Building Capacity to Advance Ecosystem Valuation and Economic Development


Good management of resources critically depends on our ability to measure and value these resources. Both organizations and capital markets depend on information about the value of those resources in making capital allocation decisions. But in this decision making process we have missed one important resource: nature. According to estimates, $125-$145 trillion is missing from our collective balance sheets. That’s the estimated value of the chemical, biological and physical processes, or “ecosystem services” delivered by Earth to its inhabitants annually.[1] This is by no means trivial as it represents more than 50% of the total assets of all publicly listed companies. Because of that blind spot it is now estimated that the unpriced externalities of business practices in land use, water consumption, GHG emissions, air, land and water pollution, and waste generate costs to society of some $4.7 trillion per year.[2] Lacking the means to measure the value of ecosystem services, corporations and society have treated them as free inputs. It’s easy to see how and why they could be mismanaged.

Indicators that they have been mismanaged are manifold, but few are as alarming as the stunning loss of Earth’s biodiversity and degradation of ecosystems over the past forty years. During that time, global populations of freshwater species have declined by a staggering 81%.[3] On average, populations of vertebrate species have fallen by 58%.[4] Any organization faced with similar balance sheet adjustments would closely reexamine its management and accounting practices. The rate and magnitude at which Earth’s assets are being depleted impair the ability of ecosystems to function properly to such an extent that leading scientists now “question the ability of ecosystems to support human societies."[5] Business cannot succeed in societies that fail.

These stunning numbers carry an important lesson: the environmental costs of private sector business activity are simply too large to counter with investments by philanthropy, development institutions, and even government spending. We cannot expect to slow the decline of ecosystems without involving the private sector in the solution. The importance of private sector in achieving desired environmental outcomes was most visibly recognized recently with the Sustainable Development Goals (SDGs). This is a fundamental departure from their precursors the Millennium Development Goals, in the development of which the private sector was absent.

There is growing dynamism in a movement to internalize environmental externalities in public and private investment decisions and measures of economic performance.  Capital markets are beginning to incorporate information on ecosystems into economic measures and governments are increasingly accounting for natural capital as a vital part of the productive base of their economies. For example:

  • Institutional investors increasingly recognize that environmental factors are material to investment risk and long-term financial value. 
  • Banks and insurance companies are expanding green accounting, investment and risk transfer related to ecosystem assets and risks.
  • Corporations are working within their supply chains to better understand and account for their impacts and dependency on nature.
  • Securities regulators and stocks exchanges increasingly mandate the disclosure of corporate environmental information.
  • Governments and development finance institutions are incorporating ecosystem accounting into measures of economic performance beyond GDP, reforming policies governing financial markets, and deploying public finance to leverage green private sector investment.

The Rockefeller Foundation formally launched Revalue Ecosystems in 2013. The grants in RF’s Revalue Ecosystem portfolio contribute to one or more of the four outcomes of a strategy to advance environmental-aligned investment in public and private markets:  

  • Knowledge and Demand: Build understanding and create demand among private investors, corporations, financial institutions and public agencies for robust measures of ecosystem value
  • Value and Measures: Strengthen and consolidate measures of ecosystem value and their integration into mainstream financial metrics
  • Accounting and Decision-making: Improve accounting, reporting and disclosure, decision-making tools and measures of financial performance to account for ecosystem value, as well as the regulatory environment underpinning their use
  • Environmentally-aligned Investment: Differentiate and scale investments that maintain or increase natural capital and the integrity of natural ecosystems and biodiversity

The grantees serve different functions and operate in different segments of the value chain. The Exhibit below provides a visual on how the different grantees fit into the landscape.


The Natural Capital Project, deeply grounded in its academic roots of Stanford University and University of Minnesota, uses rigorous environmental science to create practical tools for private sector, public sector, and investment organizations to make better decisions. Both the Natural Capital Coalition and the Sustainability Accounting Standards Board focus on the role of accounting for natural capital in organizations. While the Natural Capital Coalition concentrates on enabling leaders of companies to measure natural capital and integrate these measurements in their operating and strategic decision making, the Sustainability Accounting Standards Board (SASB) focuses on developing industry-specific standards for reliable and comparable disclosure to investors of the financially material environmental, social and governance metrics, to meet investor demand for such information.

Through its grant, and as a subset of its larger mission, the Principles for Responsible Investment (PRI) is working to empower mediators of the capital market flows from investors to public and private sector organizations – credit rating agencies – to take into account natural capital in credit ratings and to enable broader financing of environmentally-aligned investing.

Grants to CERES and Climate Bonds Initiative help mobilize investors on climate and water, empowering allocation of capital and improving its alignment with environmental development. CERES is working with equity and fixed income investors to develop a practical tool that enables investors to take into account water risks and opportunities in making decisions. The Climate Bonds Initiative is developing The Climate Bonds Standard and Certification Scheme, which is designed as an easy-to-use tool for investors that assists them in prioritizing investments that truly contribute to addressing climate change.

None of these organizations alone can solve the problems The Foundation seeks to address through Revalue Ecosystems, but their collective work is forming new systems and infrastructure needed – by corporations and the societies they serve – to evolve and even thrive in a world of finite resources, strained by global megatrends.

The market is ready for their solutions. Millennials expect corporations to be better stewards of natural and social capital than have previous generations; they make purchasing and employment decisions accordingly. Investors want to know more about how corporates are handling resource-related and environmental challenges; they now see how better management of these issues reduces risk that can affect long-term value.[1] Savvy corporate leaders are already seeing the win-wins of investing in natural capital to secure key inputs while preserving ecosystems[2] and capital markets are eager to finance green solutions.[3]

The potential to internalize environmental externalities and restore the ability of Earth’s ecosystems to support us is inherent in the markets. The Rockefeller Foundation Revalue Ecosystems grantees are developing better tools for measuring, harnessing, accounting for and investing in natural capital. We look forward to sharing their success stories with you over the coming months.



Sakis Kotsantonis, Managing Partner, KKS Advisors

Katie Schmitz Eulitt, Strategic Advisor, Stakeholder Outreach, SASB

George Serafeim, Professor, Harvard Business School and Senior Partner, KKS Advisors



[1] PwC, Investors, Corporates, and ESG: Bridging the Gap, October, 2016, p. 7.

[2] See, among others, the Natural Capital Coalition’s Natural Capital Hub, Case Studies:

[3] Climate Bonds Initiative:

[1] Robert Costanza, Rudolf de Groot, Paul Sutton, Sander van der Ploeg, Sharolyn J. Anderson, Ida Kubiszewski, Stephen Farber, R. Kerry Turner, Changes in the global value of ecosystem services, Global Environmental Change, Volume 26, May 2014, Pages 152-158, ISSN 0959-3780,

[2] Trucost, P. L. C. (2013). Natural Capital at Risk: The Top 100 Externalities of BusinessTEEB, Geneva.

[3] WWF. 2016. Living Planet Report 2016. Risk and resilience in a new era. WWF International, Gland, Switzerland, p.12 and 30.

[4] Ibid, p. 12.

[5] Tim Newbold, Lawrence N. Hudson, Andrew P. Arnell, Sara Contu, Adriana de Palma, Simon Ferrier, Samantha L. Hill, Andrew J. Hoskins, Igor Lysenko, Helen R. P. Phillips, Victoria J. Burton, Charlotte W. T. Chng, Susan Emerson, Di Gao, Gwilym Pask-Hale, Jon Hutton, Martin Jung, Katia Sanchez-Ortiz, Benno I. Simmons, Sarah Whitmee, Hanbin Zhang, Jörn P. W. Scharlmann, Andy Purvis, Has land use pushed terrestrial biodiversity beyond the planetary boundary? A global assessment SCIENCE 15 JUL 2016: 288-291