Going green would certainly pay-off for Namibian businesses if they were to strategically introduce the impacts and dependencies on natural capital into their business models.
Prof. Edeltraud Günther, Director of PRISMA, Centre for Sustainability and Policy at the Technische Universität of Dresden (Technical University of Dresden), addressed the tenth After-Work-Talk of the Environmental Economics Network of Namibia (EENN) in Windhoek on 6 April 2018. About 80 members and other like-minded persons attended the event at the Hotel School of the Namibian University of Science and Technology.
Prof. Günther spoke about, “Corporate Strategies towards identifying, measuring and valuing the impacts and dependencies on natural capital”. She highlighted the following questions: Which capitals matter for business, why is natural capital relevant for corporate strategies, does it pay to be green, and how does it pay to be green?
She emphasized that by adapting a different thinking about natural capital and incorporating it into business models would benefit the bottom line of private and public companies and institutions in many ways.
Traditionally, natural capital has not been considered a part of a business’ balance sheet, as it had been difficult to place a value against it. It should now be considered in terms of a company’s sustainability criteria. Prof. Günther referred to Lars Sorensen of Novo Nordisk, announced as the best performing CEO in the world in 2015. He said that in the long term social and environmental issues become financial issues.
Prof. Günther said various sectors in Namibia depend on nature and Namibian should think creative and design incentives for the long term, and not short term, such as for political gain.
She said business models should answer to issues such as value proposition, value creation and delivery, as well as value capture. Businesses should not only sell products and services but also deliver effective after sales services. It is of no use if a company sells an electric car but is not concerned about the longevity and servicing of the recharging unit, she mentioned as an example.
Companies should know their customer segments and build lasting relationships through being efficient. “Customers would be willing to pay a premium if they are convinced of your efficiency and effectiveness”.
Regarding value proposition, it would be beneficial to a company selling solar panels to have the backup via a solid relationship with a company that delivers technical (maintenance and repair) services.
When developing a business model, nature could be integrated in terms of Technological, Social and Organisational groupings. Under the Technological options, one could amongst other try and maximise material and energy efficiency (dematerialization, e.g. of products and packaging), create value from waste or substitute some materials with renewables and through natural processes (e.g. Solar and wind power-based energy innovations).
As an example of creating value from waste, Prof. Günther referred to the Gondwana Collection, that is reaping benefits from the recycling of waste water at its accommodation establishments throughout Namibia.
Under Social, one could deliver functionality rather than ownership, adopt a stewardship role and encourage efficiency. Regarding functionality rather than ownership, Prof. Günther referred to the German company BASF, that equipped vineyard farms in Italy with sensors (connected to computers and the internet), that would detect when pesticides would have to be administered to the plantations, thus enhancing efficiency, curbing costs and limiting the impact on the environment.
Under the Organisational option, the repurposing of society and the environment, would entail that alternative ownerships could be considered, such as cooperatives or mutual partnership. The development of scale-up solutions, crowd sourcing/funding, collaborative approaches (sourcing, production, lobbying) are further examples.
Prof. Günther said the Natural Capital Protocol should be followed, which is a standardized framework for business to identify, measure and value its direct and indirect impacts and dependencies on natural capital.
As natural capital should be considered an asset, it would serve corporates well to use accounting in measuring the amounts, extent and condition of the natural capital in physical terms, such as metric tons. Regarding the valuation, the relative importance, worth or usefulness to people or business could be qualitative, quantitative or monetary.
An example of monetary assessment could be the life cycle such as that of a water pump. It would be wise to rather opt for a quality pump that costs more than the other. In the long run it would last longer and save costs. One should thus consider the energy efficiency, which accounts to 45% of the life cycle costing of the pump. Maintenance would account for 30%, installation for 10%, halt (when out of order) 5% and 10% for investment cost.
Prof. Günther concluded her presentation by emphasizing that nature capital does matter for business, and businesses should educate their employees to be efficient in their delivery towards natural capital.
The presentation by Prof. Günther is available here.
Also click here for some pictures from the event.