The latest mallowstreet Natural Capital Investment Focus, held at the BFI Stephen Street in London, brought together institutional investors, asset managers and advisers to examine how natural capital strategies are evolving from niche sustainability allocations into scalable institutional investments.

As Head of Insight at mallowstreet, I had the pleasure of opening the morning with a keynote session presenting findings from the second annual UK Natural Capital Report.

While many investors increasingly recognise the importance of nature in climate mitigation and long-term resilience, fewer are fully convinced that natural capital yet offers sufficiently proven, risk-adjusted returns for large-scale allocations. The session highlighted an ongoing “belief gap”: investors want stronger evidence that natural capital can deliver institutional-quality returns alongside environmental outcomes.

This creates a familiar challenge for emerging asset classes. Investors are often reluctant to commit capital without an established track record, yet that track record cannot develop without greater institutional participation. Combined with ongoing concerns around fiduciary duty, measurement and scalability, natural capital risks remaining a relatively small allocation despite rising interest across the market.

Attendees then rotated through two masterclass sessions exploring different approaches to scaling natural capital investment strategies.

Aviva Investors’ session, Carbon Removal: A New Lever in Institutional Portfolios, examined how carbon removal is emerging as a distinct investable asset class. Presenters introduced the Aviva Investors Carbon Removal Fund and discussed how institutional investors are increasingly viewing high-quality carbon credits not only as a tool for supporting net zero commitments, but also as a long-term hedge against climate, transition and regulatory risks.

A central theme throughout the discussion was the growing emphasis on aligning sustainability objectives with fiduciary duty and long-term return expectations.

Foresight Group’s session, Land Use Transition and Natural Resilience Under Holistic Management, explored how natural capital investing is expanding beyond traditional forestry and agriculture models.

Using a series of case studies, the presenters demonstrated how development, enhancement and aggregation strategies can generate competitive returns while also supporting carbon sequestration, biodiversity enhancement and sustainable land stewardship.

The session reflected a broader shift within the market: natural capital strategies are increasingly being framed not simply as environmental investments, but as part of long-term portfolio construction and resilience planning.

Across both masterclasses, a clear theme emerged. Natural capital investing is gradually moving away from being viewed solely through a sustainability lens and is increasingly being assessed as a strategic allocation in its own right.

As institutional investors continue to look for diversification, resilience and long-term growth opportunities, the challenge for the market is no longer simply generating interest—but building the evidence base, scale and implementation pathways needed to support broader adoption.