NATURAL CAPITAL PROTOCOL PRINCIPLES AND FRAMEWORKDraft 26 June 2015

01

We are drawing down on our natural capital at a rate of 50 percent more per year than the earth can replenish, and this rate ofdepletion is accelerating.*

Leading businesses who recognize the risks that this poses are currently developing and using a myriad of different ways to address it.

The Natural Capital Coalition is responding to this challenge by producing a Natural Capital Protocol that aims to help business improve decision making. It will be applicable to all sectors and geographies, providing astandardized framework to follow.

* World Wildlife Fund. (2014). Living Planet Report 2014: species and spaces, people and places. McLellan, R., Iyengar, L., Jeffries, B., & Oerlemans, N. (Eds.).

Modified from original CDSBand GHG Protocol.

Simplified from GRIframework 4.

Modified from IIRC andGHGProtocol.

Principles (Draft)We suggest that the four following principles are followed when conducting a natural capital assessment to ensure that it is:

Relevant Ensure that theassessment identifies the natural capital impacts and/or dependencies that are most important and relevant for business and its stakeholders, and is capable ofinforming effective decision making in atimelyfashion.

RigorousEnsure that the assessment uses the most technically correct, from a scientific and economic perspective, information, data and methods available, and are most fit for purpose.

Consistent Ensure that the assessment measures and values impacts and/or dependencies within a consistent scope throughout. This scope will be chosen by the organization to best meet the objectives of their application ofthe protocol.

Reliable Ensure that the assessment is credible, and, whereapplicable, transparent andtraceable. Allassumptions, data, caveats andapproaches aretracked and communicated openly and honestly. This allows for verification or an audit trail, if required.

Stage 4APPLY So what?

Stage 1FRAME

Why?

Stage 2SCOPE

What?

Stage 3MEASURE AND VALUE

How?

The Stages of the Natural Capital Protocol are all connected, meaning it is possible to retrace and repeat steps that will help with decision making.

0302

01Get Started

02Define the objective

03Scope the assessment

04Determine the impacts and/or dependencies

05Select measurement and valuation route(s)

06Measure impacts and/or dependencies

07Estimate changes

08Value impacts and/or dependencies

09Interpret results

10Embed

How is natural capital relevant and important tomy business?

What is the objective of my assessment?

What is the appropriate scope to meet the objective?

Which impacts and/or dependencies arerelevant to the assessment?

Which measurement and valuation routes are relevant to theobjective andscope?

How do Imeasure the impact drivers and/or dependencies?

What are the changes in the state of natural capital related to the impacts and/or dependencies?

What is the value of the relevant impacts and/or dependencies in the assessment?

Do the results meet the objective?

What are the implications for decision making and communication?

Should I expand the use ofthe protocol in thecompany?

If so, how andwhere?

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The draft Framework is based on principles, and guides the business user through four logical stages and ten steps. Once you reach theend, the results may lead you to reconsider one or more of the steps, or to ask another question.

PRINCIPLES: Relevant, Rigorous, Reliable, Consistent

NATURAL CAPITAL PROTOCOL FRAMEWORKDraft 26 June 2015

Stag

e SCOPE What?

APPLY So what?

MEASURE AND VALUE How?

FRAME Why?

InputsKey information this step will provideGuidance on potential target audiences

Further guidance on business applications and the associated business case

Actions you will need to takeAnswer a set of questions todefine your objective:

1. What is the intended application?

2. Who is the target audience?

3. What is the business case?

OutputsExpected outputs you will achieveA completed set of answers tothe questions

What is the objective of my assessment?

SCOPE What?

02 Define the objective How is natural capital relevant and important to my business?

FRAME Why?

Get started01

InputsKey information this step will provideNatural capital concepts anddefinitions

A framework for understanding links between business, natural capital and society

A list of potential risks andopportunities

A list of ways that you might usea natural capital assessment (business application)

Actions you will need to takeIdentify relevant natural capital impacts and/or dependencies, andrelated risks and opportunities, to scope in Step 04

Identify relevant business applications to scope in Step 02

OutputsExpected outputs you will achieveAn understanding of natural capital and its importance and relevance to my business

An indicative business case for undertaking a natural capital assessment following the Protocol

An understanding of natural capital impacts and/or dependencies, and business applications to scope (in Steps 02,03 and 04)

04 05

SCOPE What?

SCOPE What?

InputsKey information this step will provideThe importance of a materialityassessment and reference to tools, techniques and Sector Guides

Specific elements relevant for natural capital including a list ofkey types of impacts and/or dependencies

Actions you will need to takeCarry out a materiality assessment (Determine which impacts and/or dependencies are most relevant and to whom, e.g. stakeholders and/or environment)

OutputsExpected outputs you will achieveA completed materiality assessment including a complete set of natural capital impacts and/or dependencies

Which impacts and/or dependencies are relevant to the assessment?

Determine the impacts and/or dependencies 0403

InputsKey information this step will provideGuidance on:

1. Organizational focus

2. Value chain boundaries

3. Value perspectives (businessand societal)

4. Measures of value (quantitative, quantitative and monetary)

5. Baselines

6. Spatial boundaries

7. Temporal boundaries

Actions you will need to takeAnswer a set of questions todefine your scope:

1. What is the organizational focus?

2. Which value chain boundary?

3. Which value perspective?

4. What type of valuation?

Consider other questions relating to:

5. Technical issues (e.g. baselines; spatial and temporal boundaries)

6. Planning issues

OutputsExpected outputs you will achieveA completed set of answers tothe questions

What is the appropriate scope to meet the objective?

Scope the assessment

06 07

MEASURE AND VALUE How?

MEASURE AND VALUE How?

How do I measure the impact drivers and/or dependencies?

Measure impacts and/or dependencies

InputsKey information this step will provideGuidance on use and selection ofsource data related to the impact driver and dependency (e.g. characteristics of consumption, emissions)

Guidance on data collection techniques for primary data

Guidance on estimation methodsfor secondary data (including information on the advantages and disadvantages of using different estimation andcollection techniques)

Actions you will need to takeCompose a plan for obtaining data

Evaluate data sufficiency

Deploy collection methods for primary data and estimation methods for secondary data

OutputsExpected outputs you will achieveA completed assessment of the drivers for natural capital impacts and/or business dependencies

Consolidated method for the business to be able to replicate assessments and monitor impact drivers, dependencies

06

InputsKey information this step will provideDecision tree to facilitate selection of a measurement andvaluation route:

A: Costs and/or benefits to business of its own impacts

B: Costs and/or benefits to society of business impacts

C: Costs and/or benefits to business of its dependencies

Note: multiple routes can be used for a given assessment

Actions you will need to takeFollow the decision tree to identify measurement and valuation route(s) for the relevant impacts and/or dependencies (as identified in Step 04)

OutputsExpected outputs you will achieveA decision on which measurement and valuation route(s) to follow

A summary of the route(s) for the relevant impacts and/or dependencies

Which measurement and valuation routes arerelevant to the objective and scope?

Select measurement andvaluation route(s)05

08 09

MEASURE AND VALUE How?

MEASURE AND VALUE How?

InputsKey information this step will provideGuidance on collecting socio-economic data to put thedata from Steps 06 and 07incontext

Guidance on the suitability of different valuation methods to the assessment, given the choice of measurement and valuation routes from Step 05

Guidance on the application of different valuation methods for impacts and/or dependencies onnatural capital

Actions you will need to takeGather socio-economic data toput the data from Steps 06 and 07 in context

Choose the most suitable valuation methods for the assessment, given the choice ofmeasurement and valuation routes in Step 05, and available data and resources

Apply the valuation methods to the impacts and/or dependencies in the assessment

OutputsExpected outputs you will achieveEstimate of the costs and/or benefits (monetary and/or non-monetary) of the impacts and/or dependencies in the assessment

08What is the value of the relevant impacts and/or dependencies in the assessment?

Value impacts and/or dependencies

InputsKey information this step will provideOverview of data, methods and models to assess how the release of emissions or use of resources can affect natural capital, and the implications for business

Guidance for different business applications

Actions you will need to takeSelect and implement an appropriate method

OutputsExpected outputs you will achieveAn assessment of the potential or observed change in the state of natural capital or its availability related to the impact drivers and/or dependencies

What are the changes in the state of natural capital related to the impacts and/or dependencies?

07 Estimate changes

10 11

APPLY So what?

APPLY So what?

InputsKey information this step will provideGuidance on how to include the protocol within current company policies/programs and training

Examples of how other companies have embedded natural capital measurement andvaluation in their processes toimprove decision making

Actions you will need to takeDecide whether the assessment should inspire a change in corporate processes and/or policy

OutputsExpected outputs you will achieveApproach for maximizing the value of the protocol within thecompany

Plans, if required, for embedding the protocol into the company

Embed

Should I expand the use of the protocol inthecompany? If so, how and where?

InputsKey information this step will provideGuidance on how to validate andverify throughout, starting atStep 01

Guidance on validating andverifying information atappropriate resolution foryourobjective

Recommended guidance standards and accreditations

Guidance on how to document limitations and evaluate confidence

Tips on transparency, internal and external stakeholder engagement, following from Step 02

Guidance on final communication and disclosure (if appropriate)

Actions you will need to takeDocument limitations and evaluate confidence

Validate and verify if required

Decide whether and how to communicate and disclose results

OutputsExpected outputs you will achieveA clear indication of the context for results in the decision makingprocess

A clear indication of the level ofconfidence at which results should influence decisions, andbe communicated

Plans for addressing identified risks and opportunities (ifapplicable)

Do the results meet the objective? What are the implicationsfordecision making and communication?

Interpret results 1009

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The Natural Capital Coalition is a globalplatform which brings together the different initiatives andorganizations working in natural capital under a common vision of aworld where business conserves andenhances natural capital.

www.naturalcapitalcoalition.org

@NatCapCoalition

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