From Ecological Protection to Corporate Interests: Exploring the Risks and Opportunities of Natural Capital | Latest Information | ASUS ESG website, ASUS ESG goal

In today's context of significant global environmental challenges, the concept of natural capital is increasingly being integrated into business management. The WBCSD's "Natural Capital Protocol" defines natural capital as the stock of renewable and nonrenewable natural resources (e.g., plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people. Natural capital encompasses all of the Earth's natural resources, such as forests, rivers, soil, atmosphere, and oceans, as well as the ecosystem services they provide, such as water cycling, carbon storage, and biodiversity. These natural capitals and their ecosystem services are not only the foundation of human life but also the primary sources of economic activity.

Natural capital differs from the recently popular concept of biodiversity. Biodiversity refers to the diversity of all species within the biosphere, encompassing genetic, species, and ecosystem diversity. Genetic diversity involves genetic variations between individuals within the same species, enabling species to adapt to environmental changes and resist diseases. Species diversity refers to the variety and number of species within a specific region. Ecosystem diversity covers the diversity of different ecosystems, such as forests, grasslands, wetlands, and oceans. In short, biodiversity is a part of natural capital.

Under the circumstances of excessive human exploitation, natural capital is facing severe threats, including direct threats like land use changes, overexploitation of resources, and invasive species, as well as indirect threats such as climate change and environmental pollution. For example, population growth leads to urbanization, extensive infrastructure construction, and conversion of forest land to farmland, destroying or fragmenting natural habitats and forcing species to migrate for survival. The extensive use of fossil fuels causes climate change, leading to frequent extreme weather events, making it difficult for species to adapt to new climatic conditions, increasing extinction risks. Industrial emissions, pesticide use, and plastic waste pollution also pose severe threats to ecosystems and biological health.

The IPBES report indicates that approximately one million species are at risk of extinction. The WWF's "Living Planet Report" shows a 60% decline in monitored species populations since 1970.

To protect natural capital and mitigate the impacts of global climate change, the United Nations has signed the "Kunming-Montreal Global Biodiversity Framework" with contracting parties, aiming to reduce threats to biodiversity, promote sustainable use, and ensure equity. The framework includes 23 action targets, such as achieving zero biodiversity loss in rich biodiversity areas by 2030, protecting and restoring 30% of land and water areas (30x30), reducing pollution to harmless levels, restoring and conserving endangered species, reducing and removing invasive species, using nature-based and ecological restoration to improve environmental change and acidification, canceling harmful biodiversity subsidies, and encouraging businesses and consumers to reduce negative impacts on biodiversity through legal measures.

Major international sustainability organizations, such as PRI, TNFD, WBCSD, and WRI, have responded to the goals of the "Kunming-Montreal Global Biodiversity Framework" by voluntarily launching the "Nature Positive Initiative." This initiative sets 2020 as the baseline year, aiming to halt and reverse biodiversity loss by 2030 and achieve full recovery by 2050.

In this context, businesses face multiple challenges. First, the depletion of natural capital will lead to increased raw material costs and supply chain disruptions. Second, stricter natural or ecological regulations require businesses to adopt more sustainable operations, increasing compliance costs. Additionally, if businesses are perceived as major perpetrators to environmental or ecological destruction, they will face reputational risks, reducing consumer brand preference.

However, natural capital is closely related to business operations, and business activities impact natural capital. For instance, factory operations discharging wastewater affect local water sources or groundwater, which may also be production inputs for the business, demonstrating the dependency of businesses on natural capital. This tight connection between the impacts and dependencies of business operations on natural capital makes natural capital issues more complex than carbon-related climate change issues. Consequently, businesses find it more challenging to avoid and reduce their impacts on natural capital, and restoring or compensating for local natural capital stocks becomes even harder.

Natural capital also presents innovation opportunities for businesses, especially in the field of artificial intelligence (AI), which shows enormous potential in biodiversity protection. AI technologies can enhance and optimize businesses' management capabilities of natural capital and generate innovative solutions to address the increasingly severe natural capital crisis.

According to Nature4Climate, there were 162 VC investments related to nature-based technologies in 2022, amounting to $1.56 billion. The agricultural sector received the highest investment, about $985 million, followed by environmental monitoring, blockchain, and other supporting technologies at $355 million, marine sector at $68 million, water resources at $48 million, biodiversity sector at $67 million, and forest sector at $37 million.

AI can be applied in natural capital fields, such as using machine learning algorithms to analyze GIS data to track habitat changes and species distribution, detecting ecosystem anomalies in real-time, and eliminating environmental disturbances. By simulating ecosystem changes under different environmental conditions, AI can develop more effective and localized conservation measures, optimizing species' living environments. Blockchain technology can improve the transparency and traceability of natural capital supply chains, preventing and reducing overfishing or deforestation, thus reducing ecosystem pressures.

ASUS has committed to implementing ecological restoration plans and environmental education actions to reduce environmental impacts, with specific commitments such as achieving zero net deforestation by 2050, no net loss of nature and biodiversity, and net positive impact. ASUS, referring to the TNFD framework, released the "Natural Impact Assessment Report" in July 2024, aligning with international trends.

ASUS's natural capital impact assessment framework is based on management actions within the value chain and carbon sequestration actions beyond the value chain. Management actions within the value chain cover natural capital depletion and environmental quality degradation, with the assessment foundation based on the previously released Environmental Profit and Loss (EP&L) evaluation. It also includes ASUS's management practices for responsible minerals and suppliers' ecological impacts, aiming to reduce the impact of ASUS's operations centers and suppliers on local ecosystems. The company sets annual management indicators and goals for performance management, aligned with ASUS's 2025 sustainability goals for responsible manufacturing.

Carbon sequestration actions beyond the value chain refer to increasing ecosystem carbon absorption through restoration and optimization of global carbon sequestration functions to mitigate climate change impacts in a carbon-negative manner. ASUS and the Kuan-Shu Education Foundation responded to the Ministry of Agriculture's natural carbon sequestration project, joining the Carbon Sink and Biodiversity ESG Project Matching Platform. They actively participated in the Daxue Mountain Middle-Altitude Pangolin Habitat Enhancement and Conservation Project, becoming one of the first successfully matched companies. Chairman Jonney Shih publicly announced ASUS's natural capital strategy map and goals at the platform launch event on September 2, supporting natural capital issues with concrete actions.

Natural capital has multiple implications for business management. First, the risks posed by natural capital depletion and loss are significant challenges that businesses need to address seriously. Companies should identify and assess the impacts of natural capital loss on their operations and develop resilient strategies to ensure supply chain stability. By diversifying supply chains and using recyclable resources, businesses can reduce the risk of resource depletion and dependence on natural capital. Secondly, consumers are increasingly valuing corporate social responsibility, and investments in natural capital can enhance brand image, increase consumer brand preference, and willingness to purchase eco-friendly branded products, thereby boosting company revenues. Additionally, protecting natural capital can stimulate corporate innovation potential. Utilizing digital technology and AI applications can reduce environmental footprints and improve resource utilization efficiency, developing sustainable products and services, providing innovation opportunities, and strengthening competitive advantages.