The Australian economy is heavily dependent on natural resources. In fact, every Australian sector is directly dependent on nature to varying degrees. Healthy ecosystems and thriving biodiversity are critical to societal and economic wellbeing. But Australia’s biodiversity is in crisis.
Since European colonisation, Australia's rich biodiversity has been in rapid decline; more mammals have become extinct here than on any other continent. Today, most of our ecosystems are in decline and 17 are showing signs of collapse (Biodiversity Council 2024).
These are serious statistics for Australian industries; many have a very high direct dependence on nature. The industries most vulnerable to ecosystem and biodiversity loss include primary industries like agriculture, forestry, fisheries, food product manufacturing, construction and waste and water services. In fact, around half of Australia’s GDP has a moderate to very high direct dependence on ecosystem services.
The time is well overdue for Australian businesses and industry to commit to restoring and protecting nature. Sectors that are heavily reliant on nature should be identifying, measuring and valuing natural assets. Natural capital accounting - reporting on nature-related impacts and dependencies - plays a key role in this measurement. It’s an environmentally responsible practice that every business, regardless of size or sector, should be doing.
Nature's contribution to business profit is immense. Yet unlike financial or manufactured capital, these natural assets have traditionally gone unlisted and unvalued on corporate balance sheets.
By measuring and monitoring your organisation's environmental interactions, dependencies and impacts, you can bring nature onto the books - revealing a more complete picture of your true costs, risks and competitive advantages.
The benefits up front
The benefits that natural capital accounting delivers are broad.
Get the full picture
Take an in-depth inventory of every natural asset and ecosystem service under your stewardship or within your supply chain. This lays the groundwork for optimising how these resources are used.
Think about natural assets in financial terms
Natural capital accounting assigns a dollar value to nature's contributions, from pollination boosting crop yields to forests that capture carbon emissions. With these benefits quantified, you can incorporate them into business cases and investment decisions.
Have a credible way to report on nature-related risks
There's rising pressure from investors, lenders and regulators for organisations to come clean on their environmental performance. Natural capital accounting provides auditable numbers to back up your sustainability credentials.
Build resilience into your operations and supply chain
By mapping your vulnerabilities to issues like resource depletion, biodiversity loss or climate change impacts, you can get ahead of environmental risks before they impact revenue.
Lead the field
While still an emerging practice, natural capital accounting is poised to become standard - especially as new disclosure policies emerge such as the Taskforce on Nature-related Financial Disclosures (TFND) Recommendations. Being an early adopter offers a powerful competitive edge. Globally, over 400 organisations have now signed up to the TFND recommendations.
The three core statements in natural capital accounting
Natural capital accounts can give detailed information and data that help organisations better manage natural resources in a way that supports economic growth and development. But what exactly is involved? There are three core financial statements:
The Natural Capital Balance Sheet
Just like its financial counterpart, this reports the monetary value of all the natural assets you own or control, from groundwater reserves to plantation forests. It also accounts for any environmental liabilities, like obligations to restore degraded land.
The Natural Capital Income Statement
Think of this as shining a light on the yearly flows of benefits, resources and services you receive from nature. It quantifies your annual "natural capital income" from sources like pollination, flood protection, timber harvesting or mineral extraction.
The Natural Capital Report
This report synthesises the previous two statements with supporting calculation methodologies, condition assessments and spatial mapping of your environmental footprint and impacts. Many organisations integrate this directly into their annual reporting suite.
A tool to help your business achieve nature-positive goals
CSIRO Nature IQ is a biodiversity assessment and management tool for science-backed business decisions. Built by the CSIRO, the geospatial data platform harnesses decades of CSIRO research and data to tap three core biodiversity indicators used in natural capital accounting.
Habitat Condition: Quantifying the capacity of surrounding ecosystems to sustain plant and animal life - a crucial factor in determining the health and value of your natural assets.
Biodiversity Persistence: Projecting the long-term survival outlook for species across your areas of influence based on habitat quality. This indicates whether ecosystem services you depend on are likely to persist or degrade in future.
Threatened Species Habitats: Pinpointing risks by mapping out the current and forecasted condition of environmentally sensitive areas that endanger species require special protection.
Aligned with global natural capital standards
The CSIRO Nature IQ platform ensures your natural capital reporting will align with globally-recognised industry reporting requirements, including:
- The Taskforce on Nature-related Financial Disclosures
- Corporate Sustainability Reporting Directive
- Corporate Sustainability Due Diligence
- Science Based Target Network
- Global Reporting Initiative and International Finance Corporation Performance Standard 6.
Alignment with global benchmarks sets your natural capital accounting to be robust, comparable, and decision-useful across organisations, supply chains, and investment portfolios worldwide.
CSIRO Nature IQ is designed with sustainability managers, land developers, ESG specialists, asset managers, and finance directors in mind. If you’re committed to understanding your organisation’s impacts on nature, CSIRO Nature IQ is designed for you.