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Accounting for Nature

Accountants can apply their expertise in measuring and reporting information to help develop and embed natural capital accounting.

What is Natural Capital Accounting?

Natural Capital describes the world’s stocks of renewable and non-renewable assets. Underpinned by biodiversity, these stocks combine to produce a flow of benefits to individuals and society.

The most tangible of these benefits include provisioning services such as food, shelter and raw materials. In addition, regulating services influence the climate, provide natural flood defences and facilitate carbon storage.

Natural capital supports and is influenced by other recognised forms of capital, including financial, manufactured, societal, intellectual and human.

As a result business both impacts and depends on natural capital.

At present, numerous facets of natural capital are not valued within our current economic system. Many of our business activities produce negative externalities, where the full cost of environmental damage is not borne by the actor. This results in the over exploitation of our natural capital stocks. Continued poor management of natural capital will be hugely detrimental to both the environment and society.

Accounting for this natural capital within business activities will therefore be vital to embed within our business practices.

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