KPMG, Fauna & Flora International (FFI) and the Association of Chartered Certified Accountants (ACCA) have launched a briefing paper, Indentifying natural capital risk and materiality calling for greater understanding of natural capital and its materiality.
The paper aims to persuade businesses to take an interest in understanding natural capital - the stock of capital derived from natural resources - as a business risk and material issue.
According to the paper natural capital is declining globally with high but often unrecognised costs for those involved.
Incorporating natural capital issues in corporate materiality and risk assessments could make for better-informed decision making, an enhanced risk management process and an increased ability to realise strategic opportunities.
The issues and risks related to natural capital are more likely to be included as material business concerns, according to the briefing.
The paper states that the definition of materiality has evolved in three main ways; the scope of the issues has extended to environmental and social impacts of organisations, the stakeholder groups have expanded to groups concerned with natural capital issues and the time frame over which business impacts are considered material has been extended.
Many regulators, standard setters and sustainability reporting bodies are adapting to incorporate changes in the materiality principle.
Stephanie Hime, manager and lead specialist at the KPMG UK Sustainability Services, said: "The changing focus of materiality analyses is the first step to ensuring that natural capital issues are included within corporate risk assessment and disclosures."
The briefing is the first in a series of shorter briefing papers aimed at business leaders, chief financial officers and accounting professionals.
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ACCA and KPMG call for understanding natural capital
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