Roundtable Natural Capital

July 14, 2025

 

Moderator Sanne van Gorp, PGGM    Participants Céline Claudon, IWC (meerderheidsbezit van BNP Paribas Asset Management) Jérôme Dulong, AXA IM Alts Sébastien Duquet, Mirova (onderdeel van Natixis Investment Managers) Arnold Gast, Morningstar Sustainalytics Ralf Kooken, a.s.r. real assets investment partners Mark de Nooij, MN

 

What are you doing in terms of investing in natural capital and how does this relate to your overall investment strategy?

Sébastien Duquet: 'We manage approximately €30 billion and have raised around €1 billion over the past ten years for biodiversity and nature solutions.'

Mark de Nooij: 'As a pension fund, we invest to ensure a good financial pension for our participants, but also for a better world. Natural capital is woven into our entire portfolio through impact investing, engagement and ESG integration.'

Arnold Gast: 'We offer a wide range of ESG data and research. Last year, we launched a data product focused on biodiversity and natural capital, with 150 data points for assessing listed companies.'

Ralf Kooken: 'Although we have been investing in natural capital for more than 125 years as an insurer, the asset class is still relatively new in the institutional world. It is growing, partly due to sustainability considerations and its low correlation with traditional assets.'

Jérôme Dulong: 'At our company, climate considerations are integrated into all our investment decisions through a three-pronged approach: CO₂ reduction in real estate, avoidance through infrastructure and sequestration through natural capital. For us, natural capital is the most direct means of making a positive impact.'

Céline Claudon: 'We focus exclusively on natural capital and offer investments in sustainable forestry, agriculture and ecosystem restoration. We have $6 billion under advice or management and offer customised solutions through funds, separately managed mandates, and fund of funds or advisory services.'

What is natural capital and why is nature so important in tackling the climate and biodiversity crisis?

Dulong: 'Natural capital is everything related to the products and services that nature provides. Without nature, there is no economy. Private capital is crucial because government budgets alone are not sufficient to finance the investments needed to tackle the climate crisis.'

De Nooij: 'Doing nothing will only make the problems worse. You have to incorporate sustainability considerations into your entire portfolio, not just into impact investments.'

What type of investors invest or want to invest in natural capital and what are their preferences?

Kooken: 'Our fiduciary clients cite three main reasons why natural capital is interesting: for sustainability, for stability and as an inflation hedge. It usually starts with a desire to contribute to climate and biodiversity, with the initial focus on forestry. Interest in agriculture usually grows as we delve deeper into the subject matter. For example, with permanent crops such as blueberries, almonds and pistachios. In this case, the land is not leased, but a manager is directly involved in the operation. This offers many opportunities to actively contribute to sustainability, which our clients find interesting.'

Duquet: 'We have over two hundred investors in various funds, with diverse motives and structures. In recent years, we have seen more interest from the business community (particularly among companies), especially around securing their value chain and carbon credits. These companies want to reduce their emissions by gaining a better understanding of the carbon footprint of their supply chain, particularly that of small-scale farmers.'

Claudon: 'Traditionally, pension funds and insurers have been the main investors in forestry and agricultural land. Recently, we have seen growing interest in natural capital from companies and family offices, often from a CO₂ reduction or biodiversity perspective.'

Can you give a recent example of a biodiversity-focused project?

De Nooij: 'For one of our clients, we are investing in forestry in the southern United States. One of the projects is a conservation easement, in which we are working with local authorities to reforest native species and restore habitats. Although this results in a slightly lower direct return, this is fully offset by government support, which maintains the total return and increases the ecological value.'

Dulong: 'In Guatemala, we work with an NGO called Fundaeco. There, we protect endangered forests on the Atlantic coast in collaboration with indigenous communities. You see jaguars, manatees and migratory birds returning to their natural habitat. The impact on biodiversity is clearly visible.'

Duquet: 'We recently made three investments through our Carbon Credit Strategy, including one in Costa Rica. We were selected by eleven institutional investors to manage a biodiversity equity fund.'

 

The various niches within this asset class each have their own characteristics and therefore offer diversification benefits.

 

What role does natural capital play in an investment portfolio and the portfolio construction process?

Kooken: 'Natural capital is a stable factor in the investment portfolio. The relatively high returns and low risks contribute to high Sharpe ratios. The various niches within this asset class each have their own characteristics and therefore offer diversification benefits. If a client prefers stable cash flows, for example, we recommend a higher allocation to agricultural land with annual crops such as soy and corn. And of course, it's also about contributing to biodiversity and sustainability, and about the low or even negative carbon footprint of both agriculture and forestry.'

De Nooij: 'Investors really need to take a long-term view of natural capital. A forest rotation can take twenty, thirty or even fifty years. Implementing sustainable forest management takes time, and only then can you really make an impact.'

Claudon: 'Many investors start with closed-end funds and then switch to separate accounts or evergreen structures. But it remains a long-term asset. That long investment horizon is a challenge, as is the question of where natural capital fits into your asset allocation. It remains a niche for many investors. A lot of education is still needed. You also need to agree with investors on the risk profile and impact goal they are pursuing. Some opt for sustainable forestry in developed core markets with low risk, others for reforestation in emerging markets. These are completely different investment profiles.'

Duquet: 'Pension funds indicate that their cash management sometimes makes it difficult to invest in natural capital. Solvency requirements also pose a risk. Not all insurers have the tools and risk indicators to properly assess these investments. And within a fund, it is difficult to combine all the wishes of investors. Some want forestry, others prefer regenerative agriculture or the circular economy. This makes structuring a fund complex. With carbon credits, you have to pay close attention to whether companies are really reducing emissions or just want to offset them. We only accept companies with a clear net-zero strategy. Otherwise, it encourages greenwashing.'

 

Private capital is crucial because government budgets alone are not sufficient to finance the investments needed to tackle the climate crisis.

 

What are the advantages of a blended finance structure for financing natural capital solutions?

Duquet: 'A junior tranche from, for example, governments or funds offers protection to private investors. This allows us to finance projects in high-risk countries such as Ivory Coast, Ghana and Bhutan. But a junior tranche is difficult to find. It often takes more than a year to secure one.'

Claudon: 'We have little experience with blended finance. Most parties that approach us are unable to provide the junior tranche. We mainly invest in ordinary equity structures.'

Gast: 'For me, blended finance is not just about structures, but also about bringing worlds together. DFIs have impact experience and data. Pension funds can learn from that. But collaboration requires you to step outside your comfort zone.'

Dulong: 'We have had positive experiences with blended finance at project level, for example with a reforestation project in the Brazilian Amazon (with Mombak). Once it proved viable, we were able to attract financing with a World Bank-supported outcome bond. This allows you to obtain concessional financing for impact projects, maximising the use of capital risk.'

Kooken: 'Blended finance can make some investments in frontier markets, for example, fit within the strategy of institutional investors because the risks are reduced. However, this often limits the upside potential somewhat.'

How can investments in natural capital be positioned within the sustainable finance landscape, and what is needed to support the investment decisions required for real-world impact?

Gast: 'I think the asset allocation approach is too restrictive in some respects. Everything has to fit into small boxes. And with blended finance, you also see a scaling-up problem: many of the projects we are talking about are difficult to scale up and therefore not interesting for some large pension funds. So scalability is a challenge, just as data and reporting are challenges.'

De Nooij: 'To achieve greater impact, you need more investors, and to attract more investors, you need higher returns. More value must be assigned to carbon credits or biodiversity credits, or other forms of credits. You need more data, and it must be understandable to everyone. There must be consensus on what the data means and how to value it.'

Claudon: 'Transparency and scientific accuracy are essential to convincingly demonstrate the ecological value and additionality of an investment. For me, that is crucial to scaling up this asset class.'

Duquet: 'Obtaining the right data and reports is a real challenge. The sector is enthusiastic, even passionate, but also prone to controversy: different indices, data, systems – for a non-specialist, it's overwhelming. The impact of solutions in the field of biodiversity and natural capital is often difficult to express in monetary terms. Until their real sustainable contribution to long-term economic development is fully recognised, the sector offers a reasonable financial return, which unfortunately is currently sometimes lower than that of some conventional sectors. Nevertheless, there is real upside potential, for example with regard to certification premiums or carbon credits.'

 

Transparency and scientific accuracy are essential to convincingly demonstrate the ecological value and additionality of an investment.

 

How do you determine the value of natural capital assets and which measurement methods or tools do you use?

Claudon: 'There is a difference between financial value and ecological value. For the financial side, there are all kinds of valuation standards, such as USPAP in the United States, and various valuation methodologies. For the ecological part, we define a number of KPIs for each asset that we want to monitor. We use various tools for this, such as EDNA sampling, camera traps, bioacoustics and visual inspections. We also use a lot of GIS and satellite imagery. We process all of this in our ESG reports. Within each mandate, we work with investors to determine which indicators to track and how exactly we will do that. Many things are still in development. With natural systems, it is always better to report over a longer period of time. We report annually, but look at the impact over five years in terms of results and trends.'

Gast: 'Our focus is on providing tools to investors to manage risk, monitor impact and apply it across their entire portfolio. We provide data through multiple products. One of our core products is “product involvement”: we identify what a company does, what products it supplies and what its activities are. This helps investors to select or exclude companies, or to engage with them in a targeted manner. We also assess what companies are doing in terms of management and policy – for example, with regard to land use – and whether these are strong policies. One of our biggest challenges is to do this not only across portfolios, but also deeper into the supply chain. How deep do you go into the chain? How far do you go in reporting or holding companies accountable for what happens upstream? Ultimately, we want carbon investors to be able to properly fulfil their due diligence responsibilities.'

Dulong: 'For us, the key concept in relation to investment value is materiality, both financially and in terms of impact. What really constitutes a high-quality, ethical project? We look at a number of criteria, but one stands out as the most critical: the greenhouse gas integrity of the project, in particular whether the investment is truly additional. In other words, would the project not take place or even be harmful without our investment? To answer this question, we collect all kinds of data using geospatial analysis, LIDAR sensors, and so on. We are constantly improving our data capacity because we need to be sure that the impact is real and that there is no 'leakage'. An example of 'leakage' is when you restore a piece of forest, while a few hectares further on everything is being cut down. In that case, your net impact could be zero. That is why we monitor not only the project itself, but also the surrounding area. And we ensure that everyone in the area benefits from the conservation, so that there are no conflicting incentives. We also check for double claims and guarantee the sustainability of the conservation. We have talked about funds lasting twelve or fifteen years, which is a long time for end investors, but for nature it is nothing. If you really want to make an impact, it has to last at least fifty or a hundred years. From the outset, we take into account changes in land use, for example through conservation easements, legally binding agreements to ensure that the land remains protected after divestment. Sometimes we return the land to local communities with clear incentives for conservation, sometimes to governments. All of this must be properly arranged from the outset, otherwise your entire investment will disappear as soon as you exit and will therefore have had no lasting value. Because we have a large research team, we are able to thoroughly analyse the integrity and impact of our investments. We collect all the data ourselves, ensure transparent reporting to our investors, and do so on the basis of twelve core impact KPIs. These are inspired by the IFC Performance Standards, but are not exactly the same, because our project developers often find it difficult to apply these comprehensive standards in full. That is why we have created a practical translation that is better suited to the reality on the ground.'

 

Investors really need to commit to natural capital for the long term. A forest rotation can take twenty, thirty or even fifty years.

 

How do you assess the materiality of your interventions, both for nature-based solutions and for identifying existing risks in advance, and how do you address those risks?

Duquet: 'It's quite specific for us. Each fund has its own metrics and approach to measuring pre- and post-investment impact. These differ, for example, for our sustainable ocean, sustainable agriculture, carbon credit and energy transition strategies. Every investment has its own characteristics. We always look at the situation before the investment and compare it with the situation afterwards. We then draw up specific measurement indicators tailored to each sector. Take, for example, an investment in the energy transition, such as solar energy systems for small-scale farmers. We measure how much CO₂ emissions are avoided. First, we calculate how much emissions there were with traditional means (such as kerosene lamps) and then what the emissions are after the installation of solar panels. We also take into account the national climate targets, the so-called NDCs, and how they are developing. Because what applies now may be different in eight years' time, depending on a country's energy mix. We do something similar for biodiversity. For example: how many hectares of land have been restored? Or how many hectares are being managed sustainably for agriculture? We check this using both satellites and site visits. Our agricultural and impact teams inspect everything on site before the investment and monitor it throughout the entire duration of the investment. It is crucial, especially in sustainable agriculture and carbon investment projects, that local communities are involved and remain involved. Long-term engagement can only succeed if local communities benefit from it in terms of additional income, improved agricultural methods, and so on. To ensure the quality of our data, we work with external auditors, such as the company I Care. They check our methodologies and the figures we report, such as the CO₂ emissions avoided or captured. Sometimes we have to make assumptions, and we want to be sure that these stand up to scrutiny. We do our best to strive for high quality, but we also recognise that others may think differently. This means that we remain open and pragmatic and regularly review our methodologies. The figures may even change during the term of a fund. This is because the world is changing, which brings with it new insights, new reporting methods and better data. We are constantly learning. We must be transparent, open to criticism and willing to undergo audits.'

Gast: 'That is also our challenge. We prefer to keep methodologies consistent over time, but the world is changing. We are gaining better insights and better reporting and have to process that. That is difficult, because investors want consistency. So sometimes we have to stick to old reports, while also including the new ones. That makes the research work increasingly extensive.'

De Nooij: 'Even if you try to do everything right, sometimes the data just doesn't look very good. To give an example: if we buy a piece of land with an old forest on it, there is a lot of CO₂ stored there. But to turn it into a healthy, ecologically valuable forest, trees first have to be cut down. This temporarily reduces the CO₂ level, and then many people think: what are you doing? But that is a long-term strategy. There is more than just a single number; it's not just about the amount of CO₂. There is a story behind it, and that is precisely the point. Forest owners store CO₂ in wood that is ultimately used for housing. The question then is who can claim that CO₂ storage. The owners of the forest where the wood comes from, or the person who bought the piece of wood and is now using it in their home? This 'double accounting' is incredibly difficult.'

Dulong: 'It's all about our assessment criteria, our 'underwriting'. We have to be conservative in our approach because knowledge, data and methodologies are constantly changing. No one knows what will happen in a few decades. Ideally, you would monitor every tree, how it grows, how long the wood remains in a structure, and so on. Unfortunately, we cannot do that yet, so we have to make the most honest estimates possible and be transparent about them to all stakeholders.'

 

Private investments account for only a limited portion of investment portfolios. We must also continue to reduce the negative impact of listed companies.

  

Investments in natural capital often involve unique risks, such as regulatory changes or climate volatility. How do you manage risk and still achieve competitive returns?

Kooken: ‘Broad diversification across crop types, sectors, markets, etc. is essential. Many risks can be partially assessed on the basis of historical data. By combining historical data with future scenarios, you can manage risks more effectively. However, climate change is still insufficiently reflected in historical data, even though it will significantly change cultivation, growing conditions and the landscape. A large part of the sector focuses on permanent crops, and California is important in that respect. In the past, high returns have been achieved there with almond and pistachio plantations, among other things. However, too much water has been pumped out of the ground in that region, more than is replenished annually. In 2014, California responded by introducing the Sustainable Groundwater Management Act. As a result, there are now quite a few plantations with weak or even no water rights, which has significantly reduced the value of those properties. It is therefore crucial to look at future climate risks. We use various methods to do this. Together with a partner, we look at the climate risks and adaptation options at the environmental and property level over different time periods. This gives us a better understanding of the long-term risks and opportunities of a forestry or agricultural project.'

Claudon: 'When managing risks, specifically for natural capital, diversification is essential, not only in terms of geography, but also in terms of species, markets and end products. Due diligence is very important. Even within a single region, the quality of assets can vary greatly. You choose the best piece of land that fits your strategy, depending on whether you are more focused on return, risk or impact. For us, with real physical assets, natural risks are important. When we looked at damage caused by hurricanes, forest fires, insect infestations, diseases, droughts, floods, ice storms, etc., we saw an average loss of less than 0.2% per year over a portfolio of fourteen billion dollars over eight years. That is relatively limited, but the impact on a single asset can of course be significant. That is why insurance is important, even though you cannot take it out everywhere and at all times. In addition, we always carry out a climate risk and opportunity analysis for each asset. Then it is a matter of active management, adapting to changing circumstances.'

 

Long-term commitment can only succeed if local communities benefit from it in the form of extra income, improved agricultural methods, you name it.

 

How do you work with other organisations or governments to increase the impact of your natural capital investments? Can you give examples of successful collaborations?

De Nooij: 'We are working on conservation easement projects, together with forestry services and other government agencies in the United States. These are extremely valuable for our investors, for biodiversity, for the climate and for the United States itself.'

Duquet: 'We try to actively build coalitions and partnerships in all our sectors. In forestry, we recently announced a collaboration with FSC, the Forest Stewardship Council. We encourage all our participating companies to obtain certification, for example through Rainforest Alliance. This is important because it shows that a party has grown in terms of sustainability. It also helps to have external verification: are they really working sustainably, or does it just look that way? In addition, certification can generate additional income, for example for small farmers who grow certified cocoa or coffee. The same applies to FSC-certified wood. In addition, we work with data agencies to strengthen our analyses and impact measurements. We have entered into several such partnerships to further substantiate our vision of impact. Thirdly, we are actively involved in coalitions and industry organisations, such as the TNFD, the Taskforce on Nature-related Financial Disclosures. We have been part of a working group within the TNFD for many years and actively contribute to its work. Dulong: ‘When it comes to forestry, certification is crucial. All our forests are FSC or PEFC certified, and we strive to maintain dual certification. This ensures that we fully cover biodiversity, carbon storage and sustainable management.'

Dulong: 'Forest management consists of multiple layers. You have the end investors, ourselves as investment managers, and the forest manager on site. On top of that, you often work with local parties and NGOs. If you manage to activate all those layers and get them on the same page, you create a powerful ecosystem. By encouraging collaboration, everyone performs better. In Finland, we have a project where we work with a paper manufacturer. We improve forest management, ensure that all paper is FSC-certified, and that everything that happens in the forest actually meets the standard and our internal requirements. The paper manufacturer's factories are designed to use everything from the forest, as close to the source as possible, so that transport is kept to a minimum. In emerging markets, as I mentioned earlier, we work with local communities, NGOs and governments. We focus in particular on revenue sharing and benefits for the local population. Together with NGOs, for example, we have set up women's clinics in the communities themselves. By working together with local communities, the government and NGOs that provide funding and coordination, we bring the entire ecosystem together. This not only has a social impact, but also financial benefits for the project. Finally, I would like to mention an example of how we invest in the entire value chain. We have acquired a stake in a company, Chloris Geospatial, which collects nature data via satellite imagery. Among other things, they measure biomass prior to our investment, during the project and after its completion. This allows us to accurately determine how much CO₂ has actually been captured by tree growth. We can also detect 'leakage', such as deforestation in the immediate vicinity. And we can assess whether there is real additionality, i.e. whether the project delivers something that would not otherwise have happened. This approach enables us to create value through the quality of the CO₂ credits, through the ecosystems that are delivered and through potential follow-up investments. Because we are a shareholder in the project developer, co-finance the project and are involved in land acquisition, we can unlock value along the entire value chain.'

Finally, do you have any closing remarks?

Dulong: 'In the current volatile macroeconomic environment with regard to government policy, it is a reassuring sign that capital from the private sector is moving in the right direction. So let's remain positive and believe that we will make the right decisions over the next twenty to thirty years, with an even longer positive impact.'

Kooken: 'What we haven't touched on is the increasing use of engineered wood products such as cross-laminated timber (CLT) and laminated wood (glulam) in construction projects as a substitute for concrete and steel. This wood stores CO₂ and is used in buildings, where the CO₂ remains stored for a long time. At the same time, you avoid the production of steel and concrete, which is very polluting. I am seeing this more and more in the United States. But there are also more projects in the Netherlands where this is being used. This is a promising trend, both from a sustainability and a financial perspective.'

Duquet: 'Climate change is having a major impact on nature, but there are solutions. As the effects of climate change are becoming increasingly visible, I think we will move faster. We also have a growing understanding of the value of natural systems. If we can capture that value – through CO₂ credits, protection, etc. – then the whole paradigm of financial investment will change.'

Guest: 'It’s fantastic to see that private investments with a positive impact on natural capital are so well developed. However, these investments only make up a small part of investment portfolios. Knowing that our natural environment can recover quickly, we must also continue to reduce the negative impact of listed companies.'

Claudon: 'There are several things working in our favour. First, the willingness to invest. More and more people are aware that natural capital investments contribute to solving the crises of climate change and biodiversity loss. Second, the revenue side. New revenue streams and attractive returns are emerging. Third, technology. AI, remote sensing and blockchain are huge steps forward for our sector. And finally, regulation. There is an increasing regulatory framework in place that supports the natural capital asset class.'
  

SUMMARY Natural capital encompasses the natural resources and ecosystem services provided by the Earth that are essential to our lives and well-being, such as forests, water, soil, air and raw materials. This asset class is still relatively new in the institutional world. It is growing, partly due to sustainability considerations and its low correlation with traditional assets. Natural capital is a stable factor in the investment portfolio. The relatively high returns and low risks contribute to a high Sharpe ratio. Investors really need to take a long-term view on natural capital. The impact of natural capital solutions is often difficult to express in monetary terms. More and more investors are aware that investments in natural capital contribute to solving problems such as climate change.

 

Sanne van Gorp Sanne van Gorp works as an Investment Strategist in PGGM's Strategy Department. In her role, she advises PFZW on the fund's sustainable investment policy, drawing on her academic background in both finance and sustainability. She is working on the development of PFZW and PGGM's new impact strategy, which actively focuses on real-world impact.

  

Céline Claudon Céline Claudon is Chief Commercial Officer at International Woodland Company (IWC), a specialist in natural capital. She has 20 years of experience in investing in natural capital, including evaluating portfolio managers for IWC's institutional clients. BNP Paribas Asset Management has a majority stake in IWC.

  

Jérôme Dulong Jérôme Dulong is Head of Natural Capital Investments at AXA IM Alts and focuses on nature-based solutions and forestry. He is primarily responsible for the deployment of the AXA IM Natural Capital Fund, which was established with a $500 million investment by the AXA Group and invests globally in nature conservation and restoration projects.

  

Sébastien Duquet Sébastien Duquet is Head of DFI & Sovereign Business at Mirova (part of Natixis Investment Managers). He develops private funds for development finance institutions and foundations, with a focus on energy transition and natural capital. Previously, he was CIO at Symbiotics. Duquet has also led Oxus and PlaNIS. He is co-founder of FinanCités and Planet Guarantee and has worked at Arthur Andersen and EY.

  

Arnold Gast Arnold Gast joined Morningstar Sustainalytics in 2022, where he currently leads the ESG Sector Research team. This team consists of approximately 90 research analysts who provide company-level ESG ratings that assess risks, controversies and climate change impact. Previously, Gast worked at Shell Pensioenbureau Nederland, ILX, ACTIAM and Delta Lloyd Asset Management, among others.

  

Ralf Kooken Ralf Kooken focuses on global infrastructure and natural capital investments in which a.s.r. real assets investment partners invest on behalf of its clients. He develops investment strategies and is responsible for the implementation and management of these investments. Kooken has extensive experience, both in the Netherlands and internationally, and is skilled in developing sustainable investment strategies, formulating net-zero policies and conducting climate scenario analyses.

  

Mark de Nooij Mark de Nooij has an educational background ranging from Electrical Engineering at Delft University of Technology to General Management at Nijenrode Business University. He began his professional journey as an Engineer at Wartsila, followed by a move to MN, where he started working as an Investment Strategist. At NZ-Funds in New Zealand, he flourished as a Portfolio Manager. He has been back at MN since 2012.

  

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