By James Bonner, independent sustainability consultant
In order to understand and translate the aims and objectives of sustainability into economic development terms, and to engage with groups such as business and governments who have economic growth interests, an approach based on multiple ‘capitals’ has evolved in sustainable development theory. Such a ‘capitals’ model aims to encapsulate and categorise the interrelated and interdependent resources, or stocks, which human development and wellbeing fundamentally relies upon and to communicate their value including in economic terms.
As stated in recent work they have undertaken on the capitals approach, the UK Government’s environmental department DEFRA emphasises that:
• social wellbeing and growth depend on services that flow from various types of capital, including natural capital; and
• broad categories of stocks of capital (produced, human, social, natural) are maintained so that the potential for wellbeing is non-declining over time.
While the capital model, and the broad categories which it includes, will be explored in greater detail in a forthcoming post in this blog series- this post aims to introduce the specific category of natural capital. As stated by the prominent international initiative TEEB (The Economics of Ecosystems and Biodiversity) natural capital ‘underpins economies, societies and individual well-being’ and ‘in addition to traditional natural resources such as timber, water, and energy and mineral reserves, also includes biodiversity, endangered species and the ecosystems which perform ecological services.’
With such studies and perspectives drawing attention to the vital role and integral function natural capital plays in our local and global social and economic development, ACCA, in partnership with KPMG and international conservation group FFI, are currently undertaking an extensive study to look at the concept of materiality in accounting practice, and the extent which it reflects the increasing realisation and acceptance of natural capital as a significant business issue.
By means of introduction to the topic, the following is an amended version of a diagram which will be included in the report – linking together the various environmental terms, and business concepts, of natural capital, biodiversity (the variability amongst living organisms- a key requirement for a functioning and healthy environment), ecosystem services (the benefits humanity obtains from biodiversity and the environment) and corporate value. It aims to introduce and depict some of the key, and overarching, relationships of these concepts and to demonstrate the potential tangible impacts and dependencies that society, the economy, and business have on, and with, natural capital.
This blog post intends to primarily support ACCA’s Accounting for the future session ‘Is Natural Capital a Material Issue?’ on Monday 8 October by introducing the concept of natural capital, and its potential materiality for organisations- issues which will be discussed in greater detail in the session. Additionally, a number of other presentations during the conference relate to the themes covered in this blog post:
Wednesday 10 October
12:30 – 13:30 Evolution of the Annual Report
Friday 12 October
18:00 – 19:00 Practical Workshop: The Economy in 2050