Alex Godfrey, our Natural Capital Investment Director, shares five key developments he thinks will reshape markets, restore ecosystems, and align environmental and financial goals in 2025.
As we look ahead to 2025, it feels like it could be a pivotal year for natural capital – one that could redefine the UK’s approach to nature and elevate its role on the global stage.
Markets are gaining momentum, creating transformative opportunities to restore ecosystems, tackle climate change, and drive meaningful progress. With new policies, innovative investment strategies, and fresh methodologies emerging, the potential to unlock natural capital’s full value has never been greater.
Here are five key developments I think we’ll see in 2025 – and why they matter.
Scaling carbon transactions
One of the biggest opportunities this year lies in scaling up carbon transactions through the Woodland Carbon Code and Peatland Code. These frameworks have already laid a solid foundation, but their growth will depend on attracting buyers who are genuinely committed to long-term sustainability – not just ticking the “net zero” box.
The right buyers bring trust to the market by focusing on nature restoration for its enduring benefits. By committing to pre-purchase agreements or partnering with landowners, they provide the financial certainty needed to unlock larger, more impactful projects.
I expect to see more businesses buying carbon credits upfront, giving developers the confidence to get projects off the ground. Stronger collaborations between landowners and corporations will also play a key role, aligning environmental ambitions with commercial priorities.
Add to that new financing models that reduce early-stage risks, and 2025 could be the year we truly accelerate nature-based carbon removals in the UK.
Policies paving the way
Governments will continue to be a driving force in natural capital markets this year.
In the UK, initiatives like the Scottish Government’s Ecosystem Restoration Code and international frameworks such as the UN Global Carbon Framework are providing the standards and stability needed to attract private sector investment.
Subsidies, tax breaks, and regulatory clarity will be key to scaling these markets. I expect 2025 to bring even more government-led initiatives aimed at fostering public-private collaboration.
This kind of support lays the groundwork for scaling UK-based carbon projects and provides a blueprint for sustainable growth.
Shifting to nature-positive thinking
Being “nature positive” has moved from a buzzword to a necessity.
Frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD) highlight the risks biodiversity loss poses – not just to ecosystems but to investment portfolios too.
Investors are becoming increasingly aware that failing to account for biodiversity loss poses financial, reputational, and operational risks.
In 2025, I believe we’ll see more investors embedding nature-positive strategies into their decisions to align with the evolving frameworks and ensure transparency and resilience. This means going beyond carbon metrics to focus on broader benefits, like protecting habitats, improving water quality, and restoring biodiversity.
It’s a mindset shift from simply reducing harm to actively regenerating ecosystems – a critical step in ensuring long-term impact.
For me, this is one of the most exciting trends of the year. It signals a maturing market that balances environmental priorities with financial goals.
New ways to capture carbon
Afforestation and peatland restoration will always be vital, but 2025 is shaping up to be a year where new carbon capture methodologies take centre stage.
Soil carbon credits, for instance, reward farming practices that lock carbon into the soil while improving its health. Hedgerow restoration is another exciting area– these underappreciated ecosystems are brilliant for both carbon sequestration and biodiversity.
Then there’s “blue carbon,” focused on capturing carbon in marine ecosystems like seagrass meadows and mangroves. These emerging methodologies reflect a deeper understanding of how diverse landscapes can contribute to tackling climate change. As they gain validation and scale, they’ll provide investors with even more opportunities to balance climate goals with biodiversity.
The rise of nature-positive funds
Another one of the most exciting trends I see for 2025 is the shift towards nature-positive investments manifesting in the creation of more dedicated funds. These investment vehicles will aim to deliver strong financial returns while prioritising measurable benefits for ecosystem health.
The past years have shown a growing interest in funds that embed environmental stewardship into their core strategy. By 2025, we can expect a wave of nature-positive funds, driven by investor appetite for aligning capital with purpose, backed by scientific rigour, and ensuring measurable outcomes. Such funds will prioritise not only carbon credit yields but also biodiversity credits and wider ecological enhancements.
The creation of these investment vehicles will demonstrate a great example of how the market is evolving to prioritise both profit and the planet.
Why it matters
For me, 2025 feels like a turning point.
And I believe it will be a landmark year for natural capital.
Characterised by growth in transaction volumes, policy-backed market integrity, richer narratives tied to investment risk management, and the expansion of carbon methodologies. The surge in nature-positive investment funds will underscore this transformation, providing a testament to the increasing value placed on sustaining the planet while achieving economic prosperity.
In the UK, we’re setting the pace. By demonstrating how environmental restoration and financial returns can go hand in hand, we’re showing the world what’s possible. The way I see it is that natural capital isn’t just an investment opportunity – it’s a way to create resilience, unlock the potential of our landscapes, and build a better future.
I look forward to seeing the progress we make this year.