Nature is no longer just in the domain of philanthropic actors. Instead, it's quickly becoming a largely untapped investment opportunity for asset managers and institutional investors alike. This was a key message at the inaugural Nature Finance Forum, hosted in Paris in April 2025.

Despite the growing urgency around safeguarding the natural environment, the market for nature is nascent and the $700 billion annual financing gap needed to adequately fund it can seem daunting. At the forum, speakers shared insights on how to close that gap. A common thread was the growing necessity for blended finance structures within nature-positive transactions.

Blended finance can be used to overcome perceived and actual risks in these transactions and to meet investor requirements regarding risk-adjusted returns. Several speakers throughout the day shared their experiences with using blended finance to launch transactions that directly contribute to nature-positive outcomes.

Blended finance models in action

One example shared by Nick Oakes, Co-Founder & Managing Director of Impact Earth, was the use of concessional capital and guarantees within the Amazon Biodiversity Fund. The fund supports sustainable businesses through venture financing to deliver lasting benefits for biodiversity and communities across Brazil’s Legal Amazon.

The $50 million fund benefits from a “double-de-risking” structure, using both concessional capital in the junior tranche to absorb first losses and a concessional guarantee to protect investors in the senior tranche. Oakes shared that blended finance was an important tool for mobilizing private capital because investors may perceive higher levels of political risks within Brazil and climactic risks within the Amazon biome. The various concessional instruments allowed the risk-return expectations to align with private investors.

Attendees then heard from a panel of speakers about a blended initiative called the Tropical Forest Forever Facility (TFFF), created at COP28 in November 2023. Aiming to protect tropical forests across 80 countries, the TFFF seeks to mobilize up to $250 billion in funding.

The facility is composed of two parts: a smaller portion from governments and philanthropies that would provide loans, grants, and guarantees, and a larger portion that would use senior debt to mobilize international capital. This fund would, in turn, invest in fixed income portfolios that would be expected to generate higher returns to repay principal investments. The yield from the difference between the funding cost and the investment return would be used to pay countries that achieve the goal of zero deforestation through fixed payments based on each hectare of forest that is conserved. Once again, panelists stated the need for a blended structure to mobilize private investors into an unfamiliar transaction with higher levels of potential risk.

A third example shared was the work that The Nature Conservancy (TNC) has done through its Blue Bonds for Ocean Conservation initiative. The program enables island and coastal nations to use debt restructuring to secure lasting sustainable funding that supports the protection of 30% of the world’s oceans, fosters sustainable economic development, and enhances climate adaptation.

Beatriz Merino, Financial Institutions Lead, Europe at TNC, spoke about the use of blended finance within the program, in particular how catalytic guarantees from the Inter-American Development Bank were critical to mobilizing private debt for their bond program. Merino further stated that TNC is seeing new actors participating in blended transactions, both as commercial investors and as catalytic capital providers.

Challenges to financing nature remain

Despite the exciting potential for blended finance to help close the nature financing gap and the growing interest from new actors, speakers and attendees stressed that there are larger, systemic challenges that continue to cause private investor hesitation.

Two of the most frequently mentioned challenges were issues with data availability and a lack of metric standardization. Regarding the first challenge, data is not consistently available or at a high enough quality to support the accurate risk assessment of nature degradation across a portfolio of investments, or to allow complete performance tracking or target-setting at the community level.

One way the Finance for Biodiversity Foundation is trying to increase data transparency is through encouraging signatories of its Finance for Biodiversity Pledge to collaborate and share knowledge; engage with companies; assess impact; set targets; and publicly report on the previous findings. At the forum, the Foundation announced that it had recently reached 200 signatories, an encouraging sign of increased commitment to collaborating on nature financing initiatives.

Compounding the issue of data availability, however, is the lack of standardization. Even where data is available, it is often highly transaction- or location-specific, leading to a lack of fungibility. Given the bespoke nature of many of these measurement frameworks, transaction costs can become quickly prohibitive for deal sponsors and lead to cumbersome due diligence on behalf of investors. Organizations attending the event, such as the International Advisory Panel on Biodiversity Credits (IAPB) are attempting to address this challenge within the biodiversity credit market. IAPB recognizes that a global solution to biodiversity measurement is not feasible. Rather, the organization has created a framework with a set of criteria through which projects or transactions can be measured and verified.

Blended finance instruments can also be useful to address these challenges; providing working capital to early-stage transactions through design-funding grants can help the transactions align with internationally recognized frameworks or to set up robust measurement processes to better understand nature impacts.

Final thoughts

Overall, the day left attendees with a few main takeaways:

• The impact of nature degradation has left massive, exposed risks across the portfolios of investors globally. The question is no longer if nature should be considered, but how and through what methods.
• Blended finance can be an important structuring approach to align the risk-return expectations of nature-positive transactions with those of private investors.
• New actors are entering the sector at an increasing rate, and every actor has an important role to play, from insurers to multilateral development banks to foundations.
• Challenges remain regarding data accessibility and standardized frameworks, but efforts are being made to align methods where possible.

As momentum builds and blended finance models continue to prove their potential, the path forward will depend on collaboration, innovation, and a shared commitment to protecting nature. Bridging the nature financing gap is a complex challenge, but the Nature Finance Forum Europe showed that it is one that the financial sector is increasingly ready to meet. The time is now for investors, policymakers, and development actors to move from discussion to deployment, and turn ambition into action for nature.