ABSTRACT
Nature is an important part of the global economic engine and the brands behind it. For example, the US forest products industry is 4% of the total US manufacturing GDP, makes over $200 billion in products annually, and provides about 900,000 jobs (American Forest and Paper Association, 2016). Nature also provides services to businesses, such as the clean water that a pulp and papermaking mill might require, which are much harder to value. At a cost of about 10% of the $75 trillion global economy, nature’s contribution is vital to future business growth and viability.
Leading businesses are now quantifying these broader forms of capital and value creation. Why are businesses valuing natural capital? Externality costs are an excellent proxy for business risk. Natural capital costs affect the future profitability of business if they are internalized as a business cost because of increased regulation. In 2016, over 750 organizations publicly disclosed their involvement in natural capital valuation initiatives. There are a wide range of business benefits to valuing natural capital, which include, for example, lower operational costs, avoiding regulatory risks, reducing lending costs, or maintaining a social license to operate.
