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Transparent Project Launches Public Consultation for Standardized Natural Capital Accounting Methodology for Business

July 28, 2021 |

The public consultation on the Transparent methodology will run to October 29. Participate in the consultation and help to shape European legislation.

The accelerating deterioration of natural ecosystems, the loss of biodiversity and a rapidly changing climate are fundamentally changing the traditional context for business decision-making.

Once a fringe discussion, the critical role that natural systems play in the functioning of our economic and financial systems is now mainstream and indisputable.

Governments, business leaders and investors across the world are increasingly recognising this fact and seeking to operationalise it. There is significant momentum from these communities to better understand, measure, manage and value the risks and opportunities that stem from their relationships with natural capital.

But, the lack of standardization across corporate environmental valuation assessments – including natural capital assessments and accounting – continues to hamper the mainstreaming of sustainable economic activity.

This lack of standardisation is exacerbating environmental destruction, exposing businesses and economies to risk, negatively impacting on communities and society, and limiting economic and business performance.

The Transparent Methodology

The Transparent project is responding to this gap by developing the first prescriptive set of guidance on what elements of natural capital companies should include in assessments and how to measure and value them.

The methodology builds on the real experiences of businesses and internationally accepted and harmonized principles and frameworks such as the Natural Capital Protocol.

The methodology will contribute to better integration of financial and environmental information, lowering the threshold for companies to adopt a capitals approach and strengthening the business case to better manage environmental risks and opportunities.

The methodology aims to establish a prescriptive standard that generates widely consistent results across businesses and sectors. It will be piloted by businesses to ensure that it is effective, robust and fit-for-purpose.

The methodology will:

  • Enable business management to better inform corporate decisions.
  • Standardize where possible, provide guidance where needed.
  • Be embedded in the broader movement, connected to existing and emerging frameworks.
  • Consider scalability and practical feasibility.

The consultation

This consultation provides an opportunity for a broad number of interdisciplinary voices and stakeholder groups to contribute to the development of the methodology and to ensure that it is robust, practical and covers the areas and issues most important to them.

By participating in the consultation, participants will have the opportunity to feed into and strengthen the development of a methodology that will be rigorously piloted by international business and has been highlighted in European legislative proposals as a key framework for companies to ‘future-proof their businesses’.

What next

In the EU legislative proposal for a Corporate Sustainability Reporting Directive, adopted by the European Commission, the Transparent methodology is highlighted as “the first natural capital accounting methodology, which will make existing methods easier to compare and more transparent while lowering the threshold for companies to adopt and use the systems in support of future-proofing their business.”

This is hugely significant as the adopted Directive is the formal position of all Commissioners in the European Commission, spanning all Directorates-​Generals and member states. The inclusion of the Transparent Methodology in the recital makes it clear that natural capital accounting can become influential in the EU and inform legislative procedure.

This consultation is your chance to feed into this proposed European legislation.

The Transparent project is funded by the LIFE Programme of the European Union and is being coordinated by the Value Balancing Alliance. The Capitals Coalition and WBCSD are project partners.

Transparent has a sister project, Align – short for Aligning Accounting Approaches for Nature. While Transparent will develop standardized natural capital accounting and valuation principles for business with a focus on air, water and land, Align will build upon these principles by developing complementary guidance focused on biodiversity.

Participate in the consultation here.

Learn more about Transparent.

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