50 Investible Opportunities for a New Nature Economy 2026

Many sectors have developed new business models, technologies and products, such as those that: –Optimize inputs and resource use, such as precision farming techniques. –Recover value from waste products, such as sewage nutrient recovery and re-mining of waste materials. –Improve resource efficiency in fast-growing digital infrastructure, such as data centre water management solutions for cooling. These opportunities can offer material improvements across water efficiency, pollution reduction, circularity and land-use outcomes, while delivering similar results to conventional alternatives; they are already demonstrating viability in pilots and specific local markets. Buyers are expressing interest in products available on the market, such as concrete made from waste, fertilizers made from fungi and seaweed, and biodegradable textiles that do not pollute beaches and waterways or take up space in landfills. However, these opportunities have not yet been taken up at scale for a variety of reasons, including increased costs of production, limited understanding and lack of supporting infrastructure. This creates an opportunity for companies to seize a first-mover advantage by pioneering these new products and business models in their markets. By sharing case studies and best practice, as well as collaborating on the underlying market infrastructure, corporates can help ensure that these promising approaches scale up. Increased input costs that in turn require a green premium are often cited as a key barrier for sustainable products. Scepticism about consumer willingness or ability to pay such a premium has been a central point of contention and was the subject of a 2023 World Economic Forum report, Winning in Green Markets: Scaling Products for a Net Zero World, among other research. Interviews with business leaders producing or buying these products offered three scenarios that they have experienced, all of which suggest optimism on this issue: –Premiums can reflect added value beyond sustainability benefits: Many consumers are genuinely willing to pay more because sustainable products are often premium products with additional benefits. For example, Holcim acquired Zinco, a green roof and living infrastructure service provider, to diversify its portfolio of offerings. Real estate developers are willing to pay more for green roof installations because they help them comply with new municipal regulation and create beautiful, resilient spaces where people want to live and work, as well as delivering nature-positive benefits. Premiums are often easier for businesses to justify in capital expenditure – as a one-off charge – rather than in day-to-day operating expenses. –Premiums may not be necessary: Many businesses are seeing that sustainable feedstocks, input prices and production costs are coming down over time as supply increases or with economies of scale. Sustainable products as wide-ranging as electric vehicles, plant-based “milks”, biodegradable packaging and solar panels have typically seen prices decline. Premiums can be used in the short term or companies can find alternative financing to ensure the longevity of sustainable product lines until breakeven. –Premiums do not need to be the only answer: Producers developing a new sustainable product line may worry that production costs are higher than for traditional products. However, businesses that think differently might choose to offer sustainable products alongside traditional products at price parity, to expand market share and gain new customers. Whether that means hotel operators dipping their toes into ecotourism, fashion houses offering sustainable textiles, or food manufacturers developing healthy and sustainable snacks alongside their classic offerings, increased brand value and new, discerning customers are more likely to create a resilient business model than charging a premium.2.3 Scalable opportunitiesTo do this, financial institutions can: –Cluster opportunities with similar cashflows and risk profiles. –Clearly define use-of-proceeds and impact covenants. –Develop borrower enablement characteristics (e.g. tying financing to pre- approved vendors with pre-defined eligibility lists) to increase standardization and speed of origination, as well as to reduce transaction and due diligence costs. If producing a sustainable product or service saves your company costs, pass those savings on to the customer or sell at parity. If it raises costs – from more expensive inputs or processes – try not to charge a premium: see this new product or service as a way to increase market share. This is how we can truly transform our economy and ensure the nature-positive transition is economically sustainable. Ankit Todi, Chief Sustainability Officer, Mahindra Group 50 Investible Opportunities for a New Nature Economy 20