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New Report Highlights Benefits to Natural Capital Accounting

J. Mijin Cha

A new report from the World Business Council for Sustainable Business details the importance of environmental accounting. As the report highlights that while every business depends on ecosystems, these resources are being rapidly depleted. The impact that resources depletion has on businesses is multi-layered:

Ecosystem change presents both business opportunities and risks, such as operational (e.g. increased scarcity and cost of raw materials), regulatory and legal (e.g. public policies such as taxes and moratoria on extractive activities), reputational (e.g. relationships and image from media and non-governmental organizations), market and product (e.g. consumer preferences) and financing (e.g. availability of capital).

The report highlights business practices that are taking ecosystem damage into account and altering their behavior to mitigate damages. It also highlights how natural capital is considered more and more in business practices, another form of alternative accounting. This trend is complimentary to other initiatives that we've highlighted, like the alternative metrics that came from the Rio +20 conference.

The Council presents several case studies of business working with local communities to implement better practices. Wider adoption of alternative metrics, like natural capital, will result in more sound, sustainable decision making. These case studies are a good first step.