Regulators have a critical role to play in creating rules and incentives to integrate the value of nature in economic activities and improve outcomes for nature. This is especially important when markets are not set up to reward such outcomes. However, regulatory action for nature is significantly lacking, which is why economic actors do not face the costs of nature loss and are not rewarded for improving the state of nature. Commonly proposed actions such as pricing for specific resources (e.g. carbon, water and land taxes to reduce negative externalities) or subsidy reform are necessary, but not sufficient to fundamentally alter targets on short-term indicators like GDP and profit or perceptions of what constitute growth and capital formation. There is also a critical lack of capital market infrastructure to support the valuation of and subsequent investment in nature, despite experts noting a significant uptick in interest from investors in recent years.47 Moreover, natural capital approaches are largely voluntary, both in the public and private sectors, limiting significant adoption. In the public sector, natural capital accounts are not explicitly connected to targets under the Kunming-Montreal GBF or National Biodiversity Strategies and Action Plans (NBSAPs).48 In the private sector, few mechanisms exist to hold businesses to account on natural capital performance beyond voluntary impact assessments – including via disclosures required by NGOs (e.g. TNFD), environmental laws, corporate charters or capital markets.2.2 Lack of regulations and incentives for nature Collecting consistent, comprehensive and accurate environmental data is challenging, especially in biodiversity-rich countries. While the technologies exist to support accurate data collection at scale, significant technical expertise and resources are required to understand how to use them, navigate complex metrics, compile relevant accounts and analyse environmental interactions with economic activity. Experts cite “chronic underinvestment” in this capability, both in the public and private sectors.49 Additionally, disagreements remain on several methodological challenges. There is limited consensus on the right output variables to support decision-making. For instance, although the frameworks and methodologies available for the public sector require maintenance of accounts covering natural capital stocks, which track the health of natural assets relative to a baseline, the outputs that receive significant attention like GEP are “flow” variables, which track the value of benefits that nature provides in a given period. Maximizing these benefits may come at the cost of the underlying stocks, perpetuating current trends. Disagreements also remain on trade-offs in extending natural capital valuation from biophysical to monetary terms (for balance sheets or income statements) and whether the former is sufficient for decision-making. Finally, accounts only provide a basis from which decisions can be made – evaluating scenarios and trade-offs for different decisions is an even more complex challenge, requiring strategic systems thinking.2.3 Data and capacity challenges There is a critical lack of capital market infrastructure to support the valuation of and subsequent investment in nature. Mainstreaming Natural Capital: Advancing the Global Agenda to Integrate Nature in Decision-Making 11

Mainstreaming Natural Capital 2025