In This Month's Newsletter:
Festive Message and reflections on 2024
Wishing you the best for 2025!
ISO 14054: Natural Capital Accounting for Organisations
Open for consultation: videos, slides, links
The value of non-financial reporting to investors
Up to £26 billion annual value for the non-financial information investors currently receive
Festive Message
Thank you to all of you for your continued support and collaboration throughout 2024.
Our highlights of the year include sharing an Ocean 24 award, meeting many of you at envecon, launching our new website, making the case for natural capital accounting, working at the heart of standard-setting for nature markets, bringing chemicals risk assessment and natural capital approaches closer together (update coming in the new year) and adding some economics into non-financial reporting debate (see below).
We are proud of each and every project. Too many to mention here: we’ve worked on 90 projects for clients in 10 different countries, with project impact areas all around the world.
Every one of these projects fulfils our purpose: to make invisible economic costs and benefits visible. We cannot wait to share what lies ahead for 2025!
We wish you all a restful festive break, a happy New Year, and a prosperous and productive 2025.
eftec
ISO 14054: Natural Capital Accounting for Organizations
Open for Consultation: Videos, Slides, Links
The draft international standard for Natural Capital Accounting for Organizations, ISO 14054, is now open for consultation in the UK until the February 10th 2025. If you aren’t in the UK, you can submit your comments on the international standard through your country’s standards institution, which can be found here. You can also purchase the draft of ISO 14054 here.
Our CEO, Ece, is Convenor of the Working group for this standard after helping to develop the British standard (BSI:8632) on which it is based.
Alongside her team at ISO & BSI, Ece has produced a range of content to introduce the standard and explain how you can contribute. You can access resources and watch her webinar here, or follow us on LinkedIn where we’ll be sharing a video series produced in collaboration with Little Blue Research, which will soon appear in its entirety here.
How UK investors value non-financial reporting
Up to £26 billion annual value for the non-financial information investors currently receive
There are increasing regulations and calls for companies to provide more and better non-financial information (e.g. CSRD, TNFD, ISSB). There are many drivers of this increased pressure, a main one being that non-financial information (NFI) and non-financial reporting (NFR) is assumed to improve investment decisions and assessments of risks and company performance. Indeed, there are many studies noting the increasing usage of NFI in investor decision-making, but few studies have quantified what this information is worth.
Working for the UK Department of Business and Trade (DBT), we explored investors’ use and demand for such information to better understand what benefits NFI provides. Our review of the literature, interviews with investors, and the stated preference study resulted in the following findings:
Investors are using NFI to understand company management, risk and risk management, future opportunities, and long-term performance potential.
Under current UK requirements, investors value the current NFR requirements at £11 billion and £26 billion per year compared against no requirements. This is measured in terms of the increase in dividend yield investors would need to receive as compensation for the no-NFR scenario.
Our choice modelling further demonstrates that good quality, comparable information has the most value, and that requirements to improve the assurance and comparability of NFI across companies could increase the value of NFR by between £6 billion and £16 billion per year (again, measured in terms of changes to dividend yield).
Asset managers in the UK are estimated to be spending around £140 to £230 million a year to use NFI, a fraction of the benefits we report above.
Read more about this project and access the report in our project summary here.
For our previous work on the value of data held on companies by the UK Companies House, see here.
Comments