Focusing on sustainability is not a new concept in accounting. There has been a growing emphasis on environmental, social and governance (ESG) issues for years, but its scope has now expanded beyond emissions reporting and climate risk.

Increasingly, the focus is shifting toward taking a nature-positive approach, which not only reduces environmental harm but actively restores and enhances nature. As a result, biodiversity, natural capital and ecosystem health are becoming recognised as being financially material – impacting valuations, risk assessments, regulatory compliance and long-term business viability.

Every organisation depends on nature in some way, whether through supply chains, land use or resource consumption, says Karen McWilliams FCA, sustainability and business reform leader in the CA ANZ advocacy team.

“Addressing nature loss is a key part of solving climate change. But measuring and managing an organisation’s impacts and dependencies on nature is more complex than measuring greenhouse gas emissions, as it is highly location specific and involves multiple factors like water, biodiversity and land use,” she says.

“The first step is understanding what the term ‘nature positive’ is. It is more like a direction of travel, rather than a state that organisations can claim to have achieved, unlike carbon neutrality or net zero.”

Using frameworks as a guide

While there are no mandatory requirements for organisations to adopt nature-positive strategies, some are finding it valuable to understand their nature-related risks and opportunities to make better business decisions. The Taskforce on Nature-related Financial Disclosures (TNFD) LEAP approach is one tool that can help organisations do this.

Christine Laban, a sustainability advocate, says that alongside the use of TNFD, we need to take a long-term, multi-capital approach, using frameworks such as integrated reporting, the Capitals Coalition framework for integrated decision making and He Tauira, a sustainability reporting framework developed for Aotearoa New Zealand, which takes an intergenerational approach.

“The core idea behind these kinds of frameworks is to change how organisations think and operate – not just how they report,” Laban says. “They help shift the mindset and once that shift happens, the reporting naturally follows.”

These tools encourage organisations to look at how their business model interacts with the external environment and how value is created or eroded across multiple forms of capital, not just financial capital.

“Accountants are well positioned to connect the dots across an organisation and incorporate nature-related risks and opportunities into their assessments. But we need to start taking a much longer-term view,” Laban says. 

“We’re not taking meaningful action yet because we are stuck asking, ‘What’s the short-term financial return this quarter?’ instead of ‘What does this mean for our long-term sustainability as an organisation – on a functioning planet?’.”

Resources for measuring impact

A suite of new resources has been released to support the mining industry to adopt natural capital accounting (NCA) – a way of accounting for impacts on nature over the life of projects.

The resources include a business case, gap analysis and roadmap, guidance on NCA concepts, methods and reporting structures, and a pilot forecasting study to demonstrate a potential strategic use of NCA.

While mining has relatively clear and direct interactions with nature, for many other industries, measuring impacts and dependencies on nature is far less straightforward. 

The challenge lies in identifying meaningful data, understanding complex ecosystem relationships and applying appropriate valuation methods to reflect nature’s role in business operations, says McWilliams.

“The key difference with nature is that we don’t have a standardised measurement,” she says. “There are many different aspects to consider – water being one, biodiversity another, and then we look at things like land use change, among others. Nature is made up of many facets, each with its own unique impact.”

“What makes it even more complex is that each of these factors carries a different level of significance depending on the location. This makes it much more nuanced and challenging for businesses to fully understand and assess their impact.”

Rayne van den Berg FCA, former CFO at Forico and currently chief value officer of Value Australia, a Capitals Coalition regional hub, says framing natural capital as an asset that needs to be protected and maintained, in the same way accountants protect financial, intellectual and physical assets, is a relatable way of looking at natural capital.

“The way I think about it is this: we shouldn’t be taking more from nature than we can give back, to ensure it maintains its value – just like any other asset,” says van den Berg.

Under her leadership, Forico calculated the natural value of the 174,000 hectares it manages and developed the award-winning Natural Capital Report based on the Natural Capital Protocol developed by the Capitals Coalition. 

“At Forico, creating a natural capital balance sheet helped us clearly show the value of nature in our business – especially assets that were largely invisible on traditional financial accounts,” she says.

Van den Berg’s role now includes helping people understand that measuring and valuing nature doesn’t need to be complicated to start making better decisions. 

“As accountants, we’re not starting from scratch – we’re building on skills we already have. When we’re forecasting or assessing a business, we need to consider all the drivers of value. If nature is one of those – whether the connection is direct or indirect dependencies or impacts, then we should be thinking, measuring and valuing it,” she says.

Further reading on nature-positive accounting

• CA ANZ and the Governance Institute of Australia: Frequently Asked Questions on Nature

• Global Accounting Alliance report: Nature is Everyone’s Business: The Global Accounting Alliance’s Progress and Pathway to 2030

• Global Accounting Alliance report: Why Nature Matters to Accountants: A guide to Building Resilience and Value Through Nature-Positive Action

• EY Australia: How Can the Net Zero Transition Create a Nature-Positive Advantage?

• EY New Zealand: How Can New Zealand Turn Biodiversity Into a Financial Asset and Climate Solution?