Financing Nature at Scale: How Green and Nature Bonds Can Restore Ecosystems
How can mainstream financial markets help regenerate ecosystems? In the fourth BIO-CAPITAL Deep Dive, Isabel Reuss of ITASIF made the case that bonds — one of the oldest and most conventional instruments in finance — may hold one of the most promising paths.
At their core, bonds are simple. Instead of taking a loan from a bank, governments, cities, companies or international institutions borrow money directly from investors. Those investors receive interest until the bond matures, and the issuer uses the capital to build roads, schools, infrastructure or innovation. Green bonds follow the same logic, but with a non-negotiable rule: the money must be spent on environmental projects.
In a market increasingly shaped by sustainability-minded investors, demand for these instruments has grown rapidly. They are regulated, widely understood, and highly liquid — a rare combination in the sustainability world. Yet despite their success, the share of green bonds dedicated to biodiversity is still surprisingly small.
Enter Nature Bonds
That is why the arrival of nature bonds in 2024 marks an important shift. They are not simply green bonds with a new label. To qualify, 100% of the proceeds must go into biodiversity-related activities, and the bonds must align with global frameworks such as the Kunming–Montreal Global Biodiversity Framework. In practice, this means direct financing for forest restoration, coastal and river ecosystems, wetland buffers, pollinator corridors, or even renewable energy projects that include biodiversity-positive design.
Nature bonds also come with strict expectations: transparent reporting, impact monitoring, third-party verification. In a sector where the risk of greenwashing is real, credibility matters — and the structure of these bonds is designed to earn trust from both investors and the public.
What This Means for BIO-CAPITAL
For BIO-CAPITAL, this matters for a simple reason: scale. Many biodiversity initiatives are small, local, and fragmented. A single forest, a pilot wetland, a cluster of farms — meaningful, but difficult to attract major long-term investment. Bonds can change that. They make it possible to combine projects into larger portfolios, open them to pension funds and institutional investors, and deliver capital at the size nature restoration actually requires.
Within BIO-CAPITAL, green and nature bonds form part of a broader financial architecture, alongside Payments for Ecosystem Services, parametric insurance and Triple Capital Accounting. Together, these tools create something that biodiversity projects very rarely have: a financing backbone that can expand beyond pilot sites, operate across regions, and bring nature restoration into the centre of financial markets.
