Rayne van den Berg, Principal at NatCap+
As professional accountants, our primary role is to protect and create value. This duty is often specified in our position descriptions as chief financial officers. The question is, where is the value? How do we protect it? How can we create it?
CFOs don’t have the luxury of relinquishing their responsibility to protect long-term corporate value in order to focus solely on short-term gains. Especially if these gains or profits are not genuinely repeatable or sustainable over time. Diminishing returns or cash flows on unmaintained assets will eventually erode corporate value. This concept, well understood by accountants, is at the heart of the definition of sustainability.
This fundamental concept of protecting and creating value in assets can be logically extended to natural capital assets, alternatively, the ecosystem assets that provide services to businesses and societies, such as pollination, water, climate control, carbon sequestration, food, and fiber. Businesses depend on these natural capital assets for current and future revenue streams but are increasingly at risk from issues such as climate change, biodiversity loss, and resource depletion.
Because these natural capital assets are at risk, the role of accountants becomes more integral to business strategy and reporting. CFOs and other professional accountants are being increasingly called upon to measure, value, and drive overall corporate value, both financial and non-financial.
“Because these natural capital assets are at risk, the role of accountants becomes more integral to business strategy and reporting.”
Strategically, accountants play a crucial role in identifying, quantifying, assessing, and disclosing nature-related financial risks that are likely to impact their operations and associated value chains. Nature-related financial risks are those that manifest in deteriorating financial performance and corporate value due to the depletion of natural capital assets.
Secondly, accountants are responsible for integrating nature-related risks into the financial statements, ensuring that organizations comply with evolving disclosure requirements such as the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations, the Corporate Sustainability Reporting Directive and the International Sustainability Standards Board Standards. Accountants must not only ensure transparency but also enhance the quality and comparability of nature-related financial disclosures to allow stakeholders, including investors, regulators, and consumers, to make informed decisions.
Accountants need not wait to be asked to assess their businesses’ nature-related financial risks for compliance and mandatory reporting obligations, but they should begin to measure and value them in order to perform their duty to protect and create underlying corporate value – including natural capital value.
Patrick Ho, Head of Sustainable Development at Swire Properties, and TNFD Taskforce member
As US$44 trillion of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services and, as a result, exposed to risks from nature loss, accountants are at the forefront of integrating nature-related considerations into financial decision-making.
Accountants are skilled at pinpointing potential nature-related risks, such as biodiversity loss, water scarcity, or land degradation, and quantifying their financial impact. For instance, they might analyse how unintended habitat destruction in a company’s supply chain could lead to potential regulatory penalties or reputational damage. By using tools like cost-benefit analysis and scenario modeling, they can assess these risks and incorporate them into financial forecasts.
Accountants ensure that companies comply with emerging frameworks such as the TNFD. This involves implementing frameworks that guide how companies assess and disclose their nature-related risks and opportunities, derived from their impact on and dependencies on nature. They also help ensure the accuracy and transparency of nature-related disclosures by applying auditing skills to verify nature-related metrics.
Beyond compliance, accountants also drive value creation by identifying opportunities in nature-positive transitions. They advise boards on governance structures for nature-related oversight and develop strategies aligned with global or national biodiversity conservation goals.
“Beyond compliance, accountants also drive value creation by identifying opportunities in nature-positive transitions.”
Strategic planning for nature-positive transitions is particularly crucial to Swire Properties, a member of the TNFD Global Taskforce, and among the first 320 global companies to adopt the TNFD Early Adopter Programme.
In our 2024 Sustainability Report, as part of our integrated Climate- and Nature-related Financial Disclosures, we have published our TNFD-aligned disclosures, integrating nature-related risks and opportunities alongside climate reporting.
Following the TNFD’s LEAP framework (Locate, Evaluate, Assess, Prepare), we conducted a comprehensive screening of our global portfolio using biodiversity indicators to identify priority sites. We have also mapped our business activities against key environment assets and ecosystem services, assessing dependencies and impacts. This analysis revealed potential nature-related risks and opportunities across property management, construction, and hotel operations, with corresponding financial implications and mitigation strategies.
Chris Joy, Head of International at the Hong Kong Institute of CPAs
The recently launched guide by the Global Accounting Alliance (GAA), titled Why nature matters to accountants: a guide to building resilience and value through nature-positive action, serves as an essential resource for accountants aiming to integrate nature-related issues into their work, thereby enhancing business resilience and value.
Nature-related financial risks encompass a broad spectrum of challenges, including biodiversity loss, climate change, and resource depletion. These risks can significantly impact an organization’s financial health and long-term sustainability. Accountants, with their expertise in financial analysis and reporting, are uniquely positioned to identify, assess, and disclose these risks, ensuring that businesses are not only aware of their environmental impact but also prepared to mitigate potential financial repercussions.
At a strategic level as well as in risk analysis, corporate reporting, and assurance work where nature-related requirements are ever-increasing, accountants have a professional responsibility to ensure that nature is appropriately considered in their work. The accounting profession can leverage its focus on the public interest to play a key role in championing and driving the transition to a more resilient net zero, nature-positive, and socially aware economy. With their unique skillsets, accountants are uniquely qualified to tackle nature-related issues by supporting organizations to identify and address nature-related risks and opportunities.
“The GAA guide provides fundamental insights into the significance of nature in the professional roles of
accountants – whatever their function in or relationship with an organization.”
The GAA guide provides fundamental insights into the significance of nature in the professional roles of accountants – whatever their function in or relationship with an organization. It emphasizes the importance of understanding how nature-related issues can affect financial performance and offers actionable steps to integrate nature into daily practices. By adopting the principles outlined in this guide, accountants can help their organizations and clients navigate the complexities of nature-related financial risks, fostering a culture of sustainability and resilience.
This guide is part of the GAA’s broader efforts to ensure that the profession is part of the solution in tackling the global nature crisis going forward. As a proud member of the GAA, the HKICPA is part of the GAA’s collective nature commitments made as 10 of the world’s leading professional accountancy bodies.
We encourage all accountants to read this detailed guide to discover how nature can foster a sustainable future.
