Natural capital accounting framework developed for business

27th January 2015


Related Topics

Related tags

  • Business & Industry ,
  • Ecosystems ,
  • Biodiversity ,
  • Natural resources

Author

Emma Douglas

Companies can better understand the importance of natural assets to its operations by using a new tool developed by the government's advisers on natural capital.

As part of its third official report to government, the Natural Capital Committee (NCC) has designed and tested a corporate accounting framework to evaluate the costs of sustaining and restoring natural assets.

The costs can then be allocated to the private and public sector organisations according their use of the asset.

The NCC says the tool can help businesses answer the following questions:

  • Which natural capital assets are the most important to our operations?

  • How much of the value of the organisation relies on natural capital?

  • How this might change in the future?

  • How much should the business spend to maintain the natural capital on which it relies?

The NCC worked with the RSPB and consultants at eftec and PwC to develop the tool. It has been piloted by Lafarge-Tarmac, United Utilities, the National Trust and the Crown Estate.

The NCC’s report calls for the government to identify how it plans to fund its ambition to leave the natural environment in a better state than it was inherited, and suggests dividing responsibilities between the private and public sectors.

“Government controls many of the levers, be they taxes, subsidies, legislation or other, and will therefore be instrumental in ensuring the right incentives are in place. However, the private sector and civil society also have a significant part to play, because they own or are ultimately responsible for the majority of natural assets,” the report states.

The NCC’s tool creates a transparent way to share costs between corporations, landowners, local authorities, central government, non-governmental organisations and others, it argues.

It can also determine whether the parties have carried out their responsibilities, the committee says.

The committee suggests a range of different funding options and levers to improve natural capital. These include capital maintenance payments from public, not-for-profit and private sector asset owners; compensation payments from developers; greater use of economic instruments such as taxes and charges; and reforming and eliminating subsidies that encourage damage to the natural environment.

Peter Young, chair of the Aldersgate group, said: “Conventional accounting systems help measure and safeguard the capital base upon which a business relies. It is only logical that these principles be applied to measure and safeguard the natural environment.

“To support this work, government must create an appropriate new institution to oversee and report on progress,” he said.

The NCC also called for the government to urgently step up action to ensure that the Office for National Statistics and the environment department (Defra) meet the target to incorporate natural capital into the national accounts by 2020.

They should create a national balance sheet outlining the value of the nation’s natural assets, along with estimates of depreciation. The government should revise its guidance on economic appraisal in the Green Book and apply the revised guidance to new projects as a matter of urgency, the committee says.

The NCC is an independent advisory body created following a government commitment in its 2011 natural environment white paper, in which it pledged to “improve the quality of the natural environment across England”.

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

Renewables account for almost half of Britain’s power generation

Solar power generation hit a new high in the last quarter as renewables accounted for almost half of Britain’s energy production, according to a report from Montel Analytics.

18th July 2024

Read more

Ahead of the UK general election next month, IEMA has analysed the Labour, Conservative, Liberal Democrat, and Green Party manifestos in relation to the sustainability agenda.

19th June 2024

Read more

Sarah Spencer on the clear case for stronger partnerships between farmers and renewable energy developers

6th June 2024

Read more

A system-level review is needed to deliver a large-scale programme of retrofit for existing buildings. Failure to do so will risk missing net-zero targets, argues Amanda Williams

31st May 2024

Read more

Chris Seekings reports from a webinar helping sustainability professionals to use standards effectively

31st May 2024

Read more

Although many organisations focus on scope 1 and 2 emissions, it is vital to factor in scope 3 emissions and use their footprint to drive business change

31st May 2024

Read more

Joe Nisbet explores the challenges and opportunities of delivering marine net gain through offshore renewables

31st May 2024

Read more

IEMA submits response to the Future Homes Standard consultation

31st May 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close