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Natural capital funds and social enterprise

Tom Kenny

The Natural Capital Committee recommended that polluters should compensate the public for damage to environmental assets. In this blog we want to entertain the idea that such compensation might be available in the near future, and explore what this might mean for the land-based social enterprise sector.

At a Policy Exchange event yesterday, the chair of the Natural Capital Committee, Dieter Helm, discussed how measuring natural capital can help make polluters pay for damage to environmental assets. While ‘marketising’ the environment is controversial to many, the fact that we need to treat the environment better is not. The government has pledged to be “the first generation to leave the natural environment of England in a better state than it inherited”. If it is serious about this, and follows the advice of Professor Helm, this would mean “a set of funding which is larger than the environmental movement has ever contemplated”.

Even if we accept the legitimacy of natural capital as a way of viewing the environment, there are still major practical and political barriers to setting up such a scheme. However, the idea has momentum. Another panelist, Mark Gough from the Natural Capital Coalition, talked about increasing interest from businesses:

Most of these companies expect the next bit of legislation to be around natural capital in some way. This isn’t just in the UK, this is all around the world. And they want to get ahead of the curve, to be involved in the conversation but also to be making sure they are in a place to be able to answer it.

With so much money in play, and with the private sector already considering the implications of natural capital legislation, there will surely be a lot of competition to take on this funding. Difficulty competing in the marketplace has been a key problem for land-based social enterprises, as the environmental and social value they produce is not properly valued at present. Were environmental assets to be valued as Professor Helm recommends, this could quickly change.

We think, and we predict a lot of the public would agree, that much of this money would be better allocated to community-based and not for profit organisations. However the land-based social enterprise sector is still relatively new and it has not yet demonstrated it could scale enough to take on greatly increased funding and responsibilities. How can we ensure that social enterprises are in a position to compete for the funding needed to maximise the amount of social and environmental value they can produce?

Our main goal here is to get the land-based social enterprise sector thinking about what these changes could mean. We’d be really interested to hear what other people think the priorities should be. Three objectives that jump out for us are:

  • Developing the sector’s reputation, experience, connectivity and political power. At the moment, the relative novelty of the sector and its lack of resources means it is not firmly established as a sector, let alone in the eyes of the market or the political arena. We need to change this by bringing the sector together, celebrating its successes, communicating its value, and developing its common interests.
  • Ensuring that the interests of social enterprises are fed into the conversation around natural capital. There is still a long way to go in developing mechanisms for natural capital accounting, compensation, maintenance and improvement. Despite the objections of many to the concept of natural capital accounting, it is important that the interests of the social enterprise sector are represented.
  • Exploring and supporting innovations that would make it easy for small, local organisations to be involved in this large, national project.

The event also covered a number of interesting topics we haven’t touched on here. If you want to hear the discussion in full, you can read the transcript or listen to Policy Exchange’s recording of the event.

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