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TEEB study calls for integration of biodiversity information into annual reports

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13 Jul 2010

The Economics of Ecosystems and Biodiversity (TEEB) study is an international initiative to draw attention to the global economic benefits of biodiversity, to highlight the growing costs of biodiversity loss and ecosystem degradation, and to draw together expertise from the fields of science, economics and policy to enable practical actions moving forward.

TEEB is hosted by the United Nations Environment Programme and supported by the European Commission, the German Federal Environment Ministry, the UK Government's Department for Environment, Food and Rural Affairs, UK Department for International Development, Norway's Ministry for Foreign Affairs; The Netherlands' Interministerial Program Biodiversity, and the Swedish International Development Cooperation Agency.

TEEB – The Economics of Ecosystems and Biodiversity – Report for Business has been released, calling for more information to be provided in annual reports about biodiversity and ecosystem services (BES) impacts. Chapter 3 of the report describes recent initiatives to enable businesses to measure, value and report their impacts and dependencies on biodiversity and ecosystem services, and outlines further work needed in this area. The report notes the IASB's existing recognition requirements are disconnected' from biodiversity reporting. The report also calls for biodiversity information to be more integrated into annual reports.

The full report is available at The Economics of Ecosystems and Biodiversity website. An extract:

Financial accounting standards and BES

Financial accounting and reporting differs from life cycle accounting, environmental performance measurement, and other types of management accounting in that it is primarily intended to serve external audiences rather than internal users.

Defining the purpose of financial reporting in terms of the needs of a narrow class of stakeholders – i.e. investors and lenders – influences the extent to which such reporting can address issues such as BES. This is because the criteria developed to ensure relevant and reliable financial reporting for the purposes highlighted above are almost inevitably framed in such a way as to exclude so-called intangible' issues, such as BES impacts or dependencies.

At the heart of this disconnect is the accounting concept of recognition' The vast majority of ecosystem services and the vast bulk of biodiversity fall outside these recognition criteria and are thus neither accounted for internally by organisations (in the public or private sectors) nor are they (or management's stewardship of them) reported externally in conventional financial statements.

Integrated reporting

Increasingly, many stakeholders are exploring how to integrate financial and non-financial information in a single report that provides a balanced and meaningful picture of a company.

Alongside the pioneering efforts of individual companies, other networks and standards bodies are also exploring how to promote more integrated reporting. With respect to BES, the challenge is how to manage and track information within a company and how to ensure that the economic values of BES are properly reflected at a level of detail that can influence corporate financial analysis.

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