We face a paradox: Nature underpins the global economy — providing clean air, water regulation, flood protection, and pollination — yet remains largely invisible in most economic and financial decisions. This is not because its value is insignificant, but because nature is not seen as a critical asset that’s necessary for the economy.

The failure to fully recognize and embed nature’s value in economic and financial decisions has contributed to rapid ecosystem degradation and climate instability that now threatens economic resilience, food security, human health and quality of life.

According to the International Monetary Fund, nature loss is financially material in both directions: economic activity degrades ecosystems and ecosystem decline undermines economic growth, drives inflationary pressures and threatens financial stability. For example, banks face significant vulnerability to ecosystem degradation and biodiversity loss because many borrowers and assets depend on — and operate in — nature-dependent sectors such as agriculture, forestry and water-intensive manufacturing.

As ecosystems degrade, costs rise, yields fall and supply chains are disrupted, reducing borrowers’ abilities to repay loans, which thereby increases systemic risk. In agriculture, the economic value of crop production is 12% to 31% lower due to declining pollination as insects, birds and other pollinators succumb to climate change and other human-driven pressures such as land-use change, intensive farming techniques and harmful pesticides.

By embedding nature into balance sheets, countries and companies can recognize nature’s value explicitly in financial terms and better manage both physical and transition risks — strengthening economic stability while fostering more inclusive, nature-based growth. Furthermore, properly valuing nature can reduce risks that threaten overall economic and financial stability, while supporting long-term prosperity, particularly for emerging markets and developing countries that are rich in natural capital but often lack resources and incentives to protect or leverage them sustainably.  

Experts, financial institutions and companies are increasingly exposed to nature-related risks across their operations and supply chains and are starting to recognize the need for putting nature on their balance sheets as the next frontier of risk management and long-term value creation, allowing businesses and governments to recognize, measure and manage their dependencies and impact on natural systems.

This article addresses why that matters, particularly from a private sector perspective, and introduces the Nature on the Balance Sheet Initiative, a coalition formed by the Capitals Coalition, The Landbanking Group, Systemiq and the Center for Global Commons, which seeks to make this transition possible. WRI is collaborating with the Nature on the Balance Sheet Initiative as part of its broader efforts to identify and advance innovative nature-finance mechanisms and investment vehicles aimed at scaling finance for nature.

Key Terms for Natural Capital Accounting

Natural Capital: The stock of renewable and non-renewable natural resources that combine to yield a flow of benefits (i.e., ecosystem services) to people. The term highlights that nature is a form of capital asset, comparable to produced capital (roads, buildings) and human capital (knowledge, skills).

Ecosystems: Both living components (plants, animals, microorganisms) and the physical environment that interact to provide services to people. In accounting terms, ecosystems are treated as assets described through ecosystem extent and condition accounts.

Ecosystem Services: The flows of benefits that people obtain from ecosystems. These are typically classified into: provisioning services (e.g., food, timber, water), regulating and maintenance services (e.g., flood control, climate regulation, soil fertility, pollination) and cultural services (e.g., recreation, aesthetic, spiritual value).

Nature-positive: A term used to describe an ambition that goes beyond “no net loss” or “net positive impact” toward a future where nature is visibly and measurably improved in absolute terms. While there is not yet a clear or consistent definition, “nature-positive” is best understood not as a target for individual organizations but as a shared goal to halt and reverse nature loss.

Understanding Nature on a Balance Sheet: Foundations and Emerging Practice  

Putting nature on the balance sheet is a figurative way to recognize natural capital as an economic driver in business, finance and government decision-making. It helps to illustrate the ways nature’s condition impacts financial performance and economic strategy, ultimately enhancing natural capital stocks over time.  

It systematically measures and values how companies, investors and economies depend on and impact natural systems (forests, water, soils, biodiversity, climate regulation) and incorporate those values into financial statements, risk assessments and investment decisions. Making nature-related outcomes visible enables capital allocators to better understand how these dependencies affect business performance and resilience. This, in turn, helps direct finance toward activities that generate measurable nature-positive outcomes while managing exposure to physical and transition risks, reducing the likelihood of stranded assets (economic assets that may lose their value in response to environmental concerns) and fostering more resilient value chains and economies.

Nature on a Balance Sheet Resources

For practical guidance on this topic, explore the following resources:

 

Historically, natural capital accounting has focused on national and subnational public systems, based on the intellectual and methodological foundations developed over several decades. The United Nations’ System of Environmental-Economic Accounting (SEEA) was first introduced in 1993 to link environmental data with national economic accounts. Meanwhile, the concept of “natural capital” gained traction in the 1990s as ecological economists such as Robert Costanza and Herman E. Daly argued that nature should be treated as a productive asset providing essential goods and services to human well-being and economic growth.

The SEEA Central Framework, adopted by the UN Statistical Commission in 2012, became the first global statistical standard for environmental-economic accounting. It focuses on the flows of nature’s goods to the economy (e.g., inputs, products and residuals), nature’s individual assets (e.g., water, energy), as well as economic activity related to the environment (e.g., nature-related expenditures).

The SEEA Ecosystem Accounting, adopted in 2021, expanded SEEA’s measurements to include regulating and cultural functions of ecosystems, by proposing measurement of ecosystems, their condition and provision of services.

Together, they offer a globally consistent approach to measuring the environment-economy relationship. The SEEA has already been used to support public policy making in high-priority areas such as climate change and environmental sustainability. However, as the framework is still novel, the producers and potential users of accounts must improve the understanding of SEEA's relevance to ensure a more systematic use for informing policies.

There is now explicit recognition that most companies, either directly or indirectly, depend on nature — for water access, soil productivity, pollination and stable climates — while also contributing to nature loss through land-use change, supply-chain impacts and emissions. High-profile financial institutions such as BlackRock and Goldman Sachs are beginning to integrate nature into investment decisions, reflecting a growing understanding that financial performance is inseparable from the state of natural systems. This growing urgency to manage nature-related risks and dependencies is shifting attention from public-sector accounting to corporate balance sheets and capital markets. Although still nascent, there is increasing recognition of the private sector’s critical role in assessing, accounting for and integrating natural capital into business and finance, and of investors’ influence in driving this transition.

Corporate Benefits of Putting Nature on the Balance Sheet

For the private sector practitioners, putting nature on the balance sheet offers the following benefits:

  1. Stronger Risk Management: For instance, recording restored wetlands or forests as productive assets or disclosing liabilities for degraded land, water or biodiversity loss. Many sectors, including agriculture, energy and water-dependent industries such as artificial intelligence, rely on nature’s regulating services. Failing to account for these dependencies can leave companies exposed to both physical (e.g., resource scarcity, supply-chain disruption due to nature loss and natural disasters) and transition risks (as policies, markets and consumer preferences shift).
  2. Better Decision-Making: Embedding natural-capital metrics into accounts can improve long-term planning and inform trade-offs about land use, production and investment, enabling companies to align financial returns with ecological resilience and avoid stranded assets.
  3. Increased Revenue and Innovation: Properly valuing ecosystem services can create new income streams, such as through clear metrics and long-term value for buyers of ecosystems, biodiversity credits, nature-linked contracts and nature-based financial products (e.g., Natural Asset Companies, parametric insurance for ecosystem services) that can reduce costs, diversify revenues and strengthen resilience.
  4. Demonstrated Industry Leadership: Embedding nature on the balance sheet can signal genuine industry leadership by moving beyond commitments to measurable action. Demonstrating how nature-related performance contributes to financial outcomes positions a company as a frontrunner in transparency and accountability. This not only differentiates them in client and investor engagement but also strengthens trust among regulators, communities and supply-chain partners.

Demonstrating Nature on the Balance Sheet in Practice 

While the concept of adding nature to balance sheets in the private sector is still emerging, several pioneers across different sectors are already integrating natural capital value into financial and strategic decision-making. For example, Forico, a forestry company in Tasmania, used natural capital accounting and demonstrated that when ecosystem services are valued, the broader contribution is roughly four times higher than what appears on its conventional balance sheet. The company tripled in value before being acquired by three pension funds for more than $670 million in 2023.

The Nature on the Balance Sheet Initiative has been working with three early-stage projects in agriculture, mining and financial services. These pioneering efforts, which are still being implemented, provide proof-of-concept examples that other companies can learn from.

Belterra

Belterra, founded in 2020, works with smallholder farmers in Brazil’s Amazon and Atlantic forests to shift degraded pastureland to biodiverse agroforestry systems that improve productivity — such as for cacao production — while helping conserve critical biomes. Its model combines technical assistance, blended finance and commercial partnerships to support transitions at scale. In its first two years, Belterra has established 1,800 hectares of biodiverse agroforestry areas and protected 18,000 hectares of land, with a target to restore 40,000 hectares of Brazilian forests by 2030.

Belterra’s practice shows that compared to monoculture, agroforestry plots show 55% less soil erosion, more than 50% less nutrient run-off, better water retention, higher biodiversity and more than 2.6 metric tons more of carbon dioxide equivalent sequestration per hectare per year compared to degraded pasture or monoculture. These ecological gains support higher long-term yields, greater climate resilience and lower environmental risk — key benefits that buyers and regulators are beginning to demand as deforestation-related regulations and ESG expectations tighten.

Building on these outcomes, Belterra is piloting an approach to quantify, verify and value in monetary terms the ecosystem service benefits associated with its cacao production. These include carbon removal, soil-water retention and improvements in species diversity and habitat quality. Modeling suggests that these services add roughly $3,600 of “nature value” per ton of cacao beyond the commodity price. By embedding this verified nature value into outcome-linked offtake contracts, Belterra seeks to reward regenerative farming, attract outcome-based funders and offer buyers a traceable, climate-aligned supply of cacao that outperforms monoculture both ecologically and financially.

Vale Base Metals

Vale Base Metals (VBM) is exploring how putting nature on the balance sheet can reinforce its existing commitments under the Taskforce on Nature-Related Financial Disclosures (TNFD) and the International Council on Mining and Metals by treating natural capital as an intangible asset that safeguards the long-term viability of mining operations. VBN is exploring how investment into nature could represent reduced risks, avoided costs and new revenue opportunities, thereby strengthening enterprise value.

The company has piloted natural capital assessment at the Carajás mining complex in Brazil, mapping landscape changes between 1986 and 2023 to understand how conservation actions have preserved value. The Landbanking Group and VBM are undertaking modeling to assess the value created by different nature investment opportunities, for example, establishment of an ecological corridor, water-body restoration, agroforestry systems on degraded pasture and riparian-zone protection.

Manulife Investment Management

Manulife Investment Management is one of the world’s largest natural capital investment managers, with over $11.5 billion in timber assets across 5 million acres of timberland as of 2024. An early adopter of TNFD, Manulife has piloted natural capital accounting to demonstrate how nature contributes to long-term asset performance.

Manulife’s pilot focuses on linking ecosystem services directly to asset performance and valuation. For example, in the Neches watershed in Texas, Manulife manages riparian forests, wetlands and floodplain habitats where water-regulating services are valued at several million dollars annually. By enhancing these ecosystem assets — improving wetland health and forest resilience — the company aims to reduce wildfire, flood and drought risks; and open new revenue opportunities such as payments for ecosystem services. As markets begin to reward nature stewardship, assets demonstrating measurable natural capital value could attract price premiums and interest from investors seeking climate- and nature-aligned portfolios.

Challenges and Opportunities for Scaling

Momentum is building as early adopters rapidly advance the technical foundations for putting nature on the balance sheet. This frontier is now focusing on overcoming four key areas that hold back wider adoption:

  1. Creating clear pathways on how to integrate natural-capital valuation into concrete business and financial decisions.
  2. Mobilizing and activating key stakeholders — accountants, auditors and boards — to embrace the opportunities, moving past initial risk aversion and providing clarity on disclosure and fiduciary duties.
  3. Showcasing financial returns to clearly demonstrate how natural capital valuation can translate into direct financial returns in the market thanks to the development of high-visibility proof-of-concept projects.
  4. Aligning regulations and incentives to create a policy environment for corporate action, including phasing out negative subsidies.

This progress is amplified by significant advances in nature-data technologies, such as high-resolution remote sensing, automated monitoring and environmental DNA, which have significantly lowered the cost of measuring ecosystem extent, condition and services, opening new frontiers for accountability and scale. Furthermore, a deeper understanding of the enabling conditions for mainstream uptake has also improved, with recent analyses highlighting the importance of consistent standards, credible governance and access to blended finance. Integrating nature into corporate accounts not only strengthens business risk management but also enables capital markets to reward nature-positive performance and penalize destructive practices, while revealing new opportunities for inclusive growth.

More evidence and real-world proof points are needed to build investor confidence and demonstrate how natural capital valuation creates tangible financial and resilience benefits. Strengthening and scaling pilot initiatives will be essential to generate this evidence base and move toward consistent adoption at scale – a challenge and opportunity that will be at the forefront of the UN Climate Change Conference (COP30) in Belém, which some are referring to as the “Nature COP.” If these opportunities are seized, putting nature on the balance sheet can evolve from an experimental concept into a mainstream financial lever for resilience, competitiveness and systemic change.