New consultation on ISO 14054 (under development) Natural Capital Accounting for Organizations launched

Introduction

ISO 14054 (under development) on natural capital accounting for organizations is a new standard that sets out the development of natural capital accounts and the information that underpins them. This blog sets out to provide a summary on what natural capital accounting is, and its purpose, to explain why this new standard is important to those working in sustainability and share details about how you can input into its development.

What is natural capital accounting?

As a recap, natural capital accounts are a systematic way of collating financial, socio-economic and environmental information about an organization’s impacts and dependencies on nature. Natural capital accounts can be a useful tool to support the delivery of other frameworks including: the recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD) and the Corporate Sustainability Reporting Directive (CSRD) among others (see Figure 1).

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Figure 1: examples of how ISO 14054 (under development) supports other frameworks, for a list of the acronyms please see the references at the end of this blog post1.

Why use natural capital accounts?

Natural capital accounts can be used for a variety of purposes including (not exhaustive):

  • Identifying the natural capital that a company owns, is responsible for, or manages, and the company’s impacts and dependencies on that natural capital from both a business and societal perspective
  • Prioritising actions to maintain natural capital and manage the risks and opportunities relating to it
  • Linking natural capital and the financial exposure to nature-related risks and resilience of the organisation**
  • To inform financial management
  • To help conduct scenario analyses by developing several versions of future looking balance sheets to help model the impact of current business as usual approaches and compare these to alternatives
  • To help set nature-related targets and monitor progress over time**
  • To communicate with internal and extremal stakeholders**

** potential links to other frameworks

All of which help to drive the integration of nature into business decision-making more widely within a company.

Why do we need a standard and why ISO

ISO the International Standards Organization has one of the most popular environmental standards used by companies – ISO 14001 Environmental Management Systems – that has more than 500,000 certifications in over 180 countries around the world2. ISO 14054 is within the 14000 family of standards because of the level of environmental information that underpins natural capital accounts. Standardisation guarantees that a natural capital account is underpinned by the same supporting information and that outputs are aligned across companies for all of those that follow ISO 14054. This ensures that those using or interpreting outputs can check if relevant supporting schedules have been produced, relevant assumptions documented, and that the principles of the standard have been followed.

The standard is intended to provide specifications for the process of preparing natural capital accounts creating a standardised approach, metrics and analyses to assess and value natural capital, as well as communicate, audit and assure the outcomes and processes.

How can you get involved?

ISO14054 (under development) has been released for public consultation until the 10th of February 2025. The consultation is particularly important for those working on or with impact accounts, relevant nature-based data tools, and those developing scenario analyses. The ISO team want to hear your feedback on relevant parts of the standard to ensure that it provides clarity to those who wish to apply this approach.

For those that want to take part you can go to the British Standards Institute register and login to provide comments here.

After public consultation, those leading the development of the standard will consider the comments received across global technical committees and address these. Depending on the outcomes of this process and the level of change needed to the current draft ISO will hope to publish the standard in late 20253.

Other resources

For those interested in Natural Capital Accounting Ece Ozdemiroglu, CEO at eftec and Convenor of ISO 14054, and I are releasing a series of videos introducing various aspects of the topic as an aid to the consultation process. Videos are being released each week on both the Little Blue Research LinkedIn and eftec LinkedIn pages over the next few months.

For more details on natural capital accounting and full set of videos please see:

- Little Blue Research

- eftec

For those wanting an additional introduction to the standard and commenting process please see the launch video here.

References:

  1. TNFD (2023): Recommendations from the Taskforce on Nature-related Financial Disclosures
  2. https://www.iso.org/standards/popular/iso-14000-family#:~:text=There%20are%20more%20than%20500%2C000,180%20countries%20around%20the%20world.
  3. ISO 15054: https://committee.iso.org/sites/tc207sc1/home/projects/ongoing/iso-14054-natural-capital.html

Figure 1 acronyms: IPCC – Intergovernmental Panel on Climate Change, IPBES – Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, GRI - Global Reporting Initiative, TCFD – Task Force on Climate-related Financial Disclosures, TNFD – Taskforce on Nature-related Financial Disclosures, IFRS – International Financial Reporting Standards, ESRS – European Sustainability Reporting Standards SBTN – Science Based Targets Network


Published by:
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Dr Stephanie Hime (FIEMA)

Director at Little Blue Research