Finance Solutions for Nature 2025

Six criteria for scoring finance solutions BOX 2 Six criteria across two dimensions are used in this analysis to “score” finance solutions for nature. Each solution receives a score of low (1), medium (2) or high (3) on each criterion, based on the best available evidence (see Figure 3). Dimension #1: Capacity of each solution to unlock capital for nature at scale –Ease of structuring: The ease and speed with which investment can be mobilized. Commercial loans, bonds and equities score high, given their dispersed market expertise; risk insurance and advance market commitments (AMCs) score lower, given the time and bespoke structure of each transaction. –Applicability: The versatility of each solution. Sustainability-linked and thematic loans score high, given their applicability across sectors, regions and project sizes; conservation notes score low, given the narrow use case. –Capital unlock: The scale of capital that the instrument can unlock at full potential. Equity and bond structures score high, given their market familiarity and commercial scale; donor-based mechanisms generally score low, given the limited pool of funding relative to markets. Dimension #2: Capacity of each solution to generate nature-positive impact –Track record: Evidence that past transactions created measurable nature-positive outcomes. Impact funds and risk insurance score high, but few other instruments do; new instruments such as natural asset companies (NACs) and internal nature pricing (INP) score low, given they have not yet been deployed. –Outcome-based structure: The degree to which returns or capital unlock depend on measured nature impact. Sustainability-linked instruments score high, as payout terms are linked to outcomes; standard commercial instruments without such conditions score low. –Nature valuation: The extent to which pricing captures the full value of ecosystem services. NACs and payments for ecosystem services (PES) score high, as natural capital valuation is core to pricing; standard commercial instruments score low, as valuation plays no such role. Prioritized solutions score 6 or higher on both dimensions, out of a maximum score of 9 per dimension. The full rationale for scoring each solution can be found in Appendix B. The scoring analysis yields 10 priority solutions – as depicted in Figure 2, which features scalability on the x-axis and nature impact on the y-axis. Eight of the priority solutions are financial instruments. Unsurprisingly, the four which score highest on scalability for nature finance are those with significant commercial scale across all purposes today, while four others score higher on nature impact as they are designed outcome-first. When applied to funds and facilities, the analysis yields one priority solution – impact funds; when applied to enabling mechanisms, it yields another – internal nature pricing (INP). The relative scores of all 10 priority solutions, measured against their capacities to unlock capital for nature at scale and to generate nature-positive impact, are presented in Figure 3.Additionally, while not prioritized in this analysis, many other solutions play a critical role in mobilizing capital for nature. For instance, credit guarantees and grants are critical to enable market creation in sectors and regions where commercial returns may not be viable. Risk insurance (particularly parametric insurance)23 is essential for de-risking investments in vulnerable landscapes, incentivizing preventative action while reducing exposure to catastrophic loss. Venture capital is key to scaling-up early-stage, high-risk enterprises driving innovation in nature markets. Their compatibility with priority solutions is highlighted in subsequent chapters. Finance Solutions for Nature: Pathways to Returns and Outcomes 11