PROJECT DESCRIPTION
BACKGROUND
Over the past century, the prevailing Western economic system has created enormous wealth. However, profit maximisation came with social tensions due to uneven income distribution, climate change and natural capital risks. Meanwhile, many different approaches to considering economic, social and environmental impacts have been developed, but they have yet to be broadly implemented. Companies are still operating and acting on accounting principles and concepts that were codified before the 1970s.
OBJECTIVES
The TRANSPARENT project aimed to:
- develop a standard for the evaluation of economic, ecological and social impact (which can be applied at company, process and product levels), named "NCMA Natural Capital Management Accounting";
- standardise assessment methods and monetization methods to calculate the value of a company and its financial and pre-financial contributions to society, including their environmental and social impacts and dependencies;
- understand interdependencies of value contribution to society and their relation to enterprise value;
- design a disclosure form enabling stakeholders to compare the natural, social, human and financial capital performance across companies, with indicators such as integrated profit and loss and the balance sheet;
- develop a management blueprint for multi-capital-based business steering, and test its use in management accounting;
- spread the ‘impact measurement and valuation’ (IMV) by publishing the results and ensure maintenance of data and further development in respective organisations.
RESULTS
The main outcome of the project has been the creation of a standardised system for corporate environmental and social accounting: NCMA Natural Capital Management Accounting.
The Corporate Sustainability Reporting Directive (CSRD) explicitly refers to the TRANSPARENT project. Regulatory frameworks should increasingly reference the NCMA methodology in existing and upcoming regulatory frameworks.
Further outcomes include:
- reduced transaction costs for environmental and social impacts assessment of businesses;
- increased comparability of estimation and impacts assessment results across a wide range of sectors and companies;
- increased use of corporate environmental accounting;
- improved corporate solutions for managing natural capital and steps towards a circular economy;
- better information regarding the overall impact of businesses to guide business decisions;
- improved natural capital and re-circulation of materials in the long term.
