The Natural Capital Fund

Natural Capital Fund

What is Natural Capital?

Natural Capital may be defined as:

“The stock of renewable and non-renewable natural assets (e.g. ecosystems) that yield a flow of benefits to people (i.e. ecosystem services).  The term ‘natural capital’ is used to emphasise it is a capital asset, like produced capital (roads and buildings) and human capital (knowledge and skills).” (from: the Economics of Biodiversity: The Dasgupta Review, HM Treasury, February 2021)

The concept of natural capital seeks to recognise the role of nature as an asset which is key to the sustained functioning of human social and economic activity.  Examples of natural capital include clean air, water supply, plant life, animals, soil and minerals.Natural Capital Fund Logo

Objective of the Natural Capital Fund

The Natural Capital Fund designation endorses schemes through which investment can be made into initiatives which make a positive contribution to, and/or significantly reduce harm done to, the natural world. The Natural Capital Fund enhances investor access to the natural capital investment space by providing a trusted and transparent product that contributes to the internationally agreed objective of abating natural capital loss. The Natural Capital Fund regime has a broader, nature-focussed, scope than the Guernsey Green Fund regime, whose focus is centred on climate change mitigation and adaptation. The extent of the Natural Capital Fund regime includes schemes which, through their activities, commit to significantly reducing environmental harm to nature as well as those which aim to contribute positively. In calibrating the scope of the regime to include schemes with such transitional investment strategies, it is envisaged that a wider spectrum of investment strategies may be accommodated, increasing the range of schemes which might seek designation.  It is hoped that as a consequence, a greater contribution can be made to the flow of resources directed towards the effort to preserve and rebuild the planet’s reserves of natural capital.

Investors in a Natural Capital Fund are able to rely on the designation, provided through compliance with the Natural Capital Fund Rules, to be confident that the scheme is committed to making a nature-positive investment.

Any class of Guernsey fund can notify of its intention to be designated a Natural Capital Fund whether registered or authorised, open-ended or closed-ended, providing it meets the eligibility criteria.

The Commission will designate Natural Capital Funds on its website and the Natural Capital Fund logo that is provided to a Natural Capital Fund may be used on its various marketing and information materials (in accordance with the Commission’s guidelines on logo use) so that it may clearly display its Natural Capital Fund designation and compliance with the Natural Capital Fund Rules. 

How does it work?

The elements for establishing a Natural Capital Fund are set out below:

  1. Set up the scheme starting with one of Guernsey’s existing structure types i.e. a Class A, B or Q Authorised Scheme, a Registered Open or Closed ended Scheme, an Authorised Closed Ended Scheme, or a Private Investment Fund.
  2. Determine which of the (currently) 3 options set out in the Natural Capital Fund Rules the objectives of the scheme will align with (further options may be added as appropriate in the future).
  3. Establish appropriate natural capital targets against which the scheme’s positive contribution and / or significant reduction of harm to the natural world may be tracked.
  4. Establish an appropriate framework to monitor, measure, review and report to the Commission upon performance as well as progress against those targets.

How do I apply?

Any Guernsey fund can make an application to seek the Natural Capital Fund designation. In accordance with the Natural Capital Fund Rules, applicants will be required to submit the appropriate completed application form NCF 2023 to the Commission, along with:

  • A final version of the Prospectus;
  • A declaration by the scheme’s governing body in accordance with Part 1 of Schedule 1 to the Natural Capital Fund Rules that the scheme meets the various criteria of the Natural Capital Fund Rules;
  • A report approved by the scheme’s governing body setting out: the investment approach and objectives of the scheme and how these align with the relevant international goals; the natural capital targets set and the approach used to set them; and how compliance is monitored;
  • A copy of the certification from a third party expert verifier, confirming the compliance of the scheme’s objectives, targets and monitoring procedures with the Natural Capital Fund Rules. Where a third party expert verifier is not used in this respect, but rather, in-house expertise is relied upon, then the governing body of the scheme should provide evidence of the strength and qualification of that in-house expertise.
  • Such other information as the Commission may require.

Where the application is for a new scheme (i.e. one which is not already authorised or registered under the POI Law), a completed application form and associated documentation relevant to the type and class of scheme for which the application is being made, along with the relevant application fee in respect of an application for that class of scheme, should also be submitted.

Processing the underlying scheme application will vary according to the type of scheme that has applied for Natural Capital Fund status – please refer to our general information for fund applicants page which can be found here.

The Commission will designate a scheme as being a Natural Capital Fund if it is satisfied that:

  • The scheme’s principal documents and prospectus appear to comply with the Natural Capital Fund Rules, and
  • The above referenced: declaration by the scheme’s governing body; report approved by the scheme’s governing body; and certification by an expert verifier have been provided.

The Natural Capital criteria

Rule 2.1 of the Natural Capital Fund Rules sets out a requirement that the objectives of a Natural Capital Fund must include seeking a return for investors whilst either making a positive contribution or significantly reducing harm to the natural world. Under the rule, those objectives must align with either:

  • The targets set out in the United Nations Convention on Biological Diversity’s Kunming-Montreal Global Biodiversity Framework;
  • The United Nations Sustainable Development Goals 12-15; or
  • The European Union Taxonomy for Sustainable Activities’ Environmental Objectives (c) to (f).

These frameworks incorporate the immense variety of natural capital and provide a comprehensive understanding of what strategies and goals are necessary to abate natural capital loss.  This affords a Natural Capital Fund the flexibility to adopt the sections of the frameworks relevant to its specific investment focus and strategy, while operating in line with internationally recognised standards.

Therefore, the objectives of a Natural Capital Fund do not have to align with every single one of the targets, goals or objectives in the specific framework chosen from the above three options, however its objectives should clearly identify those which are relevant to its investment strategy.

The Commission may, in due course, add to the list of frameworks set out above, where it considers it appropriate.


The scheme will need to acquire certification by an expert verifier, confirming the compliance of the scheme’s objectives, targets and monitoring procedures with the Natural Capital Fund Rules. It is expected that the scheme’s governing body will engage the necessary third party expertise to undertake the task of providing such certification.  However, it is accepted that certain schemes may have access to the appropriate in-house expertise, and the use of such expertise is not precluded.  In such cases, the governing body of the scheme should evidence to the Commission the strength and qualification of the in-house expertise relied upon in making the application.

Use of the logo

The Natural Capital Fund logo must only be used in connection with a scheme designated by the Commission as a Natural Capital Fund and in a manner and form that is not misleading to potential investors.

The logo must be reproduced from original artwork provided by the Commission and must comply with the Natural Capital Fund Brand Guidelines which can be found here.

Its use must not be misleading. For example due consideration should be given to the placement of the logo on stationery or the homepage of an investment manager’s website if other schemes within its portfolio are not designated as Natural Capital Funds.

A Scheme must cease to use the Natural Capital Fund logo as soon as possible after its designation has been removed. For the avoidance of doubt use of the words Natural Capital Fund is separately restricted under Rule 2.4(1) of the Natural Capital Fund Rules.