Martin Davies, global head of natural capital at Nuveen, makes his case for the alternative.

What is the case for allocating to natural resources?

Natural capital investment can generate attractive risk-adjusted returns from forestry, farmland and nature restoration. New revenue streams from carbon and biodiversity credits and monetization of ecosystem services are supported by policies and regulation, bringing market demand. In addition, it has a positive environmental impact and aligns with sustainable development goals.

You refer to natural resources as a “shock absorber.” Explain, please.

Returns from timber and crop production and ecosystem services are not correlated with stocks and bonds. When equity markets fall, these resources remain necessities of life, reducing portfolio volatility.

Land-based assets — such as food and timber — rise in value with shocks such as inflation spikes, resulting in hig