The European Green Deal and What it Means for Natural Capital Accounting

Earlier this month, the European Commission presented the much-awaited European Green Deal. In the European Commission’s press release, President Ursula von der Leyen stated: “The European Green Deal is our new growth strategy –for a growth that gives back more than it takes away.” Executive Vice-President Frans Timmerman added: “The European Green Deal is an opportunity to improve the health and well-being of our people by transforming our economic model. Out plan sets out how to cut emissions, restore the health of our natural environment, protect our wildlife, create new economic opportunities, and improve the quality of life of our citizens.”

Thus, at the heart of the European Green Deal is the acknowledgement of the interconnections and dependencies between the environment and economy. While it aims to achieve no net emissions of greenhouse gases in 2050, it also aims to decouple economic growth from resource use. Thus, Eurostat’s SEEA Central Framework accounts (energy, material flow, air emissions) will be vital to measuring progress towards both of these aims.

The European Green Deal also aims to “protect, conserve and enhance the EU’s natural capital, and protect the health and well-being of citizens from environment-related risks and impacts.” The Deal takes it a step further to state that all EU policies should contribute to preserving and restoring Europe’s natural capital by integrating ecosystems and their services into decision-making. Thus, both the System of Environmental Economic Accounting (SEEA) Central Framework and SEEA Experimental Ecosystem Accounting (SEEA EEA) will be crucial tools in measuring progress towards these aims. The progress towards an agreed methodology for the revised SEEA EEA, the Knowledge Innovation Project (KIP INCA) and the Mapping and Assessment for Integrated Ecosystem Accounting (MAIA) project all provide a means to measure the conservation and restoration of Europe’s natural capital.

The importance of having standardized natural capital accounting practices for businesses is also recognized in the communication from the Commission on the European Green Deal. In particular, to strengthen the foundations for sustainable investment, the Commission stated its support for businesses and other stakeholders in developing standardized natural capital accounting practices within the EU and internationally. Given the importance of business-level data in national-level SEEA accounts, the European Green Deal also provides the impetus to align the SEEA with future accounting frameworks at the business level.