Building Nature-Positive Portfolios
Collective Action
Van Lanschot Kempen
More than half of global GDP – approximately $44 trillion – is moderately or highly dependent on nature and its services.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 article, 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.
In practice: Komet
Austrian company Komet produces cutting-edge irrigation equipment that enables farmers to use up to 85% less water compared to conventional agricultural sprinklers. At the same time, this technology significantly reduces energy consumption and greenhouse gas emissions. Given that irrigated agriculture is one of the largest consumers of water worldwide, Komet’s solutions have the potential to deliver substantial savings on a global scale.
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.
In practice: Renewtech
An example is Renewtech, a Danish company that purchases used enterprise hardware, which is then tested, refurbished, cleaned and stored. Ultimately, it is sold to (business) customers worldwide. Renewtech contributes to the circular economy by extending the life of enterprise IT hardware and reducing the CO2 footprint of up to 90%.
Integration Across Areas
The most effective nature-positive strategies combine investments across the areas mentioned above. For example, a portfolio company developing biodegradable materials from agricultural waste not only advances circular economy principles but also creates value for regenerative agriculture practitioners and reduces water pollution. This interconnected approach multiplies positive outcomes while potentially improving financial risk-return profiles through diversification of impact pathways and revenue streams.
Portfolio Construction Considerations
Alternative Investments in a Strategic Allocation Framework
For investors seeking to create positive impact, private markets are uniquely positioned to deliver nature-positive outcomes. Private equity, private debt, infrastructure, farmland and forestry (real assets) enable capital to be invested in transformative business models and projects that combine financial returns with nature restoration.
The opportunity set is substantial and growing. The transition to nature-positive economic systems requires an estimated $700 billion in annual investment by 2030, creating opportunities across sectors, regions, and different stages of company maturity.
Institutional investors increasingly approach nature-positive private market allocations using a structured framework that considers the full spectrum of portfolio objectives, including returns, costs, governance budget, risk tolerance, and impact goals. Achieving the right balance across these aspects depends on thorough manager selection and a research team capable of conducting detailed due diligence and understanding the challenges inherent in private market investments.
These challenges, such as greater complexity, restricted liquidity, and limited transparency, require active management, rigorous oversight, and, for impact investing, sophisticated measurement systems. An experienced and dedicated manager research team can implement this effectively.
Diversification and Impact
A well-constructed, integrated portfolio that combines various asset classes – such as private equity and private debt – offers strong diversification across business lifecycle stages, geographic regions, sectors, and time horizons. This approach not only mitigates risk but also enhances the potential for positive impact.
Asset class and stage diversification: Allocating investments across different private market strategies, portfolios can support companies at various stages of their development and work synergistically for more impact. For example: venture capital targets breakthrough innovations that growth equity scales to market leadership, buyout transforms incumbent companies and debt finances growth while providing downside protection.
Geographical diversification: Investing in regions where nature faces the greatest threats ensures solutions reach the largest scale and have the most impact.
Sector diversification: Spreading investments across areas such as the circular economy, food and agriculture, climate solutions, and water and ocean systems helps manage execution risk. It also maximises the portfolio’s exposure to different impact pathways.
Time horizon diversification: Balancing short-term opportunities with longer-term projects acknowledges that different investments will generate expected returns and impact over varying timeframes. Balancing quick-turn opportunities with longer-term transformation projects creates a more stable expected cash flow profile.
Diversifying across sectors, geographies, asset classes, and time horizons can optimise the risk-return profile of the portfolio. Reducing risks from economic downturns, regulatory changes, or climate-related events also helps to ensure that impact goals remain achievable even in challenging environments.
Role of Various Asset Classes in a Nature-Positive Portfolio
Venture capital seeds transformative innovations when capital and influence are most crucial. It acts as the portfolio’s ‘innovation engine’, recognising breakthrough solutions and capturing value from paradigm-shifting business models.
Growth equity invests in companies with proven product-market fit, helping them scale towards market leadership. It serves as the ‘validation layer’ – companies that have overcome early risks and shown commercial viability. Growth balances the higher risk of venture capital with more predictable expected returns and a typical liquidity timeline of four to six years.
Middle market buyout strategies focus on transforming mature businesses by integrating nature-positive practices into established operations and supply chains. This enables the large-scale transition of existing economic activity. Buyout investments provide stable expected cash flows, lower volatility, and typically profitability with five to seven-year holding periods.
Private debt provides downside protection and recurring income, enabling participation in nature-positive opportunities with lower expected risk than equity. Private debt can support nature-positive investing by:
- Providing loans to companies delivering impactful products and services, such as loans to sustainable agricultural companies
- Financing specific projects (use of proceeds), for example, developing recycling plants that contribute to the circular economy
- Incorporating ESG and impact targets into loan agreements, with financial incentives such as lower interest rates for achieving targets like reducing companies’ CO2 emissions and waste
In a nature-positive investment portfolio, farmland can be a significant contributor to direct ecological impact. Additionally, renewable energy infrastructure is vital for the broader climate and energy transition theme – and helps lessen pressure on natural ecosystems.
Strategically allocating across asset classes allows investors to access a full range of opportunities and balance anticipated risk and return. This approach delivers a more balanced risk-return profile, diverse impact pathways, and synchronised cash flow timing, thereby maximising nature-positive outcomes throughout the entire transformation spectrum – from breakthrough innovation to mainstream adoption.
Conclusion
Investing in nature-positive strategies within private markets is not only an urgent necessity but also presents institutional investors with compelling opportunities. We offer a practical framework for building nature-positive portfolios focused on systemic impact that address the root causes of nature degradation. By targeting key transformation areas, institutional investors can achieve meaningful nature-positive outcomes at scale, while gaining access to attractive private market opportunities with strong growth potential and clear exit strategies.
Applying a systemic transformation lens to impact portfolio construction enables a well-diversified portfolio across asset classes with a balanced risk, return, and impact profile. The question is not whether to invest in nature-positive strategies, but how quickly portfolios can be positioned to capitalise on the expected opportunities and manage the risks of this pivotal transition.
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.