Companies that will succeed in the long-term are integrating natural and social capital into their business model now. Natural capital, the resources and critical support services nature provides, underpins our entire global economy. Yet despite its vast social and economic value, the many benefits of natural capital are often assumed to be "free". The future shock for business is the potential for profit to be wiped out as natural capital is internalized through regulation and markets. Freshwater, forests and biodiversity are being consumed at an alarming rate, and critical support systems such as the ability to regulate climate are failing. As these and other sustainability challenges develop, businesses and their investors need to understand their role in maintaining natural capital and their natural capital risks and opportunities. The language of finance provides a useful approach for communicating trade-offs and prioritizing sustainability at CFO, CEO and board level: companies who "future-proof" now will position themselves to thrive in a resource-constrained world. They will mitigate risk, secure their resource supplies, create long-term value and enhance their resilience, reputation and competitive advantage. This book provides a succinct introduction to natural capital: what natural capital is and how it links to other capitals; the business case for using it in decision-making; where natural capital accounting and valuation fit in the sustainability and financial toolbox; and what real life early adopters of natural capital in business are doing. Views from natural capital leaders across business, finance, accounting, government, research and NGO communities illustrate the theory with practice. Included: Quotes and case examples from CFOs, CEOs and Heads of Sustainability in early adopter businesses (Kingfisher Group, Dow Chemical Company, The Crown Estate, Patagonia®, United Utilities and Marks & Spencer) and financial institutions (Inter-American Development Bank, Citi Group and Credit Suisse). Dorothy Maxwell Valuing Natural Capital Future Proofing Business and Finance By Dorothy Maxwell Do Sustainability Copyright © 2015 Dorothy Maxwell All rights reserved. ISBN: 978-1-910174-44-9 Contents Abstract, About the Author, Acknowledgments, Foreword: Sir Ian Cheshire, former Group CEO, Kingfisher plc, Who Is This Book For?, 1 Business Case, 2 Sustainability Accounting and Valuation, 3 Drivers and Current Context, 4 Challenges, Opportunities and Next Steps, 5 Epilogue, Glossary, Appendix: Further Resources, Notes and References, CHAPTER 1 Business Case Future-proofing against natural capital shocks NATURAL CAPITAL – the critical systems and resources nature provides – underpins the successful functioning of our economy, businesses and societal wellbeing. However, much of this capital, for example, freshwater, forests and biodiversity are being depleted at an alarming rate and critical support systems such as the ability to regulate climate and flood defences are failing. The social and economic value of natural capital is vast, yet it is not adequately captured in the market. According to the Chartered Institute of Management Accounting (CIMA) and EY, 'Natural Capital is the Elephant in the Boardroom – it is invisible in the vast majority of corporate decisions, accounts and economic models.' This is one of the causes of its ongoing degradation. As illustrated in Figure 1 , very conservative estimates of economic value provided by nature's services to the global economy are $US50 trillion/year compared to global GDP $US63 trillion/year. In comparison, a relatively small $93 billion is estimated as needed to preserve natural capital (figures are for 2010). This puts the scale in context. Examples of economic values estimated for a selection of nature's services is in Figure 2 . The global cost of environmental damage from business activities such as water pollution, loss of fertile land, soil erosion, drought, overfishing and deforestation is estimated at over $US6 trillion. This is estimated to rise to $US28 trillion by 2050 if 'business as usual' continues. If Mother Nature sent an invoice, estimates for the cost of the top 100 environmental externalities from business to the global economy/annum are over $US4 trillion according to a study from the Natural Capital Coalition . This includes costs from GHG emissions, pollution, land conversion, waste and water use from primary business sectors across world regions. The top 20 sectors with highest costs and regions most impacted are illustrated in Figure 3 . The study estimated that the profits of many high impact sectors would be wiped out if these costs were accounted for. While there are many assumptions and uncertainties built into the calculations of these costs, the important message is the urgent financial rationale for reducing natural capital risk. If these externalities were internalized t