Laurent Le Pajolec
Member of Board EXCO A2A Polska, Kreston Global ESG Committee member

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General Manager and shareholder of consulting companies with a Marketing/ business development and a Financial background with direct experience with several sectors (Real estate, Transport, Fintech, Legaltech, M&A, Import- Export, HR, Restructuring). Exco Polska Board Member.

Christina Tsiarta
Advisory services on sustainability, ESG & climate change

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Christina is an experienced consultant specialising in ESG, sustainability, and climate change. She has over 13 years of expertise and has worked with various organisations, including local municipalities, national government agencies, the Directorates-General of the European Commission, and the private sector across different industries. Christina’s projects range from technical and operational support to policy reform, strategy development and implementation, due diligence and compliance, implementation of standards, stakeholder engagement, reporting, materiality assessment, and more.

Triple Capital Accounting (TCA) for environmental sustainability and corporate performance

July 13, 2023

Our experts and ESG Committee members, Laurent Le Pajolec and Christina Tsiarta, recently contributed an insightful article in Finance Digest, shedding light on the significance of Triple Capital Accounting, also known as TCA, in reshaping corporate performance with a focus on environmental sustainability. You can read the article in full here, or read a summary below.

Triple capital accounting is a method that aims to redefine corporate performance by incorporating environmentally sustainable practices. In response to the urgent need to address the climate emergency, TCA goes beyond traditional financial accounting by considering three dimensions of capital: financial, natural, and social. It challenges the notion that profitability is the sole measure of success and emphasises the importance of a company’s impact on the environment and society.

Strategic Assets

TCA introduces additional elements to the balance sheet to reflect the depreciation of natural and social capital alongside financial capital. It treats all three forms of capital as strategic assets that cannot be substituted for one another. By valuing and accounting for natural and social capital, TCA promotes the responsible management of ecosystems and social environments. This approach not only aligns with environmental, social, and governance (ESG) principles but also ensures that stakeholders properly recognise and assess the value of these assets.

While climate change receives significant attention, TCA recognises that other ecological factors should also be considered, such as biodiversity erosion, changing land use, global water use, and the introduction of new entities into the biosphere. Moreover, TCA acknowledges various social aspects, including human rights, anti-corruption measures in the supply chain, mental health and well-being in the workplace, and diversity and equality in company culture. TCA urges transparent and accountable corporate social responsibility practices.

What does TCA look like?

Different methodologies exist within the TCA framework, including the CARE model (Comprehensive Accounting in Respect of Ecology) and the LIFTS model (Limits of Foundations Towards Sustainability). The CARE model emphasises the obligation to preserve natural and human capital assets alongside financial assets on balance sheets, profit and loss statements, and other key performance indicators. It incorporates intangible assets, such as skills, which contribute to shareholder value. The LIFTS model focuses on ensuring the sustainability of a company’s activities by monitoring the integrated performance of social and environmental capital, aligning with planetary boundaries and social foundations.

As organisations face increasing expectations to incorporate environmental and social considerations into decision-making and financial disclosures, TCA has gained prominence. With the development of sustainability-related standards and frameworks, such as those by the International Financial Reporting Standards (IFRS) and the Taskforce on Nature-related Financial Disclosures (TFND), the integration of natural and social capital accounting alongside financial accounting is becoming more prevalent. Transitioning to a TCA system requires a shift in mindset and operational practices, presenting challenges but also opportunities for companies to enhance their sustainability, resilience, and brand value. TCA is not only the future of accounting but also crucial for the future of the planet.

To learn more about sustainability for your business, check out our sustainability hub here.