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Investing in what matters most: nature in focus at Davos 2025
key takeaways.
To unlock the investment flows needed to transition to a sustainable economy, governments, businesses and financial institutions must properly value our four types of capital – natural, social, human and produced
Of these, nature – on which more than half of global GDP depends – should be the entry point. Firms must value and invest in nature now, or face radical disruptions to their business models
The coffee sector could be at the vanguard of the ‘land transition’, with a move from monocultures to regenerative agriculture creating new investment opportunities
Companies that ‘put nature on the balance sheet’ will be best-placed to adapt to the transition to a net-zero, nature-positive, socially just economic model.
The World Economic Forum 2025 at Davos saw a focus on nature, as both a valuable investment opportunity and fundamental to efforts to make businesses more resilient, tackle climate change and reverse environmental damage.
At a panel devoted to mobilising financial markets to unlock the capital needed to address today’s challenges, some of the world’s leading finance and climate change voices honed in on nature and the ‘land transition’. This concept, focussed on restoring exploited and degraded landscapes to nature via mechanisms such as regenerative agriculture and reforestation, served as the essential starting point for discussing nature.
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Hosted by The Capitals Coalition at the UN Compact’s SDG Tent, Hubert Keller, Lombard Odier Senior Managing Partner, joined renowned thinkers including Al Gore, former US Vice President and Founder and Chairman of The Climate Reality Project; Sandrine Dixson-Declève, Author and Chair of Earth4All; André Hoffmann, Vice Chairman of the Board of Directors, Roche, and author of ‘The New Nature of Business’; and Paul Polman, former CEO of Unilever and author of ‘Net Positive: how courageous companies thrive by giving more than they take’. Together, the panellists explored the importance of putting an economic value on natural capital and investing in its regeneration.
With more than half of global GDP dependent on nature, it is an essential entry point for firms needing to adapt their business models as we transition to a sustainable economic model
Valuing four capitals, with nature as an entry point
Delegates heard that forward-thinking companies are already starting to embed four types of capital – natural, social, human and produced – into their decision-making, calculating the risks and opportunities associated with each. For financial markets, the panel explained, the ability to place robust values on these forms of capital will be key to unlocking investment and capital flows.
With more than half of global GDP dependent on nature1, it is an essential entry point for firms needing to adapt their business models in the transition to a sustainable economic model. Increasingly, the panel noted, financial institutions are realising the extent to which they are exposed to nature risks, especially through real assets and agricultural commodities that are under the greatest threat from climate change and extreme weather events.
Hubert Keller explained that as this realisation dawns, new opportunities are emerging in nature-based investing, including in building climate-resilient and nature-positive supply chains in the food sector.
The key to unlocking the land transition, he said, will be finding the necessary capital expenditure to convert degraded land into nature-positive productive landscapes – such as agroforests – “and then ensuring that these landscapes continue to produce in a way that makes economic sense.”
In our food systems, which are the leading cause of deforestation and biodiversity loss, he explained this means moving away from industrial, chemical-dependent monocultures, to “producing food in a way that delivers nature-positive impacts and positive impacts for local communities.”
Turning to real-world examples, he highlighted the coffee value chain as being “ripe for disruption.”
Every day, around 3 billion cups of coffee are consumed globally, he noted. Annually, the industry is responsible for 220 million tonnes of CO₂ emissions.2 The large majority of the beans are produced on monoculture farms – often on degraded, deforested land in the global south.
However, he continued: “Coffee production can be transformed into [nature-positive] agroforestry that results in high-quality produce. The challenge is that the value is nearly all downstream – USD 3.5/kg of green beans from the farm, versus USD 75/kg for the coffee in your coffee machine3. There is an opportunity to mobilise institutional capital, use this as capex for the transition, and create a more efficient value chain by connecting productive farms directly with wholesale buyers through long-term offtake agreements.”
“By disintermediating the value chain you can often sell more cheaply to end buyers. It isn’t the case that there is always a green premium. In some cases you can create more sustainable and more efficient value chains that are better value for end buyers. We can transform the coffee sector, and others, to have better environmental, economic and social outcomes, while unlocking investment potential,” he concluded.
There is an opportunity to mobilise institutional capital, use this as capex for the transition, and create a more efficient value chain by connecting productive farms directly with wholesale buyers
Pricing nature and climate risks
The importance of putting a value on natural capital was echoed at a separate panel focussed on valuing nature, which took place at the ClimateHub and was hosted by GreenUp, a Swiss advocacy and events group focussed on sustainability.
Jörg Eigendorf, Chief Sustainability Officer at Deutsche Bank, told delegates that the first step will be to price nature and climate risks as a liability in financial accounts. Referring to the markets’ failure to price-in the true cost to nature of doing business – the cost of externalities due to pollution, deforestation, and other harmful practices – he explained that governments must set the framework so that these costs become business liabilities.
Highlighting the example of livestock agriculture, which is a significant driver of global deforestation, he explained, “If you buy meat that costs forests dearly, that should be paid for. We need to monetise the protection of forests. Otherwise, they are gone.”
Peter Bakker, President & CEO of the World Business Council for Sustainable Development, emphasised this point, noting that it is only once we understand a company’s exposure to climate- and nature-risks, and its plan to address those risks, that we can include those factors in company valuations.
By factoring transition plans and the risk of nature- and climate-based disruptions into valuations, a company’s asset base may be depreciated
Professor Kai Andrejewski, Senior Partner at Agora Strategy Group, noted that this could have a radical impact on company valuations. By factoring transition plans and the risk of nature- and climate-based disruptions into valuations, he explained, a company’s asset base may be depreciated. This would likely make many of today’s business models unviable.
“We do not need a different way of thinking in accounting. We are just applying what we have in the wrong way,” he said. “When you look at valuations, be much more driven by disruption, and be clear that disruption can make assets worthless.”
However, on the positive side, companies that can deliver their goods or services using fewer resources, or in a way that has a positive environmental impact, will be profitable. “Good entrepreneurs and C-level executives will develop positive cashflow-generating business models while taking this disruption risk into account,” he said.
True value – a holistic analysis
At Lombard Odier, we believe that nature, climate and transition risks and opportunities are important considerations in valuing companies across the economy. Solutions to addressing such risks also provide potential opportunities.
When assessing a firm’s exposure to sustainability factors, we must look beyond traditional environmental, social and governance factors, which are often backward-looking, to assess firms’ level of exposure to climate and nature risks, and how they plan to adapt to or mitigate those risks. Then we can assess their long-term viability in the transition to a net-zero, nature-positive world.
While it is essential that businesses, governments and the financial sector value all forms of capital, nature – the cornerstone of our economy and foundation of all life on Earth – is the essential starting point. By properly valuing nature, and mobilising capital to invest in regenerative and more efficient value chains, directing capital ,– we can turn the tide of deforestation, landscape degradation and biodiversity loss. This is fundamental to building a net-zero, nature-positive economic model.
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
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