The Nature Investment Landscape: Understanding Environmental Finance Opportunities

Genevieve Bennett
  • The global push to mobilize private capital for nature and climate goals faces a fundamental obstacle: investors, companies, and communities lack clear, comprehensive information about the rapidly expanding universe of nature-related business models.
  • The nature economy remains fragmented across siloed markets with inconsistent frameworks. Information gaps and weak data undermine market confidence and prevent the investment needed to conserve and regenerate natural capital.
  • Despite information barriers, significant capital (including $17.7 trillion in AUM under TNFD signatories) is poised to seek nature-related opportunities, suggesting real potential once market clarity improves.
  • Our new series on nature-related opportunities will provide a landscape view of nature & bioeconomy business models, and deep dives on key sectors and innovative investment cases. This article introduces the series.


 

The success of global climate and nature finance targets probably hinges on whether or not innovative finance and private sector investment can be mobilized fast enough.

The public sector has historically contributed half of the funding for climate mitigation, and three-quarters of funding for restoration. Given today’s politics favoring shrinking government budgets in many countries, estimates of the finance gap for nature tend to conclude with a now-familiar call for more private capital.

That will require a pipeline of investment opportunities attractive to the private sector–a work in progress. But there are reasons to be optimistic. Signatories to the Taskforce on Nature-related Financial Disclosures, who represent $17.7 trillion in assets under management, are guided by the TNFD not only to understand and disclose nature-related risks, but also to pursue nature-positive opportunities. Natural capital remains an investment theme for BlackRock and KKR despite political backlash against ESG.

Yet the nature finance landscape is still not well defined.

A lack of robust, objective information, and a big-picture view in terms of how to organize it, is preventing growth in the nature economy. The quality of information on nature-related opportunities is highly uneven. Outside of a few better-understood categories like timberland investments and carbon credits, a lack of robust, credible data about the broad set of investment opportunities in real assets, credits, and certifications related to biodiversity, regenerative agriculture, innovative “bioeconomy” products, natural infrastructure for water, and other nature-based asset classes and projects constitutes a foundational barrier to investment.

This means companies may have a hard time identifying clear opportunities or improving their origination strategies. Investors lack data to evaluate specific nature-related opportunities, conduct due diligence, and make allocation decisions across environmental asset classes. Project developers are at a disadvantage in positioning themselves effectively to investors. Philanthropic funders may not be able to determine the highest-priority “enrichment areas” where concessional finance and early-stage support will deliver major impact for scale, viability, or attracting private capital.

Environmental markets fragmentation also contributes to missed opportunities. Siloed nature markets, conceptual and methodological inconsistencies, and lack of an overarching conceptual framework make it difficult to track scale and impact, share experience and best practice, or identify opportunities to innovate.

The information gap extends beyond specific financing or project models: the risk management instruments, project design and governance best practices, and innovative technologies that support commercialization and quality also aren’t necessarily well-understood or shared across market silos. That slows market growth, and throws up barriers to investment.

And hardly any information at all is available in accessible, culturally and linguistically appropriate formats for communities on the ground. As the people who actually manage land, they’re essential to achieving global goals for nature and climate. They need to be able to navigate emerging opportunities to manage land responsibly and make a living doing so.

These data gaps and information asymmetries undermine market confidence and compound risk perception above and beyond actual risks. They prevent capital flow and distort pricing. This results in overlooked opportunities, and inefficient due diligence. It results in some instruments being over-hyped, while other opportunities with excellent performance, high-integrity design, and impressive scale are hardly on the radar at all.

This all adds up to a very large missed opportunity–because there’s a lot of innovation and growth happening on the ground.

The graphic below suggests just how large and mature this sector of the economy is becoming. It sets out the “known elements” of bioeconomy business models, organized by common characteristics across instruments. It suggests how various elements might be combined to build projects or portfolios spanning landscapes/supply chains, essentially creating different “formulas” for economically viable restoration, conservation, and sustainable production.

Download this graphic as a PDF. 

What are nature-related opportunities?

New opportunities in the bioeconomy can be understood in terms of constituent elements that combine to create a massive array of business models. These include innovative financing approaches, a set of revenue/cash flow opportunities based on either ecosystem services or sustainable commodity production, and the commercialization/quality assurance tools and structure that help manage risk, assure environmental outcomes and good governance, or complete transactions.

  • Finance includes traditional and innovative funding mechanisms that support bioeconomy ventures, ranging from conventional sources like venture capital and crowdfunding to specialized instruments like green bonds and sustainability-linked bonds.
  • Cashflows from ecosystem services are revenue streams associated with environmental outcomes generated by protecting, restoring, or sustainably managing natural ecosystems. Carbon credits are a well-known example; cashflows can also come from payments for verified water quality improvements, biodiversity conservation, or other environmental benefits.
  • Cashflows from sustainable food, feed, fiber, materials, and minerals refer to income derived from producing and selling bio-based products that provide a sustainable alternative to or improvement on conventional materials, including sustainable alternatives in agriculture, forestry, textiles, construction materials, and mineral extraction.
  • Commercialization and Quality: This is the universe of rapidly evolving infrastructure, tools, and processes that enable bioeconomy businesses to scale and maintain standards. It includes the NatureTech sector and other enabling technologies, risk management instruments, governance frameworks, and quality assurance systems necessary for market viability. Many of these elements have been developed within a specific market silo, but are broadly applicable and useful.

A note on terminology: The “nature economy” generally refers to monetizing ecosystem services by keeping natural systems intact, whereas the “bioeconomy” is meant to describe economic activity based on using renewable biological resources (plants, animals, microorganisms) to produce food, materials, chemicals, and energy through biotechnology and sustainable processing. Since there’s so much overlap in practice (for example, sustainable forestry or regenerative agriculture projects provide both ecosystem services and bio-based products) it’s a bit of an academic distinction and we use both terms.

Nature investment sectors explained

This article is the first in a new series of explainers on various “elements” of bioeconomy business models. We’ll examine different nature asset classes in detail, and share case studies on innovative approaches. We’ll also discuss the TNFD nature opportunities framework, how it maps on to the nature-based asset classes that EM tracks, and how TNFD signatories can identify and engage in innovative financing models in partnership with stakeholders on the landscape and in the value chain.

Follow us on LinkedIn, sign up for our newsletter, or check back in at ecosystemmarketplace.com for future explainers.

Thanks due

This framework has benefitted from insights and feedback from a great many people – including recent contributions from Jemma Eason, Mapula Mathaba, Cristiano Alves, Marina Matkovsky, Michael Jenkins, Eszter Bodnar, Ricardo Bayon, David Antonioli, Joshua Bishop, Zoe Quiroz Cullen, Per Holger Dahlen, Adam French, Tony Goldner, Gilad Goren, Vincent Istace, Wyatt Latimer, Lily Louis, Tica Lubin, Timothy Male, Annawati van Paddenburg, Ryan Sarsfield, Ryan Sarsfield, Mariana Sarmiento, David Sternlicht, Sicco Stortelder, Larissa Taylor, Eric Wilburn, and Daphne Yin.

The “Elements” table is a work in progress (with more elements to be discovered, we are sure). If you have ideas or questions, please drop me a note.

Genevieve Bennett is Director of Communications and Strategic Outreach at Forest Trends. She writes about environmental markets and finance, with a focus on biodiversity finance, natural infrastructure, eco-entreprenuership, strategies for scaling public and private conservation investments, and other market cross-cutting issues.

Please see our Reprint Guidelines for details on republishing our articles.

Further Reading

Want to learn more about the nature economy? Here are some key (and classic) reports from EM to get you started.

State of the Voluntary Carbon Market (2025)

Nature’s Investment Frontier: Practical Paths Forward for Biodiversity Markets and Finance (2025)

State of Investment in Nature-based Solutions for Water Security (2025)

State of the Blue Carbon Market (2024)

State of Biodiversity Mitigation Markets (2017)

State of Private Investment in Conservation (2016)

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