Thought leaders in the global community of practice around Corporate Natural Capital Accounting (CNCA) have released an updated paper: Time to Take Stock version 2.0.
To ensure that nature’s value enters the mainstream of business and finance discussions, we need to define natural capital in a standardised way.
This paper asks us to pause and consider how we can best produce consistent and comparable results.
Published by the Capitals Coalition and written by experts in the field, including our own Carl Obst, the paper outlines seven proposed standardisations:
- Defining the natural capital stock as an asset
- Developing natural capital asset registers of stocks using classification systems
- Measuring changes in the state of natural capital using appropriate methods, specific to each asset category
- Employing recording rules for accounting events and linked journal entries
- Summarising the biophysical state of natural capital with a statement of natural capital position
- Summarising net periodic biophysical changes in natural capital with a statement of natural capital performance
- Using valuation or other analytical methods to link the stock-based accounts and integrated datasets with complementary value framing perspectives
The IDEEA Group wholeheartedly agrees with this approach. Our expertise encompasses all seven of the proposed standardisations and we are keen to see them adopted widely.
Thanks to the Capitals Coalition for their support of the project, and our fellow authors John Finisdore (Point Advisory), Joel Houdet (University of Pretoria) and Ian Dickie (eftec) for their expertise.
You can download the paper here.