Natural capital and externality accounting within large South African organisations
In a world with finite natural resources, the prevalence of economic models which exclude environmental impacts signals a non-sustainable business context. A paradigm shift is required to ensure that sustainable economic growth is achieved without further environmental degradation. The research investigated the organisations’ thinking surrounding aspects of natural capital, which include their interpretation, reporting and the range of valuation methods being utilised. In addition perspectives on deemed barriers and enablers to achieve natural capital accounting in South Africa have been explored with the intent to reduce potential market failures or opportunity costs incurred by society. Through semi-structured interviews with 15 experts, nine Johannesburg Stock Exchange (JSE) listed organisations across four industries, namely mining, banking, food retail and brewing, the study qualitatively explored the level of sophistication of natural capital accounting in South Africa and presents an enablement model for natural capital accounting. The results indicate that the influence of conventional economic paradigms, coupled with lack of knowledge flows and institutional voids has marginalised natural capital, creating an unquantified social cost. While institutional voids exist, there remains an opportunity for business and stakeholders to align and manage natural capital more pragmatically and create truly sustainable businesses.