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:

Long-term capital growth

Positive nature outcomes

Investment opportunities in the strategy are linked to the following investment themes and aligned with the principles of the following United Nations Sustainable Development Goals:

Circular economy

Climate action

Sustainable ocean

Sustainable land

Our approach

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.

Transition focus

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.

Bespoke engagement

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.

Macro stewardship

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.

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.

Evidencing how we are progressing against our sustainable outcomes objective

This report looks at the progress the fund has made in 2022, in delivering tangible sustainable outcomes for clients, across the companies invested in as well as through company engagement and macro stewardship.

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Investment opportunities in natural capital

Stuart Empson, Eugenie Mathieu, Jonathan Toub and Julie Zhuang explain how investments in natural capital – biodiversity, water, air, geology and soil – can deliver returns while protecting and restoring ecosystems.

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Natural Capital Transition Global Equity: Strategy in brief

PDF 5.0 MB 11 pages

We invest in global equities of solutions companies whose products or services reduce human impact on nature, or transition companies who are leading their sector in reducing their own impacts on nature.

Key risks

For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.

Investment risk & currency risk

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.

Emerging markets risk

The strategies invest in emerging markets; these markets may be volatile and carry higher risk than developed markets.

Strategies in focus

Sustainable transition

A range of strategies investing in opportunities to accelerate change for Climate, People and Earth.

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Natural Capital Transition Global Equity team

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Access key fund documentation and performance reports.

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Our views

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

2. New Nature Economy Report II: The Future of Nature and Business', World Economic Forum, July 14, 2020