We know Nature-based Solutions (NbS) work and can help address multiple societal challenges, but we aren’t yet financing them at scale. At present, the majority of funding for NbS comes from public sources. This still leaves a huge ‘gap’ between the financial flows that public sources provide and what is needed if NbS are to reach their potential. A critical question for policymakers and investors is, how do we channel private finance toward NbS at the scale needed?
This challenge took centre stage at NetworkNature's latest Science Policy Workshop in Brussels, where investors, policymakers, and EU-funded researchers gathered to tackle the NbS financing gap. The workshop revealed both promising opportunities and barriers in the race to redirect funds toward nature.
Beyond Grants and Markets: Finding the Middle Ground
The workshop started with a sobering reality check: "We are done with pure grants, but also with pure markets. But there is something in the middle and we need to find it fast”.
Despite growing concern about the de-prioritisation of nature in some contexts, one speaker pointed to promising developments. Denmark's commitment to take 15% of agricultural land out of production represents a major shift in the approach towards working with nature to address societal challenges. Poland and Sweden are exploring restoring peatlands for security and defence purposes. And Spain's Prime Minister is discussing forest management in response to devastating wildfires. These are not pilot projects - they are massive undertakings that demand coordinated funding at scale.
Yet, the challenge of funding NbS remains enormous. The Peatland Standard for Ireland, with tech company backing, aims to rewet 80,000 hectares of grasslands to protect and conserve peatlands – ecosystems that are vital for storing carbon and reducing flood risk among other benefits. This will require coordination across multiple funding streams.
These examples underline both the challenges and the opportunities for financing NbS, and the need to move quickly to find that ‘middle ground’.
The Policy Gap: Where Frameworks Work and Where They Don't
The workshop revealed that enabling environments are key for the implementation of NbS at scale. It was noted that a number of nature-positive investment opportunities are emerging, particularly in the UK. For example, under the Town and Country Planning Act 1990, developers are legally required to demonstrate Biodiversity Net Gain (BNG) i.e. that “a development will result in measurably more or better quality natural habitat than there was before development”. The EU Nature Restoration Law, which sets legally binding targets for restoring wetlands, peatlands, and rivers, is another example of how policy frameworks can drive the adoption of NbS. There was a clear message: voluntary approaches and ambitious statements do not mobilise capital rapidly. Compliance frameworks do.
Workshop participants also highlighted how conflicting or competing policies can block progress. For example, in Scotland, tree planting initiatives can compete with sheep farming subsidies in some areas. In the Netherlands, there are examples of innovative projects that cannot access agricultural support if their crops aren’t included in the Common Agricultural Policy.
Siloed policymaking is actively disrupting nature finance. To remedy this, land-use planning must happen at national level with cross-governmental alignment and greater policy coherence, or public money will continue working against itself.
The €2 Trillion Opportunity
The European Commission’s proposal for the Multiannual Financial Framework 2028-2034 includes around €2 trillion in total funding, with 35% earmarked for green initiatives and €175 billion for EU Horizon programmes. For EU Horizon programmes, 40% should support climate-related projects with strong environmental components.
The challenge now is embedding biodiversity considerations throughout these funding streams and demonstrating how nature can underpin a productive and resilient Europe.
What Investors Need: Clear Demand, Robust Standards, and Risk Mitigation
The workshop identified critical success factors for investable NbS projects:
Demand-side policies matter. Compliance schemes, like Biodiversity Net Gain (BNG) and the EU Nature Restoration Law, create guaranteed demand. Conversely, grant schemes derisk supply but leave commercial viability uncertain. "Grant schemes are great for pipeline development," noted one participant, "but they don't address the commercial risk from lack of demand”.
Nature credits need integrity. Participants saw potential in credit mechanisms but warned they would collapse without scientific baselines, transparent monitoring, social equity safeguards, and alignment with the Nature Restoration Regulation. Greenwashing is a serious concern.
Standardization enables scale. Every NbS project is unique, but finding opportunities to standardise specific categories (such as urban greening or peatland restoration) could help reduce transaction costs, increase investor confidence and ultimately build successful pipelines.
Timeline gaps must be bridged effectively. Timeline mismatches require creative solutions. Insurance companies commonly offer 3-year coverage while afforestation projects need 25-year commitments. Blended finance structures and guarantees become essential.
The Narrative Shift
Perhaps most critically, participants emphasised the need to reframe investing in nature not as a burden but as an economic opportunity and risk mitigation strategy. The way NbS are communicated is crucial — the framing, language, and benefits must be tailored to resonate with different stakeholders and align with the current political momentum. As one speaker noted, "No matter what the political landscape, the physical risk remains and needs acting on”.
With economic dependencies on nature becoming clearer, and financial institutions increasingly recognising nature-related risks, the conditions for transformation may finally be aligning. The question is whether policy can move fast enough to match the urgency of the crisis and the pace of the market transformation.
Next Steps: Translating Insights into Action
Building on the rich discussions and cross-sectoral insights from the workshop, NetworkNature will develop a brief synthesising key recommendations and actionable pathways. These will address critical areas including regulatory frameworks, de-risking mechanisms for private investment, Environmental and Social Governance disclosure requirements, and procurement reform. The brief will serve as a practical roadmap to align financial flows with nature-positive outcomes in the lead-up to the Multiannual Financial Framework 2028-2034 funding round negotiations.
The window for embedding nature finance into Europe's economic architecture is open. But it won't stay open long.
To find out more, read the NetworkNature report on the finance landscape for NbS in Europe.