A New Collaborative Report Explores the Preparedness of the Accounting Profession to Respond to Declining Natural Capital

HONG KONG and MACAU, Dec. 13, 2012 /PRNewswire/ --

The key findings of this report are:

• Perceptions of Natural Capital as a risk are variable within the accountancy profession
• Current disclosures on Natural Capital, as currently practiced, are too limited to provide insights into risk management
• A handful of companies in high environmental impact sectors are reporting substantial detail on aspects of Natural Capital, but the majority are reporting little or no information due to the perceived immateriality of the issue, and
• There are a number of barriers to corporate action such as the lack of a standardised business case, low or unclear market values for some aspects of Natural Capital and some accounting principles

The report aimed at Chief Financial Officers (CFOs), accountancy professionals and business leaders - as key gatekeepers to corporate strategy, accounting, reporting and disclosure - investigates the concept of materiality and how it is used to identify issues for management and disclosure. The recommendations made in this report are targeted to this key audience.

ACCA (The Association of Chartered Certified Accountants), KPMG and Fauna & Flora International have investigated the concept and existing use of materiality in light of the increasing significance of natural capital as a business risk. The new report entitled: Is natural capital a material issue? An evaluation of the relevance of biodiversity and ecosystem services to accountancy professionals and the private sector was officially launched at a briefing event held in London earlier.

Natural capital - the stock of capital derived from natural resources such as biological diversity, ecosystems and the services they provide - is in decline globally. The loss of natural capital exposes companies to a range of new risks and opportunities that can impact profit, asset value and cash flow. Civil society is increasingly concerned about the loss of natural capital, but are companies identifying and measuring these issues? When do they become material?

The report explores the current response of the accountancy profession to the increasing importance of natural capital as a business issue. It involved a survey of over 200 accountancy professionals, interviews with CFOs and senior management from 8 major companies, a disclosure survey of corporate reporting by 40 organisations in specific sectors, and desk based research into relevant literature and work in the field.  

Key findings of the survey included:

• 60 percent of respondents agreed that the natural world was important to their business
• More than half of the respondents had included natural capital issues in their company's business risk evaluations at some point
• Nearly half (49 percent) of respondents identified natural capital as a material issue for their business and linked it to operational, regulatory, reputational and financial risks

Author of the report Dr Stephanie Hime of KPMG's Climate Change and Sustainability Practice said: "Specific parts of natural capital are increasingly being recognised as critical and material business issues. This report aims to bring a new audience into the debate by focusing attention on what the accountancy profession can do to mitigate these risks."

Head of Sustainability at ACCA, Rachel Jackson said: "ACCA strongly believes that considerations should be made by accountancy bodies to make their members aware of the need to account for natural capital within the company annual reports and accounts, as well as sustainability reports in order to avoid failures when anticipating future risk and their associated costs to business."

For a full copy of the report, please visit: http://www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Tax/natural-capital.pdf

Notes to editors:

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. As the first global accountancy body entering into China, ACCA now has over 22,600 members and 42,500 students, with 7 offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Hong Kong SAR, and Macau SAR.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accounting professionals bring value to economies in all stages of development. We aim to develop capacity in the profession and encourage the adoption of consistent global standards. Our values are aligned to the needs of employers in all sectors and we ensure that, through our qualifications, we prepare accountants for business. We work to open up the profession to people of all backgrounds and remove artificial barriers to entry, ensuring that our qualifications and their delivery meet the diverse needs of trainee professionals and their employers.

We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills needed by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development.

www.accaglobal.com