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Richard Spencer, June 2013
Natural Capital Accounting
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1. What is Natural CapitalAccounting?
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Capitals framework
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Natural capital
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We use it because it is valuable,
we lose it because it is free.Pavan Sukhdev, TEEB Study Leader
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Tiered approach to Natural Capital
Recognise Demonstrate Capture
Source: TEEB (The Economics of Ecosystems and Biodiversity)
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ICAEW 2013
Different interpretations of corporate NCA
Natural capital
covered
Assurance?
Type of
measurement:
QL, QN, $
Internal vs.
external use
Stand-alone vs.
integrated report
Reporting boundary:
direct vs. indirect impacts
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ICAEW 2013
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2. Why useNatural Capital
Accounting?
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Risks and opportunities
Biodiversity
loss
Energy
security
Climate
change
Technology
Legislation
Population
growth
Resourcescarcity
Powershifts
Financial
stability
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Future proofed decision making
Benefits of integrating environmental and social information intodecision making:
Greater understanding of future risks and opportunities
More strategic responses to changing economic,environmental and social conditions.
Linkages between strategic direction, financial performanceand sustainability impacts can be made, therefore driving abetter and more sustainable financial returns into the future.
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Future proofed decision making
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Behavior change drivers and challenges for
Natural Capital Management in 26 earlyadopter businesses
Resource scarcity concerns in 3-5 years Freshwater, climate regulation, fibre and food
Delayed action is a business risk
Challenges :- Lack of harmonised methods
Lack of government regulation & customer demand
Research: Business case
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Research: Business case and priorities
US$ 7.3 trillion pa global environmental externality costs (2009)
Natural Capital at RiskTop 100 Externalities of Business ,Source: Trucost for TEEB for Business Coalition, 15 April 2013, www.teebforbusiness.org
http://www.teebforbusiness.org/http://www.teebforbusiness.org/ -
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3. Who is usingNatural Capital
Accounting?
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TEEB for Business Coalition(The Economics of Ecosystems and Biodiversity)
Who and what Global multi-stakeholder coalition supporting
uptake of natural capital accounting in business
Activities
Growing the business case Business focused research
Support development/business pilot testing of harmonisedframework, methods, tools & data for valuing environmentalexternalities in business and investor decision making
risks & opportunities
enable better measurement, management, reporting andinvestment
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TEEB4BC Board, Advisory & Observer Groups
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TEEB4BC - Members joining......ongoing
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TEEB4BC - Values & Locations
Not for profit
Pre competitive
Open source
Business, policy, practitioners
Global London & Singapore
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Environmental impacts (physical)
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Environmental P&L (monetary)
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Water accounting in Australia
Water availability is critical
Independent standard settingbody formed in 2006
Conceptual framework plusaccounting standards
1. Preparing accounts2. Assurance engagements
Corporate reportingboundaries, not catchment,basin or national ones
Physical units
Both stocks and flows of water
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Delivery of water accounting report to a user
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Water accounting: Illustration
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Other examples of Natural Capital Accounting?
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4. What is the roleof accountants in
NCA?
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Accountants as guardians of data integrity
Information and Reporting
Assurance process
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Accountants as leaders in sustainability
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Get in touch
www.icaew.com/sustainability
http://www.icaew.com/corporateresponsibilitymailto:[email protected]:[email protected]:[email protected]://www.icaew.com/corporateresponsibility -
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A world leader
of the accountancy
and finance profession
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