Introduction

The report examines the widening disconnect between financial markets and the real economy, where strong market performance coexists with worsening climate change, biodiversity loss and inequality . It highlights that six of nine planetary boundaries have been breached and only around 17% of SDG targets are on track.

Capital markets, representing nearly half of global financial assets, are identified as critical to financing the transition to a regenerative economy. The report emphasises that achieving Earth4All’s five turnarounds would require 2–4% of global GDP annually, compared with projected climate damages of US$38 trillion per year. It frames reform as necessary to better align financial value with human, social and natural capital.

Shifting from too little too late to the giant leap

The report contrasts a “Too Little Too Late” scenario with a “Giant Leap” requiring systemic transformation. It identifies six barriers to change, including narrow definitions of value, outdated analytical tools and flawed models.

Current financial practices prioritise short-term returns, externalising costs to society and the environment. These externalities accumulate into systemic risks, such as ecosystem degradation and inequality, which ultimately undermine long-term portfolio performance.

The report highlights the role of institutional investors as “universal owners”, whose diversified portfolios expose them to system-wide risks that cannot be diversified away. Evidence suggests that over 75% of portfolio return variability is driven by systematic risk, reinforcing the importance of addressing these broader factors.

To enable the Giant Leap, the report proposes three key reforms. First, redefining fiduciary duty to include intergenerational considerations and system-level risks. Second, improving financial tools to better value human, social and natural capital. Third, recognising how value and risk are distributed across stakeholders, encouraging more equitable outcomes.

Practical actions include aligning investment governance and incentives with long-term outcomes, integrating externalities into financial analysis, and adopting new valuation approaches that reflect real-world dependencies. These changes aim to shift capital allocation towards regenerative and inclusive economic activities.

Co-creating an enabling policy and regulatory environment

The report stresses that investor-led change alone is insufficient due to collective action challenges and short-term performance pressures. Policymakers, regulators and international organisations must create enabling conditions to accelerate reform.

Key actions include clarifying fiduciary duty to explicitly incorporate system-level risks and long-term outcomes. Regulators should also support improved data availability and financial analysis tools to integrate externalities into decision-making.

The report highlights the importance of embedding capital markets within International Financial Architecture Reform discussions, particularly given the scale of private capital in sovereign debt markets. Central banks are identified as key actors in incorporating human, social and natural capital into the cost of capital.

Additional recommendations include incentivising multistakeholder governance and ownership models to distribute wealth more broadly, and developing alternatives to GDP that better capture wellbeing and sustainability. These measures aim to level the playing field and encourage consistent adoption of regenerative investment practices.

Conclusion

The report presents a high-level blueprint for reconnecting financial value with the real economy. It emphasises that systemic risks arising from climate change, inequality and biodiversity loss threaten long-term financial stability.

Reform requires coordinated action across investors, policymakers and institutions to redefine value, improve analytical tools and align incentives. The report concludes that collaborative, co-created solutions are essential to enable a transition towards a more inclusive, regenerative financial system.