This article was originally published on Trucost and is republished with permission.

Major retail property development company Hammerson and leading construction company Sir Robert McAlpine are using natural capital accounting to inform the business case for the development of a low-impact, sustainable built environment.

Until now, environmental considerations have been difficult to incorporate within the financial decision making of companies due to their different units of measurement. Tonnes of pollution are difficult to analyse meaningfully alongside capital costs and internal rates of return. Natural capital accounting changes this by calculating the financial cost to society of environmental damage, for example, from the health costs associated with pollution or the direct business costs of a loss of resource. Our natural capital, or the impacts on our environment, can now be assessed on the same terms and using the same language as our financial capital.

Hammerson and Sir Robert McAlpine asked Trucost to weigh up the natural capital costs and benefits of three energy efficient technologies on two different development schemes: solar panels and LED lighting at Southampton’s WestQuay Watermark shopping centre, and gas fired, combined heat and power (CHP) at London’s Brent Cross Cricklewood regeneration scheme. The results will improve understanding of the wider financial benefits and costs of different technologies, leading to more informed, smarter decision-making.

Anna Baker, Head of Sustainability, Sir Robert McAlpine said: “Natural capital accounting will help drive progress within the industry by providing a critical new lens through which to assess responsible construction. Taking the long-term view on the impact of our projects on their surroundings is key to creating a more sustainable future for us all. The impact of the construction and operation of a building far exceeds just the up-front financial cost, and natural capital accounting is a great tool for capturing the benefits that sustainable design decisions can bring.

Louise Ellison, Head of Sustainability, Hammerson said: “This work has only been possible through close collaboration and co-operation between teams at Sir Robert McAlpine and Hammerson and we want to share the results of Trucost’s analysis as widely as possible. A better understanding of the natural capital costs and benefits of different  technologies will drive more informed investment decision-making. This should  focus attention on technologies that accelerate the transition to more sustainable  buildings and a more sustainable future. This is absolutely essential if we are to avoid the most damaging economic, social and environmental impacts of climate change.”

Richard Mattison, Chief Executive, Trucost said: “Companies are increasingly facing higher costs due to environmental taxes and penalties, as well as reputational issues. Natural capital accounting provides companies with visibility of potential future environmental liabilities, enabling them to be managed alongside other financial risks, and highlights where there are opportunities to radically transform business to the benefit of society and profits.”

Can natural capital accounting be mainstreamed for greener construction industry?