Asian investors can benefit from early mover advantage in nature investments: fund manager

Asian investors should view nature investments favourably despite volatility in returns and longer investment horizons, as they offer diversification benefits and tackle climate change, according to an asset manager.

There is an “early mover advantage” for investors in nature assets before it becomes mainstream, said Ben O’Donnell, chief investment officer of Climate Asset Management (CAM). The London-based fund manager is a joint venture formed in 2020 between HSBC Asset Management and climate change investment and advisory firm Pollination.

“There will be a first-mover advantage for people who put capital in this space, particularly when regulations come in forcing people to put more capital into investments that enhance climate and environment outcomes,” O’Donnell said. “Nature capital investment is underpinned by the megatrend of population growth and finite natural resources.”

Nature capital refers to natural resources such as forests, soil and water that make human life possible and are essential to a sustainable economy. Their productivity and benefits are endangered by more frequent extreme climate events, pollution and over-exploitation, which are gradually being tackled through conservation regulations and incentives to reverse damages.

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Although nature investments, such as afforestation and regenerative agriculture, can generate “high single to low double-digit” percentage annual returns, comparable with stocks, property and infrastructure, investors – particularly from Asia – are underinvested, O’Donnell said.