For several decades, natural capital as an asset class has become an increasingly important part of institutional portfolios. This has traditionally included investments in timberland and farmland. Investors in the asset class have come to appreciate and value the wide range of benefits that natural capital can bring to an investment portfolio, which include traditional financial benefits as well as sustainability benefits.
Over the last few years there has been an evolution of the asset class, and a convergence of critical trends are providing opportunities for investors to benefit from diversified investment strategies and exposure to environmental markets while contributing to solutions for addressing climate change and biodiversity loss.
We join Agri Investor to explore the evolution of natural capital and the trends driving increasing investor interest in nature-based solutions.
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Unprecedented global action to address the decline in nature and its causes is underway, and investments in biodiversity will be a critical part of these efforts.
The effects of climate change are a megatrend on a global scale, influencing the expected risk-return profile of real assets investments and the opportunity set for investors.
The benefits that timberland can bring to a portfolio depend critically on the scale of the allocation and investment selection – and these are decisions that can only be made with a clear understanding of the investable universe.
