Nature is an essential economic factor. It provides a variety of renewable and non-renewable resources and the economy depends on the provided ecosystem services. Neither benefits nor costs are adequately reflected in corporate accounting like the balance sheet or the consolidated profit and loss account. The economic valuation of natural capital is the key instrument to change this. Compared to a purely quantitative assessment it has the advantage to express the value of or damages of natural capital in the "same language” as financial capital.
How it works in practice and which corporate examples exist can be found in the study "How companies value natural capital”, which you can download here.
Pilot projects such as the "The Economics of Ecosystems and Biodiversity” (TEEB) studies, initiated by the European Commission, aimed to highlight the value of ecosystem services and biodiversity for the society and provided new arguments against destruction and overuse.
Lately, the private sector has increased its efforts to measure and evaluate environmental costs, and – in the longer term – to incorporate them into the accounting. Especially the WBCSD’s "Guide to Corporate Ecosystem Valuation (CEV)” that was road tested by 14 companies and PUMA’s environmental profit and loss account stand out as good examples.
Numerous reasons exist why companies should deal with the topic "natural capital" in general and more specifically the economic valuation, e.g.:
Further information can be found at www.naturalcapitalmarkets.org. The GNF can also support you in testing and applying natural capital accounting. For more information please get in touch with:Stefan Hörmann