Unlocking nature finance: Why investment in biodiversity and resilience is no longer niche

Introduction

The 2020s is becoming the decade where investment in nature, biodiversity, and resilience crossed an important threshold. What was once considered a small, philanthropic pursuit is now a mainstream market signal. It is backed by data, technology and an undeniable business case.¹ 

At the recent Climate Implementation Summit, Eric Usher, Head of UNEP Finance Initiative, underscored the urgency clearly.  Public finance must be truly transformational, activating market levers, breaking structural barriers and driving a real economy-wide change from Baku to Belém.² So, from Azerbaijan to Brazil there will be global climate funding, with the roadmap aiming to mobilize at least $1.3 trillion per year by 2035.³ 

The discussions have been slow and ongoing but now a fundamental shift has occurred: nature finance is no longer niche. It is the signal that the market is pricing in and those who ignore it are already being left behind. 

Capital markets do not forgive ignorance

Nature finally has a business case. Nature finance outperforms. Market evidence has destroyed the myth that renewables and nature-based solutions are just ‘additive’ or just some type of charity. Critics who claim otherwise are promoting statistical fallacies, the kind that destroy balance sheets.⁴ 

Leading global banks earned more fees arranging green debt than fossil fuel deals. Banks that pivoted back to fossil fuel financing? They underperformed. Based on latest bloonber analysis, lenders made about USD$3.7 billion from climate-related loans and bond underwriting, compared with roughly USD$2.9 billion from deals with oil, gas and coal companies.⁵ 

Meanwhile, financial institutions that integrated sustainability into their core operations pay 100 basis points less for capital. On a USD 100 billion balance sheet, that translates to a billion different reasons to pay attention. These institutions demonstrate lower volatility, stronger credit ratings awarded by S&P, and overall better long-term returns. Insurance companies following Responsible Investment principles show measurably lower downside risk. 

The transition has a business case, and it’s the case is getting stronger every quarter. Worldwide, economic benefits of restoration projects are estimated to yield between USD 7 and USD 30 for every dollar investment in restoring degraded forests. In Europe, studies from the Commonland Foundation show restoration benefits average 8 to 10 times greater than initial investment costs, generating positive impacts including enhance food production, climate mitigation, and improved water quality.⁶ As of 2022, harmful practices still receive 30 times more funding than nature-based solutions, but the tide is turning rapidly as investors recognize that knowledge of environmental impact is becoming financial material. 

What unlocked the flow? Digital innovation and data integrity

The real catalyst for this transformation isn’t rhetoric. It’s credible, real-time, primary impact data. The recent discussion paper from the ‘Green Digital Finance Alliance (GDFA), ‘Digital Impact Bonds: where Finance meets tech for impact’ (November 2025), explores how the convergence of green finance, distributed ledger technology (DLT), and verified impact data can close the persistent USD 6 trillion annual funding gap for climate, biodiversity, and sustainable development. 

Traditional green bonds, while the largest category of labelled sustainable debt, face structural limitations: 

• High costs and exclusion: Issuance is complex and costly, with minimum ticket sizes typically around USD 500 million, excluding smaller issuers like municipalities and Global South actors. 

• Credibility issues: Impact reporting is often inconsistent, based on static, retrospective data, raising greenwashing concerns. 

Digital Green bonds (DGBs) represent a solution. These debt instruments, issued using blockchain and DLT, earmark proceeds for verified environmental outcomes with issuance, tracking and reporting digitally enabled: 

• Efficiency and access: Tokenization and smart contracts streamline issuance, reduce intermediary dependence, accelerate settlement to near-instant T+O, (Trade date + 0 days) and enable fractional ownership, which theoretically lowers investment thresholds for small and retail investors. 

• Data integrity: Digital Measuring, Reporting, and Verification (dMRV) systems leverage IoT and AI to provide real-time visibility of impact performance, moving reporting from narrative-based to evidence-based decision-making with stronger safeguards against greenwashing. 

• Successful proven pilots: Early issuances by the Hong Kong government, European Investment Bank (EIB) and Hitachi demonstrate clear potential for efficiency gains including reduced origination time and automated settlement. 

The PwC 6th Sustainable Finance conference (held in Zurich on 13/11/2025) reinforced this shift, with investors now demandin hard primary data to have confidence in corporate performance. Only organisations providing verifiable, site-specific impact will retain investor trust and unlock new funding. This is viewed as essential for reducing greenwashing risk and maintaining competitiveness as regulatory scrutiny continues to increase. 

Waste valorisation meets real-world innovation

A transformation is occurring and it stems beyond financial instruments to the real economy. At IGEHO, Switzerland’s leading hospitality trade fair, innovation like Brewbee (a craft brewery in Appezell producing vegan, handmade beers while valorising waste products) demonstrate how circular, nature-based business models are becoming commercially viable and scalable. 

Similarly, Foundation Valery exemplifies the new model of philanthropic venture partnering, where philanthropic capital takes the first risk to catalyse private investment in climate, biodiversity, and circularity ventures. Their 2025 cohort includes 6 exceptional startups tacking environmental challenges: 

• Evolium Technologies (battery technology)
• DNAir (biodiversity monitoring)
• ALIEN Limited (ocean restoration)
• Windworks (renewable energy)
• Databaum (regenerative agriculture data)
• Treeless (sustainable packaging) 

Foundation Valery, led by Yannick Ritschel, with this model demonstrates that nature finance reaches beyond traditional conservation. It now encompasses the entire range of sustainable innovation, covering soil ecologies to material science. 

Public sector should act like a catalyst, not a crutch

There begins to be a problem when public finance plays merely a supportive role. It needs to be transformational. Public resources must be deployed in a way that actually overcomes structural barriers and in turn activates market-wise transformation. 

The Transformational Finance for Climate Group, supported by UNEP-FI, PRI, IDFC, FiCS and the Mainstreaming Climate in Financial Institutions Initiative, is pioneering this approach. Public and philanthropic capital can deploy first-loss structures, de-risking mechanisms and blended finance to make nature projects that were previously deemed to be high risk, in other words, ‘too risky’ investable at scale.⁷ 

Foundation Valery’s model demonstrates this in practice as their philanthropic venture partnering bridges purpose and capital, enabling ventures to access follow-on funding and scale real-world impact. 

Public and private sector must scale solutions together

MassChallenge Switzerland provides a powerful example of how public-private collaboration accelerates nature finance and innovation. Their platform connects late-stage startups with corporate decision-makers ready to act, driving real-world pilots, co-development, and commercial conversations. 

The 7th edition of the MassChallenge Sustainable Food Challenge is open for applications (until 19th November). An equity-free challenge connects Agtech and FoodTech startups with eight major corporate partners (Bühler Group, Gibaudan, Mars, Omya, dsm-firmenich, Louis Dreyfus Company, Tate & Lyle and SIG). Over six years, the Challenge has attracted 2,800+ startup applications, with 500+ connected to corporate partners and over half progressing to detailed followup discussions. In 2025 alone, 570 startups applied, with 87 semi-finalists and 53 finalists entering deep corporate engagement. The focus areas include AgTech focusing on regenerative agriculture, precision farming and soil health as well as sustainable supply chain management from decarbonisation, traceability and circular economy. Similarly, their Sustainable Materials Challenge will reopen in September 2026 which focuses on lower emissions and waste and overall more resilience and secure supply chains. 

Corporate partners span entire value chains (from sourcing and production to processing and end-use applications) offering startups opportunities to pilot, co-develop and scale solutions.⁸  

Organising this ecosystem: Standards, technology, and trust

Beyond individual instruments and programs, the enabling environment for nature finance continue to mature and rapidly at that. The growth is enabled by digital technologies, taxonomies and standards and how it all links with regulatory momentum. 

Digital technologies are revolutionising impact verification, dMRV systems using IoT and AI provide real-time, location-specific data integrated directly into financial transactions, which is analogous to how GPS revolutionised global shipping. Before, we relied on retrospective logs and estimates and now it has changed. Finance demands real-time proof that this is verifiable and the impact is where it was intended to be. 

In terms of taxonomies and standards, there are examples such as frameworks like Taskforce on Nature-related Financial Disclosures (TNFD) and International Capital Market Association (ICMA) provide clear definitions of sustainable activities, helping investor identify not only to avoid greenwashing but more accurately avoid greenwashing. 

Globally regulatory momentum is building up. New regulations, largely driven by institutions like EIB, are forcing banks, insurers, and asset managers to make sustainability and ESG principles part of standardised business rules. It has to be more than just reporting. 

The market has spoken: This is the path forward

The evidence is clear, nature finance has been unlocked due to these changes: 

1. Technology enablers: dMRV, tokenisation, digital bonds and others make nature projects much more transparent than in past AND investable at scale;

2. Data integrity: Primary, verifiable impact data has become the currency of investor trust;

3. Collaborative ecosystem support: Platforms and funds like MassChallenge, Fondation Valery, and the Transformational Finance for Climate connect innovation, capital, and scale;

4. Financial performance: ‘Sustainability’ delivers lower capital costs, stronger credit ratings and measurable better returns.

Green collars have given enough warning. For years we have been saying that the stakes of inaction are catastrophic. Now, the bankers and insurers are starting to sing a similar tune. The opportunities for a nature-positive economic are immense. Capital flows are already shifting clearly towards instruments and issuers that integrate digital efficient with data-backed proof of environmental outcomes. Nature finance is here. All sectors are already stepping up, scaling up. Circular economy is bankable. That’s the market signal. 

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Sources

1. Eric Usher on Baku to Belem, Climate Implementation Summit https://www.youtube.com/watch?v=TQRCWhf6vsg 

2. The Baku to Belém refers to a roadmap major international climate finance initiative unveiled at COP29 in Baku, Azerbaijan, and further developed for COP30 in Belém, Brazil.

3. COP30 Brasil. (2025, November 5). COP29 and COP30 Presidents present Baku to Belém Roadmap to mobilize US$1.3 trillion in climate finance. https://cop30.br/en/news-about-cop30/cop29-and-cop30-presidents-present-baku-to-belem-roadmap-to-mobilize-us-1-3-trillion-in-climate-finance

4. Eric Usher, Sustainable Innovation Forum, pre-COP30 Sao Paulo https://www.youtube.com/watch?v=BjM-eJd3UEE

5. Quinson, T. (2026, January 2). Banks notch higher fees from green bonds than fossil fuel debt. Bloomberg. https://www.bloomberg.com/news/articles/2026-01-02/banks-notch-higher-fees-from-green-bonds-than-fossil-fuel-debt

6. Maxwell‑Lwin, L. (2023, November 24). Revitalising Europe’s landscapes: New report on financing large‑scale nature restoration. Commonland. https://commonland.com/revitalising-europes-landscapes-new-report-on-financing-large-scale-nature-restoration/

7. UNEP Finance Initiative. (2025). Transformational finance for climate: Unlocking systemic effects (Position paper). United Nations Environment Programme Finance Initiative. https://www.unepfi.org/publications/transformational-finance-for-climate-unlocking-systemic-effects/

8.  Info webinar recording and slides available. Questions: switzerland@masschallenge.org