UK family offices are allocating funds to natural capital strategies in search of returns, climate risk mitigation, and diversification, according to Foresight Group and Campden Wealth.

The firms’ research showed that 55 per cent of family offices in the UK were investing in natural capital strategies.

This looked set to grow, with 59 per cent of family offices saying they were moderately or highly likely to allocate to natural capital investments over the next one to three years.

Motivations for investing in natural capital were varied but were primarily driven by financial returns (27 per cent), climate risk mitigation (24 per cent), and portfolio diversification (20 per cent).

The most popular type of natural capital asset was regenerative agriculture, with 25 per cent of respondents expressing an interest in this area, followed by 18 per cent for afforestation.

However, family offices cited barriers to investing in natural capital, which included valuation uncertainty, the lack of track record for this type of investment, and regulatory risk.

The research found that sustainability and nature-based investing discussions within family offices were typically led by a family member, rather than a chief investment officer.

For 76 per cent of family offices, a family member was the driving force behind conversations on natural capital.

“These results are fascinating as they show quite clearly that family offices are already deeply involved in the flow of capital towards sustainability and nature-based investing – with more looking to invest in the near future,” commented Foresight Group managing director and co-head of natural capital strategy, Richard Kelly.

“Family offices are uniquely long-term investors, often thinking in terms of future generations. When you take that kind of time horizon seriously, it becomes increasingly difficult to ignore the twin emergencies of climate change and biodiversity loss – and investing in natural capital is one of the most direct and impactful ways to address both.”

Campden Wealth CEO, Dominic Samuelson, added: “It is increasingly evident that family offices are investing and increasing their allocations to natural capital - such as sustainable forestry, agriculture, and nature-based solutions - due to growing pressure to align investments with values, generational wealth transfer, and the understanding that nature and the environment is fundamental to economic stability.”

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