The landscape of nature finance is growing, but complex. Nature is rapidly emerging as a strategic investment frontier and more institutional capital is flowing into new business models and projects. Yet the underlying complexity remains: nature-related data is fragmented, ecosystem outcomes are hard to price, financial markets are only just starting to embed nature into decision-making frameworks, and the links between climate and nature finance are nascent. This is compounded by varying advice on a growing universe of finance solutions.
This report consolidates available guidance into 37 financial solutions to mobilize capital for nature. These include financial instruments, funds and facilities, enabling mechanisms, and fiscal and regulatory measures. Some operate at the scale and familiarity required by institutional investors, while others are still early-stage or need catalytic funding to achieve scale.
Ten priority financial solutions can be considered for their ability to deliver nature outcomes—at sufficient scale, with investable returns:
- Sustainability-linked bonds (SLBs): Commercial bonds tying coupon rates to nature-related targets for corporates or governments. To scale up, SLBs need stronger triggers, clearer metrics, and closer alignment between issuers and investors.
- Thematic (or use-of-proceeds) bonds: Bonds with proceeds earmarked for nature projects. Scaling up requires clearer guidance and aggregation to improve outcomes for issuers and investors.
- Sustainability-linked loans (SLLs): Flexible debt, linking interest rates to nature-related targets. SLLs need simpler verification, standardized metrics, and stronger triggers to drive nature-positive lending.
- Thematic (or use-of-proceeds) loans: Loans for specific nature-related projects. Greater clarity on taxonomies and aggregation is needed to enhance capital flows.
- Impact funds: Funds investing in nature-positive outcomes, often accepting higher risk or longer pathways to returns. Scaling up requires a stronger pipeline of investable projects and better governance.
- Natural asset companies (NACs): Publicly and privately listed companies that convert the full economic value of nature into financial flows via equity models. NACs hold significant potential but need more transactions for price discovery and replicable investment blueprints.
- Environmental credits: Tradable certificates for verified environmental benefits, used in compliance or voluntary markets. Scaling up needs integrity principles, unified standards, and stronger local community engagement.
- Debt-for-nature swaps (DNS): Mechanisms to restructure sovereign debt in exchange for conservation or restoration commitments, with investable components including bonds and loans. DNS need better governance and standardization, plus an expanded pipeline of eligible debt to deliver conservation funding.
- Payments for ecosystem services (PES): Contracts rewarding conservation for specific ecosystem services, driven by the public sector. Private sector schemes require longer contracts, aggregation, and supply chain integration to scale up.
- Internal nature pricing (INP): Unexplored, voluntary shadow pricing, or fee-based tools to incentivize nature-positive performance in companies or across investment portfolios, similar to internal carbon pricing (ICP).
A flexible toolkit that deploys these solutions across contexts is essential to shift markets, as nature finance will not scale up through one “perfect” solution. Moving from a fragmented landscape of transactions to mature global markets will depend on scaling up the best of both worlds: the familiarity, liquidity, and simplicity of general-purpose finance combined with the outcome credibility of nature-specific models that deliver positive results for ecosystems.
To get there, five enabling actions are essential:
- Standardize decision-relevant data for investors: Scaling up nature finance requires high-integrity, decision-ready metrics. Standard setters can drive alignment on KPIs and natural capital accounting methods to translate nature’s full value into financial decisions, supported by auditors, data platforms, and academic partners. Credit rating agencies can also play a key role in pricing ecosystem risk into creditworthiness. Ten finance solutions can mainstream nature in capital markets.
- Strengthen structuring approaches and derisking mechanisms: Bankable nature transactions must embed nature outcomes into familiar structures, offer clear return pathways, and share risk transparently between public and private actors. Multilateral development banks (MDBs) and development finance institutions (DFIs) can expand access to catalytic capital and codevelop scalable blended finance platforms that lower risk, improve deal flow, and crowd-in investment. Donors and philanthropies can provide first-loss capital, while institutional investors can help develop replicable transactions.
- Expand the investment-grade pipeline of nature projects: The pipeline of investable nature projects remains challenging to access. From the supply side, many are early-stage, fragmented, and lack development capabilities or investment-grade metrics. At the same time, investor demand remains hesitant due to persistent perceptions of risk. The public sector and nonprofits can improve enabling conditions such as tenure, concessions, and project preparation support. Accelerators, venture studios, and impact funds can help source, derisk, scale up, and aggregate local nature models, especially those overlooked by traditional finance. Identifying and scaling up hybrid models that align expectations of returns with environmental outcomes could help accelerate investor momentum.
- Build market demand through an enabling environment: A stable enabling environment to capture the nature-positive economic prize is essential to anchor real-economy action and mobilize private capital. Governments can strengthen long-term commitments on nature through cross-ministerial engagement and economic transition plans that embed GBF-related nature targets on conservation, restoration, and fiscal policy. Central banks and supervisors can look to integrate nature into macroprudential frameworks, while MDBs and donors can support capacity building.
- Shift market norms and incentives to recognize nature’s full value: Long-term investment in nature requires updated market norms. Asset owners and boards should integrate nature and biodiversity into mandates and adopt a “3D lens”—balancing risk, return, and impact. Public sector investors and MDBs can embed nature in regional and national accounting systems. Meanwhile, credit rating agencies and asset managers can evolve risk models to reflect nature-related dependencies in corporate and sovereign credit ratings.
