E-GAAP

Why do we need a set of Environmental Generally Accepted Accounting Principles?

Only a tiny fraction of the current global economy can be considered to be sustainable according to leading financial institutions and multinational agencies, but the EU has set out an ambition to achieve a sustainable financial system and economy by 2050.

The EU has recognized that in order to achieve this ambition, a shift is required in the way that businesses understand and account for their relationships with nature and people, and that accounting for the value of nature in decision making is crucial to achieve this shift.

The lack of a comprehensive sustainable management system and standardization across corporate environmental assessment methods – including natural capital standards and practices – continues to hamper the mainstreaming of sustainable economic activity across Europe and the rest of the world.

The Demand:

In order to enable this shift, the business community is calling for holistic datasets and standardized methodologies that allow them to include the value of nature and people in their internal decision making and their external disclosure. Integrated datasets will also enable businesses to better understand how best to align their organizations with broad societal ambitions such as the European Green Deal and the Sustainable Development Goals.

The Transparent Project:

Through the Transparent Project, the Value Balancing Alliance – consisting of international companies and the four largest professional services firms (Deloitte, EY, KPMG & PwC) – and the Capitals Coalition – a global collaboration of more than 370 organizations – have joined forces with the World Business Council for Sustainable Development (WBCSD) to develop a set of environmental generally accepted accounting principles (E-GAAP) to empower the private sector and to enable a shift towards a more sustainable financial and economic system.

In line with the European Green Deal we will develop a standardized natural capital accounting and valuation methodology that provides decision-makers with the information necessary to generate long-term value and to improve business resilience while providing a clear picture of the overall impacts and dependencies of businesses on the environment, communities and broader society.

The Transparent methodology will achieve this by integrating financial and environmental information and accounts. It will encourage companies to better manage environmental risks and opportunities and apply best practice in order to establish a prescriptive industry standard that generates widely comparable results.

The model will build on international accepted and harmonized principles and frameworks such as the Natural Capital Protocol, and other approaches used by international companies, such as those highlighted by the Value Balancing Alliance.

The Transparent project is targeting a widespread adoption by companies worldwide.

The Transparent project has received funding from the LIFE Programme of the European Union.