Forestry firms will start assessing and reporting on natural capital to drive investment

Ten forestry companies have teamed up with the Capitals Coalition and TNFD to quantify and report on ecosystem services value in order to drive greater investment in nature.

The companies, which collectively own or manage millions of hectares of forests in 21 countries, launched the project on the first day of London Climate Action Week, and say their efforts could “build the foundation for an investible market”.

The initiative will last 18 months, led by the International Sustainable Forestry Coalition (ISFC) and supported by Value Australia (part of the Capitals Coalition) and the Taskforce on Nature Related Financial Disclosures (TNFD).

David Brand said, Independent Chair of the ISFC, said: “The world must begin to increase investments with positive impacts on both climate and nature. However, if we are to attract the scale of funding required these investments must also make economic sense. The global forestry sector can deliver sustainable, renewable materials as well as positive outcomes for  climate and nature. Central to this is standardising the accounting for the extensive natural capital assets managed by these companies. ISFC members wish to be at the forefront of this work and have therefore decided to come together to build out mutually supporting Natural Capital reports.”

Full list of companies to be made public at LCAW

The ISFC currently has 17 member companies, and expects to make the list of participants to the initiative public over the course of London Climate Action Week (LCAW), after extending the opportunity to join to more members.

So far, the firms involved in the nature capital valuation initiative steward forest land in 21 countries: Australia, Brazil, Cambodia, Canada, China, Estonia, Finland, Indonesia, Ireland, Japan, Laos, Mozambique, New Zealand, Papua New Guinea, Romania, Solomon Islands, Sweden, Tanzania, Uganda, UK, US and Uruguay.

Mark Gough, Chief Executive Officer of Capitals Coalition said: “The contribution that the forestry sector can make has often been undervalued. The ISFC is stepping up to address this by working with the Capitals Coalition and TNFD to produce consistent accounts and disclosures that can reflect the true value of forestry.”

A ‘game-changer’ for natural capital valuation

Rayne van den Berg, Chief Value Officer at Value Australia (a regional Capitals Coalition hub), added: “Many individual companies and thought leaders have worked for years to develop frameworks and methodologies to quantify and value natural capital with the aim of providing better information for more informed decision-making. This project will be a ‘game-changer’ as, for the first time, a collective of leading forestry companies will develop consistent reports for their most material ecosystem services and the approach taken to quantifying impacts and dependencies.”

The companies in the initiative will use the TNFD framework and its LEAP process as a frame of reference. “The missing piece of that puzzle has been the valuation of ecosystem services, which must occur if we are to pivot globally away from nature destructive investments to nature enhancing capital flows. TNFD will utilise the learnings from this project to help inform its guidance and to demonstrate the link between TNFD Nature-related assessments and Natural Capital Accounting for Valuation and presentation,” explained TNFD CEO Tony Goldner.