Integrated Reporting and Natural Capital Accounting

Tender description

Project Aims To support the continued development of integrated reporting (IR) standards used by UK businesses to enable effective natural capital accounting. The final project outputs (see Section 5) will assist JNCC to better understand the IR process and the types of natural capital data required to meet the demands of assessments that inform IR. Background JNCC has been involved in developing UK standards for nature conservation for 25 years. In the last few years, with the increasing interest in the Ecosystem Approach, JNCC has sought to contribute to the development of concepts, standards and tools that support practice in assessing and mapping ecosystem services and valuing the benefits arising from these services. In 2014, JNCC commissioned a project entitled Realising Nature’s Value in UK Business, which helped to identify motivations and barriers to accounting for natural capital in three business sectors (JNCC Report 558). The study highlighted the important role of integrated reporting (IR) in framing environmentally sustainable business models. There are a number of different IR approaches, including in the broadest sense of the term Environmental Profit & Loss (EP&L) assessments, which are being trialled and used by businesses. These approaches include those produced by the International Organisation for Standardization (ISO) and International Integrated Reporting Council (IIRC), and those produced by consultants working with specific clients and/or in partnerships with NGOs. The IR process is founded on integrated thinking that results in a periodic integrated report by an organisation about value creation over time and related communications regarding aspects of value creation. The elements of IR that are of relevance to accounting for natural capital in UK business include: a focus on reporting that communicates the full range of factors that materially affect the ability of an organisation to create value over time; creating enhanced accountability and stewardship of the broad base of capitals, explicitly including natural capital; and supporting integrated thinking, decision-making and actions that focus on the creation of value over the short, medium and long term. The level of uptake of IR by UK businesses is currently unclear but current users include large businesses such as Marks & Spencer and the Crown Estate. If there is widespread uptake of IR then it may prove useful to develop specific guidance and standards for businesses on how natural capital accounting can be integrated with and enhance IR .