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 (see below specific SDGs) 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

To support the transition to a nature-positive economy

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 on specific biodiversity issues.

Transition focus

Our proprietary transition risk framework helps identify winners from the natural capital transition across all sectors. Our approach aims to deliver more resilient performance over the long term, uncover more alpha opportunities, and more effectively support the natural capital transition than by investing in solutions-focused companies alone.

Bespoke engagement

We engage with all portfolio companies on specific social issues. Our three-year structured engagement programme systematically tracks all companies with an escalation pathway that could ultimately lead to divestment if we are not satisfied with their progress.

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.

Read more

Natural Capital Transition Global Equity: Strategy in brief

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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

Full information on the risks applicable to the Fund is detailed in the KIID and Prospectus.

Investment risk and 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.

Equities risk

Equities can lose value rapidly, can remain at low prices indefinitely, and generally involve higher risks — especially market risk — than bonds or money market instruments. Bankruptcy or other financial restructuring can cause the issuer's equities to lose most or all of their value.

Counterparty risk

The fund could lose money if an entity with which it does business becomes unwilling or is unable to meet its obligations to the Fund. 

Illiquid securities risk

Certain assets held in the fund could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

Derivatives risk

Derivatives are instruments that can be complex and highly volatile, have some degree of unpredictability (especially in unusual market conditions), and can create losses significantly greater than the cost of the derivative itself.

Sustainability risk

The level of sustainability risk to which the fund is exposed, and therefore the value of its investments, may fluctuate depending on the investment opportunities identified by the investment manager.

Natural Capital Transition Global Equity team

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.