Is Defra paying lip service to natural capital goals?

Written by: Maxine Perella | Published:
Maxine Perella spotted a rise of natural capital thinking in the government's environment plan

When Environment Secretaries clutch reusable coffee cups as they walk into 10 Downing Street, you can bet a green policy announcement is due.

And it came last month in the form of Defra’s 25 Year Environment Plan. What is interesting to me is the broader policy context behind the document – the rise of natural capital thinking within government.

The plan was produced in response to three reports by the Natural Capital Committee (NCC) on the state of natural capital, and as such is pretty far-reaching in its ambition. Taking a natural capital approach to the environment – and indeed waste and resource efficiency – is about seeing a healthy planet as the basis of sustainable economic growth, rather than an obstacle to development.

In its recommendations to Defra, the NCC noted that waste, resources, chemicals and hazardous substances were “important growing pressures on our natural capital assets” and, as such, areas where “specific and measurable goals should be developed”.

The plan itself lacks teeth in this respect, with any goals being quite vague and non-urgent. As one editorial in The Independent succinctly put it, trying to eradicate all avoidable plastic waste by 2042 leaves loopholes large enough to drive bin lorries through. However, let’s not forget, there is a new Resources & Waste Strategy waiting in the wings.

Ultimately, natural capital is about seeing the bigger picture – how the materials we consume and ultimately discard relate to not only environmental factors such as climate change, water, soil, noise and air pollution, but also social issues such as public health, wellbeing and equality.

Taking a joined-up approach

From a policy point of view, this means taking a systems perspective: rather than focusing on individual issues such as waste, energy and biodiversity in isolation, addressing them holistically as parts in an interconnected system. This necessitates a joined-up approach, not only between Defra and BEIS but also other departments such as local government, communities, education and international trade.

It also involves tougher regulation so businesses are forced to measure and manage their environmental externalities better and incorporate these costs into their balance sheets.

From an industry point of view, it could mean moving away from measuring only impacts such as waste arisings, cost of litter clean-up, even carbon, to a far more ambitious and challenging metric – measuring its dependency on the natural world.

It’s worth noting that natural capital accounting is still in its infancy; most companies still treat natural capital as an invisible cost and struggle to put a price on it. But, for example, the development of a financial accounting framework for natural capital that aligns capital investment with resource scarcity could be a useful starting point.

The plan clearly states that a natural capital approach will inform long-term policy decisions, and that is significant. To what extent, however, is less clear – it makes mention of using natural capital as “one tool among many” in any future policy formation.

Interestingly, the plan talks of the UK hosting a new major event, the International Natural Capital Conference, to “discuss new ways of incorporating natural capital approaches to long-term policy making”. A green business council to promote the business case for companies to address and report on natural capital risks will also be established.

At industry level, the government’s intention to link the forthcoming waste and bioeconomy strategies marks an important step forward. But in order to enhance natural capital rather than deplete it, much depends on how you define a bioeconomy.

If it attempts to integrate those natural systems that sustain us with economic policy then that pretty much hits the spot – but it will almost certainly require alternative metrics to GDP, our current measurement of growth.

So while I applaud attempts by policy-makers to embrace natural capital, I’m also aware that it’s very easy to pay lip service to it. How do you put an intrinsic value on nature, and then put this type of accountancy into practice to inform everyday decision-making? Well, it requires transformational change.

England therefore might do well to look at what Wales is doing with its Well-being of Future Generations (Wales) Act 2015. The Act is based on sustainable development principles and links directly to the UN Sustainable Development Goals.

It’s hugely ambitious, and will force public bodies to collaborate with each other in order to deliver the level of joined-up thinking required. It will require new metrics and national indicators in order to measure progress, and the Welsh Government is working on these.

I don’t know of another Act like it, and because of this I think it could offer some valuable lessons for those policy-makers looking to take a more radical approach to deliver the sustainable outcomes required for future generations.

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