However, some experts doubt the feasibility of mandates, especially in biodiversity-rich countries facing immediate challenges from poverty, education and healthcare that make it hard to prioritize the longer-term benefits of natural capital. Multilateral development banks (MDBs), donor agencies and public institutions have a critical role to provide these countries the finance and technical assistance they need to mainstream natural capital in decision-making. Economic indicators There is an urgent need to update the economic toolkit beyond short-term indicators on produced capital (e.g. GDP) to better account for natural capital. GEP and net gain policy are two possible mechanisms. Strong environmental accounting can be seen in Chile, Belize and Uruguay, while the United Kingdom recently passed its Biodiversity Net Gain Policy, which requires natural capital accounting in land development.56 There is growing interest in debt-for-nature swaps to achieve economic and environmental goals simultaneously, with Ecuador agreeing the world’s largest such swap in 2023.57 Regulation Macroprudential regulators (e.g. central banks, financial supervisors) have an important role to play in quantifying and managing the impact of nature- related risks on economic and financial systems. The Network for Greening the Financial System (NGFS) published guidance for nature-related financial and litigation risks,58 while the Financial Stability Board (FSB) conducted a stocktake of initiatives assessing such risks, at the request of G20 finance ministers and central bankers.59 The World Bank is developing frameworks to integrate climate and nature risk assessments, credit ratings, index rankings and reporting frameworks. Central banks (e.g. Sri Lanka) have published green finance taxonomies.60 Capital markets infrastructure also requires support. New financial instruments and contracts require new guardrails, including clear rules and fiduciary responsibilities. Subsidies and externality pricing Progress on fiscal measures to correct market failures and capture the full value of natural capital used in the production process has been slow.61 GBF Target 18 calls for $500+ billion of harmful subsidies to be reduced annually by 2030 – still a fraction of the ~$1.7 trillion of nature-harming direct subsidies.62 GBF Target 19 calls for an additional $200 billion of funding per year for nature, via domestic and international sources. Externality pricing may be one option – this taxes “excess” resource usage and waste streams, or operates permit systems like cap and trade on usage. It has proved powerful in reducing environmental impact by incentivizing efficiency and creating new revenue pools for mitigating impact. Successes in carbon and water pricing offer models, tied to robust natural capital accounting and valuation.63,64 Clearer articulation of the benefits for first movers would be helpful. Research shows repricing subsidies and externalities can make nature-positive business models more attractive, incentivizing markets to reward them with a premium.65 The public and private sectors need greater access to natural capital data and guidance on how, where and what to measure. A growing community of impact assessment professionals and environmental data platforms are developing tools to help organizations understand their impacts and dependencies on nature.66 Efforts to share natural capital data as a public good are leading to more harmonized metrics – led by TNFD67 and the World Bank-managed Sovereign ESG Data Portal.68 Guidance and consensus are needed on the trade-offs between using stock or flow variables, biophysical accounts or monetary accounts, and extending monetary valuation to financial flows – including concepts like “nature as an asset class” and “nature on the balance sheet”. Trade-offs need resolving between developing ever-more comprehensive datasets versus acting on available data today. Arguably, methodologies are sufficiently developed for organizations to begin basic natural capital accounting and incorporate it in decision- making, particularly for land, water and emissions. Alignment is needed on the “value factors” to convert data on biophysical changes in natural capital into impact on society. GIST Impact recently reported on value coefficients for 25 countries,69 while SEEA-EA provides guidance on pricing ecosystem services, similar to the “fair value hierarchy” observed in financial accounting standards.70 Developing greater capacity for natural capital accounting and valuation will be critical to mainstream this agenda. Training materials are urgently needed, along with natural capital practices that are scientifically robust, easy-to-use and transparent to audit. Networks including Stanford Natural Capital Project and Africa Natural Capital Accounting Community of Practice provide valuable opportunities for capacity building.71 3.2 Boosting data, science, analytics and capacity building GBF Target 18 calls for $500+ billion of harmful subsidies to be reduced annually by 2030. Mainstreaming Natural Capital: Advancing the Global Agenda to Integrate Nature in Decision-Making 14

Mainstreaming Natural Capital 2025