Business and National Accounting for Natural Capital—Toward Improved Understanding and Alignment

Abstract

This chapter provides a brief introduction to the natural capital accounting (NCA) undertaken by governments and business with the aim of improving the understanding and alignment of these two distinct accounting communities. Both communities have long accounting traditions, which have evolved over the last few decades to include natural capital and the impacts of economic activity on the environment. While many of the concepts and formats used are similar, the scale, terminology, and purpose of the accounting undertaken are different. This chapter aims to improve the comparative understanding of government (or national) accounting and business accounting. It outlines some of the history and key features of each system, noting where they are similar and where they diverge, and the implications for aligning the accounting of natural capital. Both accounting types have begun by including individual natural resources in their accounting, for example water, energy, or timber use, as well as air and water pollution. In such areas, there has been considerable success. However, both accounting communities face challenges, for example, how to include ecosystems and biodiversity in their accounts, assign meaningful values to natural capital, and communicate complex information to a broad range of stakeholders. These achievements and challenges provide a good basis for shared learning in the development and application of NCA by both business and government. Show more