New approaches to investing in nature to unlock billions of dollars

Forest Investor Club highlights innovative case studies

Considerable investment is poised to flow into natural capital as collaborative efforts from the Forest Investor Club (FIC) come to fruition.

Led by the World Business Council for Sustainable Development (WBCSD), the FIC – whose members include BTG Pactual Timberland Investment Group, the US International Development Finance Corporation, Lombard Odier Investment Managers and Mirova – has released its 2023 Annual Report, which examines the landscape for investment in nature-based solutions (NbS), the group’s current undertakings and innovative investment strategies.

“Natural capital underpins the health of communities, businesses and economies all over the world, and a comprehensive and collaborative approach is needed to meet ambitious goals for scaling investments in nature-based solutions to address systemic global challenges,” said Ryan Whisnant, director of land use finance at WBCSD.

“The progress demonstrated by the FIC and its members in developing new approaches and partnerships to unlock capital, originate deal flow and identify innovative solutions will help to protect, restore and sustainably manage nature and forests for generations to come.”

Launching a set of case studies that highlight multi-million-dollar investment strategies led by FIC members, the report identifies key innovations that can help overcome existing barriers for NbS investment, and scale the amount, pace and geographic spread of capital deployed into forests and nature.

For example, New Forests, a global investment manager of nature-based real assets and natural capital strategies, partnered with DFIs to launch the African Forestry Impact Platform, which invests in sustainable forestry operation companies and related assets in sub-Saharan Africa. With an initial $200m signed in investment from its DFI partners and a goal to scale to $500m though follow-on investment from long-term institutional investors, it aims to deliver commercial returns alongside conservation and sustainable development outcomes at scale.

According to the report, investments in nature could provide up to 37% of total cost-effective climate change mitigation efforts and represent a substantial market opportunity to generate up to $3.6trn annually by 2030.

NbS, however, face a significant financing need of $11trn through to 2050 to meet ambitious climate change, biodiversity and land degradation targets. To reach that goal, global investments in nature will need to double by 2025 and triple by 2030 from existing levels.

“The financial sector has a critical role to play in developing innovative investment models that can help conserve, manage, and restore forests and nature,” said Emily Kreps, head of ESG and sustainable finance, investment bank origination and advisory at Deutsche Bank.

“The access to expertise, networks and partnerships facilitated by the FIC are crucial to helping investors unlock and scale investment opportunities in this asset class across the globe.”