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A new collaborative report explores the preparedness of the accounting profession to respond to declining natural capital


09 Nov 2012


Euro & Finance

The key findings of this report are:

  • Perceptions of Natural Capital as a risk are variable within the accountancy


  • Current disclosures on Natural Capital, as currently practiced, are too limited

to provide insights into risk management,

  • A handful of companies in high environmental impact sectors are reporting

substantial detail on aspects of Natural Capital, but the majority are

reporting little or no information due to the perceived immateriality of the

issue, and

  • There are a number of barriers to corporate action such as the lack of a

standardised business case, low or unclear market values for some aspects

of Natural Capital and some accounting principles

The report aimed at Chief Financial Officers (CFOs), accountancy professionals and business leaders – as key gatekeepers to corporate strategy, accounting, reporting and disclosure – investigates the concept of materiality and how it is used to identify issues for management and disclosure. The recommendations made in this report are targeted to this key audience.

ACCA (The Association of Chartered Certified Accountants), KPMG and Fauna &

Flora International have investigated the concept and existing use of materiality in

light of the increasing significance of natural capital as a business risk. The new

report entitled: Is natural capital a material issue? An evaluation of the relevance of

ecosystem services to accounting professionals and the private sector will be

officially launched at a briefing event held in London today.

Natural capital – the stock of capital derived from natural resources such as

biological diversity, ecosystems and the services they provide – is in decline

globally. The loss of natural capital exposes companies to a range of new risks and

opportunities that can impact profit, asset value and cash flow. Civil society is

increasingly concerned about the loss of natural capital, but are companies

identifying and measuring these issues? When do they become material?

The report explores the current response of the accountancy profession to the

increasing importance of natural capital as a business issue. It involved a survey of

over 200 accountancy professionals, interviews with CFOs and senior management from 8 major companies, a disclosure survey of corporate reporting by 40 organisations in specific sectors, and desk based research into relevant literature and work in the field.

Key findings of the survey included:

  • 60 percent of respondents agreed that the natural world was important to

their business

  • More than half of the respondents had included natural capital issues in

their company’s business risk evaluations at some point

  • Nearly half (49 percent) of respondents identified natural capital as a

material issue for their business and linked it to operational, regulatory,

reputational and financial risks

Author of the report Dr Stephanie Hime of KPMG’s Climate Change and

Sustainability practice said: “Specific parts of Natural Capital are increasingly being recognised as critical and material business issues. This report aims to bring a new audience into the debate by focusing attention on what the accountancy profession can do to mitigate these risks”.

Head of Sustainability at ACCA, Rachel Jackson said: “ACCA strongly believes that considerations should be made by accountancy bodies to make their members

aware of the need to account for natural capital within the company annual reports

and accounts, as well as sustainability reports in order to avoid failures when

anticipating future risk and their associated costs to business.”


For more information, please contact:

Lali Sindi, ACCA Newsroom

+ 44 (0) 207 059 5643

+44 (0) 7921 698085

Margot Cowhig, KPMG Press Office

+44 (0)207 694 4246

+44 (0)7920 274856

Available for Comment:

  • Rachel Jackson, Head of Sustainability, ACCA
  • Dr Stephanie Hime, Lead Specialist – Biodiversity and Ecosystem Services, KPMG

Climate Change and Sustainability Services

  • Paul Herbertson, Director Environmental Markets Programme, Fauna & Flora


Notes to Editors

1. Natural Capital is the stock of capital derived from natural resources such as

biological diversity and ecosystems along with geological resources such as

fossil fuels and mineral deposits. It provides the ecosystem products and

services that underpin our economy and inputs or indirect benefits to business.

This report focuses on biodiversity and ecosystems, specific constituents of

natural capital that give rise to ecosystem services. Geological resources are not considered as they are routinely included in market transactions and

accounting practices.

2. About ACCA ( ACCA (the Association of Chartered

Certified Accountants) is the global body for professional accountants,

supporting 154,000 members and 432,000 students throughout their careers,

and providing services through a network of over 80 offices and centres. ACCA works to strengthen a global profession that is based on the application of consistent standards, which ACCA believes provide the best support for

international business and the desire of talented people to have successful,

international careers. ACCA champions the needs of small and medium‐sized

business (SMEs) and emerging economies, and promotes the value of

sustainable business.

3. About Fauna & Flora International (www.fauna‐ Fauna & Flora

International (FFI) protects threatened species and ecosystems worldwide,

choosing solutions that are sustainable, on the basis of sound science and

taking account of human needs. Operating in more than 40 countries

worldwide‐ mainly in the developing world‐ FFI saves species from extinction

and habitats from destruction, while improving the livelihoods of local people.

Founded in 1903, FFI is the world’s longest‐established international

conservation body and a registered charity. Through its global corporate

partnerships, within the Business & Biodiversity Programme, FFI aspires to

create an environment where business has a long‐term positive impact on

biodiversity conservation. FFI leads the Natural Value Initiative (NVI)

collaboration (www.fauna‐ To date, the NVI has

released a series of valuable publications and tools that address biodiversity

and ecosystem services within the finance, extractive, pharmaceutical, and

agricultural sectors.

4. About KPMG ( As sustainability and climate change issues

move to the top of corporate agendas, KPMG in the UK's Climate Change and

Sustainability Services (CC&S) practice assists organisations by providing

sustainability and climate change Assurance, Tax and Advisory services to

organisations, helping them apply sustainability as a strategic lens to their

business operations in order to better understand the complex and evolving

environment, optimising their sustainability strategy.

For more information, please visit our website: