Why we include social outcomes in natural capital accounting

What is natural capital?

Natural capital has traditionally been defined in purely biophysical terms excluding environmental services: “the stock of natural assets including geology, soil, water, land, air, and all living things.” This definition captures the foundation of ecosystems, the building blocks of life and the environment. But it misses a critical point: from an anthropocentric view, natural capital isn’t just about assets in the ground or in the air, it’s about the values and outcomes those assets create for society.

That’s why Truii uses a broader definition to embrace the ecosystem services provided by natural capital:

“Natural capital is the stock of natural assets including soil, water, land, air and all living things from which we derive environmental, economic, social and cultural value.”

This distinction isn’t just semantics, it changes how we measure, manage and invest in natural systems.

Why go beyond the biophysical?

1. 1. Ecosystem services are experienced by humans
      Clean water, fertile soils, and healthy biodiversity underpin not just environmental health but also economic productivity, community wellbeing, and cultural identity.
   2. Investment into nature often requires multiple outcomes expressed in terms of services
      A restoration project that improves water quality may also:
      • Create local jobs (economic outcome)
      • Strengthen community resilience (social outcome)
      • Protect Indigenous cultural sites (cultural outcome)

      If we only report the biophysical (water quality), we undervalue the project’s true benefits to society.

   3. Social outcomes drive adoption
      Landholders and communities are more likely to engage with natural capital projects if they see benefits for their livelihoods, culture, and wellbeing, not just for more abstract environmental benefits.
   4. NRM organisations already understand this
      Across Australia, NRM organisations routinely embed economic, social, and cultural outcomes in their strategic planning. Their priorities extend beyond protecting biophysical assets to maximising the broader values that ecosystems deliver to communities. Truii’s adoption of economic, social and cultural ecosystem services as part of the accounting in the Natural Capital Suite series of web apps reflects what NRM organisations have long recognised.
   5. Markets and reporting frameworks demand it
      Emerging standards—including ESG frameworks, the Taskforce on Nature-related Financial Disclosures (TNFD), the Global Biodiversity Framework (GBF), Sustainable Development Goals (SDGs), and the Australian Agricultural Sustainability Framework (AASF), all recognise that nature is interlinked with people and economies. They all require reporting against economic, social and cultural outcomes.

      For natural capital to be investible, it must capture this full spectrum of value. Investors and regulators increasingly require reporting across environmental, economic, social and cultural outcomes.

   Natural capital as a system of value

   By incorporating economic, social, and cultural outcomes alongside environmental measures, natural capital accounting becomes more than a ledger of natural assets. It becomes a system of value that reflects the lived reality of landscapes and the communities connected to them.

   This matters because:

   • Communities gain recognition for their stewardship and connection to Country.
   • Investors gain confidence that their funds deliver broad, enduring benefits.
   • Decision-makers can balance trade-offs across multiple outcomes, not just biophysical metrics.

   Investors are empowered to direct capital toward outcomes that reflect their broader environmental, social, and cultural priorities, not just isolated indicators like water quality.

   A note on autocorrelation

   We spent considerable time debating whether including economic, social and cultural outcomes as part of a natural capital account risks double counting because these ecosystem services depend on biophysical indicators.

   Our conclusion, the biophysical indicators are a pre-condition for the ecosystem services, but they do not automatically deliver economic, social and cultural benefits without deliberate design.

   These benefits often require active consideration in nature repair program design. For example:

   • A project that improves biodiversity may not create local employment unless local jobs are built into the project.
   • Connection to Country isn’t maximised unless First Nations people are actively involved in program design and delivery.

   Humans perceive natural capital as more than the soil beneath our feet or the trees on the horizon. It is the collective environmental, economic, social, and cultural value we derive from those assets that matters for presenting a business case for nature investment.

   “Natural capital is the stock of natural assets including soil, water, land, air and all living things from which we derive environmental, economic, social and cultural value.”