October 26, 2023
On 18 October, Fiera Capital Corporation hosted representatives from high-profile institutional investors and consultants including Redington Investments, Barnet Pension Fund and The Church Commissioners for England at The Conduit in London for a breakfast focused on the investment opportunity in Natural Capital, defined as the world’s stock of natural assets.
Co-chaired by Alex Godfrey, Head of Natural Capital at Savills, and Jessica Pilz, Head of Sustainable Investing – Private Markets at Fiera Capital, the role for real, tangible assets like agriculture and timberland in portfolio diversification as a hedge on inflation and a store of value ranked highly on institutional investors’ priorities.
The discussion took place against the backdrop of a pressing need to reverse the global decline of nature. Over £48 trillion of economic value generation worldwide is either moderately or highly dependent on nature and its services, according to the World Economic Forum, leaving it heavily exposed to the risks of nature loss – with agriculture, construction and food and beverages the most dependent industries.
Those attending first heard from Jeff Zweig, Head of Natural Capital at Fiera Comox, Fiera Capital’s $2.5bn AUM agriculture and softwood timberland fund. Zweig outlined the tailwinds and returns profile underpinning investor appetite, including a low or negative correlation to stocks and bonds and positive secular trends like population growth.
The co-chairs then explored the emerging policy landscape influencing investors’ decisions to introduce Natural Capital to their portfolio diversification strategies, particularly as momentum behind nature-related corporate reporting grows. This included the recent disclosures regime published by the Taskforce for Nature-based Disclosures, which seeks to support a shift in global financial flows towards nature-positive outcomes by enabling businesses to integrate nature into their decision-making.
Also high on the agenda was the growth and maturity of the voluntary carbon credits market. While investors have tended to focus solely on cash yield and capital appreciation, timber and soil sequestration as viable offsets are influencing the price-per-acre of land suitable for nature-based solutions.
Institutional investors attending agreed that the case is strong for investing for real, stable financial returns while doing so sustainably, particularly as beneficiaries increasingly require institutional capital to deliver social and environmental impact as part of their investment portfolio – not only for sustainable growth, but in recognition of fiduciary duty to the planet.