The latest estimates indicate that US$7.3 trillion in annual finance flows are harming nature, with two-thirds of this figure originating in the private sector. In practice, this means capital flowing to activities and business models, such as deforestation, fossil fuel expansion, intensive agriculture, and polluting industries, that degrade ecosystems, overexploit natural resources, and undermine biodiversity and climate stability.

There is a huge opportunity for nature-positive investments and an urgent need to reduce finance that negatively impacts nature Yet, private‑sector nature‑positive investment remains limited at roughly US$23–23.4 billion per year.

Pension funds and asset owners can expand and reshape the market by steering capital away from activities that degrade nature and towards nature-positive investments. In doing so, they play a pivotal role in addressing the US$571 billion annual shortfall for nature‑based solutions.

But it’s easier said than done.

Although natural resource investments offer significant growth potential—particularly in emerging markets—private-sector participation remains limited. Investors often shy away due to barriers such as previous failures to address nature-related risk in existing financial mechanisms and difficulties in integrating nature finance policies, as well as gaps in reliable data needed to assess risk and returns. As a result, many high‑value opportunities remain untapped, even as the market for nature‑positive investment continues to expand and become more attractive.

“To address these roadblocks and work towards addressing that massive shortfall in funding for nature-based solutions, we’re teaming up with Pensions for Purpose to launch a platform over the next three years to scale high-integrity investment into nature,” explains Martin Belcher, Palladium Director of Impact.

Pensions for Purpose is a membership organisation that brings together asset managers, pension funds, and their professional advisers, to encourage the flow of capital towards impact investment.

“Pensions for Purpose plays a unique role as a trusted bridge to the pension sector, offering deep engagement with asset owners, established communities of practice, and communication channels that reach decision‑makers,” Belcher adds. With nature‑negative finance still vastly outweighing nature‑positive flows, the partnership aims to equip pension funds and asset owners with clearer insights, practical tools, and stronger evidence to integrate natural capital into investment strategies.

Funded through the Mobilising Finance for Forests (MFF) programme, Belcher explains that the partnership with Pensions for Purpose will build investor capability through a range of activities, including podcasts, market briefings, research publications, and convening a programme of Community Interest Groups across the UK pensions sector. “Together, we’re hopeful that these efforts will unlock more private‑sector capital for nature‑based solutions and accelerate progress toward a nature‑positive economy,” he adds.

Included in the MFF is the Learning, Convening and Influencing Platform (LCIP), which aims to scale investment in nature by equipping institutional investors with clearer insights, actionable frameworks and examples of how such investments deliver impact in terms of financial returns and environmental and social impacts.

The LCIP convenes stakeholders across the forests and sustainable land‑use sector—including DFIs, fund managers, impact investors, and, increasingly, pension funds—to share knowledge and address data gaps that hinder investment flows into forests, sustainable agriculture, and nature more generally.“Embedding natural capital into pension funds’ investment strategies aligns with Palladium and MFF’s shared vision to grow investment at scale in nature-based solutions,” explains Belcher who also serves as Project Director on the LCIP. “This will undoubtedly include higher levels of investment into forests, sustainable agriculture and sustainable land use.”

“Through this partnership, we aim to provide asset owners with the insights and tools which will help them scale their investments in these areas so that they can meet their fiduciary duties and deliver environmental and social impacts that contribute to more sustainable economic growth.”

Supporting Sustainable Investment by Pension Funds

Palladium and Pensions for Purpose have developed a structured programme of work to be delivered over the coming year, designed to build understanding and momentum around biodiversity and natural capital investing within the pensions sector.

Central to this is the publication of a research report titled “Biodiversity & Natural Capital: where pension funds are and what comes next”, which brings together insights from interviews with fifteen asset owners and five asset managers. The report explores why investors are engaging with nature, the challenges that can limit capital allocation, and practical case studies that illustrate how strategies are emerging in practice.

Alongside this, Pensions for Purpose will convene a series of Community Interest Group meetings for its members, starting in February with a session focused on where pension funds currently sit in their nature investment journey, including the types of revenue models being used across nature-related portfolios. “Through these discussions and tailored capacity building support, our aim is to deepen understanding of investor risk and return expectations, encourage peer learning, and help build leadership across the UK pensions sector,” adds Belcher.

This work is complemented by a series of Pensions for Purpose podcasts that explore how investing in nature and biodiversity can help manage long term risk while accelerating private sector capital into high impact opportunities, beginning with an episode that introduces the partnership and explains why natural capital matters for impact investors and pension funds.

Ultimately, the partnership forms part of Palladium’s broader efforts to address climate change and biodiversity loss by advancing sustainable investment at scale and is an important strategic collaboration for both the LCIP programme and more broadly for Palladium as a whole.

MFF is financed by the UK Department for Energy Security & Net Zero and the Dutch Ministry of Foreign Affairs and managed by FMO, the Dutch Entrepreneurial Development Bank. Palladium, working in partnership with Systemiq, has been contracted by FMO to deliver the (LCIP) through 2028.