More than four fifths of Aotearoa New Zealand’s exports rely on natural capital, such as soil health, ocean health, and stable climate. Yet the condition of the ecosystems underpinning much of our economic activity remains only partially visible in lending and investment decisions, or risk assessments, according to a new report from Deloitte New Zealand and Bank of New Zealand (BNZ). 

Connecting nature, climate, and capital: From data to decisions, Natural Capital Accounting in practice finds that natural capital accounting could help close that gap by giving organisations a clearer picture of the natural assets they rely on, the benefits those assets provide and how changes in their condition could affect productivity, costs and long-term resilience. 

The report highlights how natural capital accounting is helping the likes of Fletcher Living, Pāmu and Lyttelton Port Company direct capital more intelligently, manage risks earlier and protect long-term value.

Fletcher Living’s LowCO pilot assessed housing design choices across materials, energy, water, stormwater, landscaping and biodiversity, with outputs supporting the reduction of potable water use by more than 80% in a typical, standalone house, maintaining thermal efficiency of 20-21° C year-round, and diverting 90% of construction waste from landfill. The evidence will now inform future specifications, procurement and customer propositions.

For Lyttelton Port Company operating within a living harbour, ecosystem condition is part of the organisation’s operating context. Mapping those connections gave decision-makers better evidence for where to invest, what to protect and what risks need to be managed.

Deloitte New Zealand Partner Rikki Stancich says, “natural capital accounting is key to bridging a persistent gap between non-financial and financial reporting. Consideration of nature-related costs and potential impairments relating to natural capital loss gives businesses a much clearer view of their operating context.”

“The goal here is not to put a price tag on everything in nature, but to make sure business and investment decisions are being made with clear information relating to natural capital availability, and the future trajectory of input costs.

“The case studies show that assessing natural capital can help businesses make better decisions by providing a broader picture of the assets supporting business performance.

“What we also found is that organisations don't need perfect information to start. Natural capital accounting is most useful when it improves a real decision, so start with a decision not the framework.

“Organisations should start by asking what they need to understand or decide, such as where to invest, how to manage land, how to reduce risk or how to strengthen long-term productivity,” says Stancich.

As one of New Zealand's largest business and agribusiness banks, BNZ says understanding the factors that influence long-term business resilience is becoming increasingly important.

“Nature has traditionally been treated as an environmental issue, but it's increasingly becoming a business and economic issue,” says BNZ Chief Sustainability Officer, Rebekah Cain.

"As organisations improve their understanding of nature-related dependencies and risks, financial institutions will be better placed to assess resilience, make informed investment decisions, and allocate capital effectively.

“Natural capital information provides important context for understanding future economic performance. 

"One of the key challenges is improving access to consistent ecosystem data that can support better decision-making over time,” says Cain.

While natural capital information is not yet widely incorporated into traditional financial decision-making, the report suggests its importance is likely to grow as regulators, investors and financial institutions pay greater attention to nature-related risks and opportunities.

Read the report here: Natural capital accounting in practice