Mobilising private finance for nature: learning from large-scale nature investment vehicles

This report analyses the structure and use of proceeds of 54 nature investment vehicles – vehicles with various legal structures, such as private equity funds, private debt funds and special purpose vehicles (SPVs), that pool funds to channel finance into activities that benefit nature. Nature investment vehicles can contribute to overcoming barriers and mobilising private finance for nature but evidence on how they perform and are structured in practice remains limited. The report addresses that evidence gap and sets out defining criteria for a nature investment vehicle, including determining whether an investment benefits nature.

Key points

• Investment in nature needs to scale rapidly but many projects remain difficult for institutional investors to access directly. Nature investment vehicles can help bridge this gap by pooling capital, aggregating smaller projects and assets, diversifying risk and creating professionally managed structures of institutional scale.
• This report’s analysis of 54 nature investment vehicles and mapping of relationships between over 300 actors shows that nature investment vehicles can attract institutional and commercial private capital. Itdemonstrates that nature investment can move beyond purely philanthropic models, although disclosure gaps still constrain assessment of long-term financial and ecological performance.
• The most mature investment models are concentrated in established productive sectors with clearer revenue streams such as agriculture and forestry. This suggests an important opportunity to mobilise capital for dedicated nature-positive activities and use nature finance as transition finance.
• However, the market is developing unevenly, with different parts of nature finance at different stages of maturity. Terrestrial ecosystems are the dominant targets of vehicles with far fewer targeting freshwater and marine ecosystems, and there is uneven coverage across drivers of nature loss and geographical regions.
• The important implication for scarce public finance is that it should be targeted where it is most additional. Blended vehicles still appear to outnumber fully private vehicles but private capital is already flowing without public blending in some segments. Policy should therefore enable expansion of commercially viable markets by using catalytic capital to address specific barriers where private investment is within reach, and concentrating public and philanthropic resources in areas where investable models are still missing.
• Successful nature investment depends on more than capital alone. The research points to the importance of specialist intermediaries, partnerships, risk-sharing and project-development capability in making nature investment work.
• The next challenge is not simply to attract more capital but to expand the investable frontier: strengthening enabling conditions and targeting public finance at market gaps, developing specialist structures and capabilities, and creating investable propositions with credible revenues, counterparties, evidence and scale. Better and more standardised disclosure will be essential to identify what works and replicate successful models.

DOI: 10.21953/researchonline.lse.ac.uk.00141126