What is BS 8632 about?
Natural capital is the world’s stock of natural assets such as geology, soil, air, water and also living things such as cattle and bees.
Natural Capital Accounting, specified by BS 8632, is a tool to measure the changes in the natural stock of the natural capital. The value of ecosystem services is considered in the accounting and reporting system. Basically, it’s the process of calculating the total stock and services of natural resources in the ecosystem or a particular region.
BS 8632 includes minimum requirements for defining the scope of an account, as well as the material impacts and dependencies for documenting the data. BS 8632 outlines the process used to prepare the natural capital account.
BS 8632 prescribes two key accounting outputs of natural capital accounts – each with supporting schedules:
- A natural capital balance sheet (showing the organization’s dependency on the natural capital assets)
- A natural capital income statement (showing the positive and negative impacts of the organization).
BS 8632 also presents the terminology, principles, steps, and outputs of natural capital accounting; with the aim of generating information that is useful for decision making.
NOTE 1: Scope 1 includes the natural capital assets the organization owns or has legal or voluntary responsibility for. Scope 2 includes other natural capital assets. Assets that are not owned by anyone might be included in Scope 1 or Scope 2 depending on the organization and materiality of its impacts and dependencies.
NOTE 2: Scope 1 includes the impacts from the organization’s own operations. Scope 2 includes the impacts attributed to the organization through the operations of its value chain.
Who is BS 8632 for?
BS 8632 on Natural Capital Accounting for organizations; is applicable to organizations of all types, sectors and sizes that want to understand their impacts and dependencies on natural capital and to report these in a systematic way. The decision to use BS 8632 will typically be made by:
- Investors such as fund / asset managers, and banks (to understand the impact their investment can have, and to compare the impacts across the companies they invest in)
- CEOs, CFOs, Chief Sustainability Officers of organizations (to link financial, environmental, and socio-economic priorities together; for more comprehensive business planning)
- Operations / risk management / finance / sustainability / environmental management / investor relations teams of an organization (to understand and communicate material impacts and dependencies)
- Assurance / 2nd opinion providers (to verify the process of natural capital accounting, data and assumptions used, and decision-usefulness of the outputs)
Why should you use BS 8632?
BS 8632 enables users to undertake natural capital accounting for their organization, or for their client’s organization; using a systematic and verifiable approach that has the authority of a British Standard and avoids greenwash.
BS 8632 produces outputs that are useful, comprehensive, and transparent as well as comparable and replicable over time, thereby helping an organization to:
- Identify its impacts, dependencies, and value chain in respect of natural capital assets, and the associated risks and opportunities
- Communicate information and implications within the organization and with external stakeholders
- Adopt more informed strategic and operational decisions by integrating natural capital accounts with the assessment of other capitals
- Monitor and evaluate the impacts and effectiveness of such decisions and changes due to external factors
BS 8632 contributes to UN Sustainable Development Goal 12 on ensuring sustainable consumption and production patterns.