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Getting Nature into Financial Reporting: Natural Assets Disclosures for Local Governments
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General
Document Date:
2025-01-29
Integrating natural assets—such as wetlands, rivers, forests, and coastal dunes—into financial reporting can help local governments demonstrate effective management of the financially valuable services these assets provide to communities. Natural assets are increasingly recognized as infrastructure that provide financially valuable ecosystem services to Canadian communities. Services include absorbing and storing water to limit floods and droughts, reducing temperatures to shelter communities from heat waves, and storing carbon to slow climate change.
Despite these services, “natural resources and Crown lands that have not been purchased” are excluded from Canadian public sector financial statements, including the statements of all levels of government and Crown Corporations. Consequently, natural assets and the services they provide are not appropriately considered in public sector decision-making.
Leadership in proactive management and financial reporting on natural assets is emerging from the local level in Canada. Over 150 local governments are already working towards identifying, assessing, valuing and managing their natural assets, including Canada’s largest cities. Forward-thinking local governments are also including unaudited natural asset disclosures in their financial reports. However, the disclosures made are highly variable due to a current lack of Canadian standards.
The purpose of this guide is to help Canadian local governments make consistent natural asset disclosures, building on existing relevant international and national guidance and standards.