More than half of global GDP – approximately $44 trillion – is moderately or highly dependent on nature and itsservices.¹ Yet human activity has altered approximately 75% of Earth’s land surface and 66% of marine environments.² As a result, many of nature’s essential functions are diminished or at risk. Nature loss threatens supply chains, regulatory stability, physical assets, and the long-term growth prospects of nearly every sector, posing systemic threats to institutional investors with long-term liabilities. Alternative assets offer valuable qualities for creating nature-positive, well-diversified portfolios, providing both direct and systemic impact. In this Sustainability in Action we demonstrate how this can work in practice.
Pathways to nature-positive outcomes
Direct impact: ecosystem restoration and conservation
As highlighted in our previous Sustainability in Action, we distinguish between direct and systemic impact. Direct impact investments focus on activities that restore, conserve, or enhance specific ecosystems and the biodiversity they support. These investments offer tangible, geographically specific outcomes that are straightforward to measure and verify, with clear and direct causality between capital deployment and ecosystem outcomes. An example of an asset class with direct positive impact potential is regenerative farmland, which can improve soil organic matter over time.
Systemic impact investments: addressing the underlying drivers of nature loss
Systemic impact investments, by contrast, aim to transform the fundamental economic activities that exert the greatest pressure on nature. These investments achieve nature-positive outcomes that complement direct restoration efforts by addressing the underlying drivers of nature loss. For example, a single successful investment in biological crop protection could transform agricultural practices across millions of hectares as farmers adopt these solutions to replace synthetic pesticides and fertilisers.
These investments exhibit strong financial characteristics: large addressable markets, growth opportunities, and clear profitability pathways. Investors can generate meaningful nature-positive outcomes at scale by targeting two key nature-positive investment themes that contribute to transformation:
Climate & Nature
Climate and nature are distinct, but closely interconnected challenges. Many climate solutions deliver significant nature positive outcomes by:
-Reducing pollution
-Decreasing natural resource extraction,
-Eliminating environmentally damaging activities.
Climate-oriented solutions, such as clean energy and industrial decarbonisation, can also directly benefit nature and ecosystems. Investing in clean energy infrastructure, for example, can eliminate the environmental impacts of extracting and burning fossil fuels. This means less damage to ecosystems, less pollution and fewer negative impacts on biodiversity. Similarly, decarbonising industry means that factories produce less pollution and use resources more efficiently.
Within the broader theme of climate and nature, we also consider agricultural transformation and water and oceans as major ecosystem assets. Agricultural technologies, such as precision farming and biological crop protection, increase yields while reducing chemical inputs and land requirements, supporting ecosystem regeneration. Water and ocean investments can reduce the amount of freshwater taken from stressed ecosystems, prevent pollution from entering waterways, and restore marine biodiversity
The Circular Economy
The circular economy signifies a systemic redesign that eliminates waste, reuses products and materials, and aids in restoring nature. Examples include bio-based materials, product-as-a-service models (shifting from ownership to access and promoting durability), and reverse logistics alongside recycling technologies. Circular investments decrease the extraction of new resources — a primary cause of habitat destruction — and reduce pollution by capturing materials before they enter ecosystems. They also lower energy consumption and support economic models that enable growth without depleting resources.
Sources
1 World Economic Forum 2020; Nature Risk Rising
2 IPBES (2019) Global Assessment Report on Biodiversity and Ecosystem Services. Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services
Disclaimer
Van Lanschot Kempen Investment Management (VLK Investment Management) is licensed as a manager of various UCITS and AIFs and authorised to provide investment services and as such is subject to supervision by the Netherlands Authority for the Financial Markets.
The views expressed in this document may be subject to change at any given time, without prior notice. VLK Investment Management has no obligation to update the contents of this document. As asset manager VLK Investment Management may have investments, generally for the benefit of third parties, in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments.
The information in this document is solely for your information. This document should not be considered to constitute an investment recommendation and it is not intended as an offer or a solicitation to buy or sell any financial instrument mentioned in this document. This document is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The views expressed herein are our current views as of the date appearing on this document. This document has been produced independently of the company and the views contained herein are entirely those of VLK Investment Management.
General risks to take into account when investing in Impact strategies: Please note that all investments are subject to market fluctuations. The strategy will primarily invest in a diversified pool of investment funds managed by third-party investment managers with the primary investment objective to achieve capital growth and positive social and environmental impact. Investing in this strategy is subject to risks arising from the volatility of securities, bonds, currency and interest rate markets that could negatively affect the performance. Under unusual market conditions the specific risks can increase significantly. Potential investors should be aware that the underlying investment funds often pursue a more alternative investment policy than traditional investment funds. Some investments, particularly private (non-listed) investment strategies, may involve assets which are illiquid, are difficult to value and/or are exposed to high market, credit and liquidity risk including the risk of insolvency or ban
General risks to take into account when investing in Farmland strategies: Please note that all investments are subject to market fluctuations. Due to the illiquid nature of the underlying investments, redemption of the investment is limited and may be delayed. Economic downturns and market fluctuations can significantly reduce returns and affect rental income, property values, and dividend payments. Environmental, social, and governance events can negatively impact investment value and overall portfolio risk. Farmland investments have a low vacancy risk, but asset allocation and investment selection can affect returns. Farmland is not a liquid asset class,
and external factors may also affect the liquidity of individual farms. Tenant defaults can affect returns and working capital. Currency exchange rates can impact the asset value of the strategy. Government-related risks, including taxation and legislation, can affect financial performance and investment returns. Incorrect asset valuation can negatively impact the strategy returns.
The value of your investment may fluctuate, past performance is no guarantee for the future. Do not take unnecessary risks. Before you invest, it is important that you are aware of and are informed about the characteristics and risks of investing. This information can be found in the available documents of the strategy and/or in the agreements that are part of the service you choose or have chosen.
The strategies currently hold or have previously held shares in the companies mentioned. This document has been produced independently of the companies and the views contained herein are entirely those of VLK Investment Management.
