Natural capital investment sits below 0.2% of institutional portfolios, report finds
Climate Asset Management report finds natural capital is 4-5% of global GDP but under 0.2% of institutional allocations, with a $351bn annual gap.
Photo by Siarhei Nester on Pexels
Natural capital accounts for 4 to 5 per cent of global GDP but less than 0.2 per cent of institutional capital allocations, according to “Is Natural Capital the New Infrastructure?”, a paper published in July 2026 by Climate Asset Management and written by Carl Atkin-House, the firm’s head of natural capital strategy. The paper argues that a large part of the gap is structural: asset owners cannot agree where natural capital investment belongs in a portfolio, and that ambiguity caps how much money can flow into it.
The report was covered by AgFunderNews on 21 August 2026. The two headline percentages are not the firm’s own estimates. The 4 to 5 per cent figure is taken from World Bank data on agriculture, forestry and fishing value added as a share of GDP, a proxy measure rather than a natural-capital-specific series. The sub-0.2 per cent allocation figure is attributed to Preqin (2025) and State Street’s Global Market Portfolio (2026).
The allocation question behind the natural capital investment gap
Natural capital has usually been treated as a corner of real estate or infrastructure. It shares the defining features of real assets: long duration, stable cashflows, inflation linkage. Climate Asset Management defines it as the stock of natural assets, including soil, water, air and biodiversity systems, on which economic activity rests.
The report’s case for a standalone allocation is that natural capital carries revenue lines the other real-asset classes do not, including carbon and biodiversity credits and conservation easements, alongside physical services such as flood mitigation from wetlands. Where it sits in the allocation framework determines who inside an institution is responsible for it, which in practice determines whether it gets funded.
Survey data in the report comes from Mallowstreet’s “Natural Capital Report 2026”, published on 28 January 2026 with support from BNP Paribas Asset Management, Foresight Group and Rebalance Earth. It covers 68 UK institutional asset owners representing more than £3 trillion, with fieldwork in October and November 2025. Two findings carry the argument: two in five of those not already invested expect to make a first natural capital allocation within five years, and 68 per cent of respondents said well-defined project-level KPIs matter most when assessing a strategy. The two-in-five figure applies to non-investors in the sample, not to all asset owners.
The finance gap in numbers
The scale of the shortfall comes from the UN Environment Programme’s “State of Finance for Nature 2026”, subtitled “Nature in the Red”. Tracking 2023 flows, it puts finance for nature-based solutions at $220 billion against $7.3 trillion flowing to activities that damage nature, and sets the requirement at $571 billion a year by 2030 to meet global biodiversity, climate and land restoration targets. Current spending is 38.5 per cent of that requirement, leaving an annual gap of $351 billion.
| UNEP State of Finance for Nature 2026 (2023 flows) | Amount |
|---|---|
| Finance for nature-based solutions | $220 billion |
| Of which public | $197 billion |
| Of which private | $23.4 billion |
| Flows to nature-negative activities | $7.3 trillion |
| Required by 2030 | $571 billion per year |
| Annual shortfall against the 2030 requirement | $351 billion |
Source: UN Environment Programme, “State of Finance for Nature 2026: Nature in the Red”, tracking 2023 flows.
How much of the economy depends on nature
The report grounds its case in two widely cited dependency estimates. The first is the World Economic Forum’s “Nature Risk Rising”, published on 19 January 2020 with PwC UK as the first report in the New Nature Economy series, which found that $44 trillion of economic value generation, more than half of world GDP, is moderately or highly dependent on nature and its services. The breakdown is 15 per cent of global GDP, or $13 trillion, in highly dependent industries and 37 per cent, or $31 trillion, in moderately dependent ones.
| Dependency of global GDP on nature (WEF, 2020) | Share | Value |
|---|---|---|
| Highly dependent industries | 15% | $13 trillion |
| Moderately dependent industries | 37% | $31 trillion |
| Combined | Over 50% | $44 trillion |
Source: World Economic Forum and PwC UK, “Nature Risk Rising”, 19 January 2020.
The second is the emissions side. Climate Asset Management cites the IPCC’s Sixth Assessment Report, working group III, chapter 7, which found net anthropogenic greenhouse gas emissions from agriculture, forestry and other land use averaged 11.9 gigatonnes of CO2 equivalent a year over 2010 to 2019, plus or minus 4.4, or around 21 per cent of the global total. The same chapter gives a range of 13 to 21 per cent with medium confidence, the lower bound applying when national inventory data is used instead of bookkeeping models. The report uses the upper end.
The World Bank states separately that nearly half of world GDP is linked to biodiversity and ecosystem services, and that a partial ecosystem collapse could cost the global economy $2.7 trillion a year by 2030, with low-income countries facing GDP losses of up to 10 per cent a year.
About Climate Asset Management
Climate Asset Management was established in 2020 as a joint venture between HSBC Asset Management and Pollination, the climate change investment and advisory firm, with the stated aim of becoming a leading natural capital asset manager. The venture was announced on 23 September 2020 and the firm is authorised and regulated by the Financial Conduct Authority under registration number 944222.
The firm runs two strategies: a Natural Capital Fund, which targets sustainable agriculture, forestry and environmental assets producing both financial returns and environmental outcomes, and a Nature Based Carbon Fund of $445 million, which funds projects generating carbon credits. In September 2024 it announced it had secured commitments of more than $1 billion for natural capital projects across the two strategies. It has not published a headline assets-under-management figure.
The July 2026 paper sits inside a wider shift in how nature is accounted for in finance. Winss Solutions has covered the reporting frameworks now taking effect, including the sustainability abbreviations that shape ESG reporting and the sustainability trends running through 2025 and 2026, alongside the deal flow that natural capital strategies depend on, such as Mombak’s early delivery of Amazon reforestation credits and the agroforestry removal agreements signed by Google and Tencent. The Mallowstreet finding on project-level KPIs points at the same issue those deals turn on: whether the environmental outcome can be measured well enough for capital to price it.
Sources: Climate Asset Management; AgFunderNews; UN Environment Programme; Mallowstreet via Foresight Group; Foresight Group; World Economic Forum; Intergovernmental Panel on Climate Change; World Bank; World Bank Open Data
Featured image: photo by Siarhei Nester on Pexels (free Pexels license).
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I specialize in sustainability education, curriculum co-creation, and early-stage project strategy. At WINSS, I craft articles on sustainability, transformative AI, and related topics. When I’m not writing, you’ll find me chasing the perfect sushi roll, exploring cities around the globe, or unwinding with my dog Puffy — the world’s most loyal sidekick.
