High-integrity carbon and biodiversity markets are scaling fast, transforming natural capital into one of the century’s most powerful asset classes. Unsplash+
Natural capital, the planet’s stocks of soil, air, water and biodiversity, has shifted from the margins of philanthropy into the center of global finance. Once the concern of activists and campaigners, it is now emerging as a recognised asset class. As climate change, biodiversity loss and sustainability pressures mount, governments, corporations and investors are rethinking how to value and invest in ecosystems that underpin our economies.
This represents a profound paradigm shift: nature’s services are no longer just to be protected, but also priced, traded and embedded within financial systems. To understand how we reached this point, it’s worth tracing the origins of natural capital markets in early carbon trading systems, which laid the groundwork for today’s more sophisticated structures—and looking ahead to what the future may hold.
Early ventures to structured financial markets
The first formal natural capital investment frameworks emerged out of regulated carbon markets. The Kyoto Protocol (1997) established international carbon trading, and by 2005, the E.U. Emissions Trading System (E.U. ETS) became the world’s largest compliance market. Standardized allowances and credits represented one tonne of CO₂ equivalent (CO₂e) either avoided or removed from the atmosphere, making projects comparable and markets transparent.
Yet these early compliance systems were never designed to create truly investable products. They were blunt policy instruments focused on reducing emissions at the lowest cost. In practice, over-allocation and volatility led to price collapses, and the system often acted as a “licence to pollute,” permitting emitters to continue business as usual so long as they purchased allowances or credits.
In parallel, voluntary—or perhaps better described as private—carbon markets offered something more innovative: opportunities for companies or individuals to fund projects with positive environmental and increasingly social outcomes. This distinction between regulation-as-permission and voluntary action-as-restoration is central to the modern natural capital story.
Still, voluntary markets were fragmented and highly variable in pricing. In 2006, reforestation projects traded anywhere between £0.37 and £33.33 ($0.50 and $45) per tonne, while avoided deforestation and monoculture plantations commanded lower values. Early voluntary markets also faced significant integrity challenges. Project methodologies were inconsistent, verification standards varied widely and some credits were criticised for overstating emissions reductions or lacking additionality, meaning they might have happened without market funding. These early weaknesses highlighted the importance of robust standards, independent verification and transparency, lessons that continue to shape modern natural capital investment and the evolution of high-integrity carbon and biodiversity markets.
Meanwhile, the United States pioneered wetland and conservation banking, where developers purchase credits to offset habitat impacts. Today, this market has expanded to more than $100 billion in credit value and can be viewed as the early ancestor of the U.K.’s Biodiversity Net Gain market. While these systems created a mechanism for private capital to flow into conservation, they were restricted to specific habitats or species and designed around achieving “no net loss” rather than genuine biodiversity uplift, limiting the diversity of investment opportunities and potential for landscape-scale enhancement.
The acceleration of private natural capital markets
Natural capital markets are now scaling quickly. Growth is fueled by compliance mandates, corporate net-zero pledges and recognition that resilient, nature-based investments are essential in a changing climate. High-integrity credits from peatland restoration, reforestation and coastal ecosystems now command premium prices.
In 2024, U.K.-accredited credits averaged £26.85 tCO₂e for Woodland Carbon Code projects. By 2025, landmark deals—including Burges Salmon x Oxygen Conservation x WCC (£125 or $169 tCO₂e for up to 8,000 tonnes) and Arup X Nightingal X Wilder Carbon (£100 or $135 tCO₂e for up to 10,000 tonnes)—reset global benchmarks. Forward projections, including the Oxygen Carbon Curvesuggest that prices for the highest-integrity credits could reach £150 ($203) tCO₂e by 2030 and potentially £500 ($675) tCO₂e by 2050.
Major corporate buyers are accelerating global demand. Microsoft, now the largest purchaser of carbon-removal creditshas secured millions of tonnes to meet its 2030 carbon-positive goal. Stripe’s Frontier fund has committed over $300 million to remove over half a million tonnes of CO₂e, while JP Morgan has invested nearly $200 million into durable carbon removal solutions. Such transactions signal institutional-scale interest and reinforce natural capital’s credibility as an asset class.
Biodiversity net gain: the U.K. compliance catalyst
The Environment Act 2021 created the U.K.’s first compliance-driven biodiversity market by mandating a 10 percent Biodiversity Net Gain (BNG) for most developments from January 2024. This has spurred a growing supply chain of habitat banks and trading platforms, including Environment Bank, Gaia Marketplace and BNGx.
In its first year, mandatory BNG delivered strong signals of market activity:
Although only two percent of registered biodiversity units have been sold so far, forecasts suggest a $4 billion market by 2035. Pricing dynamics within BNG markets are also revealing. Common habitat units currently trade between £25,000 and £35,000 ($33,760 and $47,266) per unit, reflecting their broader availability. At the other end of the spectrum, the rarest units, particularly those linked to river and wetland restoration, are commanding extraordinary premiums, often exceeding £100,000 ($135,000) per unit. Their scarcity makes them both ecologically significant and highly attractive to investors seeking exposure to the most exclusive segment of the biodiversity market.
Innovation is also advancing quickly. The leading U.K. business in this space, CreditNaturehas designed methodologies to baseline and measure biodiversity gains over time. These credits are increasingly viewed as the private-market equivalent of BNG, extending principles of standardization and integrity into wider ecosystem services.
Globally, demand for carbon and biodiversity natural capital credits is projected to reach between $37 and $49 billion annually by the early 2030s, with some forecasts suggesting voluntary biodiversity credits alone may be worth as much as $69 billion by 2050—underscoring the scale of opportunity.
The new frontier of natural capital
Natural capital is fast becoming one of the most compelling investment opportunities of the century. Once speculative, high-quality projects that restore ecosystems, sequester carbon and enhance biodiversity are now attracting large-scale institutional capital.
What began as a mechanism to channel private capital into environmental projects has matured into markets with robust governance, transparent measurement and increasing liquidity. The co-benefits—from cleaner air and water to healthier communities—enhance, rather than substitute, financial performance.
The U.K. is already setting the pace for global leadership in this transformation. With strong legal systems, advanced science and technology and transparent price-setting mechanisms, it is demonstrating how commercial success and ecological impact can be mutually reinforcing. Whether the challenge is climate change, biodiversity collapse or the search for diversified investment opportunities, the imperative is clear: act now. There has never been greater urgency—or greater opportunity.
