Making nature finance investable: What matters most

As nature loss climbs the global agenda, attention is turning to a critical question: how do we move from recognising nature-related risks and opportunities into real financial returns that attract investment at scale? Fiona Donnelly CA, Director of Sustainability, reflects on the top 10 takeaways from the Scottish Forum on Natural Capital's annual event, 'Nature Finance into Action'.

I was fortunate to facilitate a discussion at this year's event with experts from finance, insurance and nature restoration, exploring what it takes to make nature investable in practice. The panel brought together perspectives from rewilding, insurance and investment to unpack the barriers and opportunities ahead for nature finance. Panellists included Jeremy Leggett from Highlands Rewilding, Simon White from DUAL, and Eoin Murray from Rebalance Earth.

From ambition to reality: Why nature needs a market

A clear theme throughout the discussion was that good intentions alone are not enough. For nature restoration to attract serious capital, it needs to operate within a system that investors understand.

That means clear rules, consistent measurement and a shared understanding of risk and value.

Without these, nature remains difficult to price and even harder to invest in. But when governments step in to create structure through regulation, reporting requirements or market mechanisms confidence begins to grow.

There are already signs of this working. Where policy has created clarity, markets have started to form. The mandatory requirements for developers in England about biodiversity net gain is a good example.

The lesson here is simple: if you want investment to flow, you need to build the conditions that allow it.

The critical role of government

Across the panel, there was strong agreement that government action is essential to unlocking private finance.

This isn't just about early funding. It’s also about creating long-term demand and stability.

Mechanisms such as guarantees, advance market commitments or policy incentives can help reduce uncertainty and encourage investors to take part.

The renewable energy transition offers a useful comparison and learnings. It took years of policy support before investment scaled. Many of the same ingredients are now needed for nature.

Understanding risk in a new type of asset

One of the main challenges discussed was how to manage and price risk.

Nature-based projects are fundamentally different from traditional investments. Outcomes can be uncertain, timelines are long, and data can be unreliable and evolving. That makes it harder to predict returns with the same level of confidence investors are used to.

However, the panel was clear that uncertainty isn’t a reason to step back. Instead, it highlights the need for better risk management, which may include insurance, legal covenants and sound governance structures.

Investors share some traits in common, like not expecting guarantees, but they do need reassurance that risks are being actively managed. But they often differ in details like time horizons and risk appetite.

Insurance as an enabler of change

One of the most powerful insights from the session was the role insurance can play.

Insurance is often seen as something that responds after things go wrong. In reality, it has always been a key enabler of economic progress. From global trade to infrastructure development, insurance has helped unlock investment by reducing uncertainty.

Panellists stressed that, “if it is not insurable, it is not investable,” noting that insurance underpins most mainstream economic activity.

The same principle applies to nature. By transferring or mitigating risk, insurance can make projects more attractive to investors and help build confidence in a relatively new market.

In many ways, it’s a missing piece of the puzzle. If nature is to become a mainstream asset class, insurance will need to play a much bigger role.

Blending different types of capital

Another important takeaway was that no single funding source can deliver this transition alone.

Nature projects often require a mix of public funding, private investment and even philanthropic support. Each type of capital has a different role to play whether that’s absorbing early risk, catalysing other investment, supporting development, or delivering long-term returns.

Getting this balance right is essential. When structured well, a collaboration of blended finance can help make projects viable while also delivering outcomes for nature, communities and investors.

The challenge of demand

While there’s growing interest in funding nature projects, demand for nature-based products and services is still developing.

This means there are more projects than there are buyers. This creates a gap that needs to be addressed so investment can scale.

The discussion highlighted the importance of identifying who will ultimately pay for ecosystem services whether that’s corporations, governments or other stakeholders. Without clear and reliable demand, it becomes much harder to build investment models that deliver consistent returns.

Rethinking how we value nature

A broader theme running through the session was the need to rethink how nature fits within the economy. The panel argued that nature must be treated as a business, insurance and investment class if markets are to scale beyond niche activity.

Rather than treating it as an external factor, there’s growing recognition that nature underpins everything from food and water systems to economic stability. The recent national security assessment warns of ecosystem collapse, alongside continued low levels of demand for nature-positive investment, highlighting a disconnect between risk recognition and financial response.

Some speakers described nature as critical infrastructure, highlighting the need to reflect its value more clearly in financial systems.

This shift in mindset is already beginning, with efforts to bring nature onto balance sheets and into decision-making processes. But there’s still a long way to go.

Ensuring communities benefit

Nature restoration projects often take place in rural areas, raising important questions about who benefits financially as well as socially and environmentally. There’s a risk that value could flow away from the communities hosting these projects.

However, emerging models show that this isn’t inevitable. Collaborative approaches, where landowners and communities work together, can help ensure that benefits are shared more fairly. Building the right structures and governance around projects will be key to making this happen.

Innovation and system change

While many of the challenges are practical, the discussion didn’t shy away from the bigger picture.

There was recognition that current economic systems don’t always value nature appropriately. Moving towards a more circular, nature-based economy will require both innovation and long-term change.

Encouragingly, examples are already emerging from new investment funds to creative ways of monetising and measuring social and environmental value add and other returns. These early innovations could help shape a more sustainable financial system over time.

Looking ahead: Making nature investable at scale

There’s still work to do particularly around risk, demand and policy but the foundations are starting to come together. With the right collaboration between finance, government, insurers and communities, nature could become a recognised and investable asset class.

Ultimately, the shift from risk to return isn’t just about finance. It’s about building a system where restoring nature isn’t only necessary, but attractive as an investment. And an accountant’s skillset is one of many things that will contribute to making that happen.

A founding member

ICAS is a founding member of the Scottish Forum on Natural Capital. Natural capital is a priority sustainability topic for us as we help members to understand the dependencies, impacts, risks and opportunities of their business with nature.

ICAS has contributed to practical references about nature for accountants, including Global Accounting Alliance's 'Why nature matters to accountants: A guide to building resilience and value through nature-positive action' and titles in Accounting for Sustainability’s Nature Guidance series.

Catch up on the event