Integrated Profit & Loss (IP&L) accounting BOX 2 Natura &Co’s IP&L account is an example of business leadership in generating natural capital accounts.45 The IP&L is an integrated management tool that enables accounting for the impact of corporate performance in the environmental, social and human dimensions (the three “capitals”) – in addition to financial results. The IP&L consists of 15 indicators and covers the company’s entire value chain. Natural capital indicators include air and water pollution, land and water use, forest conservation, climate change and use of resources. Natura &Co’s management uses the IP&L regularly in key decisions that seek to maximize results across capitals. This includes guiding investment in agroforestry business models and improving hiring practices. The IP&L results showed that, in 2023, for every Brazilian real (R$) of revenue, the brand generated a net return of R$2.7 in benefits for society. Although impact on natural capital was “negative”, Natura &Co’s IP&L has been crucial to reducing impact.There is a consensus among experts that natural capital approaches are more suited to businesses with significant exposure to natural assets, including those in agri-food and mining sectors. For example, BHP’s Beenup Site Pilot Case Study is a recent example of natural capital accounting in the mining sector.28 Forico, a leader in the forestry sector, produced Australia’s first Natural Capital Report.29 In a world-first, 18 leading forestry companies across 21 countries have launched a sector-wide pilot with the International Sustainable Forestry Council (ISFC), Capitals Coalition and Taskforce on Nature-related Financial Disclosures (TNFD) to test natural capital accounting using a shared valuation framework.30 United Utilities, based in the UK, produced a natural capital account for its operating area.31 These examples of natural capital accounts are akin to balance sheets. Meanwhile, agri-business Eosta’s true cost accounting approach focuses on producing natural capital statements that more closely resemble management accounts.32 Nevertheless, sectors without direct exposure to natural assets have also created leading initiatives, spurred by consumer demand and regulatory requirements for businesses to disclose their impacts and dependencies on nature. For example, Kering – a luxury goods multinational – created an Environmental Profit & Loss (EP&L) account that was among the first corporate efforts in environmental accounting; it has since been developed and shared with the fashion sector.33 Notable guidance exists for businesses to incorporate natural capital approaches. This includes the Capitals Coalition’s Natural Capital Protocol, which was developed through extensive stakeholder consultation and was also influenced by Kering’s EP&L.34 The Natural Capital Protocol has in turn informed the development of many organizational-level approaches, both in the private sector and beyond.35 One example is the Integrated Profit and Loss (IP&L) management account developed by Natura &Co, a multinational cosmetics group (see Box 2).36 Holcim, a leader in the construction sector, publishes a similar IP&L statement.37 In July 2025, the Capitals Coalition also introduced the Integrated Decision-Making Framework that provides guidance on integrating metrics on natural, human and social capital in decision-making.38 The Biological Diversity (BD) Protocol, developed by the Biodiversity Disclosure Project (BDP), is another tool to support companies with credible accounting and reporting frameworks that is receiving significant attention in Africa.39 Official (but voluntary) standards include the British national standard BS8632: Natural Capital Accounting for Organizations40 and the similar, in-development ISO 14054: Natural Capital Accounting for Organizations — Principles, requirements and guidance.41 Both provide guidance on a mixture of financial and management accounting analogues. It should be noted that natural capital assessments are a separate approach, typically designed for businesses to measure their impacts and dependencies on nature for reporting and strategic purposes. These assessments may be a mix of quantitative and/or qualitative analyses.42 Natural capital approaches in the private sector form part of broader approaches to guide business action on nature. For example, the Assess, Commit, Transform and Disclose (ACT-D) framework is a set of high-level actions that guides businesses through various tools available to support them in developing nature strategies.43 Natural capital accounting and valuation form part of the “Assess” phase to provide science-based information to support decision-making through the subsequent steps of the framework. The recommendations of the TNFD are similarly designed to support the “Assess”, “Commit” and “Disclose” phases.441.4 Natural capital initiatives in the private sector are relatively nascent Mainstreaming Natural Capital: Advancing the Global Agenda to Integrate Nature in Decision-Making 9

Mainstreaming Natural Capital 2025