Accounting for natural capital: the elephant in the boardroom

A new report launched by CIMA, in collaboration with EY the International Federation of Accountants (IFAC) and the Natural Capital Coalition, calls for finance professionals to take action and lead the change to prevent their organisations failing in today’s ever changing environment.

London, May 2014

The report outlines the key steps professional accountants and others in financial leadership positions should help their companies to take in order to integrate natural capital considerations into decision making, resource allocation and reporting, and to adapt to growing competition for ever more scarce natural resources.

Organisations that respond swiftly, embracing opportunities to innovate and manage their risks, will thrive. Some of these companies that are taking a proactive approach, including Dow Chemical, Kingfisher and Coca Cola, are highlighted as examples in the report. Organisations that do nothing will suffer from rising input costs, risks to their supply chain and reputational damage.

Sandra Rapacioli, Head of Sustainability Research and Policy, CIMA, said: 'Natural capital depletion will certainly become one of the most prominent business concerns in the 21st Century. However it is still an elephant in the boardroom as business leaders continue to focus on short-term pressures and treat natural resources as if they’re infinite. 'Accounting for natural capital issues isn’t easy. But just because it’s hard doesn’t mean it shouldn’t be done. We are calling on finance professionals to take action now and incorporate natural capital considerations into strategic planning and business decisions, before the regulatory axe falls.'

Dr Dorothy Maxwell, Executive Director of the Natural Capital Coalition, said: 'Many of the economic costs and benefits of sustainability impacts and dependencies have been largely invisible in business decisions to date. Valuing these externalities financially enables a more pragmatic understanding of the risks and opportunities they present to the business. The message this report sends is very clear: that businesses that fail to adapt in a world of increasing sustainability pressures and scarce resources will lose competitiveness as the value of these resources is realised through tighter regulation, consumer choice and limited supply.'

The ways in which finance professionals can galvanise their organisations are set out below. For further tips, advice and case studies, the report is available here.

Further information

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