Leveraging natural capital accounting to support businesses with nature-related risk assessments and disclosures

Abstract

Nature loss threatens businesses, the global economy and financial stability. Understanding and addressing these risks for business will require credible measurement approaches and data. This paper explores how natural capital accounting (NCA) can support business data and information needs related to nature, including disclosures aligned with the Taskforce on Nature-related Financial Disclosures recommendations. As businesses seek to measure, manage and disclose their nature-related risks and opportunities, they will need well-organized, consistent and high-quality information regarding their dependencies and impacts on nature, which few businesses currently collect or track in-house. NCA may be useful for these purposes but has not been widely used or applied by businesses. National NCA guided by the U.N. System of Environmental-Economic Accounting may provide: (i) a useful framework for businesses in conceptualizing, organizing and managing nature-related data and statistics; and (ii) data and information that can directly support business disclosures, corporate NCA and other business applications. This paper explores these opportunities as well as synergies between national and corporate natural capital accounts. In addition, the paper discusses key barriers to advancing the wider use and benefits of NCA for business, including: awareness of NCA, data access, business capabilities related to NCA, spatial and temporal scales of data, audit and assurance considerations, potential risks, and costs and incentives.

This article is part of the theme issue ‘Bringing nature into decision-making’. Show more