IFC signed on to the Natural Capital Declaration, a statement endorsed by 39 financial institutions to affirm the importance of the earth's natural resources in maintaining a sustainable global economy.
Natural resources provide essential services for businesses. For example, agribusiness relies on crop pollination, the tourism industry benefits from coastal protection provided by coral reefs, and the beverage industry depends on the purification of water. Services like these could be valued at trillions of dollars per year, however they have largely been seen as "free goods" and companies often fail to make the connection between the health of an ecosystem and their business bottom line.
The Natural Capital Declaration is a step towards recognizing the value of these services. It was designed by the UN Environment Program Finance Initiative and is consistent with IFC's Performance Standard on Biodiversity Conservation and Sustainable Management of Living Natural Resources, which was recently updated to introduce new requirements for companies to systematically assess their impacts on ecosystems services and consider the ways in which their supply chains impact natural habitats. The objective is to ensure that companies look beyond their immediate project footprint and better assess how their operations affect natural resources that surrounding communities depend on.
The Natural Capital Declaration encourages development and commercial banks, insurance companies, and asset managers to embed natural capital considerations into their financial products, such as through policies and procedures that could mitigate environmental impacts.
William Bulmer, Director of the Environment, Social and Governance Department, participated in the launch of the Natural Capital Declaration at an event associated with the UN Conference on Sustainable Development, known as Rio+20.
"There is a fundamental business case for sound environmental management," Bulmer said. "Launching the NCD in the context of Rio +20 provides an opportunity for private sector lending institutions to emphasize the importance of natural capital in their decision-making and project planning. Ultimately, this can help protect our natural resources and support long-term economic growth."
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