Transparent was an EU LIFE funded project that developed standardized natural capital accounting and valuation principles for business in line with the ambition of the European Green Deal.
Only a tiny fraction of the current global economy can be considered to be sustainable according to leading financial institutions and multinational agencies, but the EU has set out an ambition to achieve a sustainable financial system and economy by 2050.
The EU has recognized that in order to achieve this ambition, a shift is required in the way that businesses understand and account for their relationships with nature and people, and that accounting for the value of nature in decision making is crucial to achieve this shift.
The lack of a comprehensive sustainable management system and standardization across corporate environmental assessment methods – including natural capital standards and practices – continues to hamper the mainstreaming of sustainable economic activity across Europe and the rest of the world.
In order to enable this shift, the business community is calling for holistic datasets and standardized methodologies that allow them to include the value of nature and people in their internal decision making and their external disclosure. Integrated datasets will also enable businesses to better understand how best to align their organizations with broad societal ambitions such as the European Green Deal and the Sustainable Development Goals.
Transparent was supported by the LIFE Programme of the EU Commission and led by the Value Balancing Alliance – consisting of international companies and supported by pro bono consultants from the four largest professional services firms (Deloitte, EY, KPMG & PwC) – in consortium with Capitals Coalition – a global collaboration of more than 400 organizations – and the World Business Council for Sustainable Development (WBCSD).
The Transparent methodology builds on internationally accepted and harmonized principles and frameworks such as the Natural Capital Protocol, and other approaches used by international companies, such as those highlighted by the Value Balancing Alliance.
The project kicked off in March 2020 and ran until July 2023. The primary output includes the world’s first standardised methodology providing practical application guidance for corporate accountants in charge of establishing a natural capital accounting system.
The methodology was in an iterative process and close engagement with corporate practitioners, experts, academia and the general public. Each phase of the methodology development was accompanied by stakeholder reviews, piloting and public consultations to facilitate widespread adoption by companies worldwide.
- A benchmark of best practices
- The first set of methodology principles
- Tested corporate implementation
- Cross-industry and sector-specific application guidelines
- Update of the MIT Shift Capitals Toolkit
- A blueprint for corporate management decision-making
- Uptake recommendations.
How Transparent connects with other initiatives
The above image shows the relationship between the Transparent NCMA and other developing frameworks towards the support of natural capital management accounting and the requirements of reporting and disclosure standards and regulations.