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This article was originally published on Disclosure Hub


“In this space I’ve sometimes commented on initiatives and issues which don’t directly have anything to do with IFRS, the headline topic of this blog, and I suppose the link back to that (because I always feel obliged to make some sort of link) is always pretty much the same: shouldn’t this topic have more to do with IFRS than it actually does? The same will apply in here in briefly addressing the subject of “natural capital,” defined (in one place anyway) as “The stock of renewable and non-renewable natural resources (e.g., plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people.” I only recently came across the “Natural Capital Protocol,” a somewhat stunning, if daunting, 136-page publication from a few months ago that sets out “a framework designed to help generate trusted, credible, and actionable information that business managers need to inform decisions.”

As it specifies near the outset: “To value something means to understand what it is worth to us. In the Protocol, valuation refers to the process of estimating the relative importance, worth, or usefulness of natural capital to people, in a particular context. In financial accounting terms, valuation is understood to mean monetization, but in environmental economics and this Protocol, valuation means more than just monetization. It includes qualitative, quantitative, and monetary approaches, or a combination of these.” Still, it’s a little disappointing perhaps to reflect that even with this limitation, the document seems to find little value to draw from the financial accounting field. I mean, shouldn’t we have something to contribute?…”

Read on at: Disclosure Hub.