UK Investors Signal Natural Capital’s Move into the Mainstream

New research from Mallowstreet shows appetite for natural capital is rising, whilst investor exposure and evidence of returns for new entrants is needed to unlock larger allocations

(London, 28 January) New research from Mallowstreet published today shows that natural capital is moving decisively into the mainstream. Produced with support from BNP Paribas Asset Management, Foresight Group and Rebalance Earth, the Natural Capital Report 2026 finds that the market is approaching a critical inflection point, as asset owners indicate their intention to commit more capital and significantly increase allocations.

Based on responses from 68 UK institutional asset owners representing more than £3 trillion in assets, the new research finds investors agree that investment in natural capital makes long term economic sense, but that many need to see more proof of return delivery before they strongly agree. However, conviction builds after initial investments have been made and investor experience of the sector is increasing.

Key findings:

1. The momentum is real: two in five non-investors are planning their first natural capital allocations in the next five years and many existing investors are looking to scale up significantly.
2. 94%of local government pension schemes, 75% of defined contribution, 75% of insurers, 58% of defined benefit and 50% of charities said they expect to hold an allocation in natural capital in the next five years.
3. Experience drives confidence: among investors planning to increase allocations beyond 3%, nine in ten strongly link nature and climate, and six in ten strongly back the long-term economic rationale for natural capital.
4. 59% of UK institutional asset owners strongly agree that protecting nature is inseparable from tackling climate change, underlining a robust foundation of environmental conviction across the market.
5. Investors now prioritise substance over compliance, with 68% saying well-defined project-level KPIs matter most when assessing natural capital strategies

Together, the findings point to a market that is no longer debating whether natural capital belongs in institutional portfolios, but how confidently it can be invested in rapidly and at scale.

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.”

With greater comfort, momentum is being built, with one third of existing investors expect to allocate more than 3% of assets by 2030. 

Rob Gardner, CEO and Co-Founder of Rebalance Earth, comments 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 cash flow, resilience, and risk reduction. In practice, this means that a modest allocation can help reduce risk across the rest of the portfolio over the long term.”

Investor expectations of asset managers are also evolving. While familiar themes such as forestry, timber and agriculture remain popular, contracted payments for ecosystem services, including flood protection and clean water provision, have emerged among the top expected revenue streams. By contrast, carbon and biodiversity credits are increasingly viewed as potential upside rather than core drivers of investment.

Robert Guest, Co-Lead of Foresight Natural Capital said: “This report offers a remarkable trove of insights for asset managers seeking to understand the natural capital priorities of their institutional clients, and for asset owners looking to gauge sentiment among their peers. With our experienced team and track record in the sector, we are energised by the opportunities ahead. Our two natural capital strategies in the UK and Europe are well placed to support the growing wave of allocations into natural capital. My thanks and congratulations to everyone involved in producing this valuable research.”

The full Natural Capital Report 2026 (Available HERE) explores how UK and European institutional investors are approaching natural capital, what is driving allocation decisions, and how the market can move decisively from early adoption to meaningful, long-term scale.