Frequently Asked Questions.
What is Environmental Accounting?
Environmental Accounting provides standardised, quantifiable assessments of the state of “environmental assets” such as agricultural soils, native vegetation and wildlife, rivers and marine ecosystems. This enables natural resource managers, policymakers, investors and customers to link the condition of environmental assets with economic decision-making.
Environmental Accounting focuses on establishing the condition of environmental assets within a defined area (e.g. farm or protected area) or at a regional (ecosystem) scale. Importantly, environmental accounting also seeks to determine the trend in environmental condition - that is, to show whether (or not), and at what rate a resource management activity and underlying investment is making a real and measurable difference on the ground.
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In September 2023, version 1 of the Recommendations of the Taskforce on Nature-related Financial Disclosures was released. The Recommendations include 14 Recommended Disclosures covering four broad categories: Governance, Strategy, Risk and Impact Management, and Metrics and Targets.
To support the generation of disclosures, the Taskforce on Nature-related Financial Disclosures (TNFD) have developed the LEAP approach to assess nature-related impacts, dependencies, risks, and opportunities. The four-step LEAP approach broadly involves:
1. LOCATE the interface with nature,
2. EVALUATE dependencies and impacts,
3. ASSESS risks and opportunities,
4. PREPARE to respond and report.
As noted in the TNFD document Guidance on the identification and assessment of nature-related issues: the LEAP approach, the Accounting for Nature® Framework can be used as a credible tool in the EVALUATE step to measure the state of nature to identify nature-related impacts in a consistent, scientifically rigorous, transparent, and verified way. The state of nature results generated in the EVALUATE step can then be carried through to the ASSESS and PREPARE steps.
To underpin the Recommended Disclosures and ensure they are informed by reliable and relevant data, the TNFD has also published a set of five Core Disclosure Metrics that are used to understand impacts and dependencies on nature. One of these Core Disclosure Metrics (Metric 5) relates to the state of nature. The TNFD recommend that the state of nature is measured using an Ecosystem Condition Metric (for ecosystems) and Extinction Risk Metric (for species).
The Accounting for Nature® Framework and its core metric, the Econd®, is recognised by TNFD (in Annex 2 of Guidance on the identification and assessment of nature-related issues: the LEAP approach) as a headline standard for measuring changes in the state of nature. Depending on the type of Environmental or Ecosystem Asset, the Econd® can be used as an Ecosystem Condition Metric or Extinction Risk Metric.
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The Econd®, or “Environmental Condition Index”, is the core metric used in the Accounting for Nature® Framework. The Econd® is a composite index which summarises complex scientific information into a single metric between 0 and 100, where 100 represents the Condition of an Environmental Asset in its undegraded, ideal, or best-on-offer state (e.g. a pristine old growth forest). This state is called the ‘Reference Condition Benchmark’, or simply the Reference Benchmark. On the contrary, an Econd® of 0 indicates that the Environmental Asset is fully degraded, dysfunctional, and/or no longer existing (e.g. a cleared field).
An Econd® is constructed using an Accounting for Nature® Accredited Method that outlines a set of measurable and scientifically robust indicators that are aggregated in a meaningful way and together represent the Condition of a specific Environmental Asset. While the Econd® is a simple metric, there is significant complexity in the way it is constructed and this is outlined in detail in the Method(s).
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Yes, the Accounting for Nature® Framework is designed to support and underpin nature markets and biodiversity market schemes, when adopted under the correct certification and license pathway.
It is a robust measurement, reporting, and verification standard that can be integrated into these markets.
1. Alignment with Nature Markets: The Accounting for Nature® Framework is built with the aim of supporting biodiversity market schemes and Nature Credits. It can accommodate the unique needs and requirements of these markets, ensuring practical integration.
2. Claims Rules for Credibility: The Accounting for Nature® Framework incorporates Claims Rules, which are vital in maintaining the credibility and effectiveness of nature markets. These rules ensure that all claims made by participants within these markets are accurate and verifiable, preventing greenwashing and safeguarding biodiversity.
3. Accountability and Transparency: The Framework promotes accountability and transparency, both of which are essential in nature markets. It enables accurate measurement and reporting of the impact of biodiversity market schemes and Nature Credits, fostering trust among investors, organisations, and the public.
The Accounting for Nature® Framework is a powerful tool that can be used to support nature markets as it offers a comprehensive solution to ensure that investments in nature-based solutions make a genuine, positive impact on the environment.
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How to apply our Standard under the Land Restoration Fund.
The Queensland Government Land Restoration Fund (LRF) aims to expand carbon farming in the state by supporting land-sector projects that deliver additional environmental, social and economic co-benefits.
Learn more about how Accounting for Nature® can be applied to LRF projects.
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How does our Framework align with global frameworks?
There are many global frameworks emerging that outline global goals and targets to improve the state of nature and the conservation of biodiversity. The Accounting for Nature® Framework provides a globally consistent and scientifically credible standard for measuring, certifying and communicating the condition and change in condition of environmental assets.
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Nature Repair Bill.
What impact does the Australian Government Nature Repair Bill have on Accounting for Nature® Framework?
We are strongly supportive of the Australian Government’s mission to attract private capital into nature repair. As noted in our submission to the Government, the key to success is to design a system that creates high integrity standards and mandates processes that ensure verifiable, high integrity, measurable outcomes; creates commercially attractive products and drives demand (without creating a national biodiversity offset scheme by proxy); creates incentives to innovate and drives down the costs of developing and auditing nature repair projects; and can work seamlessly with the carbon farming market. We continue to provide feedback into the design and application of the Nature Repair Market – you can read our latest submission to the Australian Government.
