Investing in the natural capital transition
Biodiversity loss is one of the greatest sustainability issues of our time. The natural world – defined as all living things, air, water, geology, and soil – supports our whole existence, with over half of GDP dependent on them. 1 Despite this, 14 out of the 18 ecosystem services are degraded or in decline.
We believe markets will increasingly price in the costs and opportunities of addressing natural capital depletion. The World Economic Forum estimates the transition to a nature-positive economy, with critical shifts in land, oceans, infrastructure and energy, could deliver an estimated $10 trillion of business opportunities and 395 million jobs by 2030.2
Our Natural Capital Transition Global Equity strategy targets opportunities aligned to the principles of the United Nations’ Sustainable Development Goals that support and benefit from the transition to a nature-positive economy. We invest with an active, high-conviction approach to address the needs of investors seeking two objectives:
We go beyond a simple approach of only investing in companies providing solutions to reduce human impact on nature, to instead also invest in companies transitioning their business models towards a nature-positive economy. Moreover, we seek to drive further positive change by engaging with investee companies and policymakers to tackle key market failures.
Our proprietary transition risk framework helps identify winners from the natural capital transition across a wider opportunity set, increasing portfolio diversification. Our approach aims to deliver more resilient performance over the long term, uncover more alpha opportunities, and more effectively support the natural capital transition.
We engage with every company in the portfolio on specific biodiversity issues. Our three-year structured engagement programme systematically tracks all companies from leaders to laggards, with an escalation pathway that could lead to divestment if we are not satisfied with their progress. We believe this bespoke programme with teeth is the most effective way to support the natural capital transition.
We are leaders in actively engaging with policymakers to reform the market to correct what we perceive as material market failures. We have a longstanding track record in actively engaging with policymakers on market reform to correct material market failures. We have specific market reform initiatives that can help deliver nature-positive outcomes.
Where the wild things are
Finance must wake up to the risks associated with biodiversity loss and the opportunities that arise from nature-friendly solutions, argue Eugenie Mathieu, Julie Zhuang and Jonathan Toub.
Natural Capital Transition Global Equity strategy
Aviva Investors Natural Capital Transition Global Equity Fund
This strategy aims to deliver long-term capital growth by investing in companies globally that either provide solutions to reduce biodiversity loss or are transitioning their business models to manage their impact on nature, while avoiding those that do not meet minimum environmental criteria.
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
Natural Capital Transition Global Equity team
Explore our equities range
Our range of strategies is underpinned by a robust process designed to meet clients' objectives across capital growth and income.
Global emerging market equities
A range of strategies that offer investors specialist exposure to a rapidly growing asset class, with portfolios targeting income and smaller companies.
Covering both continental and pan-European regions, our range of equity funds focus on identifying companies with improving fundamentals.
Climate Transition Equities
A range of strategies investing in companies that can play a major role in the transition to a low-carbon world.
Social Transition Global Equity Fund
An equity strategy seeking positive social outcomes while delivering long term capital growth.
Act now: A climate emergency roadmap for the international financial architecture
1 Nov 2022
To help tackle the climate emergency, financial institutions and governments must work together to reform the global financial architecture and create a more robust net-zero transition plan, argue Steve Waygood and Thomas Tayler.
The levers of change: A systems approach to reconcile finance with planetary boundaries
13 Sep 2022
Financial services underpin all economic activity, which itself depends on Earth’s natural capital. Resolving their interconnected issues to bring about a just transition will require a holistic, systems-thinking approach.
A tragedy of perception: Fixing the ESG blind spots in business, finance and economics
8 Sep 2022
A distorted sense of reality has caused us to disregard sustainability concerns when modelling economies, companies and finance. We can no longer ignore such material issues just because they are too hard to fathom. This is where systems thinking comes in, explains Steve Waygood.
Redefining stewardship: Why stakeholder capitalism needs to wake up
31 Aug 2022
Asset managers and other financial institutions have a duty to act in the best interests of their customers and society. Macro stewardship will be crucial to meeting these responsibilities, argues Mark Versey.
Know your limits: An interview with Nafeez Ahmed
29 Aug 2022
Warnings that natural systems are close to breaking point are not new – but how will we respond? Combining what we know with existing technologies could offer a remarkable opportunity to rethink our world, as Nafeez Ahmed explains.
The burning issue: Avoiding ESG fatigue
25 Aug 2022
How can we face existential problems and stay positive? Abigail Herron contemplates simple steps to protect momentum and avoid burnout.
Strategies to change the financial system: An interview with Natalie Mangondo
16 Aug 2022
Can society reform the system that has enabled growth but simultaneously brought the long-term health of the planet into question? UN Climate Change High Level Champions Finance Youth Fellow Natalie Mangondo contemplates choices and change with AIQ.
Investing in a just transition to net zero: A Q&A with Nick Robins
30 Jun 2022
Reaching net zero by 2050 will require significant injections of capital. But it is also an opportunity to rethink social relationships, as Professor Nick Robins explains.
What does the data say? Biodiversity loss: From horror to hope
24 Jun 2022
In this month’s instalment of our visual series on topical themes, we explore the world of biodiversity.
Antimicrobial resistance: Q&A with Dame Sally Davies
10 Jun 2022
Resistance to antibiotics is already killing millions. Professor Dame Sally Davies, UK Special Envoy on Antimicrobial Resistance, spoke to AIQ on the latest developments to counter antimicrobial resistance Antimicrobial Resistance (AMR) in the UK and globally.
Deep water: Ten threats to marine ecosystems
8 Jun 2022
Our air, weather, food, the health of diverse marine life and millions of jobs all depend on the ocean. But we have not done well as custodians of marine ecosystems. Here, we set out ten ways where human actions threaten the health of an essential environment.
Life force: Why nature matters
12 May 2022
Growing awareness that natural systems are stressed or even close to breakdown is prompting asset managers to look closely at nature-based risks and investee companies to understand their environmental impacts and dependencies.
Back to nature: Why we must act now on the biodiversity crisis
31 Mar 2022
In an age of mass extinctions, policymakers, businesses and financial institutions are beginning to acknowledge the risks associated with biodiversity loss, along with the opportunities that arise from nature-positive solutions.
Change diets, not the planet: The link between food and sustainability
29 Mar 2022
We explore how shifting diets can help create a more sustainable world.
Energy in focus: Part 2: The pivot to green
28 Mar 2022
How will the surge in the prices of oil, gas and coal impact the transition to low or zero carbon sources of fuel? In the second part of our Q&A on the energy sector, experts from our credit, equities and ESG teams contemplate the challenges and opportunities in the pivot to green.
Energy in focus: Part 1: The last hurrah for fossil fuels?
24 Mar 2022
The fallout from the conflict between Russia and Ukraine has highlighted the fragility of energy markets, with significant implications for the global economy.
1. SwissRe Biodiversity and Ecosystem Services (BES) 2020. IPBES (2019) Global assessment of the status of biodiversity and ecosystems. Planetary boundaries: Stockholm Resilience Centre. Ecology ecosystem services