Forests quietly underpin much of the global economy. They regulate water systems, support food production, sustain rural livelihoods, and play a critical role in climate stability. In economic terms, they function as essential infrastructure — yet they are rarely treated as such.

Despite their value, forests remain chronically underinvested. According to the UN Environment Programme’s State of Finance for Nature report, only around US$220 billion was directed toward nature based solutions in 2023, while an estimated US$7.3 trillion flowed into activities that continue to degrade nature.

This gap does not reflect a lack of evidence or opportunity. The economic case for investing in forests is increasingly well understood. Instead, the challenge lies in how capital flows — or fails to flow — into forest positive activities.

Financial markets are not yet designed to consistently channel investment into high integrity forest solutions, leaving viable opportunities fragmented, under supported, and difficult to scale.

Forest positive businesses are enterprises that generate commercial returns while actively protecting, restoring, or sustainably managing forests. These can include sustainable timber and agroforestry ventures, non timber forest product enterprises, deforestation free commodity supply chains, and nature based solutions that reward conservation. While these models can deliver long term economic and environmental value, they often operate in complex landscapes shaped by land tenure issues, unmet infrastructure needs, community livelihoods, and environmental risk.

Put simply, forests and sustainable land use (FSLU) thrive where capital, capability, and collaboration come together. In practice, those elements rarely align. Early forest positive enterprises often struggle to demonstrate commercial viability or attract partners, while investors face limited deal pipelines, inconsistent data, and uncertainty around risk and return. Unlocking the value of forests therefore requires more than good intentions: it requires mechanisms that deliberately connect viable businesses with confident, capable investors.

Catalysing Market Transformation

Partnerships for Forests (P4F) is doing exactly that. Funded by the UK and implemented by Palladium, the programme is now in its second phase, continuing to mobilise private investment into sustainable businesses that protect and regenerate tropical forest landscapes, empower local communities, and enable inclusive economic growth.

Many forest positive businesses struggle to attract finance due to early stage risk, weak market linkages, and a lack of proven, investable models. P4F addresses this by providing tailored support to forest friendly enterprises, helping them become commercially viable and investment ready. Through targeted technical assistance, the programme supports businesses to move from idea to scale—strengthening core capabilities, reducing risk, and building a credible pipeline of opportunities.

“Partnerships for Forests exists to prove that forest friendly business models can be commercially successful,” explains Kate McCoy, Team Leader. “Unlike many forest protection initiatives that rely solely on public or philanthropic funding, P4F uses public finance strategically to unlock private capital.”
P4F works across entire forest commodity markets—from producers to buyers—to shift incentives away from deforestation. Collaboration is central to this approach, bringing together producers, supply chain actors, buyers, investors, and policymakers to create the systems sustainable businesses need to thrive.

“In our first phase, we catalysed over £1.35 billion in private investment,” McCoy adds. “Demonstrating that forest positive solutions can attract finance while delivering real economic opportunities for communities that depend on forests.”

Building Investor Confidence in Nature

For investors, development finance institutions (DFIs), fund managers, and project developers, investing in nature is often complex. Returns may be long term, risks are perceived as high, and environmental and social outcomes can be difficult to measure and compare. Addressing these challenges is essential to scaling capital into the FSLU sector.

This is where the Mobilising Finance for Forests’ Learning Convening and Influencing Platform (MFF LCIP) plays a critical role. Implemented by Palladium and managed by the Dutch development bank FMO, the platform strengthens investor knowledge and capability through practical tools, guides, case studies, and peer to peer learning focused on real world investment challenges.

Beyond written resources, the LCIP convenes high impact events and communities of practice, creating spaces for investors and practitioners to share lessons across key themes such as blended finance, deforestation free supply chains, and ESG integration.

“Building the capacity and confidence of investors is critical for driving capital into sustainable forest and land use systems at scale,” explains Isabella Shraiman, Team Leader, MFF LCIP. “The LCIP is designed to overcome barriers at individual, institutional, and systemic levels—accelerating investment into nature while delivering sustainable economic returns.”

Unlocking Impactful Investment Together

Together, P4F and the MFF LCIP address both sides of the investment equation. P4F helps forest positive enterprises reach investment readiness, while the LCIP strengthens investor capability and confidence to deploy capital responsibly and at scale.

Ultimately, the goal is not simply to protect forests, but to build an economy that makes protection the rational choice for communities, producers, and investors alike. By aligning enterprise support with investor readiness, these programmes demonstrate that protecting and restoring forests is not only possible—but investable at scale.