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Natural Capital Accounting with eftec
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Created on November 11, 2024
How NCA helps you think differently about nature, supports investment , and TNFD disclosure
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Natural Capital Accounting
for investing in what matters most
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
Foreword
We depend on nature. Unfortunately, most of us forget about this when making business and policy decisions. Environmental economists work to ensure we have better memories: we combine scientific evidence with economic analysis to make nature's invisible values visible. We show an organisation's impacts and dependencies on nature and how financially material nature is for the organisation. This brochure is about one particular way of doing this: natural capital accounting. Natural capital accounting will help you to:
- think differently about nature
- identify how to invest in what matters most
- monitor and disclose for nature markets and initiatives such as TNFD
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
TM
Natural capital accounting is a systematic way of collating and analysing environmental, financial, and socio-economic information. It uses the familiar and effective formats from financial accounting, with some necessary revisions: Natural Capital Balance Sheet This shows the value of the natural capital assets and liabilities of the organisation. Both the asset values and liabilities are projected over a relevant future period. Asset values include benefits derived from nature, for both the organisation and the rest of society. Liabilities are the costs the organisation does, or plans to, incur to produce those benefits or to maintain the stock of natural capital assets. Natural Capital Income Statement This shows the positive and negative changes due to the activities of the organisation during a given financial year. Changes that affect both the organisation and the rest of the society are shown. Both aim to show monetary values as much as possible but could also contain non-monetary information. Notes are prepared to show data sources and assumptions.
NatCap Statements
- Impacts on land
- revenue from extraction
Inputs to nature market reporting & TNFD, CSRD disclosures
Aligned to BSI 8632 & ISO 14054
for impacts & dependencies such as:
TM
for impacts & dependencies such as:
- Food, timber & goods
- Changing carbon stores, water, biodiversity
- Accumulated emissions
- Cost of production and maintenance
- GHGs
- Air pollution
- Water use & pollution
NatCap Statements
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
Natural Capital
Stocks
This can answer the ultimate sustainability question: are we maintaining the stock of natural capital sufficiently for it to continue to provide us with flows of benefits and value?
Ecosystem servicesAbiotic Services
Flows
Value
Benefits to business and society
Natural capital accounting focuses decision makers' attention on the stocks of natural capital that underpin the flows, benefits, and value creation.
Thinking Differently About Nature
Or continue to see how natural capital accounting supports investment
Watch eftec CEO, Ece Ozdemiroglu, explain in this short video
To become high integrity buyers and sellers in nature markets and to disclose
To use the info for scenario testing, like in management accounting
To understand how nature is financially material
To classifiy spending on nature as an investment, not an expenditure
To see nature as an asset, not just a risk
Natural Capital Accounting helps organisations think differently about nature:
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
... and after investing, it helps you with continued monitoring of the natural asset, as well as with disclosure through frameworks such as the Taskforce on Nature-Related Financial Disclosures (TNFD)
Natural Capital Accounting helps you identify investments that are ecologically appropriate, economically beneficial, financeable, and socially & politically aligned...
Socially & Policy aligned
Economically beneficial
Financeable
Investing in what matters most
invest in what matters most
Ecologically appropriate
Monitor & Disclose
See the full case study on our website
Financeable
Socially & Policy Aligned
Ecolonomically Beneficial
Ecologically Approppriate
Defra's ELMs test & trial: land management & finance opportunities
- Landholder Consultations
- Baseline benefits
- Developed pilot land use mapping tool
- Review of national and local policies
Available
Emerging
Baseline values from nature at over £660million/year
Investing in what matters most in Hampshire:
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
Natural capital accounting for TNFD
this natural capital account has made it easier to decide to adopt and know how to adopt TNFD United Utilities
- The focus of accounting on the extent and condition of the natural capital stock helps set strategy and targets for managing chronic impacts and dependencies holistically instead of piecemeal fixes of acute risks
- Accounting helps link the metrics and analysis through the LEAP approach to financial materiality of nature related risks & opportunies
- The materiality exercise used in accounting can be leveraged for TNFD by showing both nature and financial materiality
- Accounting requires coordinating input from many parts of the organisation, as does TNFD reporting
- Accounting is the starting point for much of the information needed for TNFD
An organisation that has prepared a natural capital account will find it easier to adopt TNFD
by NatCap StatementsTM
Materiality Assessment, Asset Values Production & Maintainance Costs
Natural Capital Risk Register
Natural Capital Balance Sheet
Natural Capital Asset Register
Physical & Monetary Flow Accounts Materiality Assessment
To respond & report
Risks & Opportunities
Dependencies & impacts
Capital Allocation
Strategy
Governance
Risk management
Opportunites
Systemic risks
Transition risks
Physical risks
Ecosystem services
State of nature
Impact drivers
Other corporate data
Physical water risks
Biodiversity importance
Ecosystem integrity
The interface with nature
is supported at each stage
TNFD's LEAP approach
Response metrics
PREPARE
Risk & Opportunities Metrics
ASSESS
Dependencies & Impact Metrics
EVALUATE
Location productionmetrics
LOCATE
When it's time to disclose with TNFD, having a natural capital account will support you
Interpreting Natural Capital Accounts & scenario analysis
Using the data from the Natural Capital Account
Adapted from United Utilities' Corporate Natural Capital Account (2024) & Unitied Utilities' Sustainability Report (2024)
Refreshed Materiality Assessment for TNFD, TCFD, and ISSB Disclosure
2024
Natural Capital North West Governance Group
Corporate Natural Capital Account
UU become a TNFD Early Adopter
2022
North West Baseline Account
2021
Catchment Systems Thinking (CaST)
2019
First Corporate Natural Capital Account
Integrated Catchment Approach
Sustainable Catchment Management Programme
2015
2005
2018
2023
United Utilities Natural Capital Journey
- How can the results be used?
- Latest NCA will feed into their TNFD disclosure
- Support integration with other management frameworks (e.g., 6 capitals framework and catchment systems thinking)
- Help identify opportunities and manage synergies and trade-offs between different benefits
Net natural capital asset value (asset value – liabilities) of £4.5 billion over 60 years
56,000 hectares of mountain, moorlands, heath and grassland across the North-West of England
United Utilities Natural Capital Balance Sheet
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
Natural Capital Accounting with eftec
Using our bespoke checklist, we audit the alignment of your account with the British Standard on Natural Capital Accounting for Organisations (BSI 8632:2021)
Auditing
We coach your team to set up the accounting system, prepare your natural capital accounts, and compare changes across years
Coaching
We collate data across the organisation & external sources to prepare your natural capital accounts
Preparing accounts
Our process is flexible
- Make the most of available information
- Measure material impacts and dependencies
- Speak to different stakeholders
- Prepare transparent methodology, assumptions, calculations
- Ensure the results are comparable across space and time
- So that the work can be audited by third parties
Good practice at eftec means:
Blue chip companies with land-based investments around the world
We started with preparing national accounts for the UK, UK Overseas Territories, and research for organisations like European Commission and European Investment Bank, ISO and BSI. The leaders in natural capital accounting are organisations and investors closer to land, water, and the sea: those who are more aware of their impacts and dependencies on nature and familiar with long term and/or asset management planning. Increasingly, we see more clients in manufacturing and other industries.
Our portfolio
UK & Ireland Snapshot
Organisation type
By land use type/industry
20%
19%
14%
47%
Who are our clients?
Reasons for conducting a natural capital account
- to decide on which natural capital assets and strategic and management priorities to invest in
- to decide on what ecosystem services to offer to nature markets
- to understand and manage impacts & dependencies on nature
Why do our clients commission natural capital accounts?
hugely useful... great recognition that natural capital assets are [also financial] assets ~ Northumbrian Water
the NCA has enhanced the organisation's reputation and improved potentials for green financing opportunities ~ Forestry England
gained further insight into the inner workings of the business ~ Manulife
Gave me the confidence to continue the path I was following ~ Cholderton Estate
TM
Foreword
Nat Cap Statements
Thinking Differently About Nature
Investing in What Matters Most
Contact & More
Meaningful Disclosure with TNFD
Natural Capital Accounting with eftec
Contents
Our News
Our Projects
View project examples & newsletter archive:
eftec.co.uk
+44 (0) 20 7580 5383
eftec@eftec.co.uk