Digitization of The UK Natural Capital Accounts

& The Role of XBRL!

Presented by: Liv Apneseth Watson Sr. Director Workiva, Inc. [NYSE: WK]

Brad Monterio Managing Director ColcomGroup

Today's Agenda

• The Future of Business Reporting - "As Usual" Not an Option • About Natural Capital Accounting • Natural Capital Accounting Today • The Structured Data Task Force (INCA-SDTF) • Combing Forces on Natural Capital Joint Statement

The Future of Business Reporting "As Usual" Not an Option

Business "As Usual" Not an Option

Corporate Disclosure "As Usual" Not an Option

• <IR> was developed to be consistent with a number of corporate reporting trends taking place across the globe.

• <IR> aim to align capital allocation and corporate behavior

to wider goals of financial stability and sustainable development through the cycle of integrated reporting and thinking.

About Natural Capital Accounting

There are four basic natural capital accounting categories: • Air • Water • Land • Biodiversity

These provide us with the crucial renewable and non-renewable

resources and environmental services that benefit society as a whole.

(All are interdependent)

Natural Capital Accounting

WHY ? (1) The Statical View - Green Gross Domestic Product (GGDP) Calculating GGDP requires that net natural capital consumption, including resource

depletion, environmental degradation, and protective and restorative environmental initiatives, be subtracted from traditional GDP. GGDP would arguably be a more accurate indicator or measure of societal well-being.

The environment, our natural capital, is a resource that is used and managed by individuals, corporations and governments.

(2) The Corporate View - The NCA Corporate Disclosure Companies that embrace natural capital accounting are more likely to come to grips with the major challenges and risks facing the environment, society and their economic development.

WHY Public ? Gross Domestic Product (GDP) looks at only one part of economic performance

"income" but says nothing about "wealth and

assets that underlie this income.

GDP = private consumption + investment + government consumption + (exports − imports).

European System of Accounts which is broadly consistent with the UN System of National Accounts

WHY Private ?

Globally, we are drawing down on our natural capital provisions at a rate of 50 percent more per year than the earth can replenish and the rate of depletion is accelerating. Natural assets are co-owned so value that corporates derive from their consumption is in fact value that they are deriving from society at large, often at a discount, or even for free.

Source: https://climatecare.org/can-natural-capital-accounting-add-value-to-your-sustainability-programme/

MANAGE

RISK +

GAIN COMPETATIVE ADAVANTAGE

Natural Capital Accounting Today

In 2015, countries adopted the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals. In 2016, the Paris Agreement on climate change entered into force, addressing the need to limit the rise of global temperatures.

17 Goals to Transform Our World

2030 Agenda for Sustainable Development

Note: 193-of the Member United Nations General except USA and Syria

National Accounts Data Entity Disclosures

Natural Capital Accounting Today Differences are related to the different focus of interest

PURPOSE: • Assessment of business impacts and

dependencies on natural capital • To help generate trusted, credible and

actionable information to inform decisions

MEASUREMENTS:

• Companies focused mainly on measuring flows of natural capital.

• Companies use prices and/or values (changes on welfare), depending on the perspective of their assessment (business vs. societal).

PURPOSE: • Support policy-makers on assuring

future growth and society’s welfare, including management of sector and thematic issues (e.g. forestry, water)

• Assessment of depletion and degradation of natural capital at national and sector level, measurement of environmental pressures and policy responses.

MEASUREMENTS:

• SEEA measures both stocks and flows. • Market prices is the most common

monetary valuation approach used in SEEA. There is also a more experimental approach to promote the assessment of non-market values of ecosystem services.

Do we have a problem?

Natural Capital Accounting Reporting Frameworks and Standards

Private and public approaches to the development of natural capital assessment and accounting can and

should be complementary

National Accounts Entity Disclosure

GGDP Reporting Standards • The System of Environmental-

Economic Accounting (SEEA) • Local National Natural Capital

Accounts Extensions

Standardized Economic Accounting Frameworks

• ISO 2600 • ISO 14007 + 14008

FASB ACCOUNTING STANDARDS AND NATURAL CAPITAL

• Topic 410 Asset Retirement and Environmental Obligations

• Topic 420 Exit or Disposal Cost Obligations

• Topic 450 Contingencies • Topic 905 Agriculture • Topic 930 Extractive Activities

– Mining • Topic 930 Extractive Activities

– Oil and Gas IFRS AND NATURAL CAPITAL

• IFRS 6 Exploration for and Evaluation of Mineral Resources

• IAS 41 Agriculture • IFRIC 6 Liabilities Arising from

Participating in Specific Market – Waste Electrical and Electronic Equipment

• IFRIC 20 Stripping Costs for the Production Phase of a Surface Mine

CDP, GRI, SASB MORE........(i.e, 40 + today)

The Natural Capital Protocol Protocol

The ICAEW Natural Capital Accounting - Structured Data Task Force (INCA-SDTF) -

The Project

UK Environmental Accounts by 2020

The ICAEW Natural Capital Accounting - Structured Data Task Force (INCA-SDTF)

About the ICAEW Natural Capital Accounting - Structured Data Task Force (INCA-SDTF)

CHARTER MISSION • Provide recommendations and guidance to inform ONS's’s

decision on whether to implement an XBRL strategy and pursue development of an XBRL implementation program for its reporting framework.

OBJECTIVES • Determine how XBRL will help companies adopt and

disclose using the SASB standards • Assess the feasibility of an XBRL implementation program

for SASB standards by looking at the full implementation lifecycle for XBRL (sourced from XBRL International Best Practices Board) to determine the business requirements, value propositions, resource needs, risks, opportunities and impact on SASB and its stakeholders.

• Identify possible XBRL-related revenue opportunities for SASB (e.g., education and training)

DELIVERABLES • Final XBRL Feasibility Study / 2018

ICAEW Leads: Richard Spence Francesca Sharp

Co-Chairs:

Project Team Members:

• Tanuj Agarwal • Phillip Allan • Glen Gray • Pierre Hamon • Ian Hicks • Gavin Marais • Richard Mattison

Project Team Members:

Project Team: Lindsay Cirks; Kathy Dubansky; Ally Sabrowsky

• Urmish Mehta • Maria Mora • Conor O’Kelley • Laura Irina Rusu • Greg Soulsby • Mike Zimonyi

Natural Capital Accounting and GAAP Standard Setters , Regulators, Policy Makers, and Other Standard Setters i.e SEEA

Develop a Core Natural Capital Accounting Vocabulary of UK's National Accounts

CORE NCA

Vocabulary (i.e., XBRL Taxonomy

+ Metadata

Schema)

Entities

Supervisory

Reporting NCA Members Harmonization

Ontology

Multilingual

Reporting Fram

ework

A Goal of Semantic Interoperability • Refers to the preservation of meaning in the exchange of

electronic information A Goal of Developing of Core NCA Vocabulary

• Development a Natural Capital Asset Description Metadata Schema

Foster an Open Data Platform of NCA Data • Fosters the interoperability of open data portal

Who needs to be at the table?

Combing Forces on

Natural Capital Joint

Statement

Thank you for your attention!

ICAEW Leads: Richard Spence Francesca Sharp

Co-Chairs:

Project Team Members: