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The CSIRO says economic growth has coincided with a "catastrophic decline" in our natural systems and a 70 per cent reduction in the average species population size since 1970.
Key points:
- The CSIRO says our failure to account for nature has had serious consequences
- "Natural capital accounting" is gaining momentum globally
- It says this type of accounting is expected to become mandatory
It says much of our economic activity relies on nature, and extracts economic "value" from it, but our failure to account for nature in our decision-making has had serious consequences over time.
It says the destruction of nature is increasingly recognised as a material risk to business.
So today, the CSIRO has released a handbook to guide businesses on how to account for their natural assets so they can better protect our environment.
Its Natural Capital Handbook presents step-by-step guidelines on how businesses can measure "natural assets" such as clean air, water, soil, and living things and incorporate them into their financial books.
It says natural capital accounting makes the relationship between nature and economic activity explicit, and it's intended to promote long-term environmental and economic well-being.
It says the accounting framework is gaining momentum globally and is expected to become a mandatory requirement for Australian businesses in the future.
Natural capital accounting
The CSIRO is Australia's national science agency.
It says much of the value that flows from our economy is drawn from natural resources including clean air, water, and soil, but we have neglected that reality for too long.
"While nature underpins our economic growth, the value of nature is excluded in dominant financial analysis tools and not always factored into decision-making by businesses," said CSIRO scientist and lead author of the handbook, Dr Greg Smith.
"This is now being recognised as a critical component in helping to reverse environmental decline," he said.
The CSIRO's handbook reflects the global effort to make the standard way of measuring economic growth — "gross domestic product" — account for the impact that human economic activity has on nature.
"Natural capital accounting" is an accounting framework that measures and reports on the stocks and flows of "natural capital" that recognised the economic, ecological, and social value of the environment.
The handbook draws upon existing frameworks by national-level accounting under the United Nations System of Environmental Economic Accounting (SEEA) framework, which will one day be integrated with the System of National Accounts (SNA) which produces the GDP measurement.
It also aligns with the global market-led initiative Taskforce for Nature-related Financial Disclosures (TFND) recently released framework for risk management and disclosure.
CSIRO Living Landscapes research director and co-author Dr Libby Pinkard says the handbook will help businesses to produce consistent and transparent reporting to investors and the general public on their interactions with nature.
"By adopting natural capital accounting practices across the private sector, we can be more confident that our economic growth and prosperity are sustainable," she said.