Building Support for Natural Capital Accounting – What Can the Private Sector Do?
Natural Capital-Everybody’s Business
Natural capital and the services it provides are fundamental to the wellbeing of our businesses and society. However, they are not well represented within our economic accounting system and increasingly depleted and under threat. Like other forms of capital, natural capital requires investment, maintenance, and good management if it is to contribute fully to increasing output and prosperity. Natural capital accounting is a tool that can help measure and manage the full extent of businesses' deployment of and contributions towards natural assets.
The 50:50 Campaign
The '50:50' campaign is a World Bank Group-facilitated initiative that provides a unique opportunity for the public and private sectors to join forces, demonstrating on a global stage the importance of taking collective action in support of including natural capital in economic decisions or business operations.
To strengthen the implementation of this important issue and its relevance in the Rio negotiations, on June 20 2012, during a high-level event (pdf) at Rio+20, we will highlight the support from governments, private sector leaders and other stakeholders for working towards integrating natural capital into decision making. Our aim is to join forces with other organizations and to present 50 governments and 50 corporations (50:50) supportive of working towards natural capital accounting.
How you can help
Currently, several private-sector focused initiatives work towards creating recognition of the value of natural capital, including some which actively engage in developing concepts for integrating natural capital into their accounting and reporting. Corporations and financial institutions might want to consider joining the pilot program of the International Integrated Reporting Committee (IIRC), the Natural Capital Leadership Compact, the Natural Capital Declaration, the TEEB for Business Coalition, or other related initiatives or working groups.
For those companies and banks interested in providing support to the recognition of the value of natural capital, the '50:50' campaign also includes a 'Private Sector Communiqué on Natural Capital'. This communiqué acknowledges the importance of natural capital for smart business by recognizing its importance in business operations, expressing a shared consideration to improving how we account for the value of natural capital in our planning and decisions, and acknowledging others who have joined in working towards better accounting for natural capital. Read the full Private Sector Communiqué on Natural Capital.
To express your company’s or financial institution’s support for the Private Sector Communiqué on Natural Capital, please send an email response to email@example.com. Please indicate who you are representing in this email.
Monday morning after Rio+20
The idea of accounting for clean air, clean water, forests, and other ecosystems has been around at least since the Earth Summit in Rio in 1992. In February 2012, the UN Statistical Commission approved the System of Environmental and Economic Accounts (SEEA) as an international statistical standard like the System of National Accounts (SNA). This was a fundamental leap forward for natural capital accounting. Now, countries can implement natural capital accounting.
Unlike governments, who have a standard methodology to measure natural assets provided by the SEEA, financial institutions and companies do not yet have an internationally agreed framework to adequately report or account for natural capital. Financial Institutions that are signatories of the Natural Capital Declaration, together with the International Integrated Reporting Committee (IIRC) have already committed to work to build standardized methods of reporting. Interested corporations and financial institutions may wish to consider joining these or other related initiatives such as the Cambridge Natural Capital Leaders Platform and the TEEB for Business Coalition, co-convened by the Institute of Chartered Accountants in England and Wales.
The 50:50 campaign aims to increase global momentum for implementing natural capital accounting. In order to help with implementation, the World Bank launched a partnership called WAVES - Wealth Accounting and the Valuation of Ecosystem Services - which includes several UN agencies, national governments, NGOs, academic and other institutions. Businesses and financial institutions supporting the 50:50 campaign are invited to join the WAVES dialogue and to make sure their views are heard and incorporated.
What does it mean to 'support the communiqué?'
Expressing support for the 'Private Sector Communiqué on Natural Capital' will mean that your bank or company will be recognized at the '50:50' campaign launch on June 20th in Rio, and that you will be invited to discuss and engage on the topic of developing appropriate methodologies and processes for natural capital accounting with national governments and other organizations brought together through the WAVES partnership.
What is the drop-dead deadline to express support?
Tuesday, June 19th, 2012 COB is the drop-dead deadline for governments, banks, and companies to support the communiqué and be part of the launch event in Rio. Businesses and financial institutions supporting the 50:50 campaign are invited to join the WAVES dialogue and to make sure their views are heard and incorporated.
What are governments doing?
Natural capital accounting is a tool for policy makers that is being used for informed decision making in developing and developed countries with some 24 countries now regularly compiling at least one account. Around Rio+20 many governments have voiced their interest in introducing accounting for natural capital into policy and investment decision making.
The concepts underlying the natural capital accounting proposal - are they new?
No, the concepts are the same that were developed through the TEEB (The Economics of Ecosystems and Biodiversity). They are consistent with IFC's Performance Standard 6 and the Natural Capital Declaration led by UNEP FI.
Is the accounting industry engaged?
Other organizations-such as the IIRC and the Natural Capital Declaration-work closely with the accounting industry. The primary purpose of the 50:50 campaign is to bring various other efforts together - and these other organizations then do bring along the accounting industry.
How does this relate to IFC's Performance Standard 6?
Performance Standard 6 requires companies, in certain circumstances, to undertake assessments of ecosystem services and biodiversity values. However, in the absence of an agreed accounting methodology these assessments will be done on a project specific basis with help from relevant experts to ensure credible results. Development of natural capital accounting methodologies that are broadly accepted will be of great help in implementing PS6 in a consistent manner.
Natural Capital Accounting Supporters
Natural Capital Accounting Supporters (as of June, 2013) (pdf)
To express your company’s or financial institution’s support for the Private Sector Communiqué on Natural Capital, please send an email response to firstname.lastname@example.org. Please indicate in this email that you are authorized to take this decision.
Natural Capital Declaration
Natural Capital Leadership Compact
In March 2012, corporate leaders within the Cambridge Natural Capital Leaders Platform issued a collective call for action to properly value and maintain the Earth’s natural capital - the environmental assets and resources that are vital for the functioning of the world’s economies and society.
International Integrated Reporting Council (IIRC)
Integrated Reporting is a new approach to corporate reporting that demonstrates the linkages between an organization's strategy, governance and financial performance and the social, environmental and economic context within which it operates.
Over 70 leading companies are testing the principles of Integrated Reporting (IR) in their corporate reporting cycle as part of the Pilot Programme.