By integrating nature into financial reporting, local governments in Canada can plan for sustainable growth and get ahead of new accounting standards that are on the horizon
Waterloo, ON (Jan. 29, 2025) – The new guide, Getting Nature into Financial Reporting, authored by the University of Waterloo’s Intact Centre on Climate Adaptation, and supported by the Standards Council of Canada, KPMG LLP and Natural Assets Initiative, was developed with over 120 experts across the country. The guide outlines how local governments of all sizes can start integrating nature into their financial reports today.
Natural assets – such as wetlands, rivers, forests, and coastal dunes – are not just decoration. They are increasingly recognized as infrastructure that provides financially valuable services to Canadian communities. These services include absorbing and storing water to limit floods, reducing temperature to shelter communities from heat waves, and storing carbon to slow climate change.
The absence of natural assets from financial reporting often results in undocumented loss and degradation of their critical services. Natural assets remain excluded from financial statements in Canada. However, nature can, and should, be integrated into other sections of financial reports that accompany the financial statements, to avoid costly “surprises” down the road.
“Nature underpins healthy societies and resilient economies,” stresses Joanna Eyquem, author of the new guide and Managing Director, Climate-Resilient Infrastructure at the Intact Centre. “Nature-related reporting is critical to recognize our dependencies on, and effectively manage, the financially valuable services nature provides to people. Accountants have a key role to play, and we are delighted that so many certified professionals contributed to this new guide.”
Canada’s Nature 2030 Strategy, presented at the United Nations Biodiversity Conference (COP16) in October 2024, identifies the opportunity to support communities in integrating biodiversity and ecosystem services into their decision-making and planning processes.
The good news is that local governments are stepping up, with over 150 communities working to identify, assess, value and better manage their natural assets. Forward-thinking communities, including major cities like Toronto and Montreal, have already included information about natural assets in their financial reports. However, these disclosures are highly variable due to a lack of Canadian standards – a gap the new guide aims to fill.
“This new guide was developed with and for local governments, with input from finance and accounting experts,” explains report contributor, Bailey Church, lead for Public Sector Accounting Advisory at KPMG LLP. “It clearly explains a suite of metrics that can be used to report on the state of nature and the services it provides, from basic descriptive information to more sophisticated financial valuations. There is a place to start for every community.”
Recommended metrics include:
- Natural asset types and classes: Identification of ecosystems, like forests, wetlands and coastal dunes, on which the community depends for services.
- Natural asset extent: Detailed location data and spatial extent, and ownership distinctions between government-held and external assets.
- Natural asset condition: Assessment of the ecosystem composition, structure and function.
- Ecosystem services: Metrics outlining services provided (e.g. water storage), benefits to the community, and associated dependencies.
- Financial valuation: Assignment of monetary value to services provided, as well as replacement costs.
It is understood that many local governments are not yet ready to disclose the full suite of identified metrics. Using the guide, they can plan a phased approach towards more complete reporting, within a consistent framework.
“Consistency and comparability are at the heart of our work, and we are delighted to have brought this lens to natural asset reporting,” explains Chantal Guay, CEO of the Standards Council of Canada. “We look forward to hearing how communities are using the guide and where we can provide additional support to mainstream natural asset management.”
The guide builds on international guidance and standards, including those from the United Nations, the Taskforce on Nature-related Financial Disclosures (TNFD), and the International Sustainability Standards Board (ISSB). The guide also anticipates new standards from the International Public Sector Accounting Standards Board (IPSASB) relating to “tangible natural resources,” and potentially related standards from Canada’s Public Sector Accounting Board (PSAB). The guide benefited greatly from insights that observers from both of these organizations provided.
While policies towards reversing nature loss may be made at national and international levels, through initiatives such as COP16, better decision-making by local governments is critical to reverse nature loss on the ground. The new guide provides a yardstick to measure and document the integration of nature into financial reporting.
This is a crucial step in transforming our financial system into one that makes nature’s services to people really count.
- Access the guide: Getting Nature into Financial Reporting
- Integrating natural assets – such as wetlands, rivers, forests, and coastal dunes – into financial reporting can help Canadian local governments demonstrate effective management of the financially valuable services these assets provide to communities. The purpose of this guide, developed for the Standards Council of Canada, is to help governments include natural asset disclosures in their financial reports, building on existing relevant international and national guidance and standards.
About the Intact Centre for Climate Adaptation
The Intact Centre for Climate Adaptation (Intact Centre or ICCA) is an applied research centre at the University of Waterloo. The Intact Centre was founded in 2015 with a gift from Intact Financial Corporation, Canada’s largest property and casualty insurer. The Intact Centre helps homeowners, communities and businesses to reduce risks associated with climate change and extreme weather events. For more information, visit www.intactcentreclimateadaptation.ca.
About the University of Waterloo
The University of Waterloo is Canada’s top innovation university. With more than 42,000 full and part-time students (Fall 2020), the university is home to the world’s largest co-operative education system of its kind. The university’s unmatched entrepreneurial culture, combined with an intensive focus on research, powers one of the top innovation hubs in the world. For more information about Waterloo, please visit uwaterloo.ca.
About Intact Financial Corporation
Intact Financial Corporation (TSX: IFC) is the largest provider of property and casualty (P&C) insurance in Canada, a leading provider of global specialty insurance, and, with RSA, a leader in the U.K. and Ireland. Our business has grown organically and through acquisitions to over $20 billion of total annual premiums. In Canada, Intact distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect. Intact also provides affinity insurance solutions through the Johnson Affinity Groups. In the U.S., Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, and wholesalers and managing general agencies. Outside of North America, the Company provides personal, commercial and specialty insurance solutions across the U.K., Ireland, Europe and the Middle East through the RSA brands. For more information, visit www.intactcf.com.
SOURCE: Intact Centre on Climate Adaptation, Faculty of Environment, University of Waterloo
Tags: climate change, Intact Centre on Climate Adaptation, resilience