This paper highlights some of the ways companies can report on their natural capital impacts and dependencies. It provides examples of the natural capital reporting tools, guidelines and standards available to companies, and makes recommendations to companies looking to report.
This is the second in a series of papers that expands upon the natural capital research conducted by ACCA, Fauna and Flora International, and KPMG (published as Is Natural Capital a Material Issue?).
This paper highlights some of the key ways in which companies can report on natural capital. It provides some examples of the natural capital reporting tools, guidelines and standards available to companies, before setting out recommendations to companies looking to report.
Companies are increasingly looking to improve the management of their impacts and dependencies on natural capital and disclose these to their stakeholders, largely owing to a growing awareness of the links between the earth’s natural systems and corporate value.
Such disclosures relate to a company’s environmental footprint, focusing on how the organisation’s operations, inputs (eg energy, materials, water) and outputs (eg waste, emissions, effluents, products) affect the natural world. Corporate reporting on matters such as climate change is relatively well established, but that on matters such as corporate impacts on biodiversity is still nascent. This is expected to change in the future.
Reporting on natural capital can be split into two main categories – narrative reporting on strategy and management, and performance reporting. The former provides stakeholders with a qualitative understanding of an organisation’s relationship to natural capital and the processes used to manage the various risks and opportunities associated with the organisation’s activities. Performance reporting provides stakeholders with quantitative information, in the form of key performance indicators (KPIs), which can be used to track performance over time. Reporting on natural capital performance can be a challenge, as indicators generally reflect organisation-wide performance while corporate impacts and dependencies on natural capital are often site-specific in nature.