Swarovski turns to natural capital accounting to measure environmental impact
Jewellery giant Swarovski has calculated the monetary value of the natural resources used to produce its namesake crystals, in a move towards its overarching aim to supply "the world's most transparent crystal".
The company has been working with S&P Global’s Trucost subsidiary to develop a screening tool that places a monetary value on the raw materials and manufacturing processes used during crystal production.
The tool was used to measure the environmental impact of the 53 raw materials used to make Swarovski crystals across eight key metrics: global warming, fresh water, land use, human toxicity, marine environments, ecotoxicity, water consumption and the formation of fine particulate matter.
According to Swarovski, these impacts are measured across the life cycle of the product, from upstream activities to the end-of-life stage.
When data from corporate and supplier disclosures and academic sources were run through the tool, the natural capital cost of Swarovski crystal was found to be €2 per kilogram. Most of this cost was found to be accounted for by ecotoxicity.
In comparison, the same methodology found that mined diamonds carry a natural capital cost of €6,400 per kilogram. The figures for mined silver and gold respectively stand at €897 and €98,000 per kilogram.
Swarovski has said that it will use these findings to communicate the environmental impacts and benefits of its crystals to stakeholders and to develop time-bound numerical targets around key sustainability metrics. The company also claims that the natural capital assessment has helped it to better understand the specific environmental risks associated with its raw materials, meaning it is now in a position to launch tailored mitigation measures.
“As a brand which has been committed to positive and responsible production for nearly 125 years, we are delighted to provide clear transparency with the release of Trucost’s environmental impact assessment of our crystal raw materials,” Swarovski’s head of corporate branding and communications Nadja Swarovski said.
“This landmark study shines a light on the overall natural capital cost of Swarovski crystal, and signals our position today as the most responsible and transparent crystal on the market.”
The world’s total natural capital was valued at £53trn by the United Nations Environment Programme in 2010, with numerous reports having emerged since then presenting the potential benefits of adopting a natural capital approach.
A recent study by the UK’s Natural Capital Finance Alliance (NCFA) found that corporates across the globe are likely to miss a $1.6trn opportunity if they do not undertake natural capital accounting, such an approach integrates ecosystem-oriented management with economic decision-making and development by placing a financial value on natural resources.
Some of the world’s largest companies are now using natural capital in their sustainability approach, including Kering, Dow Chemical Company, Kingfisher, Stella McCartney and Mars. However, wider global adoption has proven slow, with a recent joint report from Credit Suisse AG and the McKinsey Centre for Business and Environment concluding that business action on preserving healthy ecosystems is falling up to $348bn short annually.
Firms like S&P Global are therefore increasingly developing tools to help investors assess the environmental risks posed to, and created by, the firms they invest in. Launched this spring, S&P Global Ratings’ ESG Evaluation benchmark tool combines qualitative data surrounding an organisation’s financial and ESG performance with qualitative analysis of its past, current and planned sustainability actions to assess its current risk exposure and its preparedness for the low-carbon, resource-efficient economy of the future. Similar tools include the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations; SASB’s new green accounting and reporting standards.