The transition to natural capital management is a prospect as daunting as it is exciting. Once you map your natural capital risks, it becomes clear that they are complex, multifactorial and interconnected. Value can be created – or destroyed – at every level of your organisation.
This has implications for many of the processes and systems that underpin operations. In particular, companies that have begun the journey are finding that natural capital management requires a much more collaborative approach, with real implications for their human capital management.
Human factors
The starting point is usually to consider whether the right people in the right places have the right power. Do the people who have visibility over these newly identified risks have the authority and resource to deal with them or a workable mechanism to escalate them? Sustainability functions too often sit outside the mainstream of corporate decision-making and struggle to influence decisions that impact on natural capital. A thorough review of risk accountabilities, reporting lines and key performance indicators is warranted, and the traditional decision-driving powerhouses of finance and marketing may need to cede some space to other functions.
What’s more, the management of natural capital often cuts across reporting lines, and accountability can shift rapidly. Take an airport that holds a significant amount of land as a buffer zone. Deciding on the use of that land and monitoring the value it creates is likely to involve ongoing contributions from experts in safety, environment, finance, community, engineering and marketing. Who is responsible for optimising that land use and monitoring changes (such as community expectations, new airfleet, potential for renewable energy use or natural climate solutions) that could impact it? In reality, it will take collaboration to build, and to maintain, its value.
Once you realise the silo is the enemy of value, solutions start to emerge
All of this means you need to focus on building your organisation’s collaboration muscles. And it is challenging: differences in terminologies, methodologies, professional cultures and even in the actual brains of the people who are drawn to specific types of work can pose real barriers.
But practice makes perfect, and once you realise that the silo is the enemy of value, then solutions start to emerge. For example, organisational effectiveness reviews can raise a flag if there is not some cross-functional reporting line or forum for every role. Collaborative behaviours need to be identified and rewarded, and recognition awarded to those who support the achievement of goals outside their direct responsibilities.
Data
The cliché that data is the lifeblood of an organisation holds true for natural capital management. New metrics may be needed to support your decision-makers, and signals and signposts be made visible across functions to reduce the risk of unforeseen impacts.
Given the levels of complexity and change, there’s a real risk of data overload. New skills in data management and analysis may be required in new places within your organisation. Micro-credentials and cross-functional training can also help to equip your teams to filter the signal from the noise.
More information
Read Vanessa Richards’ columns ‘Valuing what makes life possible’ and ‘Are you TNFD-ready?’ as well as our features on the TNFD guidelines for natural capital reporting and nature-related disclosures.
Visit ACCA’s Accounting for a better world hub for articles and resources, and read ACCA’s guide to preparing for sustainability reporting.
