Natural capital moves from ‘impact’ to portfolio resilience lens
Institutional investors are moving natural capital from within pure ‘impact’ investment framing into a portfolio resilience lens, according to research from mallowstreet.
In the group’s Natural Capital Report 2026, in which it surveyed 68 UK asset owners representing more than £3trn in assets, it found this shift was being driven not by values but by proof of returns alongside measurable outcomes as well as execution and delivery.
It found investors agree investment in natural capital makes long-term economic sense, but investors need to build confidence when investing in the sector. Nonetheless, the research described the market as “approaching a critical inflection point” with more commitments of capital.
For example, two in five non-investors plan their first natural capital allocation within their first five years of investment, while one third of existing investors expect to increase their natural capital allocations to above 3% by 2030.
Among investors planning to increase allocations beyond 3%, nine in 10 strongly link nature and climate, and six in 10 strongly back the long-term economic rationale for natural capital.
Ally Georgieva, head of insight at mallowstreet, said: “Natural capital is no longer unfamiliar to UK investors, but confidence in how it delivers economically is still uneven. What we see clearly in the data is that experience builds conviction. As investors become more comfortable, expectations rise sharply around evidence, transparency and performance. The next phase of this market will be defined by proof and execution, rather than labels alone.”
Rob Gardner, CEO and co-founder of Rebalance Earth, commented on the findings: “For years, natural capital sat in the ‘impact’ box. That framing is shifting toward portfolio resilience. As highlighted by actuaries and government analyses, flooding, water stress, and ecosystem failure are no longer theoretical risks; they are already affecting balance sheets, asset values, and supply chains.
“What’s changing is how investors respond. Natural capital is increasingly being assessed as infrastructure, with a focus on cashflow, resilience, and risk reduction. In practice, this means a modest allocation can help reduce risk across the rest of the portfolio over the long term.”
See also: Bridging the adaptation gap