Issue #7 - From Capital Accumulation to Planetary Circulation: The Promise of Regenerative Finance

The Cost of Stagnant Capital

When we speak of finance as neutral - a ledger, a tool for allocating resources or measuring returns - we obscure its deeper power. In truth, finance is the bloodstream of human civilisation: value coursing through communities, economies, ecosystems. Where it flows determines what lives, what grows, and what withers.

Today’s financial system resembles an organism suffering from chronic circulation problems. Trillions sit locked away in pension funds, endowments, offshore accounts, earning ‘safe’ returns while soils erode, communities decay, and ecosystems unravel. Just as stagnant blood can breed disease, stagnant capital breeds inequality, fragility, and ecological collapse.

Yet there is a different possibility. If we redesign finance to flow like a living current - nourishing, renewing and circulating into the conditions that sustain life, it could become the greatest lever for planetary repair and social renewal. This principle lies at the heart of regenerative finance.

Finance as Circulation: Lessons From Biology

In biology, life thrives on flow. Nutrients cycle through soil, oxygen moves through blood, and waste products are metabolised into new resources. Wherever flow is disrupted, vitality declines. This is a matter of system design, not metaphor.

When capital circulates equitably and intentionally, into jobs, infrastructure, community enterprises, or ecological renewal, it stimulates regeneration. When it pools excessively in speculative markets or locked‑in low‑yield reserves, the velocity of money slows, and vitality fades. Recent reports underscore the dysfunction of our current flows. According to the UN Environment Programme (UNEP), nearly US $7T per year is invested globally in activities that directly harm nature, roughly 7 percent of global GDP. By contrast, in 2022 only about US $200B flowed into nature‑based solutions (NbS).¹ 

That means for every dollar spent restoring ecosystems, more than thirty dollars go into destroying them.

At the same time, inequality remains extreme. According to the World Inequality Lab (WIL), the global bottom 50% owns just 2% of total net wealth, while the top 10% control roughly 76%. ²  These imbalances are not accidents or signs of scarcity, they are by design. They expose where capital has been allowed to pool - favouring extraction, speculation, and accumulation – over regeneration and resilience.

Ecosystems as Productive Assets

But what if that pooled capital were unleashed, purposefully, toward ecosystems, not away from them?

If finance mirrored the wisdom of natural systems, money would cycle continuously, creating conditions for renewal. Repairing ecosystems and restoring communities would not be ‘side projects’ they’d be recognised as core investments in the foundation of long-term prosperity.

Take coastal mangrove forests: once dismissed as wild wetlands, they are now recognised as living infrastructure. A global study found that mangroves provide more than US $65B in flood‑protection benefits annually, averting floods for 15 million people worldwide, all while supporting fisheries and biodiversity.³ 

Another, more recent analysis estimates the present value of mangroves’ flood‑defence services at US $855B, a testament to their long‑term economic, social, and ecological value.⁴

Restoration projects function as productive assets, not acts of charity. When finance supports them, landscapes become living infrastructure, cash‑flowing systems that generate continuous ecological, social, and economic returns. A restored watershed can save cities billions in water treatment costs. A restored reef can reduce insurance costs for coastal businesses. Investing in repair is not a burden; it multiplies prosperity.

Social Flow: Circulating Capital Through People and Communities

Just as no organ can hoard nutrients without starving the body; no society can thrive when capital is locked at the top. Finance that flows equitably strengthens education, healthcare, housing, and entrepreneurship. It creates opportunity, builds trust and resilience.

When flows stagnate, inequality soars. Rigid inequality - in wealth, access, opportunity - is not just unjust: it is destabilising. The concentration of capital in the few undermines social cohesion, hampers innovation, and erodes resilience. Finance reimagined for circulation however nourishes the social fabric.  It can embed value where people live, enabling cycles of empowerment and renewal. This isn’t hypothetical; across history and cultures, models such as local micro-finance pools, community-owned banks, and co-operative ownership, demonstrate how democratised capital can generate cycles of empowerment and resilience that sustain communities rather than deplete them.

Designing for Flow: New Regenerative Finance Instruments

If we mean to harness finance as a regenerative force, we must evolve our tools to direct capital where it nourishes ecosystems, communities, and economies simultaneously. Among the promising instruments already emerging:

• Impact-royalty agreements - where investors’ returns depend on measurable ecological or social outcomes (eg. biodiversity restored, carbon captured, community welfare improved), aligning profits with positive impact.

• Outcome-linked insurance & guarantees - policies that reduce risk for sustainable practices, such as farmers implementing regenerative techniques or companies adopting circular supply chains, to encourage adoption through risk mitigation.

• Reinvestment cooperatives - community‑centred funds that recycle returns locally into green energy, infra‑structure, restoration projects - so benefits compound in place within the community.

• Progressive capital‑release vehicles - funds that disburse progressively over time, contingent on environmental or social milestones, enabling adaptive, accountable investment.

• Transparent traceability networks – digital platforms that track flows of capital and outcomes in real time, making ecological and social impact visible and for all stakeholders.
  

Far from theoretical, these practical, emerging tools link returns to real-world regeneration, rather than abstract market performance, turning money into a force for repair and resilience, and laying the groundwork for a financial system rooted in ecology, equity, and regeneration.

Finance as Stimulus, Not Scarcity

One of the most pernicious myths in economics is that planetary repair is “too expensive.” In truth, when capital flows toward regenerative projects, it becomes a powerful stimulus.

Projects restoring soil, wetlands, forests; building renewable energy; regenerating ecosystems - these are labour‑intensive, often requiring local workforces. They create jobs, reduce systemic risk, lower disaster costs, reduce insurance burdens, and mitigate migration pressures. They open paths to innovation in governance, technology and business models.

This is the double dividend of regenerative finance: ecological renewal and economic vitality. A world where money flows into planetary repair is not one of austerity and sacrifice, but of resilience, creativity, abundance.

Finance as the Engine of Repair

Financial systems are often portrayed as neutral, but neutrality is illusion. Where money flows, futures are built. Today, flows are misaligned: favouring extraction over repair, hoarding over circulation. The result is instability, inequality and ecological breakdown.

Yet we stand at a design choice. Finance can remain stagnant, siloed, and extractive, or it can be reimagined as a living current. We can accept current stagnation and bottlenecks of flow, or actively channel capital into soils and forests, circulate it into communities and ecosystems, and stimulate economies that regenerate the very systems that sustain us rather than erode them.

To think of capital as circulation rather than accumulation is to tap its full force - capital as catalyst. With intention, we can reshape economies, rebuild communities, and restore ecosystems for generations to come. In that possibility lies hope - quiet, radical, regenerative. In the same way that a single river can revive a drought‑parched valley, a re‑directed flow of capital can re‑animate a wounded planet. This is not about smaller charities or green ‘add‑ons.’ It's about fundamental systemic redesign - finance as the circulatory force of a living economy, not the dam that holds back life. If we choose circulation over accumulation, repair over extraction, then money becomes more than measure: it becomes medicine.

Onward,

The HSG Team

At HSG, we’re not waiting for solutions, we’re building them!

If you’d like to join us on our journey: ➡️ Join our new Discord group ➡️ Follow our LinkedIn page ➡️ Share this post with your networks to help spread regenerative thinking 🙏 ¹ State of Finance for Nature 2023 - UNEP (2023) ² World Inequality Report - World Inequality Lab (2022) ³ The Global Flood Protection Benefits of Mangroves - Menéndez et al. (2020)

⁴ The Changing Wealth of Nations – World Bank (2021)