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Rethinking nature investment: capturing the opportunity in regeneration
Marc Palahí
Chief Nature Officer
key takeaways.
Nature degradation threatens the foundation of economic activity and exacerbates the scarcity of vital goods like healthy food and clean water
Regenerating landscapes directly supports industries from agriculture to medicine and textiles, while fortifying ecosystem services including pollination, pest control, and flood and drought mitigation
We believe regenerative agriculture investment may offer economic opportunities – especially in private markets, by improving the resilience and growth of businesses in a climate-changed world.
Our global fossil-based economy, built on the extraction of non-renewable resources, has developed at the expense of nature and the climate. Nature, which regulates the climate and the ecological processes that ultimately underpin economic activity, has become a depleted and degraded asset.
The consequences are increasingly visible. Over the last decade, the combined effects of climate change, ecosystem degradation and resource constraints have translated into material economic losses and financial risks – particularly in highly nature-dependent sectors such as food and agriculture. These pressures are being compounded by growing concerns about resource security and the increasing fragmentation of global trade, exposing vulnerabilities in existing agricultural-production systems and value chains.
Rethinking nature investment
Download this article to discover the investment case for regenerative value chains.
‘Insetting’: putting nature regeneration at the core of business models
Addressing these challenges requires a fundamental shift in how nature is perceived and managed. Nature should be understood as productive regenerative capital: an asset that can be actively restored and sustained to improve its resilience and long-term productive capacity in a challenging environment. Doing so can increase the availability of increasingly scarce goods – such as healthy food and clean water – while strengthening ecosystem services including pollination, pest control, and drought and flood mitigation through healthy soils. These outcomes support more resilient and sustainable economic systems.
Despite growing recognition of the importance of investing in nature, much of the investment focus over the last decade has centred on offsetting the impacts of our extractive economic model through mechanisms such as carbon and biodiversity credits. While these approaches can play an important role, restoring natural capital at scale requires a broader reallocation of capital towards economic activities, productive landscapes and value chains that are underpinned by nature-based solutions1. Such approaches, which include regenerative agriculture and sustainable forestry, produce economic goods like food, textile fibres, medicines and construction materials while restoring and protecting nature.
Unlike offsetting, which benefits nature in one place to compensate for environmental degradation elsewhere, insetting transforms businesses and value chains by embedding nature regeneration within operating models, seeking to build economic systems that are inherently nature-positive. By supporting nature – the bedrock of our economy – these businesses also become more resilient and better positioned to generate long-term growth in a climate-changed world.
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Regenerative business for financial and environmental value
We believe that investing in regenerative approaches for businesses, supply chains and land-management practices may offer great economic opportunity. It is a pragmatic, scalable approach that creates financial and environmental value by producing critical goods and services in ways that restore nature. The opportunity set is diverse – spanning regenerative agriculture, food systems, sustainable forestry, bio-based materials, biomedicines, biochemicals and enabling biotechnologies. This investment focus reflects a fundamental economic reality: preserving, regenerating and embedding nature as an integral part of economic activity is more effective and less costly than restoring exhausted, damaged environments.
Preserving, regenerating and embedding nature as an integral part of economic activity is more effective and less costly than restoring exhausted, damaged environments
A nature-positive transition for our economy requires a strategic, cross-asset approach including public and private-market strategies. On one hand, public-market strategies have an important role to play in identifying, managing and repricing nature-related risks as they become increasingly financially material. On the other hand, private-market strategies offer the greatest potential to capture growth opportunities, in our view. These are found in nature-based solutions and regenerative value chains that improve the resilience and performance of businesses in a climate-changed world.
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We believe that the nature transition in general, and regenerative agriculture in particular, will underpin economic performance in a climate-changed world. We believe in investing systemically to address the interconnected crises of climate change and nature loss.
Climate change has resulted in more frequent and intense weather events in the form of droughts, floods, pests and diseases and wildfires
Nature loss has resulted in degraded land that is not any longer resilient to climate extreme events
Together, these pressures are translating into material operational, economic and financial risks across the food system.
We believe that investing systemically in businesses that integrate value and key actors across the entire agricultural value chain is the way forward. These businesses sell traceable regenerative produce, sourced from networks of trusted farmers, directly to downstream buyers seeking resilient and reliable products. The more integrated these businesses are, the greater the value creation potential at exit, as both farmers and buyers increasingly recognise the importance of landscape and supply resilience to climate change.
Regenerative agriculture can restore soil health, biodiversity and ecosystem resilience while supporting climate change mitigation and adaption. Scaling regenerative agriculture requires an investment ecosystem that brings together farmers, processors, distributors, brands and investors to drive system-wide change.
The regenerative agriculture investment universe can be framed around three main opportunities:
Land-backed strategies invest directly in farmland, permanent crops, grazing systems or forestry assets. Returns are typically generated through agricultural income, biological growth and resilience, and long-term land appreciation. These strategies tend to offer inflation-hedging characteristics. Challenges related to the potential displacement of farmers and concentration of land ownership must be managed.
Integrated value-chain strategies invest across multiple stages of the food system, combining traceable regenerative production from farmer networks with processing, distribution and branded product sales. The investment thesis is that much of the value in food systems is created beyond the farm gate, where products are processed, differentiated, marketed and distributed. By integrating multiple stages of the supply chain, investors can capture both agricultural and downstream margins while supporting farmers through long-term offtake agreements, premiums for verified regenerative production and knowledge-sharing networks.
Agricultural technology and enabling businesses invest in the infrastructure that enables regenerative agriculture, including: precision agriculture, robotics, biological inputs, genetics, advisory services and farm-management platforms, among others. Among the main regenerative agriculture investment approaches, these strategies generally employ the most aggressive risk/reward balance.
Potential investment returns are driven by five levers:
Land appreciation and resilient biological growth
Improved farm economics through lower input dependency and greater resilience
Downstream margin capture through processing, logistics, branding and market access
Productivity and efficiency gains enabled by technology and data
Environmental revenues through ecosystem-services markets and outcome-based payment schemes where commercially viable.
An important observation is that return potential often increases as investors move downstream in the value chain. This explains why many asset managers are evolving away from pure farmland ownership towards integrated operator models that combine productive agricultural assets with processing, market access, and value-added products. These models can capture a greater share of the value created within the food system while benefiting from growing demand for traceable products with verified environmental outcomes.
Nature-based solutions are actions that protect, restore or sustainably manage ecosystems while benefiting both people and nature. Examples include regenerative agriculture, agroforestry and ecosystem restoration.
These activities can be used through either:
Offsetting: purchasing verified environmental outcomes, such as emission reductions or removals, generated outside a company's own value chain.
Insetting: generating environmental outcomes within a company's own value chain – e.g., by supporting regenerative agriculture among suppliers.
The key distinction is not the activity itself, but where the environmental outcome occurs. Offsetting relies on outcomes generated elsewhere, whereas insetting embeds environmental improvement directly within the value chain. As a result, insetting can improve supply-chain resilience, support farmer transitions and strengthen long-term business performance.
While both approaches have a role to play, insetting is often considered more transformative because it embeds environmental improvement within the value chain, whereas offsetting primarily compensates for impacts outside it.
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1 Actions or practices to protect, restore and sustainably manage natural and modified ecosystems, benefiting people and nature at the same time.
important information.
For professional investors use only
This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.
