July 20, 2023 | less than a minute read

Nature markets; the next paradigm shift for investors

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Laetitia Argar

Director

Get in touch

Laetitia Argar

Director

The UK government’s proposed Big Nature Impact Fund is a great example of the kind of productive collaboration between public sector and private investment needed to deliver nature positive solutions with attendant financial returns. The opening up of new nature markets will be a key element in the transition from a linear, broken, fossil fuels based economy to circular, nature positive economic system. As asset managers increasingly seek to evaluate nature, and the impact of investments on biodiversity, blended finance solutions are likely to proliferate reflecting the breadth of stakeholders vested in addressing the existential challenges of biodiversity loss and climate change. As part of this transition asset managers will need to assess whether they have the requisite science-based skillsets and technicians to develop and scale nature based solutions that will deliver transformational change. This will likely lead to a greater cross-pollination of professionals into the investment industry from sectors outside financial services such as agritech, forestry, science and academia.

Sandy soils in Norfolk, in the south east of England, are not ideal for growing wheat. So, in 2021, four local farmers took up an offer of government funding to adapt the land for conservation. “It would become unsustainable for cereal production in the long term, so we were thinking ahead to take advantage of new nature markets,” says Glenn Anderson, one of the group, which has since launched Wendling Beck, a 2,000-acre habitat creation project. Though farmers in the UK are increasingly expected to nurture biodiversity as well as to produce food, it is not always cost-effective to do so. But, now, that may be about to change. A government-backed plan to establish a new blended finance instrument later this year could make it more economically viable to develop nature-based solutions (NbS) such as peatland restoration and habitat creation.