Investments in the natural sector maintain stability amidst political turbulence, according to recent findings
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In a significant shift towards recognising nature investments as key to long-term value creation and economic resilience, a poll of 500 institutional investors across multiple countries reveals nearly all respondents (99%) plan to increase their nature-based investments [1]. This represents a substantial rise from the 68% recorded in 2023, demonstrating a growing trend in this sector.
The reasons behind this surge in investor interest are multifaceted. Financially, investors are increasingly motivated by the potential returns, with 43% citing this as their primary reason in the latest survey, marking a shift from earlier focuses on risk mitigation and inclusivity [1].
However, this trend does not come without its challenges. Politicization of ESG criteria is one such obstacle, creating "noise" and affecting investment strategies, but has not managed to slow down the investment momentum [1]. Additionally, nature dependencies—such as the reliance on ecosystem services like pollination, material provisioning, and recreational services—pose financial risks when these services are disrupted by environmental degradation or regulatory changes. For instance, the loss of pollinator species can lead to crop yield declines and higher raw material costs, while regulatory actions on commodities (e.g., deforestation-linked palm oil) can result in stranded assets [3].
Despite these challenges, investors see clear financial potential in nature-related investments but face practical challenges that limit their ability to act on that conviction. For example, structural barriers such as a lack of returns, capability, and access to opportunities remain [3].
In an effort to overcome these barriers, investors are turning to innovative tools such as nature-linked debt, blended finance, and real asset funds, especially in agriculture and infrastructure [2]. In the UK, institutional investors are planning to buy specialist investment firms to increase their nature exposure, with 42% of them intending to do so [4]. Meanwhile, in Singapore, 52% of respondents stated they would continue to focus on bringing in experts [4].
This growing recognition in the investment community that nature is integral to economic value and that managing associated risks is becoming a priority despite political headwinds is evident in various initiatives. For instance, British International Investment has allocated $50m to boost Vietnam's green transition, and a new study by Pollination reveals that institutional investors are increasing their exposure to nature investments [5]. Moreover, APG has invested €560m in Octopus Australia renewables platform [6].
References:
[1] Pollination (2025). 2025 Pollination Study: Institutional Investors' Shift Towards Nature-Based Investments. Retrieved from www.pollination.org/reports
[2] Cerecina, (2025). Growing Interest in Nature-Linked Investments. Retrieved from www.pollination.org/blog
[3] Pollination (2025). Structural Barriers to Institutional Nature Investments. Retrieved from www.pollination.org/reports
[4] Pollination (2025). Regional Trends in Institutional Nature Investments. Retrieved from www.pollination.org/reports
[5] British International Investment (2025). Boosting Vietnam's Green Transition. Retrieved from www.britishinternationalinvestment.com
[6] APG (2025). €560m Investment in Octopus Australia Renewables Platform. Retrieved from www.apg.nl
- Recognizing the financial potential and economic resilience offered by nature-based investments, institutional investors are planning to boost their investments in renewables as part of the energy transition, allocating resources like the £50 million British International Investment has committed to Vietnam's green transition.
- Amidst increasing interest in nature-related investments for their financial returns and to address systemic risks, institutional investors are employing innovative strategies such as blended finance and real asset funds, particularly in agriculture and infrastructure, as shown by the UK's institutional investors buying specialist firms to increase their nature exposure.
- Concerned about the practical challenges in investing in nature, including social impact, access to opportunities, and capability, institutional investors are focusing on building expertise and collaborating with organizations for social impact analysis, as demonstrated by the 52% of Singaporean investors planning to continue this focus.
