Successful implementation of natural capital accounting helps businesses understand their exposure to risks and capture the full value of their nature based activities. Compiling a natural capital account coupled with long term business planning ensures business are prepared for the environmental challenges of the 21st Century.

Natural Capital Accounting is an approach that aims to calculate and value the ‘total impact’ of an asset, project or organisation. It is also known as impact measurement, wealth accounting and all capital assessment.

The impact of non-financial drivers such as greenhouse gas emissions and land use are valued using well-established economic methodologies. This approach allows different types of impact to be considered on a like-for-like basis and in a language that decision-makers readily understand.

Impacts are measured on the following four dimensions:

• Financial – metrics used in project appraisal
• Economic – economic impacts, such as pay, tax and investment
• Social – impacts such as health, education and training
• Environmental - impacts such as greenhouse gas emissions, air pollution and land use.

A simplified example of this approach will focus on the environmental, economic and social impact of a project. More innovative approaches evaluate the interlinked relationship between the four dimensions. For example, upfront investment could in turn preserve and improve social and environmental impacts.

It can be a particularly effective tool where ‘impact’ is considered to be a key differentiator or hurdle that the project needs to get over. It is well-suited for engaging the public sector and helping to drive forward social value and environmental net gain.

How can savills help

• Natural Capital accounting
• Evaluation of natural capital assets
• Reporting and governance