By Hugh Locke
During Climate Week NYC this past September, amid discussions about regenerative agriculture, there was an unmistakable signal that money was beginning to move. Not traditional agricultural lending, but something fundamentally different. Financial institutions were talking about natural capital funds. Investment managers were describing ecosystem services as tradeable assets. Pension funds were allocating capital to portfolios built around soil health and biodiversity enhancement.
This was institutional investment capital seeking returns through a category most smallholder farmers have likely never heard of: natural asset management. As regenerative agriculture continues building momentum following COP30 in Brazil, understanding this emerging financial architecture matters. Because the way capital flows will shape who benefits from the transition, what practices get rewarded, and whether smallholder farmers in the Global South find themselves as partners in transformation or merely suppliers in someone else’s investment strategy.
A New Asset Class Takes Shape
Natural asset management emerged as investors began recognizing that healthy ecosystems generate measurable economic value. The foundational insight is straightforward: land managed to enhance rather than deplete natural systems produces tangible environmental benefits with market value. Carbon sequestration, water filtration, biodiversity conservation, and soil restoration are services that corporations increasingly need to purchase to meet sustainability commitments and comply with emerging regulations.
Natural asset companies convert these ecosystem services into investment vehicles. Rather than requiring investors to purchase farmland directly, these companies create portfolios that allow institutions to invest in environmental outcomes that regenerative land management delivers. A natural asset fund might raise capital from pension funds, then deploy that capital to support farmers transitioning to regenerative practices. The fund retains economic rights to environmental benefits while farmers continue working their land.
The model began taking form around 2009 when pioneering firms like SLM Partners started building investment strategies around regenerative agriculture. By 2019, major institutional players were entering the space. Nuveen Natural Capital, now the world’s largest farmland asset manager with over $12 billion under management, launched its Nature Positive Farming initiative. Climate Asset Management, a joint venture of HSBC and Pollination, has raised over $1 billion for natural capital strategies. French impact investor Mirova has mobilized more than €350 million specifically for regenerative agriculture projects.
What Investors Are Seeking
For institutional investors, natural asset funds offer access to environmental markets without operational complexities of owning farms. They can allocate capital to portfolios representing measurable environmental outcomes—tons of carbon sequestered, hectares of habitat restored, watersheds protected—with financial returns increasingly linked to growing corporate demand for verified environmental benefits.
This demand is not speculative. California’s climate disclosure laws now require companies with revenues exceeding one billion dollars to report greenhouse gas emissions throughout their supply chains. Europe’s Corporate Sustainability Reporting Directive applies to approximately 50,000 companies. These regulations have transformed environmental outcomes from marketing claims into necessary compliance mechanisms.
The Promise for Smallholder Farmers
For smallholder farmers, particularly in the Global South, natural asset investment presents what proponents describe as a pathway to access capital for regenerative transitions without requiring land sales or taking on debt. This distinction matters significantly in contexts where farmers already face pressure from land speculation.
In carbon credit projects like Mirova’s recent investment in India, farmers enter agreements to adopt specific regenerative practices. Technical assistance helps with implementation. When carbon sequestration is verified and credits are generated, farmers receive payments through revenue-sharing arrangements. In that Indian project, over 337,000 farmers are expected to benefit from credit sales while seeing improved soil health, reduced input costs, and better water retention.
What makes these arrangements potentially transformative is access to capital and markets that would otherwise remain out of reach. Traditional agricultural lenders typically cannot finance the transition to regenerative practices because benefits accrue over years rather than single seasons. Natural asset investment provides the patient capital needed for transitions that might take five to ten years to fully realize their economic and environmental potential.
Significant Issues and Open Questions
The optimistic framing needs examination against implementation realities. Investment capital is flowing—substantial commitments from major institutions signal real money moving into nature- based solutions. Technology advances are addressing measurement and verification barriers that have historically prevented smallholder farmers from accessing environmental markets.
But warning signs are equally real. Most concerning is how little climate finance actually reaches the solutions it’s meant to support. Despite billions being invested in natural capital strategies, only about 4 percent of climate finance is making it to solutions like restoring degraded land agroforestry.
Unlike organic certification, natural asset investment has no unified regulatory framework. Multiple competing frameworks from organizations like Regenified, the Rodale Institute, and Leading Harvest have each introduced their own standards for measuring regenerative outcomes. This proliferation creates confusion and opens the door to greenwashing. When every fund can define regenerative agriculture differently, and when there’s no independent authority verifying those definitions, the risk that the term becomes meaningless increases substantially.
Perhaps the most fundamental question is whether natural asset investment genuinely serves smallholder farmers or represents a new form of financial extraction dressed in green language. When institutional investors retain ownership of ecosystem services while farmers work the land, who truly benefits? When carbon credits generated by smallholder practices are sold to corporations that use them to offset continued emissions elsewhere, is that regeneration or just making pollution more palatable?
What This Means Going Forward
Natural asset investment represents a significant shift in how capital might flow to regenerative agriculture. But potential is not the same as guarantee. Whether it becomes a tool for genuine agricultural transformation or another mechanism through which financial interests extract value from farming communities will depend on choices being made right now.
As regenerative agriculture continues building momentum, smallholder farmers and their advocates need to understand this emerging financial architecture. The terms of participation matter. Who defines what counts as regenerative matters. How revenues are shared matters. Whether farmers maintain autonomy over their land and practices matters.
Natural asset investment is neither savior nor villain. It is a tool, and like any tool, its impact will depend on who wields it and for what purposes. The time to shape how these mechanisms develop is now, while the sector is still young enough to be influenced by voices beyond the financial industry. That requires ensuring that the farmers doing the actual work of regenerating land have meaningful power in the systems being built to finance that work.
The money is moving. The question is whether it moves in ways that serve regeneration, or whether regeneration becomes just another story investors tell while continuing business as usual with better accounting.
