Angeli Mehta reports on how the water firm is using natural and social capital in its sustainability accounting
Yorkshire Water road-tested the Natural Capital Protocol to help it decide what to do about a sludge landfill site that is coming to the end of its natural life. It worked with Arup, which has developed its own natural capital framework. A baseline survey provided information about habitat and land use, and what Yorkshire Water was putting into the site in terms of both landfill and vehicles visiting, for example.
Hannah James, lead adviser on sustainability at Yorkshire Water, said the company was interested in exploring whether aluminium oxide from water treatment could be recovered and the environmental implications: would it lead to degradation elsewhere?
It doesn’t matter what you label it as long as we know what the outcomes are, and they are consistent.”
A baseline of doing nothing was compared against four options: aluminium oxide recovery, house building, developing a solar farm, or handing the land to a third party for biodiversity management.
“It was quite challenging,” says James. There were a lot of assumptions and hypotheticals. “We looked at carbon pricing from the Treasury green book; case studies from other sites; then generated discounted cash-flow analysis using monetary figures for environment and social impact.” From all the research, a graph was generated showing the impacts of each option on ecosystem services such as flood protection, carbon sequestration, recreation, and food production from allotments.
The most beneficial, in terms of both natural and social capital impacts turned out to be conversion to a solar farm. The residential development was assessed as detrimental to both. When the site does come to the end of its life in a couple of years’ time, James says they’ll use the results from the case study to help decide its future.
James says that as she’s been developing sustainability accounting, she refers to natural and social capital, and it helps structure projects. “In a way it doesn’t matter what you label it as long as we know what the outcomes are, and they are consistent.”
At Yorkshire Water, an environmental profit-and-loss approach has been championed by its chief financial officer, an accountant with a geography background.
James says she is being asked by colleagues from across the business if capital assessment models can help them make decisions. Indeed, it is looking to integrate the approach throughout its entire business plan when it is next reviewed.
Just do it. Start a small project. We made lots of mistakes but gained confidence, and that has taken us forward
Last month, Yorkshire Water committed to planting a million trees in the next 10 years to reduce flooding, and support plans for a Northern Forest as part of the government’s 25-year environment plan.
It’s been mapping land to assess where tree planting will have the most impact on flood reduction, carbon emissions, recreation and wildlife. “We will also have to be pragmatic about where we can plant trees, and balance tree planting against other priorities eg tenant farmer requirements, other valuable and priority habitats like wildflower meadows and grassland.”
James says they’ve had some very valuable partnerships with Acoounting for Sustainability, and others.“Just do it. Take a small project,” she advises. “We made lots of mistakes but gained confidence, and that has taken us forward.”
This article is part of the in-depth briefing Natural Capital: See also:
Accounting for change: the drive to put a dollar figure on natural capital
Birmingham's approach to creating a liveable city
Earth Genome using big data to zero in on water scarcity
Kering gets to the bottom of its supply chain with EP&L
AkzoNobel puts a price on its impact across four capitals
How Nestlé is collaborating in building a business case
The restoration economy: why trees are the next growth opportunity
Natural Capital Protocol A4S Arup yorkshire water tree planting flood protection