As the global impact investing community convenes at this year’s Global Impact Investing Network (GIIN) conference, one theme is impossible to ignore: nature-based solutions (NbS) are indispensable to achieving climate and biodiversity goals. Yet the capital flowing to NbS remains overwhelmingly debt-heavy, in the form of loans, rather than grants or investments. As Palladium’s Andrew Sutherland explains, equity, though essential for scaling enterprises, absorbing early-stage risk, and building long-term resilience, continues to be scarce.

“If we want NbS to perform at institutional scale, we must make nature equity investment grade,” he adds.

In response, the team is launching consultations on the Nature Equity Fund for Emerging Markets (NEF-EM) this week at GIIN. The fund will be a blended-finance vehicle designed to unlock early stage funding for nature-positive enterprises across the tropical belt. Structured by Cygnum Capital in partnership with Palladium, NEF-EM aims to bridge the gap between incubation and institutional capital, creating a high-integrity pipeline of investable businesses that deliver both resilience and returns.

“We believe scaling regenerative, nature-based enterprises in emerging markets isn’t just good impact — it’s smart, forward-looking investment, says Jan Martin Witte, COO, Cygnum Capital. “The NEF-EM is structured to drive real systems change by unlocking catalytic capital, building resilient green economies, and backing the entrepreneurs shaping the future of our planet.”

The Opportunity—and the Gap

NbS enterprises restore ecosystems, regenerate soils, protect watersheds, and decarbonise supply chains. They are business models, not projects alone: aggregators of smallholder farmers’ supply, producers of bio-based materials, landscape restoration platforms, and ecosystem service companies.

These models often require patient, risk-tolerant capital to build capacity, partnerships, and routes to market. Debt can finance working capital and capital expenditures; equity finances transitions, the period when execution risk is highest and impact pathways are still being proven.

Without equity, the pipeline stalls, and resilience remains hypothetical.

The Risk Barrier

Fund managers often avoid Nature Equity because of perceived failure risks: jurisdictional (tenure and permitting), operational (execution in remote contexts), governance (misaligned incentives), and reputational (community conflict or low-integrity credits).

“These risks are real, but they are not insurmountable,” says Sutherland. The question is practical: How do we make NbS “investment grade” so that equity becomes both deployable and scalable? The team explains that the solution lies with credible de-risking.

Three pillars consistently convert perceived risk into underwritable risk:

1. Rigorous, NbS-specific due diligence.
Move beyond generic ESG (environment, social, governance) screens. Assess land tenure and use rights; map biodiversity baselines; verify social license through FPIC (free, prior, and informed consent) and benefit-sharing; diligence offtake reliability and price floors; stress-test MRV (measurement, reporting, verification) methodologies and permanence assumptions. Often, this boils down to doing a deep dive into the specific risks and realities of nature-based projects though checking who legally owns and can use the land, understanding what wildlife and ecosystems are already there, and making sure local communities have agreed to the project and will benefit from it.

2. Blended finance by design.
Structure first-loss tranches, guarantees, or outcome-based payments to absorb policy and adoption risk. Pair equity with technical assistance to accelerate investment readiness; building management systems, certification pathways, and data architectures that reduce execution risk over time. This involves combining different types of funding, like grants that take the first hit if something goes wrong, or payments tied to specific results, to make projects safer for investors.

3. Strong governance and monitoring.
Align incentives via board oversight, milestone-based disbursements, and transparent KPIs (e.g., hectares restored, leakage avoided, community revenue share). Embed grievance mechanisms, third-party audits, and digital MRV so that integrity is observable, not asserted. For investors, this looks like setting up clear rules and accountability systems, like only releasing funds when specific goals are met, and tracking progress with measurable indicators

Crucially, investors don’t just need strong projects; they need high-integrity pipelines, repeatable origination, standardised underwriting, and operational playbooks that make deal quality consistent across landscapes and jurisdictions.

“The tropical belt is the frontline in the fight against climate change and nature loss,” says Sutherland. “We know there is a growing network of locally-driven businesses that hold the keys to tackling these crises, but they often lack access: access to markets, technical support, and finance.”

“Our goal is to support these partners using our deep expertise and global platform. The Nature Resilience Platform, with NEF-EM as its latest vehicle, provides partners with the opportunity to support the growth trajectory of these warrior businesses.”

Operational Competency as a Differentiator

What ultimately converts risk into return is execution capacity and boots on the ground across tropical jurisdictions that can deliver community engagement, compliance, and delivery against offtake. The best Nature Equity managers look as much like operators as financiers: they house agronomy, forestry, and supply-chain expertise; maintain country-level compliance teams; and run data and MRV systems that are audit-ready from day one.

This is how integrity gets built into the capital stack, deal by deal, and how equity becomes truly investable. “Impact is not an afterthought, it is the investment thesis. When we measure tonnes of carbon reduced, hectares restored, or jobs created for women farmers, we are also measuring risk reduction, value creation, and resilience,” adds Nicolas Couture-Miambanzila, Managing Partner. “That is how we define success: impact and returns reinforcing each other.”

Equity is not just another financial tool, it’s the key to unlocking transformation, especially when applied to nature-positive enterprises. It enables early-stage innovation, supports long-term resilience, and builds the foundation for scalable impact.

If we want nature-based solutions to deliver at the speed and scale the planet demands, equity must lead the way.