Yesterday, the World Business Council for Sustainable Development (WBCSD), in collaboration with Valuing Nature, launches the Corporate natural capital accounting – from building blocks to a path for standardization report, as a contribution to the EU Life funded Transparent project. To realize the ambition of a sustainable financial system and economy that allows for 9+ billion people living well, within planetary boundaries, by mid-century, we must understand how business impacts and depends upon nature, valuing natural capital in our decision-making. This report provides an overview of corporate natural capital accounting resources and applications, identifying best practices, challenges and standardization opportunities.
Mario Abela, Director, Redefining Value at WBCSD said “We can no longer afford to attach a zero price to externalities and our failure to account for the use of natural capital has led to nature loss and degradation. This loss is occurring at a faster pace than ever before. We must now scale natural capital accounting and the debate needs to shift from fine-tuning methods, process and integration to active decision-making in businesses. This business model and strategic focus will accelerate the transformations that are needed to respond to the climate and nature crises.”
The report provides clear recommendations on the way ahead highlighting the need to focus on: impact pathway definition, valuation techniques and factors, accounting rules, Input-Output and Life Cycle Assessment alignment, decision-making applications, dependencies and business value pathways and multi-capital approaches.
This report is the first output of the Transparent project, a collaboration between the Capitals Coalition, Value Balancing Alliance and WBCSD, which is developing a methodology promoting standardized natural capital accounting for business. This effort supports the commitment of the EU Green Deal, with the aim of ensuring appropriate management of environmental risks and mitigation opportunities, and the reduction of related transaction costs. Natural capital accounting though focused on strengthening internal management decisions can also support sustainability reporting and associated standards, as described in the recently released proposal for an EU Directive on corporate sustainability reporting.
We invite all businesses to assess how they are accounting for their impacts and dependencies on nature, and to input into forthcoming consultations seeking to advance approaches and methods.