In their latest addition to the “On The Radar” series, titled “Valuing Natural Capital: Is it on your radar?“, CPA Canada sheds light on the importance of valuing natural capital, and highlights considerations, methods, tools and resources for CPAs when assigning economic value in this sphere. This insightful publication is intended to help CPAs navigate the terrain ahead by also defining the role CPAs can play in valuing natural capital.
Using an array of valuation methodologies and guidelines on nature-related disclosures, CPAs can help public and private sector organizations in their planning and reporting phases. What gets reported, gets managed. What gets valued, gets done. CPAs can build the business case for leveraging natural assets to deliver cost-effective services that not only enhance community and corporate resilience, but also generate nature-positive results for the environment.
Nature is high on the agenda of regulators and standard setters. It is only a matter of time until disclosures on ecosystems, biodiversity, and other natural assets become a habitual exercise in the public and private sectors. It is not a question of whether, but when.
The time is right for CPAs to learn the new way to appreciate and account for nature. Listed below are five core questions to consider in helping your organization, or that of your clients, to leverage the potential of natural capital:
- How reliant is the organization on natural assets, either directly or indirectly, to achieve objectives and deliver value? For instance, are value chains and supply chains impacted by the deterioration of natural assets?
- Can existing natural assets or newly built natural infrastructure help the organization achieve its objectives and deliver value in a more cost-effective and sustainable manner?
- Have you considered the full range of potential environmental, social, and economic co-benefits that can be delivered by natural assets and natural infrastructure? Such ‘benefit stacking’ contributes to a well-informed and comprehensive business case, and can help enhance resilience and reduce carbon emissions.
- How robust is the organization’s enterprise risk management and business continuity planning? The physical, transition, and reputation risks posed by climate change can be material to the organization. Natural assets and natural infrastructure can play an important role in enhancing corporate and community resilience.
- Are you staying abreast of regulatory developments relating to the integration of natural assets in financial reporting? Staying abreast of standards, guidelines and reporting frameworks will keep you ahead of the game. These include, but are not limited to, any forthcoming or potential standards and guidelines from the ISSB, IPSASB and other regulatory bodies, as well as voluntary reporting initiatives, such as the TNFD or the Capitals Coalition, as precursors to standards and guidelines.
The complete publication, which features contributions from Todd Scaletta, FCPA, FCMA, Senior Vice President of Foresight and Research at CPA Alberta, can be downloaded here.
Source:
