The British Standards Institution (BSI) has launched a novel natural capital framework, intended to help companies determine and address their environmental impact.
The standard – titled BS 8632 Natural Capital Accounting for Organisations – sets out guidelines for delivering ‘transparent, comparable and repeatable’ natural capital accounts. The initiative seeks to help companies integrate natural capital into their financial planning processes, and adapt to increasing demands for nature-conscious practices.
Features include minimum requirements for defining the boundary of an account, as well as material impacts and dependencies.
“There is increasing awareness that maintaining natural capital is a business sustainability issue,” said Ece Ozdemiroglu, founding director of Economics for the Environment Consultancy (Eftec) which helped to develop the new standard. “Yet many investors still believe that nature is too complex to invest in. By setting out a framework and documentation requirements for natural capital accounting, the new standard will make such investments much easier.”
In addition to advising companies on how to best incorporate natural capital into their business plans, the standard will also include guidance on data collection. This is intended to help firms identify reputable data sources to use when restructuring their practices around environmental considerations.
The new standard targets a growing demand for companies to identify and mitigate damages inflicted on the natural world, as awareness of the issue has grown. The UK Government has already announced plans to make natural capital a more foundational part of its COVID-19 recovery plan, following on from the seminal Dasgupta Review. Published in February this year, the report detailed how the government’s neglect of environmental wellbeing comes at a ‘devastating cost’ to biodiversity and ecosystems.
“By combining financial, environmental and socioeconomic information, natural capital accounting can reveal the value of nature to organizations and society, and importantly, the value of organizations’ impacts on nature,” says David Fatscher, Head of Environment, Social and Governance Standards at BSI. “The purpose is to enable better integration of natural capital considerations into financial and other business analysis.”
The BSI standard was created by a committee made up of experts from a variety of fields including environmental science, forestry and social capital. It is intended for use by professionals such as environmental and sustainability personnel, accountants, and environmental economists.