By Jane ‘Carter’ Ingram
April 22 was Earth Day, and President Biden marked the occasion by signing an Executive Order that will support a suite of initiatives aimed at protecting and sustainably managing forests, addressing climate change through nature-based solutions, and better understanding and accounting for the value of nature. One of the key developments is the launch of Natural Capital Accounting, which will allow the US to track and measure the economic value that forests, reefs, wild pollinators and other natural assets bring to the economy.
“Because many of the benefits that nature provides seem ‘free,’ they are not visible in our economic models and indicators,” said the White House Office of Science and Technology Policy, at its virtual roundtable “Knowledge in Nature.” (You can watch the White House roundtable that I was privileged to be a part of here)
Nature on the balance sheet
At Pollination, we believe such accounts are vitally important because they put the value of nature on the balance sheet. That gives government agencies, companies, investors and other stakeholders a more complete set of information, alongside more traditional measures such as GDP and jobs, with which to manage the country’s wealth and growth. The data will inform future decisions on land use by including the value of, for example, carbon sequestration, air quality, or clean and abundant water supplies, provided by different ecosystems.
National Capital Accounts can provide standardized and regular information on the stocks of natural capital and the flows of ecosystem services. The information can help identify where land or water resources are being damaged, or conversely, where regeneration efforts may offer a range of social, environmental and economic benefits. Decision-makers can also use the data to evaluate potential trade-offs between natural capital and other forms of wealth, such as built infrastructure.
For the past five years, I’ve been co-leading a working group of fellow academics and colleagues from a range of disciplines including economics, accountancy and ecology, from the US Geologic Survey, the Department of Commerce, the Environmental Protection Agency, United States Department of Agriculture, and others to develop pilot natural capital accounts for the US that can demonstrate how to do this in a large, ecologically and economically diverse country.
We used a variety of public and private data sources to compile an initial set of land, water and ecosystem accounts, in line with the UN System for Environmental-Economic Accounts (SEEA), which is the international standard for natural capital accounts.
We strongly welcome the administration’s backing to advance these efforts, which put the US alongside other countries, including the UK and Australia, and the EU, in developing natural capital accounts to strengthen their system of national accounts. This type of framework and the information it will provide can inform and support critical decisions related to much-needed nature-based solutions that can benefit our economy and planet we live on for the long term.
Being able to compare apples and apples will unlock investment
We believe national Natural Capital Accounts also will drive and support companies and investors to understand the dependencies and impacts of their business on natural assets. Clear, comparable, frequent, and credible data is vital to understanding the risks of using natural resources in an unsustainable way, as well as the opportunities generated by well managed ecosystems and nature-based solutions.
As companies and investors seek to better manage their natural capital impacts, dependencies, risks and opportunities, Natural Capital Accounts can provide useful, credible information that businesses may not collect or have in-house.
More from the ‘climate playbook’ – Nature Action 100 announced
The playbook developed to combat climate change is being rapidly adapted to tackle nature loss – the latest example is the announcement that Nature Action 100 (NA 100) will launch in the middle of this year. The initiative will build on the Climate Action 100+ model, which sees ‘lead investors’ (typically two per company) assigned to engage with big emitters on ambitious targets and plans to reduce emissions.
The focus of the NA 100 will be on companies that are “systemically-important” when it comes to biodiversity loss. It has already attracted some heavy-hitting global investors signed up – including AXA Investment Managers, BNP Paribas Asset Management and Federated Hermes – and is actively seeking further investor participation.
The momentum for effective nature action is building – the announcement of the NA 100 is clear evidence of this. In the past, credible and comparable nature data has been a barrier for investors to take action, but with tools like national natural capital accounts rolling out, momentum will only accelerate.