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
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
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