As I have been discussing the impact of factors other than just finances on business performance, I cannot give Nature a miss, especially in today’s world of global warming and climate crisis.

The impact of any business on nature is inextricably linked to the impact of nature on business in general. Stakeholders, especially investors, treat and evaluate this issue very seriously. The Integrated Reporting Framework has included Natural Capital as one of the six pillars of a business.

To define Natural Capital, we need to discuss natural resources, energy, and others including renewable and non-renewable materials used by the business to provide its services and products. We also need to understand that when we discuss these we need not focus only on their absorption in the business. Businesses also may have processes to neutralize the effect of the waste it generates or recycle the resources to have minimal impact on nature.

Other than the fact that we only have one planet and destroying it is tantamount to our extinction, solely from the long-term business perspective it is critical to evaluate the impact of a business on nature owing to the rapid climate change caused by environmental damage. Unless we consider the relevant parameters, the regulations brought in to restrict the negative effects damaging the environment may pose a high risk to the business.

As with the other aspects we discussed, it is not only the direct in-house operations of the business that we need to consider here. We also need to be cautious of our other stakeholders to avoid unforeseen supply chain disruptions and volatile changes in the cost structure.

This is the reason why at VFS Capital we always prefer women entrepreneurs who bring in business ideas built around sustainability and environmental good. I love ideas related to recycling, refurbishing, or any other business that boosts the circular economy and gives waste a new life. We need to understand that it is high time we come out of the linear model that includes only manufacture, use, and disposal. As with most of the things we see around us in nature, this is also a cyclic process. Only then can we keep the usage of natural raw materials in a closed loop.

In this way, resources are used to their full capacity, disposal is in a form that has downstream value, the need for new resources is reduced, non-manageable waste is avoided and the life cycle of natural products is increased. In short, waste transforms into raw material, even if it is for a different purpose. Just like it happens in nature: leaves incapable of photosynthesis become manure, but still, contribute to plant health.

These are the concepts that investors and other stakeholders see as viable and sustainable in the long term.