As nature emerges as an asset class, leading experts highlight the broadening – and perhaps unexpected – opportunities for institutional investors.
While consensus holds that the nature-positive investment case is less clear than for net zero, opportunities for asset owners are emerging across their portfolios.
The market for dedicated vehicles for investing in nature restoration is nascent, and may never be a major part of the landscape. But initiatives launched at COP30, including the Tropical Forests Forever Facility, are paving the way, while other announcements at the ‘COP in the forest’ are shedding more light on the interplay between impact and returns.
As policy and regulatory frameworks evolve, there are already opportunities across asset classes, both in terms of identifying early movers in existing holdings, and expanding into less familiar territories, such as nature markets.
Many investors are already focused on the upsides arising from transformation of global food systems. Direct investment in sustainable farmland and forestry has already seen substantial inflows, as have the private markets vehicles targeting the innovations and technologies that will shift food production away from its resource-intensive and polluting past.
But these exciting new opportunities should not blind investors to the role of public equities and bonds, including the outperformance potential of issuers that already recognise the long-term value from a rebalanced approach to natural capital. As outlined below, these extend way beyond the food value chain – to sectors ranging from property and pharmaceuticals to mining and materials.
The scope for differentiated returns does not stop there. Blue bonds are just one of many burgeoning channels for institutional investment in the sustainable ocean economy, for example. Many believe that the momentum behind biodiversity credits – represented by consensus on standards, measurements and policy frameworks – could see this pioneering sector become the next generation of nature markets
In this second of Sustainable Investor’s biodiversity-themed Q&As, leading experts scrutinise all these opportunities for asset owners to support the restoration, protection and sustainable use of natural ecosystems – through the activities and strategies of investee companies, the offerings of investment intermediaries, or government policies.
Q1: What are the key investment opportunities arising from the shift to sustainable agriculture and forestry practices and agrifood system transformation?
Robert-Alexandre Poujade, Biodiversity Lead, BNP Paribas Asset Management (BNPP AM:
“Natural capital is emerging as a compelling component of asset allocation strategies, providing both financial and environmental benefits. Forestry, for example, offers not only appealing investment returns and inflation protection, but also carbon capture and conservation, as well as biodiversity preservation and water management, providing a critical global climate regulation service. As an investment market, natural capital is still at a nascent stage. Nonetheless, it is evolving rapidly, encouraged by initiatives from the UN and other supranational agencies, and is expected to be accompanied by the continued development of associated investment and growing client awareness.
“As well as investments in sustainable forestry and private assets, there is a need to find tailor-made solutions for clients who adopt a passive approach, for example reducing the biodiversity footprint of a passively managed large-cap global equity portfolio without significantly affecting its tracking error.”
Georgina Thomas, Head of Impact, Cibus Capital:
“Investment opportunities are three-fold. The first lies in the shift from extractive, low-efficiency models toward practices that prioritise resource optimisation, climate resilience and long-term value creation. Integrating sustainability is no longer a reputational choice for asset owners; it’s driving cost reductions, yield stability and stronger market positioning with buyers. For investors, particularly those in private equity who have historically viewed agriculture as high-risk and low-yield, this represents a structural revaluation. Engage now to shape resilient business models and capture upside as the cost of inaction, climate exposure, volatility in input prices and stranded assets intensifies.
“The second opportunity arises from the ecosystem of companies enabling this transition from agtech and data platforms to input innovation, robotics, food and input alternatives, soil and water monitoring, waste processing and regenerative finance services. These firms are the infrastructure of transformation, providing the tools, technology and analytics that make sustainability measurable and investable.
“A third opportunity comes from the monetisation of ecosystem services. Carbon and biodiversity credit markets, particularly those backed by regulatory frameworks, are creating financial pathways for climate-positive land use. For investors, these markets can generate additional revenue streams, de-risk sustainability improvements and strengthen the economic case for regenerative practices.
“The most credible returns will come from integrated models, where emissions reduction and natural capital enhancement are embedded in core operations rather than sold as offsets; for example, diversified farming systems that combine multiple crops, rotations and on-farm carbon or biodiversity projects within a single enterprise. “The most successful investors will recognise that sustainable agriculture is a commercial imperative that rewards those able to combine patient capital, operational expertise and a long-term view of value creation.”
Dr. Henning Stein, Finance Fellow, Cambridge Judge Business School:
“Restoring nature can be a source of income and capital appreciation, not just a cost. While a large share of climate opportunities depend on long-dated technologies, subsidy regimes or the repricing of externalities, nature-positive investments in agriculture and forestry have immediate and measurable real-economy effects. Healthier soils, improved water dynamics and more resilient landscapes translate directly into yield stability, lower input reliance and stronger long-term valuations, creating a tangible and cash flow-linked investment case.
“But we are now seeing how political pressure shapes agricultural and land use policy. In the EU, adoption of the Nature Restoration Law sits alongside efforts to relax environmental requirements and simplify CAP conditionality. In the US, shifts in climate-smart agriculture funding and the polarised Farm Bill negotiations highlight how unstable policy support can become. The UK is advancing a Nature Markets Framework to crowd in private finance, while concerns have emerged about access constraints in parts of the farming and nature budget. China is developing pilot zones that link finance to measurable ecological outcomes, including in land use. These tensions should not discourage investors, but rather highlight the need to focus on the areas where nature restoration has clear, near-term economic benefits.
“From an asset class perspective, key opportunities arise in real assets (including direct investment on farmland and timberland), private equity (accelerating transition via growth and buyout strategies) and agtech (both through venture and listed equities). All of this depends on high-integrity data. The transition in agriculture and forestry cannot progress without robust baselines, field-level ecological metrics and monitoring systems. A strong evidence base is essential for separating credible transition plans from attractive narratives, while policy and governance determine how quickly these opportunities scale.”
Sajeev Mohankumar, Senior Technical Specialist, Climate and Nature, FAIRR Initiative:
“Shifting away from intensive agricultural production can be the next big opportunity, where profit and planet can grow together. A mix of approaches can yield both financial and environmental benefits.
“Innovations like precision agriculture, biotech, and meat alternatives are high-growth areas that can dramatically shrink environmental footprints. Pros: Strong upside potential, scalability, and direct sustainability impacts (less land, chemicals, emissions). Cons: Not all tech will succeed commercially or achieve large-scale adoption. Some alternative protein solutions may face consumer acceptance hurdles or regulatory uncertainty.
“Many listed global food producers, manufacturers and retailers are expanding sustainable product lines and sourcing, recognising the risks of relying on factory-farmed inputs. Pros: Investors can influence large players through stewardship, and winners may capture market share as preferences shift. Listed equities offer liquidity and scale. Cons: Incumbents often have legacy environmental liabilities. Progress can be slow, and there’s greenwashing risk. Stock performance depends on broader market factors, so returns aren’t guaranteed. Selecting truly committed leaders is key.
“Direct investment in agricultural land allows investors to drive sustainable management on the ground. For example, acquiring farmland and transitioning it to regenerative practices can boost productivity and soil carbon over time. Several studies show that regenerative farms eventually earned higher profits than conventional peers.”
Q2: In what other sectors with exposure to biodiversity loss are the clearest investment opportunities for asset owners?
Amanda O’Toole, Lead Portfolio Manager – Clean Economy and Biodiversity Strategies, Redwheel:
“Materials innovation and low-impact critical mineral production for the energy transition, sustainable urban solutions (green infrastructure, permeable surfaces), and pollution control/monitoring across soil, water, and air all feature strong demand and regulatory tailwinds. Many of these solutions address the challenges of the climate-nature nexus, by supporting climate mitigation efforts whilst protecting biodiversity and, in some cases, facilitating climate adaptation.”
Julien Moussavi, Head of Sustainable Fixed Income Product, FTSE Russell:
“Real estate offers potential through green infrastructure and biodiversity-friendly urban planning, with significant investment opportunities in fixed income instruments. The pharmaceutical sector can benefit from biodiversity-based R&D for new compounds, while mining companies can pursue circular economy initiatives and biodiversity offset programmes.”
Laina Draegar, Director of Global Equities at Los Angeles Capital Management:
“Some of the most transparent investment opportunities are in sectors with material biodiversity risks in which there’s a range of technologies available to sector participants, including nature-positive technologies. Nature-based solutions (NbS) include resource management software and hardware, regenerative and advanced agriculture technologies, waste management solutions, and sustainable alternatives to legacy technologies in food, agriculture, pharmaceuticals, real estate, and mining sectors. NbS tend to be lighter in capex and asset reliance, meaning they can be deployed more readily than asset-heavy climate solution technologies, such as carbon capture. Another distinction is that these industries have a history of working with natural resources and incorporating environmental considerations into their operations. This means firms in the mining sector instinctively consider water management solutions when making operational business improvements.”
Carlota Garcia-Manas, Head of Climate Transition & ESG Engagement, Royal London Asset Management (RLAM):
“Our investment teams are finding interesting opportunities in sectors like industrials and utilities, where we can identify companies which are promoting the sustainable use of natural capital inputs, and therefore help to reduce negative impacts on biodiversity. For instance, industrial companies which promote the development of the circular economy and therefore reduce the usage of natural capital dependencies. We also find compelling opportunities in the materials sector with companies which are promoting responsible forestry practices.”
Q3: How do nature-based solutions such as biodiversity credits need to evolve in order to increase investment in nature stewardship and ecosystem protection?
Peter Walker, Nature Programme Manager, Investor Strategies, IIGCC:
“Where nature-based solutions are used in tandem with nature and credit markets, it is essential that the underlying frameworks and regulations are grounded in robust scientific evidence. Human rights concerns, geographic displacement of risk, and leakage of activities to other areas are issues that have arisen with poor consideration of the practical effect of nature credits. Substantial research already exists and it is imperative these frameworks are aligned to it to ensure intended conservation outcomes are delivered. Without this rigour, there is a real risk of falling short on conservation targets, eroding investor confidence in these instruments, and ultimately contributing to further nature loss.”
Christian O’Dwyer, Head of Nature Solutions, Bloomberg:
“Standardisation and integration with credible verification (e.g., satellite imagery, geospatial baselines) is required for investors to use biodiversity credits. Overcoming the fragmented status of voluntary nature markets is essential. Governance and integrity will need to exceed those of carbon credits to avoid controversies related to underperformance.”
Erika Korosi, Senior Director, Nature Markets, Conservation International:
“Biodiversity or nature credits are emerging as an important mechanism to channel private capital into ecosystem restoration, conservation and stewardship. For asset managers, these markets present an opportunity to mitigate nature and climate-related risks, share the costs of action with others, and manage investment risk through robust means of safeguarding, measurement and verification – all while contributing to national and regional climate and nature goals. With strong governance, the market could scale rapidly, with estimates projecting up to US$69 billion by 2050, unlocking billions for protecting the ecosystems that underpin our economies and communities.
“Principles to guide the market from the Biodiversity Credit Alliance, the International Advisory Panel on Biodiversity Credits and the World Economic Forum are setting the guardrails for high-integrity markets, while governments, including the EU, Peru, Indonesia, Chile and Australia, are driving efforts toward market realisation. Indigenous Peoples and local communities are also seeking to be active market shapers. The International Environmental Guardianship, a member-based alliance of Indigenous, Local and Afro-descendant communities is working to build trust and elevate communities in emerging nature markets.
“Biodiversity credits can become the next generation of nature markets. Investors should lean in, help shape these markets and recognise nature as an essential asset for long-term economic prosperity and portfolio resilience.”
Ruth Murray, Investment Director, Sustainable Infrastructure, Gresham House:
“The success of England’s statutory Biodiversity Net Gain (BNG) market offers a useful blueprint due to three interlinked features. First, consensus on metrics, and monitoring, reporting, and verification (MRV). The UK’s BNG legislation applies a single BNG metric, which is closer to a calculation methodology, that effectively puts a value on nature, providing the market with a level playing field. Furthermore, Environment Bank’s voluntary products use the government-backed BNG metric as a baseline with layers of additional MRV tools for features such as species abundance, soil carbon, flood mitigation to mention a few.
“Second, market demand. An ‘investable’ product typically delivers financial returns, but biodiversity credits generate value because another party purchases the ecological outcome — not for traditional profit. Nature-based solutions (NbS) can offer the potential for traditional return, but to grow demand biodiversity credits must link clearly to business priorities such as supply chain resilience, regulatory compliance, reputation, or stakeholder pressure so that the value of the biodiversity outcomes are properly quantified. We are beginning to see this shift.
“Lastly, policy and regulatory frameworks. Standards and frameworks underpin both metric consensus and market demand. Wider adoption — and eventual mandatory application — will accelerate action. This evolution is already underway so there is no barrier for those who want to start taking positive action now.”
Q4: What are the main options for asset owners looking for investments that support the development of a sustainable ocean economy?
Ellen O’Doherty, Impact Analyst, Fixed Income, T Rowe Price:
“Asset owners seeking investments that support the development of a sustainable ocean economy have several emerging options, with the ‘blue economy’ gaining traction as a thematic focus. One notable instrument is blue bonds, which finance projects that deliver positive outcomes for marine ecosystems and water quality. For example, Aegea’s US$750 million blue bond issuance is directed toward improving water and wastewater infrastructure in Brazil, with the goal of reducing pollution and enhancing biodiversity in areas such as Guanabara Bay.”
Sophie Lawrence, Stewardship and Engagement Lead, Rathbone Greenbank:
“Responsible investors can play a key role in supporting the blue economy by avoiding harmful financing, engaging with investees to support the mitigation of negative impact and identification of positive behaviours, and investing in blue economy solutions.
“Investors can focus on revenue-generating solutions where scalability is commercially viable. Traceability technology for sustainable fisheries and aquaculture, marine renewable energy developments, and sustainable port infrastructure are all examples of commercial solutions providing environmental benefits and financial returns. Scaling-up data gathering technologies like satellite monitoring and AI-led ocean data analysis supports improved risk management and impact tracking.
“Opportunities spearheaded by sovereigns or multilateral development banks can help to de-risk nascent sustainable ocean ventures and improve transparency. Investors can also mobilise their voting power to support policies that protect marine biodiversity, including enforcement of sustainable fishing, or the banning of harmful subsidies.”
Gayaneh Shahbazian, Engagement Manager, Biodiversity and Stewardship, Morningstar Sustainalytics:
“Global momentum, from the UN Ocean Conference to the High Seas Treaty, has brought the marine ecosystem into sharper focus. For asset owners, this creates both responsibility and opportunity. Key actions include excluding harmful activities such as deep-sea mining, setting clear expectations for companies operating in ocean-linked sectors, and channeling capital through credible instruments such as blue bonds and sustainability-linked loans. These steps align portfolios with ocean stewardship while tapping into a market that is gaining traction.”
Jessica Smith, Nature Lead, United Nations Environment Programme – Finance Initiative (UNEP FI):
“Asset owners can support ocean health through blue bonds financing coastal ecosystem restoration, sustainable aquaculture ventures that reduce pressure on wild stocks, and shipping decarbonisation technologies. UNEP FI’s Sustainable Blue Economy Finance Initiative, with over 80 member institutions, has identified emerging opportunities including seaweed cultivation for carbon sequestration and biomaterials, small-scale fisheries improvement linked to secure tenure rights, and marine protected area financing mechanisms.
“We also see particularly positive movement in the blue bond market, which has grown significantly, rising to about US$7.2 billion by July 2024. UNEP FI previously co-authored Blue Bond Guidelines that have raised the integrity of this market.”
Q5: Noting Brazil’s promotion of its bioeconomy concept at COP30, what policy shifts would be most catalytic to nature positive-investment flows?
Ruth Murray, Gresham House:
“Brazil’s Bioeconomy Challenge is to be applauded in creating another global call to action. Reassuringly, the fundamentals behind the concept are nothing new, demonstrating the growing global consensus on the characteristics of a high-integrity nature product. These include acceptance that nature is place based, dependencies and impacts must be assessed before targets are set, the mitigation hierarchy should be honoured, stakeholder rights should be respected and social benefits ensured, and that products must have quality data monitoring and independent verification.
“Helpfully, the concept highlights the need for policy to do more to drive demand. This includes creating more mandatory drivers for action, whether through creation of compliance markets, like BNG in England, or tax reliefs and subsidies to drive action, as we have seen successfully deployed to support the net zero transition. As nature is location specific, national efforts to develop scalable investable projects can address common investor and buyer concerns over nature-based products. The ‘localness’ of nature also means that governments can focus on policies that benefit their own countries without the level of dependencies involved in carbon reduction policies.”
Anita de Horde, Executive Director, Finance for Biodiversity (FfB) Foundation:
“We advocate for a comprehensive ‘whole-of-government’ strategy, urging governmental bodies, regulators, central banks, and financial supervisors to mobilise voluntary action and commitments from the private sector.
“By fostering innovation, aligning incentives, and setting clear boundaries, governments can steer sectoral pathways towards reducing negative impacts, increasing positive impacts, and catalysing private finance at scale to bridge the current biodiversity finance gap.
“In doing so, policymakers can provide long-term clarity and directly support the mobilisation of the private sector to mobilise financial flows towards the sustainable use, conservation, and protection of biodiversity.
“Similarly, by setting ambitious national targets and delivering on their commitments, both for climate through their nationally determined Contributions and biodiversity through their national biodiversity strategies and action plans, policymakers increase coordination and build confidence for all stakeholders.”
Arif Saad, Head of Natural Capital – Farmland Solutions, Van Lanschot Kempen Investment Management:
“Restoring confidence in voluntary carbon markets may be the single most catalytic policy shift for unlocking nature-positive investment flows. Today, fragmented standards and credibility concerns have eroded trust, constraining capital for climate and biodiversity solutions. A unified global framework, anchored in rigorous measurement, reporting, and verification, would transform carbon credits into a credible asset capable of generating returns for investors.
“The Australian Carbon Credit Unit system illustrates the importance of integrity and trust. Robust governance and independent auditing underpin prices of US$22–25/tCO₂e, compared with US$4–6 for many voluntary credits, proving that investors will pay for quality. For farmland investors, this means soil carbon sequestration and biodiversity gains can be monetised, turning sustainability outcomes into bankable assets. Coupled with Brazil’s bioeconomy push, harmonised standards would accelerate investment flows into regenerative agriculture, ecosystem services, and nature-based solutions – shifting finance from extractive to regenerative models.”
Q6 How best can asset owners use their influence as bondholders to encourage faster policy action on the underlying drivers of biodiversity loss?
Anita de Horde, FfB Foundation:
“Worth around US$100 trillion, sovereign debt markets are the largest global asset class. But they rarely factor nature into debt assessments, even though healthy ecosystems underpin more than half of global GDP. The FfB recently released a decision-useful assessment model and practical guidance to bring nature-related risks and opportunities into the core of sovereign debt analysis, pricing, and policy engagement.
Sovereign issuers are responsive to the needs of investors. Engaging issuers on key concerns around nature loss and highlighting necessary policy improvements can help focus efforts on strengthening the long-term prospects of a country’s economy. Incorporating nature considerations into investment decisions can promote more responsible fiscal and environmental planning, and resource mobilisation.
To complement the assessment model, the FfB’s Public Policy Advocacy Working Group will launch a policy engagement initiative to help sovereign debt investors engage with policymakers on nature. This will provide members with direct engagement opportunities with policymakers to share the private finance sector perspective on the implementation of the Global Biodiversity Framework.”
Carlota Garcia-Manas, RLAM:
“Engaging with issuers as creditors rather than owners, our credit team focuses its engagement activities on sectors most reliant on debt financing, ensuring engagements have high impact and are truly additive to portfolio decision making. Examples related to biodiversity include our long-standing engagement with the water sector, which has included a focus on biodiversity, as well as our engagement on biodiversity net gain with the property sector.”
Jessica Smith, Nature Lead, UNEP FI:
“Engagement with sovereigns should focus on policy coherence – ensuring trade, agricultural and infrastructure policies align with climate and biodiversity commitments rather than undermining them. Bondholder coalitions could condition lending to governments on meaningful progress addressing drivers like harmful agricultural expansion, unsustainable fisheries, and infrastructure development fragmenting critical habitats, while supporting just transitions for affected communities. UNEP FI is working with Oxford University with funding from the European Space Agency on KPIs for sovereign bonds, which can reward nature performance on a much larger scale with much lower measurement, reporting, and verification costs. This should be more of a mainstream approach in future.”
Robert-Alexandre Poujade, Biodiversity Lead, BNPP AM:
“Bondholders can engage directly with countries, especially via collaborative sovereign engagement. These initiatives are designed to complement engagement on specific sovereign issuances to create national or regional policy environments on a range of sustainability issues. This is critical not only to set countries on a path to sustainable and equitable economies, but also to create an enabling environment in which companies operate. As part of the Investor Policy Dialogue on Deforestation, we continued engaging with Brazil and Indonesia this year, joining its consumer countries working group.”
