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“Natural capital” is growing in importance to investors and land-holders alike. But with asset quality hard to prove, one economic expert is seeking to ensure the sector is standardised.
Ken Henry, former Treasury Secretary and one-time NAB chairman, is on a mission to make things transparent for land-holders looking to preserve and rehabilitate the natural resources contained within their holdings, and buyers interested in investing in the same.
So called “natural capital” — meaning the quality of the flora and fauna, biodiversity, water and soil — has become increasingly significant in assessing land as an asset.
For farmers, having a quantifiable assessment of the state of the environment that they manage is not only a matter of pride, but provides assurance in their business. For companies such as BHP, which has promised to have at least 30 per cent of the land and water it controls under conservation, restoration or regeneration, land assessments are essential for keeping track of progress and proving it to the public.
Mr Henry’s latest venture, Accounting for Nature (AfN), was established in 2019 and is gaining steam as the industry standard for assessing and backing up claims of the quality of land one holds — or is looking to sell.
Though Dr Adrian Ward, AfN’s chief executive, was quick to note in a recent webinar with NAB that the company itself was not concerned with assigning a dollar value to nature. Rather, it was a tool for “measuring the biophysical condition, or the health of nature, using world-class scientific methods”.
Those who are involved in assessing the value of land could use their data as a tool to show the state of its health.
“We let other people put the value on top, but before you do that, you really need to understand if the state of nature is actually improving, sustainable, or degrading,” Dr Ward said.
“From there, you can effectively monetise it”.
After an assessment from AfN, landowners and buyers can then be assured of the state of the asset in question.
“It’s been audited and it’s a claim you can make with confidence without greenwashing the market,” Dr Ward explained.
The venture, in part, grew out of witnessing the issues that had arisen with the carbon credit market in Australia and questions over whether offset projects legitimately avoid or reduce CO2e.
“We don’t want the same mistakes made in the nature market as it develops because it would be catastrophic for market confidence and actual outcomes for the environment in the long term,” Dr Ward said.
“We’re pretty much the only standard which prescribes the scientific process for measuring environmental outcomes,” he explained, noting that AfN had recently been selected by Deloitte for the Taskforce on Nature Related Financial Disclosures as the nature accounting standard.
“We have scientists to sign off on methods, we have an assurance process like you’d have for financial accounting, and we’re very much into transparency so when you build an environmental account with AfN, it goes on to a central public registry,” he said.
In light of recent issues with claims to be “green,” Mr Ward said that transparency was becoming increasingly important in all aspects of environmental sustainability.
“On the opportunity side, there are a lot of organisations out there starting to think about how they position themselves to be nature positive by 2030 or 2050, and prove that without greenwashing the market”.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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