Five Drivers of Natural Capital as an Asset Class

New Forests’ Case Studies on Bridging Investment Returns and Environmental Impact

In the face of climate change, biodiversity loss, and mounting environmental degradation, the global financial system is undergoing a paradigm shift. Investors, asset managers, governments, and regulators are increasingly recognising that long-term economic prosperity is linked to the health of the natural world.

In response, natural capital – the world’s stocks of natural assets including geology, soil, air, water, and all living things – is rapidly emerging as a distinct and investable asset class. This shift holds the promise of delivering both competitive financial returns and measurable environmental and social impacts.

Historically, major economic systems have treated nature as a free and infinite resource, external to financial calculations. In the 1990s, however, ecological economists popularised the term ‘natural capital’ by extending economic theories of capital to nature and its associated environmental goods and services.

While the concept of natural capital was initially criticised by both environmentalists and corporates, there has been continued pressure and momentum over the past three decades to reconsider how economic systems are designed, measured, and operating beyond solely financial outcomes.

This short paper highlights five drivers of natural capital and how New Forests’ assets across forestry and agriculture have delivered positive impacts on nature, climate and local communities.