Glossary entry

Natural Capital

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Definitions

Option 1

Natural Capital means the stock of all renewable and non-renewable resources and natural assets [of which [society depends/that combine to yield a flow of benefits to people both directly (e.g. by delivering clean air) and indirectly (e.g. by underpinning the economy)], which includes plants, animals, air, water, soils and minerals.

Parts of this definition are adopted from the Dasgupta Review: Independent Review on the Economics of Biodiversity Interim Report (April 2020) (see References below).

Option 2

Natural Capital means those elements of the natural environment which provide valuable goods and services to people, such as the stock of forests, water, land, minerals and oceans.

This definition was developed by the UK’s Natural Capital Committee for its Natural Capital Valuation (see References below). TCLP has adopted it without significant amendments as we consider it will be suitable for the precedent clauses drafted by TCLP participants.

Option 3 (based on the definition in Rory's Clause)

Natural Capital means the natural assets in and around the Property including the geology, soil, air, water and all living things that the residents and community use, [which make their lives possible].

Drafting notes

These definitions may be tailored to refer to the specific ‘natural assets’ of the project or site.

The term ‘natural capital’ is used to emphasise it is a capital asset, like produced capital (roads and buildings) and human capital (knowledge and skills). The benefits provided by natural capital assets to people are either direct (for example, delivering clean air) or indirect (for example, by underpinning the economy).

In Option 3, the words ‘which make their lives possible’ narrows the definition to exclude natural assets which are not necessary for residents of the Property (as defined). Drafters that wish to use a wider definition could delete this wording.

Application

Supply chain clauses, national climate laws.

All governments, companies and organisations are reliant on the health of the natural world, and to varying extents use ‘Natural Capital’ in their supply chains and business dealings. This definition can be used when re-contracting for an obligation to promote the sustainable use of Natural Capital in the business dealings or supply chains.

Corporate governance / ESG benchmarking – where corporations are considering their impacts and dependencies on natural capital as part of their strategic and operational decision making (see National Capital Protocol in References below).

Promoting net zero land developments – see Rory’s Clause [Net Zero Land Promotion Agreement].