Accounting for Sustainability (A4S) released its first in a series of guides on natural capital in December. The Business Case for Nature provides accountants with a range of resources that they can use to help their companies understand why they must factor nature into their strategies, operations and reporting.

As the guide points out in its introduction, nature is “the foundation on which all organisations depend to create value. It underpins the financial returns of businesses and the capital markets, and the growth of the wider economy.” However, it says, despite that reliance, business operations have caused a “significant decline” in nature and biodiversity, stemming mainly from their lack of visibility in the financial system. As a result, many natural resources are becoming scarcer – leading to potential supply and price risks.

Capital markets have amplified this degradation, financing activities that cause harm to the world’s natural capital. A failure to halt and reverse nature loss as a matter of urgency, the guide warns, means we risk exceeding tipping points for the global ecosystem, with “catastrophic results for humanity”.

As such, the guide stresses: “Businesses have a crucial role to play in reversing the damage already caused and preserving nature into the future.”

Rallying cry

The guide points to finance teams as being well placed to help develop their organisation’s business case for action. One important way they can do so is by encouraging companies to draw connections between nature, financial value and wider business value.

In that spirit, the guide sets out a rallying cry of sorts, in the form of the top five most pressing reasons to act.

Collectively tackling the nature crisis, it warns, is a matter of urgency before damage to business resilience becomes irreversible. The degradation of ecosystems is disrupting global supply chains, threatening the secure supply of key resources. Effective management of nature and preparation for coming regulations will help to limit the permit refusals and lawsuits that have already marred companies’ credit ratings and valuations. 

Acting now to meet investors’ expectations – through means such as reporting in line with the framework devised by the Task Force on Nature-related Financial Disclosures – will put companies in a better position to secure future funding. And efforts to protect and restore natural habitats can play a valuable role in helping companies meet their climate and net-zero goals.

Resources provided in the guide include a business case checklist and tips on how to pinpoint your organisation-specific drivers of action. Short case studies of how United Utilities and GSK are approaching their business-critical nature challenges come with hyperlinks to deeper dives into the companies’ strategic processes, hosted on the A4S website. 

Finance teams’ role in building the business case for nature, the guide says, will draw upon core skills such as data analysis, management reporting, presentation of complex data and the ability to interpret and follow reporting standards. In addition, it notes, finance is well placed to work with other departments to identify and gather key inputs, set up control frameworks and build capacity. That sort of collaboration, it adds, “will be crucial in your own organisation for taking meaningful action on nature, with its complex set of dependencies, impacts, risks and opportunities”.

Valuable resource

ICAEW Nature and Biodiversity Manager Toby Roxburgh was part of the advisory group that supported the development of the guide.

“Alongside climate change, nature is fast becoming a business-critical issue,” he says. “However, many finance teams struggle with knowing where to begin. Packed with practical advice on how to make the business case for action, this guide will be a valuable resource for finance teams wanting to help their organisations get going.”

Topics of forthcoming guides in the A4S series include the link between nature and climate change, plus how to embed nature into strategy, decision-making and reporting.

ICAEW is currently working with colleagues in the Global Accounting Alliance to develop complementary nature guidance for accounting professionals. Due for publication in early 2025, the guide will show how nature connects with the professional responsibilities of accountants working in a range of specific roles – such as board members, senior managers, analysts, report preparers and external auditors – providing practical guidance on how they can start embedding nature into their day-to-day practices.

Further reading

For more information on this topic, explore ICAEW’s Nature & Biodiversity Hub.