Article

Banking on natural capital

Unlock the true value of nature

Nature is a fundamental - and fundamentally underappreciated - part of the economy and human wellbeing. But what if we valued it differently?

Every economy, at every stage of development, is reliant on resources and ecosystems provided and sustained by the environment. The World Economic Forum has estimated that US$44 trillion – more than half the world’s economic output – is moderately or highly dependent on nature.

But right now, natural resources are being extracted faster than they can be
restored and are being used to provide goods and services which result in
harmful waste products such as carbon emissions and plastic packaging.

By presenting natural assets as ‘capital’, it becomes clearer to see how the
environment is comprised of finite stocks which may be invested in to generate
value or degraded to deplete value. For this reason, natural capital is an
attempt to better convey the true value of nature and an untapped market
opportunity rooted in truly sustainable returns.

With this basis, we can create a new vision for the global economy, which is
transparent, inclusive and ecologically sustainable. The growing ecological
deficit can be addressed by mobilising investment into the conservation,
sustainable management and restoration of natural capital assets.

The time has come to bank on natural capital.

Deloitte engaged with more than 20 global organisations in the financial services industry through a targeted survey and select interviews, to pull together our report Banking on natural capital. Through this report, we aim to explore how the growing ecological deficit can be addressed by mobilising investment into the conversation, sustainable management and restoration of natural capital assets.

Take a look at the key themes from the report below.

Explore the key themes

<p>Estimates indicate that we would need more than 1.7 earths to make our current rate of consumption sustainable.</p><br> <p>We’ve lost sight of the true value of nature, a living resource in which every economy is firmly rooted, and this has led to some of the biggest crises humanity faces today. Globally, we are facing an ecological debt that is largely obscured from global budgets, balance sheets, corporate strategies, and risk frameworks. To avoid both ecological and economic bankruptcy, we need to better value nature in how we make financial, political and economic decisions.</p><br> <p>Investing in nature also has the potential to unlock market opportunities rooted in truly sustainable returns. The ongoing growth in demand for sustainable finance, impact investments, voluntary carbon markets and sustainably sourced commodities provide an exciting glimpse into what a thriving nature-positive economy could look like.</p><br> <img src="https://www2.deloitte.com/content/dam/Deloitte/au/Images/custom/accordion/au-about-banking-natural-capital-3.png" alt>

<p>Organisations can tap into the opportunities associated with natural capital and the nature-positive transition today. This may resemble:</p><br> <ul> <li><strong>Greening Finance:</strong> Integrating natural capital considerations into strategic, lending and investment decisions to redirect harmful financial flows to nature-positive activities</li> <li><strong>Financing Green:</strong> Directly investing in nature-based solutions and projects, or nature-positive businesses and initiatives, including through the provision of green debt or equity</li> </ul> <p><strong>The marketplace of the future</strong></p> <p>To facilitate credible, effective and profitable investment in nature at scale, we envision an environmental market founded on the following principles:</p><br> <img src="https://www2.deloitte.com/content/dam/Deloitte/au/Images/custom/accordion/au-about-banking-natural-capital-2.png" alt><br> <p>This will require a range of actors to collaborate to create, activate and support investments in nature. Financial institutions are able to play multiple roles in a nature-positive economy, with legitimate drivers towards acting in supply, demand and enablement roles.</p>

<p>The time has come to bank on natural capital. Together, we can define a new, nature-positive ‘business as usual’ which is truly economically, environmentally and socially sustainable. We have identified five key actions an organisation can take to pursue this goal:</p><br> <img src="https://www2.deloitte.com/content/dam/Deloitte/au/Images/custom/accordion/au-about-banking-natural-capital-1.png" alt>
Did you find this useful?