ABSTRACT
Natural capital underpins the successful functioning of our economy, businesses and societal wellbeing. According to the Chartered Institute of Management Accounting and EY, 'Natural Capital is the Elephant in the Boardroom – it is invisible in the vast majority of corporate decisions, accounts and economic models.' This is one of the causes of its ongoing degradation. The global cost of environmental damage from business activities such as water pollution, loss of fertile land, soil erosion, drought, overfishing and deforestation is estimated at over $US6 trillion by 2050 if 'business as usual' continues. On the positive side, financial valuation of natural capital costs and benefits also informs decisions on capital allocation, new investments, market opportunities and return on investment. From a risk perspective, identifying the potential for Stranded Assets in investment decisions is a particular priority in light of sustainability challenges. This can cause significant reductions in the long-term value of entire sectors and companies.
