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New Method Being Developed to Evaluate “Natural Capital” Of Business

A new method is now being developed to put a price on the priceless — the natural resources used in business.  The innovative evaluation system will be applied to various business sectors including the global textile industry.

The initiative was announced recently by Ms. Dorothy Maxwell of The Economics of Ecosystems and Biodiversity initiative (TEEB), speaking at the annual Textile Exchange conference, held this year in Istanbul, Turkey.

According to its web site TEEB “…is a global initiative focused on drawing attention to the economic benefits of biodiversity including the growing cost of biodiversity loss and ecosystem degradation. TEEB presents an approach that can help decision-makers recognize, demonstrate and capture the values of ecosystem services & biodiversity.”

Natural resources and phenomena, and resource usage employed in the textile sector to be assigned a monetary value under the price analysis system include water, especially in areas where water is scarce, land conversion, pollution and the cooperation of insects in the pollination process for crops such as cotton.

Specific criteria for establishing monetary or economic values for the new initiative has not been announced as of press time.  But an organization called Trucost calculates the dollar value of natural capital across the top 100 business sectors at $4 trillion annually.

According to its web site, Trucost “…has been helping companies, investors, governments, academics and thought leaders to understand the economic consequences of natural capital dependency for over 12 years.”

Puma, a major shoes, clothing and accessories retailer recently retained Trucost to conduct an environmental profit and loss report on the company’s resource use.

Trucost has pegged the value of natural capital at risk for the textile sector at $18 billion annually, attributable mainly to cotton growing and its water consumption.