blossoming community growing up there as well now around this. So, the conversation — changing that is a second thing that really needs to be done, and it’s been a blocker here.
The next one is around the incentive mechanisms and rules. So, it’s changing the rules. How do we actually make sense of all of those other parts of the system? And most people, when they start applying this — there’s a particular agricultural company, a food and beverage company, that once it got to its eighth or ninth application on a small individual area, it came back to us and said, “You know what? We can’t do this without the other stakeholders in this watershed. We can’t do this unless we actually change incentive mechanisms that are coming through from the rules and the regulations that we see.” So, working not just at the international level with the big international conferences, but also being able to unlock that at a national or a regional or even a city level is really important. So, changing those rules is the third one.
The fourth one has to be about the new normal, as you’re saying, the changing the system. How do we actually get this into day-to-day parlance? There are a lot of people that understand the benefits of this, but actually getting this to become a standardized approach, we’ve really got to start moving towards that. And I think the Protocol, if you have a look at that, that was very much in the language of “you could do this.” You could do this assessment; you could use this approach to valuation.
We’re now moving into the next phase, which is “you should do this.” And we can see this coming through with lots of different organizations saying, “Well, actually, you should do this now. This is really important. This is critical to your business. This is a risk to your business. There is great opportunity there. This is something you should be doing.”
The next phase, we can see this coming already, there’s legislation coming through the European Union at the moment, the European Commission on certain areas. There are other areas in the world like Indonesia where we’re starting to see some regulation. This is coming. This is a piece of work that we can see. You will be required at some point in the future to be looking at this and that is going to be a significant driver for certain people. When your lawyer turns around to you and says, “You’re going to need to be including this.” And that’s going to be a breakthrough moment, and I think we can see that coming at the moment very closely.
Hagler
Well, you just preempted my next question, which is what do you see next? (Laughs) But that’s part of it, right? Potentially increased regulation in Europe. Probably slower in the United States or other parts of the world. What else do you see as next for the concept in general and for your organization, Mark?Gough
I think it might move faster in certain areas of the world definitely, but I think you’ll find certain states particularly, as we know, California and various others in the US, that are likely to move faster on some of this even if it isn’t necessarily nationally around the world in each country.Other steps I can see coming quite quickly at the moment, we’ve just started a project in the last couple of weeks to rewrite the generally accepted accounting principles to bring in the natural capital into those principles that are used by all businesses around the world. We’re working very closely with XBRL, about how do we make sure that this work becomes integrated into the XBRL, which is the coding system that many of your listeners may be aware of that is used by companies to understand what that is that they’re reporting.
We’re working very closely with the Impact Management Project at the moment, which is bringing together all of those ESG and reporting side of things, the SASBs, the GRIs, and those others, and we’re making sure that there’s a bridge being built between what we’re doing on the management accounting decision-making through to that disclosure. And we can see that’s starting to build up over this next period of time.
We’ve got a very active community. We’re over 370 organizations at the core and about 20,000 more globally. And out of those 370, there are 30 that have stepped forward in the last few months that are going to be leading different projects that are going to take this forward. So, we’ve got SHIFT, which works with human rights, which is going to be looking at the human rights and living wage issues at the moment. Now how does that connect in?
One of the interesting facts that I’ve found out recently is that the plastics in the oceans, a lot of that is connected back to how much we’re paying people in poverty, and that’s how the plastic is getting into the oceans. It shows the connections that actually an environmental problem is actually being led by a social issue. And actually we’ve got to see those connections if we’re going to solve these issues. It can’t be done individually, and that’s what the SDGs, the sustainable development goals, shows us very clearly how they’re all connected.
Ingram
I love the way you said all of that, Mark, and I think taking the systems approach where you’re looking at some of these natural capital and human capital challenges as taking a systems approach to understand the full scale of the problems is the way that we’ll find solutions and answers to some of these challenges.Gough
And it has to include all of the stakeholders as well. Particularly the work we’ve just been doing in Africa, it’s very obvious. If you did not include the people that are being impacted upon when you’re making those decisions, you may think you’ve come up with a solution for a while, but later on that comes back to you, and we’ve seen that time and time again. You have to include all of the stakeholders. It has to be a collaborative effort, and that’s how we’re going to create this transformational change in decision-making by including all of those that are going to be involved, whether it’s the international organizations, the businesses, the financial organizations, the science and academia, the nongovernmental organizations. All of those people have got to come together to find the solution. It can’t be done alone.Ingram
What I like about what you’re saying, too, is across all these different scales from the community scale all the way up to the international scale. I remember when you and I were working on a project a few years ago, one of the things that came out of some of our research and analyses was that one of the things that stakeholders found most valuable about using the Protocol really after it came out as a framework and way of thinking was that it really brought people together. That was one of the biggest benefits we heard when people were talking about the value of using that kind of framework.So, I think we’ve been seeing that as well. Just getting the different people around the table to focus on these issues together can add a lot of value and really further conversations and new conversations in many cases.
Gough
Definitely, and it feels sometimes that this is a very big, enormous thing to do, a very systems-based holistic thing. It’s very practical though on a day-to-day basis. What we see is that it gives an opportunity for the sustainability team to sit down with the risk and the finance teams, and the operations teams and others and practically talk about something. And it’s very real. It’s not something which is another high-level commitment. It’s a very real, practical application of this which gives you robust data to make more informed decisions.Ingram
And I think it’s so interesting, Mark, to hear about all of the different entry points that you’re talking about, for lack of a better word, from communities, businesses, all of the different organizations you’re working with. The accounting standards, if you can influence that, that’s a big change as well. One group I’m curious to hear your thoughts on are the rating agencies. How much are they taking on natural capital in their assessment and rating of companies. Is that an audience that you’ve engaged with very much? I know they get a lot of attention in the private sector.Gough
Definitely, and that connection between the financial community and the businesses is extremely important. One of the things that we’ve been doing a lot of is taking an issue. So, for food, at the moment we’re working in seven countries around the world looking at food system change. And what we’re trying to do is connect up all parts of the system there as well. How does the stock exchange in that country actually function, and how does that work in relationship to the businesses, to the other rating agencies, etc? This is really important to get that connection.When we started the finance work a couple of years ago, we purposely launched in Hong Kong thinking that that would be quite a challenging market in Asia to try and bring these concepts in. And it was. It’s taken a year or two to really start getting traction on this. And we did an event in November at the end of 2019, and we had standing room only. So, things have changed considerably over the last couple of years in this space.
In the rating agencies, we’ve got one of the big rating agencies that has joined up very recently to the coalition and is making massive strides in this area. And we’ve got plenty of the others as well that are very active in this, but S&P Global is the one that’s joined up more recently with us, and they are doing some really interesting things. And we can see, starting to see a transition here and how we connect things together in the ratings space. The World Benchmarking Alliance as well is very active in this space, a new organization that’s just recently come out looking at some of that benchmarking and rating space.
So, I think there will be changes. It’s not there yet, but it’s definitely coming. I think you’re right, Carter, that the rating agencies and the financial community are going to be very important in this.
Hagler
Mark, Carter, thank you both so much for thinking about this and helping us understand more about the capitals, that Natural, Social and Human Capital Protocol, the use of it. A couple of key learnings. I’ve had one for sure. This supports what companies spend most of their time on, decision making, and it’s not in competition with reporting or reporting protocols, which should be less percent of the time that a company spends reporting and more time on actually decision-making. I thought that was really a useful perspective to have.And the other piece that I think is really important is the Protocol is getting easier to use, it’s easier to access, and that’s very important. And stakeholder engagement is just as important as the use of the Protocol itself. So, I really appreciate the insights that you’ve shared here. As we wrap up, is there any last thing that you want to make sure our listeners hear, Mark?
Gough
Thank you so much for the opportunity to have this conversation with you today. Just to round up on this, capitals as a concept can really help you on your day-to-day decision-making. Pick it up, give it a go. And the key thing about this is there’s a really big community out there that can help you to do that.EY has a lot of resources to help you to do this, and there are lots of other people out there as well. Come to this community, we’ll work through this together and we can find ways. We’re still developing it, but it’s becoming simpler every day. Pick up the Protocol, come and have a look at some of the case studies and give it a go. It’s the best way to find out really what this means for you. How you can make better decisions, how you can reduce your risk and create better opportunities for your organization.
Hagler
Awesome. Carter, any last comments?Ingram
I just want to echo what Mark was saying. I think it’s such an important way the Protocol really provides an important framework for supporting decision-making and bringing together different parts of an organization across risk, finance, operations to address challenges together. And I think we’ve seen that in our own work in bringing together people from very different parts of an organization to address challenges. And it has been so useful for us in our work with clients to uncover risks that hadn’t been identified or maybe fully appreciated before, new market opportunities, and ways to set strategy and bring additional value to longer-term business strategies.So, I’m really excited that the Coalition’s work continues to evolve and continues to support practical decision making, and alongside that, bringing stakeholders together in building a community of practice and really identifying all the parts of the system that can benefit from this kind of information and this sort of framework. I look forward to following you, Mark, and all the next steps you guys are taking.
Gough
Thank you, Carter.Hagler
Me too, Mark. I’m sure all of our listeners are, too. So, thank you both so much for taking the time to talk about natural, social and human capitals.If you’d like to know more about the Capitals Coalition, please follow them @NatCapCoalition on Twitter. And you can check out their website, which is thecapitalscoalition.org. If you want to follow my good friend, Carter, she’s on Twitter at @jcarteringram. And she’s also quite active on LinkedIn. And I happen to know she’s working on a new story. So, you check her out there. And please follow me @chrishagler and EY Sustainable Impact hub @EY Sustainable. And please subscribe to this podcast on iTunes, Google Play or wherever you get your podcasts.