This report provides an overview of four innovative approaches to including natural capital in financial accounts, and identifies potential future routes (and collaborations) to mainstream solutions. The four methods explored all show how parts of financial accounts, such as an income or balance sheet, can be altered to include figures that reflect natural capital impacts and/or dependencies. The methods presented are all illustrated through real-world examples, showing how action can be taken. They can be used to help companies understand how they can integrate natural capital within their income statement and/or balance sheet, and what impact this could have. The specific methods differ in their approaches, providing different routes to make natural capital visible within different aspects of financial accounts:
- Method 1 – Integrating Natural Capital Accounting practices into Financial Accounting of Intangible Assets: Treating some investments to enhance natural and human capital as an “intangible asset” under existing accounting standards (International Accounting Standard 38).
- Method 2 –Value Added Statement for Nature: Reshaping the income statement to show how much of the value generated by companies is “given back” to nature.
- Method 3 – Comprehensive Accounting with Respect to Ecology (CARE) Model: Including new types of liabilities and assets that reflect debts to (as a result of inputs from) natural and social capital.
- Method 4 – Integrating Natural Capital into Financial Accounting: Illustrating integration of financial and natural capital into a single income statement and balance sheet.