As the world confronts biodiversity loss, climate change and ecosystem degradation, nature-positive finance is emerging as a critical frontier. Private capital must increasingly flow into solutions that protect, restore and sustainably manage nature. According to the World Economic Forum, there are 10 “priority” nature finance models that stand out for their potential to mobilise significant investment to achieve both financial returns and nature outcomes.
In this article, we’ll explore each of these top models, explain how they work, highlight their benefits and challenges, and outline how investors and policymakers can act now.
1. Sustainability-Linked Bonds (SLBs)
What are they?
Sustainability-linked bonds are debt instruments in which the coupon or interest rate is tied to nature- or sustainability-related targets (for example: forest area restored, water withdrawal reduced).
Why they matter
- They align issuer incentives with measurable nature outcomes.
- Attract mainstream capital due to familiar bond structure.
- Help channel large volumes of capital into nature-positive targets.
Key considerations
- Clear metrics & triggers: The bond must define verifiable targets.
- Transparency & reporting: Outcome data must be reliable.
- Risk of greenwashing: Without strong standards, they may lack credibility.
2. Thematic or “Use-of-Proceeds” Bonds
What are they?
These bonds raise capital where the proceeds are legally dedicated to nature-related projects or assets (for example, blue bonds for marine habitats).
Benefits
- Straightforward for investors familiar with green/blue bonds.
- Direct link to nature project funding.
- Easier to structure when project pipelines exist.
Challenges
- Measuring nature impact vs simply spending the proceeds.
- Standardising use-of-proceed frameworks to avoid fragmentation.
3. Sustainability-Linked Loans (SLLs)
What are they?
In a sustainability-linked loan, a borrower’s interest rate is adjusted based on achievement of nature-related performance metrics (e.g., water footprint, biodiversity index).
Why useful
- Encourages corporations to set nature targets and act on them.
- Leverages existing corporate financing channels for nature outcomes.
Key points
- Requires credible internal tracking of performance metrics.
- Verification regime must exist to ensure targets are met.
4. Thematic or Use-of-Proceeds Loans
What are they?
Similar to use-of-proceeds bonds but structured as loans. The capital is earmarked for nature-focused projects (e.g., sustainable forestry, ecosystem restoration).
Advantages
- Flexible finance for early-stage or project-driven work.
- Can support restoration, agriculture, water infrastructure.
Barriers
- Often smaller scale and higher risk than bonds.
- Requires viable project pipeline and monitoring mechanisms.
5. Impact Funds
What are they?
Funds that invest in portfolios of nature-positive projects or companies, seeking both financial return and environmental impact.
Why invest
- Diversifies risk across projects.
- Enables smaller investors to access nature finance.
- Can target frontier instruments and innovators in the nature economy.
Issues to address
- Track record is still limited.
- Need scalable, investible project pipelines with credible metrics.
- Governance and measurement standards must improve.
6. Natural Asset Companies (NACs)
What are they?
New corporate vehicles (public or private) that own and manage natural assets (forests, wetlands, mangroves) and monetise ecosystem services like carbon sequestration, flood mitigation or biodiversity credits.
Potential
- Brings nature assets onto balance sheets.
- Aligns nature-positive incentives with investor returns.
- Offers scalable business models for ecosystem protection.
Challenges
- Relatively few transactions so far—proof-of-concept needed.
- Valuation of ecosystem services is complex.
- Governance, risk, and regulatory frameworks need development.
7. Environmental Credits (Nature / Biodiversity Credits)
What are they?
Tradeable certificates representing verified nature or ecosystem outcomes (e.g., biodiversity credits, water quality credits).
Why important
- Market-based mechanism for nature value.
- Encourages private investment via revenue-linked instruments.
- Can layer over restoration, conservation or sustainable supply-chain efforts.
Key risks
- Integrity and credibility concerns (ensuring real impact).
- Standardisation of measurement and verification still weak.
- Market illiquidity and emerging legal frameworks.
8. Debt-for-Nature Swaps (DNS)
What are they?
Mechanism where sovereign or corporate debt is restructured in exchange for conservation commitments—effectively converting debt relief into nature investment.
Why useful
- Enables emerging-market countries to finance conservation.
- Leverages public finance tools for nature outcomes.
- Links debt management with environmental gain.
Considerations
- Requires strong governance and accountability frameworks.
- Impact measurement and investor-friendly structures need improvement.
- Limited scale so far relative to global needs.
9. Payments for Ecosystem Services (PES)
What are they?
Contracts or programmes where beneficiaries of ecosystem services (like water companies, downstream users) pay providers (e.g., communities managing forests) for maintaining or enhancing those services.
Benefits
- Ties financial flows directly to nature outcomes.
- Creates revenue streams for local communities and conservation.
- Encourages long-term stewardship of ecosystems.
Challenges
- Often small-scale and fragmented.
- Requires clear measurement of services value and long-term monitoring.
- Need aggregation to scale to institutional investor levels.
10. Internal Nature Pricing (INP)
What is it?
A voluntarily applied shadow pricing or internal cost of nature-loss within corporate decision-making—companies embed the cost of nature degradation into investment choices and capital allocation.
Why it matters
- Raises awareness of nature risk inside companies.
- Helps shift business models toward nature-positive outcomes.
- Acts as a precursor to external nature-risk pricing in markets.
Key hurdles
- Metrics and methods still nascent.
- Data and tools for nature valuation not fully standardised.
- Implementation across assets and sectors remains limited.
How to Mobilise These Models: Strategic Enablers
Building an enabling ecosystem
- Standardise data & metrics: Quality measurements of nature outcomes are foundational.
- De-risk transactions: Use blended finance, first-loss guarantees, and public-private partnerships to make nature finance investible.
- Scale project pipelines: Aggregation, standardisation and preparation of investible nature projects is essential.
- Align policy and regulation: Clear taxonomies, disclosure frameworks and incentives help integrate nature into capital markets.
- Change market norms: Investors and companies must view nature not just as ESG but as financially material and value-creating.
Final Thoughts
The next decade is crucial for channeling finance into nature-positive solutions. These 10 priority nature finance models provide a toolbox for mobilising capital at scale, delivering both returns and critical environmental impact. Financial institutions, asset owners and governments that act now to develop and implement these models stand to benefit—while helping preserve ecosystems, biodiversity and natural capital for future generations.
By building robust frameworks, credible data, scalable project pipelines and alignment across stakeholders, we can transition from fragmented activity to mature markets for nature finance. The business case is clear—and the imperative has never been greater.
