As Southeast Asia confronts the accelerating impacts of climate change, from deforestation to increasingly severe floods and droughts, the need to mobilise capital for climate action has never been more urgent. Yet across the region, early-stage financing for nature-based solutions remains scarce, limiting the potential for community-driven climate action to scale.

To address this financing gap, Convergence Blended Finance has announced new support through its Asia Climate Solutions Design Grant program, which provides early-stage grants for high-impact blended finance solutions in emerging markets in Asia that target climate mitigation and adaptation.

Under this program, Palladium has been awarded a feasibility grant to design and structure The Nature Catalyst, a blended finance facility aimed at unlocking early-stage capital for nature-based solutions in Cambodia, Vietnam, the Philippines, and Laos.

Unlocking the Potential of Nature-Based Solutions

Nature-based solutions offer powerful tools for sequestering carbon, protecting biodiversity, and building community resilience. Despite their promise, these approaches remain severely underfunded, particularly in the Southeast Asia region. The Nature Catalyst aims to address this funding gap by designing a dual structure to support small and medium-sized enterprises, community-based projects, and local developers to deliver nature-based solutions in the agriculture, forestry, and fisheries sectors.

“The Nature Catalyst is an opportunity to bring a blended finance approach to fill a critical gap in the ‘missing middle’ of nature finance by identifying, incubating and scaling nature-positive businesses and projects,” explains Dennis Hall, Palladium Partner for Inclusive Growth & Nature. “Palladium is excited to bring our regional and global experience catalysing investment and supporting investment ecosystems, working in collaboration with our partners.”

A Dual Mechanism for Impact

The Nature Catalyst will operate through two complementary components designed to support nature-based solutions across their development cycle and mobilise local capital for climate action.

The Nature Catalyst Incubation Facility (NCIF) will provide performance-based grants and technical assistance to local pipeline developers and early-stage enterprises. These grants will help projects navigate country-specific risks, meet investor requirements and secure follow-on financing. By fostering connections between promising initiatives and domestic capital, the NCIF will bridge the critical gap between concepts and investment.

In parallel, the Nature Catalyst Fund (NCF) will offer tailored financing instruments aligned with the risk profiles and maturity stages of nature-based investments. Alongside technical assistance, these instruments will help unlock co-investment from private regional partners, absorb early-stage risk, and strengthen a pipeline capable of returning capital to investors.

Building the Foundations for Climate Resilience

To catalyse investment in this sector, Palladium is working in partnership with Impact Earth and Capital Continuum Advisers to engage local corporations, family offices, and regional financial institutions to participate as pipeline partners and potential investors. The Nature Catalyst aligns with Palladium’s broader efforts to integrate climate resilience, financial inclusion, and private sector engagement into sustainable development strategies worldwide. The team brings extensive experience in catalytic finance design, from blended funds to public-private partnerships, having enabled over USD 1 billion in sustainable land use.

The Nature Catalyst feasibility study is undertaken with the financial support of Convergence. As a global network for blended finance, Convergence aims to increase private investment in emerging markets and developing economies to advance the UN Sustainable Development Goals and Paris Agreement. To accelerate advances in the field, Convergence also provides grants for the design of vehicles that could attract private capital to global development at scale.

Convergence support will accelerate the Nature Catalyst’s design and market testing. With this foundation, the team aims to finalize a market-ready fund structure capable of driving both environmental and social impact at scale.