Natural capital accounting for organizations. Principles, requirements and guidance

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What is BS ISO 14054:2025 - Natural capital accounting for organizations about? 

BS ISO 14054:2025 Natural Capital Accounting for Organizations - Principles, requirements, and guidelines is an international standard that defines how organizations can systematically measure, report, and integrate their impacts and dependencies on natural capital - such as forests, soil, water, air, and biodiversity - into decision-making and financial planning.

It provides a structured method for developing two key accounting outputs:

• Natural Capital Income Statement (NCIS): shows the increases and decreases in natural capital benefits related to the activities within the chosen natural capital account scope during the natural capital accounting period.
• Natural Capital Balance Sheet (NCBS): shows the natural capital values and costs related to the activities within the chosen natural capital account scope during the natural capital accounting period.

These tools allow organizations to shift their view to see nature as an investable asset critical to long-term resilience and value creation.

Who is BS ISO 14054:2025 - Natural capital accounting for organizations for?

BS ISO 14054 is intended for professionals responsible for preparing natural capital accounts. This includes environmental and sustainability professionals, accountants, economists, and others with relevant ecological, economic, and interdisciplinary knowledge, typically working in collaboration.

While the preparation is targeted at these technical roles, the resulting natural capital accounts are designed to inform a broader audience. This includes organizational managers, as well as interested parties such as:

• Investors and asset managers
• Auditors and assurance/certification bodies
• Regulators and policy makers
• Non-governmental organizations (NGOs)
• Customers
• The wider public

The process of preparing the accounts is as valuable as the outcomes themselves, offering insights that support decision-making, risk management, and nature-positive strategies.

What does BS ISO 14054:2025 - Natural capital accounting for organizations cover? 

BS ISO 14054:2025 sets out the principles, terminology, requirements, and guidance for preparing natural capital accounts at the organizational level. It aims to support a transparent, repeatable process that generates useful insights for decision-making by combining financial, environmental, and socio-economic data.

It introduces a dual-scope structure for both the Natural Capital Income Statement (NCIS) and the Natural Capital Balance Sheet (NCBS), distinguishing between organizational, value chain and extended value chain. It includes both market and non-market values using qualitative, quantitative, and monetary methods.

Natural capital accounts can inform internal management and be reported externally, with links to financial accounts. The process helps organizations:

• Identify risks and opportunities related to nature.
• Communicate internally and externally.
• Support strategic decisions and scenario analysis.
• Monitor changes over time.
• Evaluate options for managing or investing in natural capital.

Joint accounts can be prepared by organizations sharing the same natural capital (e.g. a water basin). Data may come from financial records, ESG analysis, environmental systems, and public or academic sources. The standard requires clear documentation of scope, data quality, and assumptions, and can support audit and assurance activities. 

It aligns with global frameworks such as:

• ISSB (International Sustainability Standards Board).
• TNFD (Taskforce on Nature-related Financial Disclosures).
• CSRD (Corporate Sustainability Reporting Directive).
• UN SEEA-EA (Ecosystem Accounting).

Why should you use BS ISO 14054:2025 - Natural capital accounting for organizations?

BS ISO 14054 has been developed through a UK-led international collaboration with 69 countries, including the US, Germany, China, Brazil, Canada, and Japan, and organizations such as DEFRA, the Environment Agency, UNEP FI, and IEMA.

Organizations can benefit from using this standard in several strategic and practical ways, including:

• Improving strategic understanding and prioritization: Identify natural capital assets under the organization’s control, assess impacts and dependencies (including through the value chain), and prioritize actions to maintain or enhance natural capital.
• Managing risks and opportunities: Link natural capital to potential financial exposure and operational resilience. Understand risk drivers such as regulatory change, environmental degradation, supply chain disruption, reputational harm, and shifts in financing conditions.
• Supporting operational decision-making: Inform everyday and long-term operational choices to manage impacts, restore or maintain natural capital, and improve sustainability outcomes across product lines and value chains.
  Informing financial management: Understand which benefits delivered to society could attract investment or funding. Build business cases for nature-positive investments, evaluate financial risk exposure, and optimize capital allocation.
• Informing and engaging stakeholders: Provide transparent, evidence-based communication to internal and external audiences about the organization’s relationship with natural capital.
• Setting targets and tracking progress: Monitor changes in natural capital over time, evaluate the effectiveness of interventions, compare performance with peers, and refine assumptions for future planning.
• Contributing to scenario analysis: Assess potential impacts and dependencies under various future scenarios, test strategic assumptions, and prepare for changes in ecosystem services, regulation, or market conditions.
  

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