There is growing recognition of the dependence and impacts of economic activity and productivity on our natural environment, including biodiversity and natural ecosystems.
Natural Capital
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ASFI’s Sustainable Finance Action Plan (2025-27) recognises the importance of natural capital to a resilient and sustainable economy and makes several recommendations that will enable the finance sector to recognise, value and incorporate natural capital into capital allocation decisions and risk analysis.
What is Natural Capital and why is it important?
Natural capital is the stock of the earth’s renewable and non-renewable resources (e.g., including trees, soils, air, water, minerals, and all living things) that combine to yield a flow of benefits or “services” to people (often called ecosystem services).
Natural capital is the living parts of any business operation – ecological assets like air, water, soil, plants, and animals. It represents significant ecological and commercial value that can be accounted for alongside other assets like land size, infrastructure, livestock, or other typically valuable stocks to provide a full picture of business assets.
As a large primary producer and exporter, Australia is dependent on nature. Given the primary sector's market significance, financial institutions who provide capital to support these industries are invested in their ongoing success and resilience. The growing pressure of climate change has led to an increasing focus on natural capital among primary producers and the corporations, banks, insurers and others who support and fund them.
In June 2024, ASFI and Macdoch Foundation’s Farming for the Future initiative released insights from our ‘Valuing Natural Capital’ program of work.
How Financial Institutions are Approaching Nature
Based on interviews with members of our Natural Capital Advisory Group (NCAG), the report highlights:
A growing interest in natural capital, though progress remains slow due to nascent understanding, a lack of clear definitions, evolving standards, and competing sustainability priorities.
The essential role of the entire value chain in driving the adoption of sustainable natural capital management practices.
The importance of Government leadership in enabling investment in natural capital and sustainable land management.
We are applying these insights to support our ongoing efforts to advance the integration of natural capital considerations into decision-making across the finance sector.
ASFI’s Valuing Natural Capital Program
ASFI is proud to be partnering with Macdoch Foundation’s Farming for the Future (FftF) on a program of work to deliver on the Roadmap recommendations by integrating natural capital into decision-making of financial institutions, and enabling tangible on-farm outcomes.
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