Rebalance Earth has outlined four steps for investors to follow to increase investments into nature-positive solutions in its latest white paper.
This comes as research reveals allocating just 2% of the £5trn the UK holds in pension and wealth assets to nature could generate £50-£100bn for nature restoration. Further, the World Economic Forum estimated embracing nature-positive investable solutions to protect biodiversity could create £7.6trn in new business and approximately 400 million new jobs by 2030.
First, the paper suggested investors should revisit and update their investment principles to understand the scale of biodiversity and nature-based risks and opportunities.
Second, investors should speak to consultants and asset managers to understand how biodiversity issues and nature loss impacts investment portfolios, and how they are engaging to manage these impacts.
Third, they should view all investment projects from the perspective of future generations, and fourth, consider investments in nature as a separate asset class.
To achieve these four steps, the paper states that rather than the familiar asset allocation by sector or geography, investors concentrate on themes, such as land pollution and deforestation. The companies in which they invest could be involved in areas such as soil remediation, circular economy materials recovery, or smart renewable energy-powered irrigation systems.
The paper also makes a case for Nature-as-a-Service (NaaS), stating “there is an opportunity for long-term asset owners such as pension funds to invest in landscape-level NbS. This could be focusing on river catchments in high-value urban areas such as Manchester or Glasgow.” In terms of returns, it explains that returns on investment are generated by offering companies facing nature-related risks the opportunity to sign Nature-as-a-Service (NaaS) contracts. These contracts act as long term offtake agreements, ensuring sustained benefits, such as year-round flood risk reduction and improved water quality through natural filtration processes.
It also noted attitudes to a nature-based economy are changing with a “growing appreciation of the concept of double materiality: that companies affect the world, and the world affects companies.”
Further, recent global initiatives and regulatory standards are driving substantial financial flows towards nature-positive outcomes. For example, the Finance for Biodiversity Pledge has secured commitments from global asset managers managing nearly £17trn to protect and restore biodiversity across the world.
The paper also provides case studies where companies have invested in NbS including an example of investing in urban forests, specifically Glasgow’s New Urban Forests, where 18 million trees have been planted to avert £100m of flooding damage. The trees are an integral part of the city’s sewage system, flood defence and air quality regulation, the paper said, which also contribute to improved mental and physical health through creation of green spaces and nature reserves.
Rob Gardner, co-founder of Rebalance Earth, said: “Nature is not just the foundation of our lives; it is the bedrock of a thriving, sustainable economy. It provides the clean air, water, and raw materials that fuel industries across the globe. Every sector’s supply chain and operations depend on the natural world, from agriculture to construction to finance. For instance, by 2050, a water shortage could cost London’s economy £500m per day.
“Rebalance Earth’s latest white paper redefines nature as an investable asset class, underscoring its indispensable role in sustaining global economies. At an estimated £140trn annually, Nature remains critically undervalued in financial systems despite its vital importance in combating climate change and protecting communities. Investing in nature restoration goes beyond preserving biodiversity; it is a strategic move to enhance economic resilience.
“Restoring ecosystems not only mitigates climate risks and reduces flooding but also improves public health, offering a multitude of co-benefits. The imperative is clear: we must rebuild and invest in our natural infrastructure to safeguard the future of our cities, communities and economies.”
