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.
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.
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.
Natural Capital Transition Global Equity: Strategy in brief
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.
For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.
Strategies in focus
Explore our equities range
A diverse range of UK equity investment solutions backed by a highly experienced team of portfolio managers and a dynamic, forward-looking investment process.
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.
Climate Transition Global Equity Fund
A strategy investing in companies that can play a major role in the transition to a low-carbon world.
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