INTHEBLACK May 2026 - Magazine - Page 48
F E AT U R E
“For financial leaders, biodiversity loss is fundamentally
a risk-management issue.”
KRISTY GRAHAM, AUSTRALIAN SUSTAINABLE FINANCE INSTITUTE
relevant stocks and flows. “An accounting
framework for nature recognises that a
business depends on the environmental assets
it owns, uses and manages.”
Each environmental asset — whether a
wetland, agricultural land, forest or river — is
treated as a distinct asset.
“You need to account for each
environmental asset: how much of it you
have, its condition or health and what
ecosystem services it provides,” Obst says.
“Natural capital accounts are basically
describing these details at a point in time
and then tracking changes, just as a set of
company accounts would do for business
transactions. Once you have got that set
of accounts, you can report performance,
identify risks and opportunities, and run
scenarios such as: What would change if we
invested here? What would happen if we lost
this asset? What services would we lose and
who else might be affected?”
Over time, this builds a dataset that can
inform strategic decisions. One possible
outcome might be that organisations
participate in environmental markets, such
as Australia’s Nature Repair Market,
to counterbalance negative nature impacts.
Organisations may also use the data
to identify efficiencies in their use of
the environment, “weed out waste”
and make their dependence on nature
more sustainable.
“You are saving costs because you run
in a more efficient manner, and at the same
time you are doing good from a nature
perspective,” says Viljoen. “It is about balance
and viewing these things from more than
a cost perspective.”
THE TOPIC OF CAPITAL
A nature financing gap of US$4.1 trillion
(A$5.83 trillion) must be closed by 2050
to meet climate change, biodiversity and land
degradation targets, according to the United
48 INTHEBLACK May 2026
Nations Environment Programme’s
State of Finance for Nature report.
Most funding for nature-based solutions
comes from the public sector. In Australia,
initiatives such as the Nature Finance
Council aim to unlock greater flows of
private capital.
“ASFI research shows private finance has
a critical role to play in closing the nature
funding gap, primarily by embedding nature
considerations into mainstream financial
decision-making,” says Graham.
In its research report Integrating nature
into f inance, ASFI outlines that scaling
private capital requires clear, decision-useful
information about how natural capital
condition affects financial performance,
risk and resilience; and how capital flows
most effectively where risk-return dynamics
are transparent and measurable.
At present, barriers remain. “Natural
capital indicators are not yet consistently
integrated into land valuation
methodologies, credit assessments or
risk-modelling frameworks,” says Graham.
“Where improvements in the condition
of ecosystems are not reflected in asset
pricing or in lending terms, these incentives
risk misalignment.”
She says private finance can support
progress by integrating nature-related risk
and resilience into credit and investment
frameworks, developing products that
recognise sustainable land management
and ecosystem stewardship, and applying
consistent criteria to identify activities
that support long-term economic and
environmental outcomes.
“Ultimately, unlocking larger flows of
private capital depends on strengthening
the infrastructure of measurement, valuation
and disclosure,” Graham says. “Where
nature-related performance is visible and
financially material, capital allocation should
adjust accordingly.”
