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accounting for natural capital

Measuring, Valuing, and Monitoring Natural Capital Assets for national and organisational accounting, investment appraisal and policy design

The benefits of nature are vast, yet conventional markets often overlook them. Mainstream indicators used to measure market activities, such as company financial accounts or national accounts, frequently fail to capture nature's contributions to profits and economic growth. Moreover, they turn a blind eye to the true costs of biodiversity loss, climate change, and environmental degradation.

 

Explore Natural Capital Accounting with Us 

 

Our approach systematically gathers and analyses economic, environmental, and social data, shedding light on our interactions with nature. By presenting this information in formats familiar to decision-makers, we aim to empower them to make informed decisions such as

 

  • Using land, fresh water and marine resources

  • Investing in natural capital and nature based solutions, and monitoring & reporting the returns to such investment

 

Discover the Breadth of Our Work

 

We have delivered over 100 natural capital accounts for organisations in farming, forestry, water supply, infrastructure, and tourism.

 

Within our range of expertise, we also cover urban parks, greenspaces, and their associated health and social benefits. We highlight the economic value present in these spaces in line with our core values of prioritizing the environment, people, and the economy.

 

Our diverse range of clients includes private, public, and NGO investors, and local and national governments.

  

Why Natural Capital Accounting?

 

Businesses account for the financial, physical, and human capital they own, manage, and depend on. So, why not natural capital? 

 

From showcasing how these sectors depend on nature, to prioritising actions to maintain and enhance natural capital, our track record speaks volumes in understanding our clients’ impacts and dependencies on nature.

 

Our clients commission natural capital accounts to increase their ability to manage their businesses effectively and ensure their financial sustainability.

 

NatCap StatementsTM for natural capital accounting

 

For private or public organizations, we offer NatCap Statements™, comprising a Natural Capital Balance Sheet and a Natural Capital Income Statement which serve two key functions:

 

Revealing Impacts and Dependencies on Natural Capital:

 

  • Identification of owned or managed natural capital assets

  • Assessment of benefits derived from these assets

  • Evaluation of impact on asset sustainability and benefits provision

 

Uncovering Risks and Opportunities:

 

  • Analysis of implications for future profits

  • Consideration of trade-offs and timing for investment decisions

  • Recognition of external factors such as climate change, biodiversity loss, and macroeconomic shifts, influencing long-term sustainability.

 

Natural capital accounting serves as a crucial tool for informing investment decisions and nature market strategies, benefiting both sellers and buyers or investors. For instance, the Asset Register aids in pinpointing which assets to invest while Physical and Monetary Flow accounts present expected market and non-market returns from investment. Additionally, statements of Enhancements and Deteriorations facilitate the monitoring and verification of returns on investments or credits sold.

 

What insights a Natural Capital Balance Sheet can provide?

 

The Natural Capital Balance Sheet provides insight into an organization's and its value chain’s impacts and dependencies on nature over a suitable future accounting period. 

 

What natural capital assets do we own, manage or depend on?  - The comprehensive Natural Capital Asset Register documents all assets owned, managed, or depended on for your organisation.

 

What flows of benefits do these assets produce?  - The statement of physical flows quantifies the benefits in physical terms, shedding light on the ecosystem services provided by natural capital assets.

 

What is the value of these benefits and who do they accrue? - The statement of monetary flows shows financial and other benefits and whether they accrue to the organisation or the rest of society.

 

What does it cost to maintain our natural capital assets? - A schedule of maintenance costs outlines the relevant activities to restore, maintain or enhance natural capital and their associated costs.

 

What is the net impact on natural capital? - A Natural Capital Balance Sheet compares the sum of natural capital benefits overtime against the costs required to maintain the assets, offering a comprehensive view of the organisation's net impact on natural capital.

 

What insights a Natural Capital Income Statement can provide?  

 

A Natural Capital Income Statement reveals the impacts and dependencies of an organization and its value chain on nature during the current financial year.

 

What are the positive changes in natural capital? - The Schedule of Enhancements details the improvements in the extent and condition of assets, along with the provision of benefits in both physical and monetary terms.

 

What are the negative changes in natural capital? - The Schedule of Deteriorations outlines any declines in the extent and condition of assets, as well as reductions in benefits (or costs), both in physical and monetary terms.

 

What is the net impact on natural capital? - A Natural Capital Income Statement calculates the net impact by summing up enhancements and deteriorations over the accounting period, providing a comprehensive overview of the organization's influence on natural capital.

 

As part of preparing NatCap Statements, we also conduct materiality assessments to assist clients in identifying which assets, benefits, and impacts are significant for their decisions and nature. We also perform risk assessments to identify pressures on natural assets, enabling us to develop scenarios for managing these risks and financing their management. All of this also enables our clients to prioritise their data needs and increase the value for money from their data management systems. 

 

For regional and national governments, we prepare natural capital accounts that are aligned with the United Nations System of Environmental Economic Accounting (UNSEEA) guidelines.

 

Standards

 

As the leaders in our field, we have been involved in the development of standards:

 

 

 

Some of our clients for this service include:

 

Department for Environment, Food & Rural Affairs (Defra), Office of National Statistics, Eurostat, Natural England, Natural Capital Finance Alliance, Capitals Coalition, World Wide Fund for Nature (WWF), Forestry England and Coillte, United Utilities, Northumberland Water, Transport for London, several farming estates including Clifton Castle in Yorkshire and Cholderton in Hampshire, Derbyshire County Council, Surrey County Council, London Boroughs of Barnet and Barking & Dagenham.

Contact Person: Ian Dickie

Natural Capital Analysis for North Sea Sandeels Fishery

Natural Capital Analysis for North Sea Sandeels Fishery

project for:

Natural England

Caribbean Overseas Territories Natural Capital Accounting Programme

Caribbean Overseas Territories Natural Capital Accounting Programme

project for:

Joint Nature Conservation Committee (since 2017), Darwin Initiative Grant (2020-2022), Fishmongers’ Companies Fisheries Charitable Trust (2022)

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