The Challenge of 'Internal Nature Pricing' for Corporate Natural Capital Accounting

Nature generates roughly $220 trillion in annual ecosystem services, nearly twice global GDP, and more than half of global GDP depends on it. Yet only 5% of corporations measure their nature impacts and just 1% assess their dependencies. Meanwhile, funding flows that directly harm ecosystems are estimated at approximately $7.6 trillion per year (2025), outpacing the $220 billion invested in nature by a factor of 35.

Nature Data Lab supported a white paper that surveys the history and current state of corporate natural capital accounting (CNCA), documenting methods that can help companies quickly get on the path to becoming nature-positive. Its central finding is that the field seems to have the sequence backwards. While new accounting standards developed by TNFD, GRI, and others are very valuable, comprehensive measurement of impacts shouldn’t be treated as a precondition for action.

Action at a scale, proportional to the rate of nature loss driven by each business sector, should be the top priority. Measurement and accounting methods can be refined over time.

This was the approach taken in the early days of climate impact accounting. Microsoft led the way by introducing the concept of ‘Internal Carbon Pricing’ – something akin to a voluntary internal tax, which gave various departments within the company an incentive to account for their carbon emissions. An internal fee was developed, and commensurate funds were set aside to be applied to various mitigation efforts. The concept took off, and today over 1700 corporations use Internal Carbon Pricing to help drive business transformation.

This paper asks the question, can the same concept be applied to the broader nature sector when it comes to corporate ESG reporting?

Key conclusions

Allocation must precede precision. Most corporations lack the capacity, time, and funding to complete the full pathway through the Taskforce on Nature-related Financial Disclosures (TNFD), the Science Based Targets Network (SBTN), and the Natural Capital Protocol (NCP), which requires multi-year timelines and specialist expertise. Waiting for perfect methods while nature loss accelerates is not a defensible position. Any finite valuation of nature is an underestimate, yet a crude estimate that drives mitigation funding is categorically preferable to the implicit zero value nature receives in conventional accounts. Pursuing analytical granularity before allocating mitigation funding amounts to analysis paralysis: the marginal value of additional precision is rapidly exceeded by the cost of the inaction it enables.

An 'Earth Fee' could be an entry point. The Earth Fee concept was introduced in 2024, proposing a rapid, top-down method for nature action: divide the global annual rate of nature-value loss by global GDP, then apply that ratio to a corporation's Gross Value Added (GVA), revenue minus purchased goods and services. Averaged across six leading valuation studies, the resulting set-aside is approximately 9.7% of GDP contribution, which could be directed to nature loss mitigation averaged across all sectors. A corporation contributing $500 million to GDP would carry an indicative annual liability of $48.5 million. This could of course be tailored to specific sectors. The method uses the same benefit-transfer logic introduced by Costanza et al. (1997), but here it is used to scale estimated losses at the global level down to the enterprise level. This shorthand method requires no specialist expertise, and could be useful in onboarding C-suite executives to a larger financial accountability system for ESG impacts that can be refined over time.

Nature-related dependencies and impacts by sector, with materiality ratings and exposure to risk for investor assets under management. Source: TNFD (2023).

Accounting must be grounded in critical thresholds. The Earth Fee is an “entry-level” approach, developing a primitive for associating business activities with nature loss at the broadest level. Over time, stronger sustainability accounting methods should be developed based on ecological economics, which rejects substitution for natural capital with potentially irreplaceable functions of ecosystems. The paper holds that the field's core failure is not imprecise quantification but the absence of scientifically grounded critical thresholds and benchmark targets. Seven of nine Planetary Boundaries are now transgressed, and 60% of global land has crossed local thresholds of functional biosphere integrity. How are these to be understood in the context of the EU’s Corporate Sustainability Reporting Directive and other transparency directives?

No method currently exists to do this. SBTN draws on the Earth Commission's Safe and Just Earth System Boundaries and supplies very useful target setting methods along with recommended metrics, but not the scientific basis for correlating those metrics to Planetary Boundary thresholds. Its own pilot confirmed that companies would not be able to accomplish this task without significant specialist support. TNFD structures assessment, SBTN provides a framework for targets, and NCP prescribes a valuation process, but none translates global boundary science into an enterprise's proportional share of a regional or global threshold. The three frameworks were developed independently and were never designed as an integrated sequence. Frameworks such as r3.0's Global Thresholds and Allocations Commons (GTAC), State of Nature metrics (SON), and others are maturing, but currently strong sustainability accounting remains an unresolved frontier even at the most comprehensive level of implementation.

A three-level pathway

The paper organizes CNCA as a practical progression rather than an all-or-nothing commitment:

Level 1: Rapid allocation scaled to the problem. A GDP-proportional Earth Fee generating each corporation's average fair share of global nature loss as an indicative liability, enabling immediate mitigation allocation.
Level 2: Focused accountability on critical thresholds. Sector-based supply chain risk analysis, ecosystem condition assessment, and Daly/Natural Step threshold evaluation, used to calibrate the Earth Fee to the enterprise's actual dependencies and impacts and to close the most urgent gaps first. This is where the gap left by TNFD, SBTN, and NCP is most addressable.
Level 3: Completeness when capacity allows. Full TNFD-SBTN-NCP integration as aspirational best practice, most defensible once Level 2 gap analysis is complete.

Across all three levels the purpose is constant: to determine how much profit is possible without increasing risk to critical natural capital, how much to allocate to correcting the imbalance, and where to prioritize that allocation for the most urgent change.

Why the language matters

The paper focuses on CNCA. While Internal Nature Pricing is a compelling idea, it has associations with legacy carbon market solutions, which were often relied upon in lieu of direct action within a company’s own supply chain. Nature's value spans ecological, social, and cultural dimensions that markets cannot price. Valuation estimates help to inform decisions; price reflects only what a market will bear. Because non-use, regulatory, and life-support functions are routinely omitted and irreplaceable functions approach infinite value once thresholds are crossed, valuation will always exceed price until nature loss is resolved. Credible CNCA also depends on the discipline not to price everything: some critical natural assets are society's non-substitutable life-support system and must be declared off-limits to pricing, sale, or commodification.

Next frontiers

The paper identifies critical threshold analysis and scarcity dynamics as the central unresolved gap of the field, not one priority among many. There is a significant role that philanthropy could play in helping to align TNFD, SBTN, and NCP into a cohesive end-to-end pathway for corporate accounting, building upon the recent launch of the Semantic Commons for Climate, Nature, and Economy (CNE). To move the space forward several things are needed:

Machine-readable semantic standard for natural capital data
Maturation of ecosystem condition indicators, including explicit reference-condition disclosure and coverage of intensively managed land
Scope 1/2/3 boundaries for measuring nature reliance
Context-based, fair-share allocation that foregrounds intergenerational equity

The paper concludes by recommending corporates to begin now by piloting CNCA at Level 1, embedding an Earth Fee as a budget allocation signal while building internal literacy and data infrastructure, then align with TNFD, CSRD, and GRI disclosure frameworks. The trajectory of CNCA will determine whether corporate practice aligns with planetary and societal boundaries, or continues to treat the foundation of all economic value as a free input whose depletion carries no consequence.

Download the full white paper > https://zenodo.org/records/22692754