Integrated accounting and integrated reporting (IR) seek to better integrate all forms of capital (financial, manufactured, social, human, natural) into financial reports for companies and for governments. Natural capital accounting and reporting can offer essential insights into a company’s risks and opportunities (see Natural Capital Coalition). Integration of natural capital (and other capitals) into government’s “system of national accounts” - the same system that tracks GDP and other economic indicators - provides government decision makers with a more complete picture of a country’s assets and resource flows. A recently published article in Science magazine tracked the progress of natural capital accounting efforts in countries around the world. Natural capital accounting is becoming increasingly relevant as nature-based solutions are further explored as effective tools for sustainable development.
The Natural Capital Project at Stanford University is a highly valuable source of information on natural capital that works togeher with decision makers looking to invest in nature based solutions and also provides publicly accessible tools for natural capital accounting and valuation.
Natural capital accounting-national accounts
National-public-natural capital accounts measure the stocks of natural capital and flows of services supplied by them. Methodologies and international standards exist for calculating forests, land and water accounts, while more experimental exercise are being piloted for biodiversity and ecosystems. The incorporation of natural capital into national accounts can support better financial and economic decisions as well as influence spending allocations in the long term.
Promoting Natural capital accounting
To encourage the incorporation of natural capital into national and enterprise accounts can support better financial and economic decisions as well as influence spending and investment in the medium to long term. Natural assets are the “the naturally occurring living and non-living components constituting our biophysical environment." They produce ecosystem services that provide great economic benefit to humanity and the planet but tend to receive inadequate financing of policy support. Better economic accounting for natural capital can assist policy makers better incorporate ecosystem services and natural capital in decision making.
Natural capital accounting-natural capital protocol - corporate natural capital accounting
Every business impacts and depends on natural capital to some degree and will better manage risks and opportunities associated with natural capital if they seek to integrate natural capital accounting into decision making. All impacts and dependencies create costs and benefits for the business and society. Understanding these connections can better inform corporate decision makers, investors, and clients. The natural capital protocol provides detailed guidance to enterprises.