Corporate natural capital accounting

The Committee is developing a methodology for corporate natural capital accounting. In 2014, it will undertake a pilot project with a range of organisations to test and refine this methodology.

Private sector and non-governmental organisations own or are responsible for a significant proportion of England’s natural assets.

The Natural Capital Committee is therefore encouraging organisations that own or manage land to develop natural capital accounts.

Natural capital accounts aim to document an organisation’s ownership, liability and assets related to natural capital. In the same way that recording more conventional assets on their balance sheet informs and improves a company’s management decisions, natural capital accounts will enable organisations to make better decisions about their natural capital.

The Committee is developing and testing a new framework for ‘corporate natural capital accounting’. Through 2014, it will run a pilot project for corporate natural capital accounting with several major UK businesses and landowners.

The project will involve working closely with the pilot organisations to trial and refine the Committee’s experimental natural capital accounting methodology. The lessons learned from this process will be distilled into high-level guidance and the Committee will publish a generic accounting framework that can be adapted for use by a wide group of organisations.

The Committee will seek opportunities to work with the private sector to encourage adoption of this model for corporate natural capital accounting.

More information on the Committee’s work to develop corporate natural capital accounts will be published here as the project progresses.

Metrics and risk register

The Committee is currently working to develop ways of measuring natural capital, and identifying which assets are at risk. This work will help us better understand how the state of our natural assets affects the benefits they can provide to people. The risk assessment will flag up where these benefits are threatened.



What are natural capital metrics?

A metric is a system of measurement. The Natural Capital Committee is currently working to develop a system of measurement for natural capital. Ultimately, we want to measure changes to our natural assets directly. In addition, metrics will allow us to assess the quantity, quality and location of our natural capital. They will also help us to determine how the state of our natural capital assets affects the benefits they can provide to people.

Why do natural capital metrics matter?

The measurement of natural capital is an emerging field of study. There are currently no agreed metrics to measure natural  assets, despite their importance for our prosperity and wellbeing.

We need to keep track of the state of our natural capital and gain a better understanding of how our actions could undermine or enhance the benefits provided by nature. As many of the vital services that our natural assets supply – such as clean air, clean water and flood defences – do not have a conventional ‘market value’, they are often taken for granted and eroded. Developing metrics for natural capital will allow us to make better decisions about how it should be managed and flag up where our patterns of use are unsustainable.

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Risk register

What is a natural capital risk register?

The Committee’s risk assessment for natural capital highlights where the benefits we derive from natural capital are most at risk. The Committee’s initial risk assessment for natural capital will be published in its second State of Natural Capital report on 11th March 2014.

Why does a natural capital risk register matter?

The Natural Capital Committee has been asked to advise the Government on “when, where and how natural assets are being used unsustainably”. The risk register is a crucial component of this advice, as it will flag up where human activity threatens to impact on the level of essential goods and benefits currently provided by natural capital.