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We Need a New Standard for Natural Capital Accounting

January 06, 2021 |
Photo by Valdemaras D. on Unsplash

This article was written by Dr Stephanie Hime, Director Little Blue Research, BSI Committee Member and Advisory panel Capitals Coalition & Dr Marta Santamaria, Director Capitals Coalition and BSI Committee Member.

There are several different projects looking at standardisation at the moment, including the EU LIFE-funded project Transparent, being delivered by the Value Balancing Alliance, the Capitals Coalition, and WBCSD.

Accounting for natural capital has long been recognized as an essential progression for sustainable management of government and business alike. The private sector has become increasingly cognizant of their impacts and dependencies on the environment, and the public demand for greater accountability and transparency from business has grown in recent years. As such, the need for a natural capital accounting standard for organizations has never been greater. 2020 has seen downloads of the Natural Capital Protocol reach tens of thousands from the Capitals Coalition alone, and the number of natural capital assessments undertaken by corporates similarly continues to grow. Given the uptake and interest in the field, it is important to encourage organizations to look at these relationships in a consistent and systematic way.

The new draft standard

The draft British Standard BS8632 (currently out for consultation) provides the relevant specifications and guidance for the process of preparing natural capital accounts for organizations to meet this need. The final version of the standard will help organizations — public, third sector, listed and unlisted private organizations of any size or sector — integrate natural capital considerations into financial and other business decision-making. While it is not a reporting standard the outputs from this process will support decision making and help to inform future disclosures.

The standard sets out different scopes for natural capital accounts to help different organizations set out their impacts and dependencies while accounting for the level of influence they may have over specific assets. The standard has been developed by the British Standards Institution (BSI) and is designed to be equally applicable across international contexts. This is best described by the relationship an organization has with different natural capital assets — for example, whether they own, manage or have legal or voluntary responsibility for natural capital assets or whether these are more directly influenced by their supply chain(s). The standard also allows for the comparison of the natural capital accounting process that has been undertaken between organizations and, if desired, can help with the auditing of accounts.

The draft BSI Standard has been developed by a dedicated panel of experts as part of a technical committee. As part of this process, the team has sought to build upon and link to many of the frameworks that are already available and under development. The standard is aligned with the Natural Capital Protocol and a number of the technical committee members have links with the Capitals Coalition, including the authors of this blog.

We hope the release of the final standard will encourage more organizations to start exploring the value of their impacts and dependencies on natural capital as a central part of their decision-making processes. It is therefore crucial for natural capital experts and practitioners to reflect and provide feedback on the draft standard. To do this you will need to register with the BSI to read and add comments to the online feedback system. Following the public consultation, the comments received will be reviewed by both the technical committee and BSI staff and the final updated standard published at the end of this process (for more information on the development of British Standards see here).

Your participation in the public consultation will help to ensure that the final version of the standard is fit for purpose and that any concerns are addressed upfront. We ask you to provide your comments by the 24th January 2021 and help be a part of the process to standardize the process for developing natural capital accounts. Take part now.

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