Finance Solutions for Nature 2025

2.8 Internal nature pricing (INP) INP is a novel pricing tool for natural capital to support investors and corporates in offsetting nature impact. Overview95 Internal nature pricing (INP) is a voluntary tool for corporate and institutional investors to assign an internal “price” to their negative impacts on natural capital – such as land use, deforestation or water pollution – similar to internal carbon pricing (ICP). INP can allow companies to charge internal fees on nature-related impacts at the unit or department level. These are pooled into internal funds for investing in nature-positive projects (e.g. offsets, value chain initiatives) or hedging against future regulation. Institutional investors may apply INP across portfolios. Accurate INP requires robust natural capital accounting, valuation methodologies and trusted MRV systems, often supported by internal teams or third parties. Potential to mobilize capital for nature INP has not yet been implemented and would be bespoke and complex to structure. ICP offers a model for growth. As of 2023, over 1,700 companies used ICP (14% of CDP disclosures),96 including nearly half of the world’s 500 largest firms. ICP has helped companies prepare for carbon pricing regulation. Singapore- based Temasek applies an ICP across its portfolio, currently set at $65 per tonne of CO2-equivalent and rising to $100 by 2030, to align investments with emissions targets, incorporate cost of carbon into investment decisions and incentivize portfolio companies to reduce their footprint.97 Microsoft applies a $15+ internal carbon fee on scope 1-3 emissions, reportedly generating over $100 million annually.98 It also tracks its land and water impacts, though not yet with internal pricing. INP could follow a similar path. Over 100 companies already use natural capital accounting or tools such as environmental or integrated P&L accounts (EP&L or IP&L).99 For example, Kering, which developed the world’s first EP&L, valued its total environmental impact at €455 million in 2022 through this tool.100If adopted by nature-intensive sectors or portfolios, INP could generate substantial funds for nature projects and value-chain transitions. As fees are designed to incentivize lower impact, collected fees may decline over time. Ability to price nature into markets INP places a value on negative nature externalities, allowing companies and institutional investors to generate internal funds for natural capital. However, pricing guidance is lacking. While natural capital accounting and ICP methods are more advanced, few tools exist to guide pricing nature impacts. Internal fees assign a fixed price per unit of impact and trigger real fund transfers. These prices may be linked to nature targets and the cost of achieving them. Shadow pricing, by contrast, uses notional values (e.g. for land or water) to inform decisions such as internal rates of return (IRR) but does not create internal funds. Pathways to mainstream Without past implementation or consistent guidance, INP remains difficult to adopt. Pilot cases, common standards and replicable models from leading companies or investors are essential. Over 500 early adopters of TNFD are already assessing their nature impacts and dependencies.101 Organization-wide alignment is important. Securing P&L holder buy-in is a major hurdle, given the perceived cost of fee schemes. Tying INP to a clear nature strategy can highlight how it supports goals, controls costs and improves governance. Using internal funds to support nature-linked initiatives can also build credibility. Academics and researchers could help establish sector-based, impact intensity benchmarks, enabling companies to apply INP without full assessments – similar to the Science Based Targets initiative (SBTi) model. Internal carbon pricing (ICP) offers a model for internal nature pricing. As of 2023, over 1,700 companies used ICP , including nearly half of the world’s 500 largest firms. Finance Solutions for Nature: Pathways to Returns and Outcomes 30