A new report entitled Accounting for Natural Capital: The Elephant in the
Boardroom was launched by CIMA, the Chartered Institute of Management
Accountants, in collaboration with EY, the International Federation of
Accountants (IFAC) and the Natural Capital Coalition, at an event at CNBC Africa
In a panel discussion and with a live audience, panellists debated our
reliance on natural resources, which are dangerously thin from the demands of a
growing and more prosperous global population, and the critical role businesses
face in addressing the issue.
Report co-author, Sandra Rapacioli, Head of Sustainability Research and
Policy, CIMA, joined by live link from London, with a representative of Shell
Nigeria Gas (SNG), Nwakaego Arize-Nwokoye, Finance and Planning Manager,
joining by link from Lagos. The in-studio panellists were Francois Byleveldt from
SAP and Peter Lukey, Chief Policy Advisor: Strategic Environmental Intelligence
of the Environmental Advisory Services Unit of the Department: Environmental
Says Sandra Rapacioli, Head of Sustainability Research and Policy, CIMA:
"The depletion of natural capital will become one of the most prominent business
concerns in the 21st Century. Accounting for natural capital issues isn?t easy. But
just because it?s hard doesn?t mean it shouldn?t be done.
"We are calling on finance professionals to take action now and incorporate
natural capital considerations into strategic planning and business decisions,
before the regulatory axe falls. They have the skills and oversight to show the
connections between natural capital, commercial opportunity and business risk,
and ultimately, financial performance. Financial professionals need to lead the
change to prevent their organisations failing in today?s ever changing
environment, or face a stark choice- adapt or fail.'
The report highlights how, despite its importance, natural capital is largely
ignored by investors as boardrooms continue to focus on short-term
management decisions and priorities. The true cost to society from the impact of
business activity on natural resources is not reflected in corporate accounts and
finance professionals, especially those in leadership roles, have a vital role in
helping navigate their organisations through the challenges and opportunities
which the depletion of our natural resources will create.
By outlining the key steps professional accountants and others in financial
leadership positions can take, the report shows how they can help their
companies to integrate natural capital considerations into decision making,
resource allocation and reporting, and to adapt to growing competition for ever
more scarce natural resources.
Says Rapacioli: "Organisations that respond swiftly, embracing
opportunities to innovate and manage their risks will thrive. Some of the
companies that are taking proactive approaches include Dow Chemical,
Kingfisher and Coca Cola. Organisations that do nothing will suffer from rising
input costs, risks to their supply chain and reputational damage.'
? Raise natural capital as a strategic issue and make the business case for it
in the boardroom
? Measure your natural capital inputs and impacts; value these where
? Integrate natural capital into decision making
? Engage in the debate around natural capital and business; contribute to
the development of the Natural Capital Protocol
? Develop skills for natural capital accounting in your teams
The panel discussion will air on CNBC Africa on DSTV channel 410 on 26 June
2014 at 14:00 CAT.
What do you think?
Who should pay for the depletion of natural resources?