TOOLS
Login to access your documents and resources.
Summary
As COP30—the 30th annual UN international summit on climate change—came to a close in the Amazon city of Belém, this year’s discussions highlighted the world’s steadfast commitment to meaningful, coordinated climate action as well as the need for pragmatic compromise to maintain forward momentum. In the week leading up to high-level policy meetings in Belém, stakeholders across the private sector came together in São Paulo to advance climate-aligned investing, share insights and make connections across business sectors and geographies. Private capital remains a critical part of national plans to decarbonize economies, manage and mitigate climate risks to vulnerable populations, and transition to more sustainable land management practices.
Gwen Busby, Head of Research and Strategy at Nuveen Natural Capital, and colleagues from Nuveen, participated in a range of events on the ground in Brazil. They observed several emerging themes from the pre-COP30 meetings in São Paulo and events in Belém. Here are three main takeaways for natural capital investors.
Key Takeaways
- Nature-based solutions (NBS) investments are investor-ready
Showcased throughout the events were examples of NBS investments and investment opportunities, spanning forestry to food systems, all designed with the intention to deliver climate benefits alongside financial returns. Notably, achieving investors’ risk-return expectations often requires a mix of sustainable production of food, fiber and timber alongside revenue from quantifiable ecosystem service benefits, like carbon credit sales. In both emerging market and developed market countries, there are a growing number of examples of blending sustainable production systems with targeted carbon and conservation outcomes, and in certain cases, blended finance. The most successful examples pair experienced investment management teams working closely and in alignment with on-the-ground operational teams. - Carbon markets are enabling NBS investment, mobilizing private capital
Revenue from carbon credit sales is helping to finance the restoration of vast areas in Brazil, protection of forests from development in the U.S., and improved management of croplands in Europe. These are just a few examples of how carbon markets are unlocking NBS investment opportunities. MSCI highlighted the growing scale of the voluntary carbon market—worldwide, there are 3,100 registered NBS carbon projects (REDD+ and nature restoration) and a pipeline of 2,700+ projects. Established carbon crediting standards and mechanisms for monitoring, reporting and independent verification are more rigorous today than ever before giving quality assurances to both project owners and buyers and, enabling standardization across project types and geographies previously not possible. - Dual focus on climate action and economic development
Agriculture, forestry, and water are three sectors widely viewed to have great potential for jointly delivering both development and climate benefits. At the same time, NBS investments that create jobs and support local communities may produce long-term land-management practice changes and more durable climate benefits in turn. Both NBS investments and national climate action plans (NDCs) increasingly reflect this dual focus on economic development and climate, recognizing the risks of a myopic focus on climate in isolation.
Looking ahead: Opportunities for private capital continue to expand and mature
NBS investments and investment opportunities, designed to deliver quantifiable climate benefits alongside positive financial returns, are more numerous today than ever before. Many NBS investments include a meaningful component of sustainable food, fiber, and/or timber production, creating the future possibility of transformational, landscape-scale investment opportunities across managed timberland and farmland. Undoubtedly, carbon markets' growth and development have been, and continue to be, a critical part of advancing climate-aligned investing. Altogether, we expect credible pathways for private investment in climate action will only continue to grow in scale and expand across strategies.
Related articles
Explore U.S. ecosystem restoration markets that could offer financial returns alongside quantifiable environmental benefits for investors.
We review California’s preliminary estimates and explore what they mean for almond prices in the years ahead.
We evaluate how natural capital may serve three key portfolio objectives during periods of high volatility and significant drawdowns.
The view and opinions expressed in this material are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market, economic or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass.
Risk and other important information
Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the possible loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Certain products and services may not be available to all entities or persons. There is no guarantee that investment objectives will be achieved.
As an asset class, agricultural investments are less developed, more illiquid, and less transparent compared to traditional asset classes. Agricultural investments will be subject to risks generally associated with the ownership of real estate-related assets, including changes in economic conditions, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties.
Timberland investments are illiquid and their value is dependent on many conditions beyond the control of portfolio managers. Estimates of timber yields associated with timber properties may be inaccurate, and unique varieties of plant materials are integral to the success of timber operations; such material may not always be available in sufficient quantity or quality. Governmental laws, rules and regulations may impact the ability of the timber investments to develop plantations in a profitable manner. Investments will be subject to risks generally associated with the ownership of real estate–related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance and risks related to leasing of properties.
Nuveen considers ESG integration to be the consideration of financially material environmental, social and governance (ESG) factors within the investment decision making process. Financial materiality and applicability of ESG factors varies by asset class and investment strategy. ESG factors may be among many factors considered in evaluating an investment decision, and unless otherwise stated in the relevant offering memorandum or prospectus, do not alter the investment guidelines, strategy or objectives. Select investment strategies do not integrate such ESG factors in the investment decision making process.
