Development co-operation can help mobilise private finance for biodiversity by improving investment conditions, strengthening revenue models and addressing risk-return barriers. Mobilising private capital is essential to narrow the biodiversity financing gap and support implementation of the Kunming Montreal Global Biodiversity Framework, especially in developing countries where financing constraints and perceived risks remain high. The chapter sets out three complementary pathways, organised by revenue models: direct investment in biodiversity-related assets and activities; integrating biodiversity into broader sustainable finance instruments; and embedding biodiversity considerations into existing environmental market mechanisms. It reviews the role of blended finance, guarantees, catalytic capital and innovative financial structures in supporting bankable biodiversity projects and attracting institutional investors. The chapter also discusses thematic bonds, debt-for-nature swaps, sustainability-linked finance and biodiversity-related carbon market approaches. Throughout, it emphasises the importance of integrity, measurable biodiversity outcomes, strong safeguards and enabling environments to ensure that mobilised finance contributes effectively to nature-positive development pathways.
Scaling Up Private Action for Nature
Abstract
Scaling financing for biodiversity is mainly constrained by the public good characteristics of biodiversity. The value of biodiversity and the ecosystem services it provides are often not reflected in private sector decision making, meaning that investors are less likely to invest in it, with consequent limited demand for finance (chapter 1). As a result, investors often struggle to find direct links between reliable cashflows and concrete environmental or biodiversity outcomes (World Economic Forum, 2025[1]). Beyond these biodiversity-specific challenges, many biodiversity investments are also affected by barriers that are not necessarily exclusive to biodiversity, including small deal sizes and high transaction costs, the need for active management, and limited scalability (Christiansen et al., 2025[2]). At the same time, investors may perceive some of the most biodiverse countries as too risky to invest in, reflecting broader structural investment constraints in developing countries, rather than an intrinsic feature of biodiversity investments (Christiansen et al., 2025[2]).
Despite these constraints, opportunities exist to mobilise private finance for biodiversity through development finance instruments and mechanisms. Using a range of blended finance instruments and approaches, development finance providers can help address market failures or risk-return considerations to directly or indirectly mobilise private finance towards biodiversity (OECD, 2018[3]). Concretely, development finance can help mobilise private finance in three different ways.
Pathway 1: direct investing in biodiversity-related assets or activities1,
Pathway 2: integrating biodiversity into non-biodiversity-related sustainable finance,
Pathway 3: integrating biodiversity into existing market mechanisms.
These pathways are not mutually exclusive. Rather, they complement each other in that they increase the scale of private finance mobilisation opportunities. They offer an analytical framework to show when and how private finance can be mobilised in nature-dependent sectors where biodiversity objectives and financial objectives align (Pathway 1). However, such opportunities often remain limited in terms of scalability potential in developing countries and they tend to rely on significant development finance contributions. Unlocking private finance for biodiversity through non-biodiversity sustainable investment is an alternative (Pathway 2), as is integrating biodiversity into existing market mechanisms (Pathway 3).
The first pathway relates to mobilising private finance into investments that generate financial returns directly from biodiversity-related sectors or operations. Examples of such financing include investments in activities linked to conservation or the sustainable use of natural resources. However, given the limited scalability and revenue potential of many pure conservation activities, this pathway emphasises investing into biodiversity-related economic activities that can generate cashflows including agricultural production (e.g. organic food) with biodiversity-aligned practices and business models, new business ventures that directly support biodiversity such as ecotourism, or infrastructure that integrates NbS. Such biodiversity-related activities offer an opportunity to directly contribute to address biodiversity loss. Along with their underlying operations, these activities generate returns on investments, thereby delivering both biodiversity outcomes and financial returns. This relationship between private finance flows, the underlying biodiversity assets and the (financial and environmental) returns highlights the importance of stable and long-term revenue streams.
Approaches under this pathway include two modalities for mobilising private finance: through development finance instruments that finance biodiversity-related assets or activities; and by financing biodiversity through use-of-proceeds of green, social and sustainability (GSS) bonds.
Development finance approaches to finance biodiversity-related assets or activities
As elaborated in chapter 1, the fact that biodiversity and nature underpin the economy means that all businesses depend, directly or indirectly, on biodiversity (IPBES, 2026[4]). An extensive range of economic and business activities, notably in nature-dependent sectors, are directly dependent on, and also impacting, biodiversity. The financing and financial products for these activities can be designed to support investment in sustainable practices with positive biodiversity outcomes. The whole range of development finance tools – from debt to equity and other private sector instruments – can be used to financially support businesses adopting sustainable practices or implementing biodiversity-friendly projects.
This section focuses on three of these financing approaches, which can be used by development finance actors to unlock additional private finance into biodiversity-related assets or activities: collective investment vehicles (CIVs), guarantees and project finance for infrastructure projects.
Collective investment vehicles23 can accumulate exposures to smaller enterprises. They provide a larger-scale financing opportunity to private investors while also diversifying risks, thereby helping overcome some of the challenges to directly financing biodiversity.4 Investments in nature-dependent sectors such as agriculture or tourism – for example transactions involving large agribusinesses and major commodity traders – can also be sizeable. Still, in many developing countries, smallholder farmers and SMEs are the backbone of the agrifood sector, which results in small ticket sizes and numerous fragmented projects (OECD, 2021[5]). Individual development finance providers are often not equipped to directly invest in or provide financing for individual, relatively small-scale ventures in developing countries. Setting up a specific investment vehicle to pool finance, and including specific expertise and capacity for biodiversity-focused investments, can make a difference with respect to private financiers’ risk and return considerations in the context of financing private investment for biodiversity. More generally, structured CIVs5 blend finance by strategically deploying development finance, for example in junior tranches in order to mobilise private investors in the mezzanine or senior tranche of the CIV by providing them a risk cushion (OECD, 2018[3]; Dembele et al., 2021[6]).
One such CIV is the eco.business Fund initiated by KfW (German promotional and development bank), Conservation International and Finance in Motion, which aims to strengthen local financial institutions to ensure more financing towards companies whose business practices contribute to biodiversity conservation. The Fund provides technical assistance for product development, capacity development and awareness as well as debt financing to local financial institutions, which on-lend to their clients, thereby contributing to local market development for biodiversity finance (eco.business Fund, 2023[7]). A concrete example is its partnership with Produbanco in Ecuador to scale the adoption of sustainable practices in sugar industry companies, with eco.business Fund’s Development Facility providing technical assistance (eco.business Fund, 2023[7]). In the fund, public investors and donors provide a risk cushion to investors via a first-loss tranche, which helps attract private institutional investors. Among the private investors in the Fund are the Dutch bank ASN (Environmental Finance, 2020[8]).
Another CIV example is the Land Degradation Neutrality Fund managed by Mirova, which focuses on sustainable land-use projects (e.g. regenerative agriculture) in emerging markets. This fund provides both equity and debt financing, including into cocoa value chains in Ghana and macadamia nut production in Kenya and the United Republic of Tanzania (hereafter Tanzania), as well as in conservation efforts in Colombia through special protected areas (Mirova, 2023[9]). This fund’s structure is also layered, with public actors acting as anchor investors and de-risking partners, which makes investment from the private sector less risky and thus more attractive (One Planet Summit, 2024[10]). It blends commercial financing (e.g. from asset managers or impact investors) and development non-grant financing from, among others, the AFD; the European Investment Bank (EIB); the UK Department for Environment, Food and Rural Affairs (DEFRA); Canada; and Luxembourg (UN Convention to Combat Desertification, 2025[11]). Overall, by pooling resources into dedicated funds or investment vehicles such as CIVs, it is possible to address challenges related to investment volumes and intermediation as well as capacity and expertise limitations that would otherwise make it difficult to identify investment opportunities. Such challenges are common to efforts to mobilise private finance for biodiversity, and the vehicles can be tailored for biodiversity objectives. This is relevant even when the financing challenges themselves are not specific to biodiversity, but rather to mobilising private finance in developing countries, to a large extent defined by the development context.
A further example is the African Forestry Impact Platform (AFIP), a CIV by Norfund, British International Investments (BII) and Finnfund that acquires stakes in companies, among them forest development and wood processing enterprises such as Green Resources that operates in Mozambique, Tanzania and Uganda (Norfund, 2022[12]; ODI Global, 2025[13]). As illustrated by this example, equity investments by development finance actors can address issues associated with sustainable forestry or wetland restoration projects that may be at an early stage, with high risk and delayed cashflows. In such cases, equity in its patient role can unlock investments.
Guarantees can improve access to finance and thereby unlock investments into biodiversity-related assets or activities. In the context of biodiversity, guarantees can also improve the risk-return profiles of biodiversity conservation project developments, increasing the private capital available (AFD, 2021[14]). The AGRI3 Fund (2025[15]), for instance, is a blended finance initiative initially launched by Rabobank and the United Nations Environment Programme (UNEP). Its primary objective is to mobilise public and private capital to promote sustainable agriculture, prevent deforestation and enhance rural livelihoods in developing countries (Van Manen et al., 2024[16]). By providing credit enhancement tools such as partial risk guarantees and subordinated loans, the fund aims to de-risk investments in sustainable land use, making them more attractive to commercial banks and private investors. AGRI3 Fund for example backed a USD 5 million loan from Rabobank Brazil to the LPCD Group by providing a partial credit guarantee. The guarantee enabled the LPCD Group, a traditional Brazilian farm managing 48,1k hectares of land in Brazil’s Mato Grosso state, to implement sustainable cattle farming practices, including pasture restoration and full compliance with Brazil’s Forest Code. The tenure of ten years and the credit risk guarantee allowed for financing “non-cash-generating activities such as forest protection” (Rabobank, 2021[17]).
In theory, guarantees can be designed to target risks very specifically, including specific risks in relation to biodiversity. Often and in the case of the aforementioned examples, rather than addressing specific biodiversity risks, the guarantees unlocked financing and investment by reducing the overall financing costs, which allowed investment into activities with more limited cash-generating potential.
Project finance also offers specific potential for private finance mobilisation. Project finance refers to financial structures specifically designed for individual projects. They are particularly relevant for infrastructure financing, given the high degree of idiosyncrasy as well as project financing volume, which make tailored financing both relevant and feasible. Infrastructure projects have a strong biodiversity dimension due to their characteristics as built environment. Infrastructure investments also are a familiar business model, typically with ringfenced and often guaranteed revenue streams and long-term, large-scale investment opportunities. Infrastructure can be financed by project finance approaches at a volume that is large enough to both tailor specific financing solutions to individual projects and through direct participation by and cross-border financing from international investors (OECD, 2018[3]).
Biodiversity considerations can therefore be integrated into infrastructure projects, and cross-leverage the revenue-generating ability of such projects, helping build the business case for biodiversity finance and investments. However, there are numerous barriers to overcome, such as prevailing regulations and technical standards that have been developed to favour so-called grey rather than green infrastructure (OECD, 2020[18]), and the potential negative effects of infrastructure on biodiversity should be carefully studied and addressed.
In particular, NbS can help mitigate risks arising from nature loss and support the mainstreaming of biodiversity considerations into infrastructure, while leveraging revenue streams generated by these projects (e.g. through the sale of energy or user fees). The relationship between NbS and biodiversity is very strong and direct as all NbS impact biodiversity and biodiversity impacts how the solutions function (OECD, 2020[18]). Given that developing countries are expected to invest more than USD 2 trillion annually on infrastructure (Abid Hussain et al., 2019[19]), there is significant potential to integrate NbS at scale into infrastructure development, including by leveraging private finance (IFC, 2024[20]).
To support this integration, the IFC has identified a range of NbS that can be integrated into the core business operations of private sector infrastructure companies. Examples include applications in water utilities (e.g. integration of wetlands into wastewater treatment); extractives (e.g. road decommissioning and responsible mine closure); and energy (e.g. reforestation and watershed management to decrease sedimentation in reservoirs behind hydroelectric dams) (IFC, 2024[20]). When appropriately designed (e.g. mainstreaming biodiversity considerations into technology selection and spatial planning for renewable power infrastructure) (OECD, 2024[21]), integrating NbS presents an opportunity to reduce biodiversity impacts while generating financial returns, improving infrastructure performance and environmental quality. Overall, NbS can support conservation outcomes while also serving as tools for risk reduction, asset protection and long-term economic resilience.
Large-scale transport, renewable energy generation and other infrastructure projects also lend themselves to de-risk projects by using financial instruments such as CIVs and guarantees (as discussed above). Building on experience with blended finance solutions6 (OECD, 2025[22]), development actors can support NbS by providing finance – whether in the form of equity or debt (loans and credit lines) or via bond purchases – to help balance risk for private investors. Grants and technical assistance provided by development agencies can further support NbS by addressing project development costs, which may be higher when biodiversity considerations are integrated. The Papua New Guinea Biodiversity and Climate Fund, funded by the GEF, New Zealand and UNDP, provides grants, including to support NbS that mitigate climate impacts while supporting conservation and community livelihood initiatives (PNG Biodiversity and Climate Fund, 2022[23]). Furthermore, guarantees can deploy limited donor capital to leverage private investment for NbS, thus increasing liquidity, reducing borrowing costs, extending loan duration to match project needs and mitigating investment risks (Climate Policy Initiative, 2024[24]).
Overall, development finance can unlock investing into activities that have strong biodiversity dimensions, and it can be used to focus on supporting specific practices and approaches to align with biodiversity goals. The key financing constraints are not necessarily specific to biodiversity-related activities or assets but are rather general constraints. Moreover, not all activities that are critical to biodiversity action can be financed through or are suited for private investment (chapter 1). However, where it is possible to mobilise private capital flows, it is essential to focus on financial additionality, especially when deploying concessional finance and the potential of development finance to contribute to market creation and growing overall financing volume.
Financing biodiversity through the use-of-proceeds of GSS bonds
Green, social and sustainability (GSS) bonds are another instrument well-suited to directly mobilise private finance for biodiversity. GSS bonds are fixed-income debt instruments with a use-of proceed mechanism: issuers commit to using the proceeds to (re)finance specific projects with a social and/or environmental impact (OECD, 2023[25]). As large-scale instruments that tap into capital markets, they can be a powerful way to mobilise private finance towards biodiversity-related government and corporate activities. By earmarking proceeds for eligible activities GSS bonds can help mainstream biodiversity considerations by directing finance towards biodiversity projects and investments. Importantly, while GSS bonds can unlock private finance, their use is not limited to private investment: they also can be issued by the public sector to increase funding resources available to fund public biodiversity investment. In the case of more innovative bond issuances, public sector issuers play an important role in establishing market standards, credibility and best practice. They are also typically the main counterparts of donors in development co-operation, which makes them a natural partner for scaling issuances that mainstream biodiversity.
The scale of the GSS bond market, which had a volume of close to EUR 5.2 billion as of Q2 2025, suggests its potential for mainstreaming biodiversity (Luxembourg Green Exchange, 2025[26]), and biodiversity conservation is a growing feature. Between 2020 and 2023, the global share of green and sustainability bonds featuring biodiversity conservation as part of their use of proceeds increased from 5% to 16% (Sustainable Fitch, 2023[27]).7 Despite their potential for both mainstreaming biodiversity considerations and driving financing towards developing countries, the vast majority are issued in developed countries (OECD, 2023[25]; OECD, 2024[28]). Likewise, biodiversity-related issuances are heavily concentrated in advanced markets (Sustainable Fitch, 2023[27]). This mirrors broader trends in the GSS bond market, which is also concentrated in advanced markets – reflecting general financing constraints for EMDEs (OECD, 2023[25]).
Green bonds are use-of-proceeds instruments designed to (re-)finance environmentally friendly or sustainable projects. In the context of biodiversity, these can include projects relating to nature restoration, conservation and sustainable land use (CBD, 2022[29]). Green bonds are issued and backed by the overall balance sheet of the issuing entity, such as a government, but then serve to finance specific eligible new or existing green investments. The International Capital Market Association (ICMA) Green Bond Principles, best-practice guidelines for the issuance of green bonds, are the primary reference point for issuers. They address biodiversity and sustainable land use under two distinct categories: (1) terrestrial and aquatic biodiversity conservation and (2) environmentally sustainable management of living natural resources and land use (Chahine and Liagre, 2020[30]). The recent ICMA publication, Sustainable Bonds for Nature: A Practitioner’s Guide, further supports issuers, investors and other market players in issuing nature-themed bonds and understanding their impact, including by providing an indicative list of nature-related projects for nature-themed bonds (International Capital Market Association, 2025[31]).
With investors becoming more familiar with use-of-proceeds instruments, new bond labels are emerging – including for blue and biodiversity bonds. Blue bonds are a variation of green bonds where the use of proceeds is designed to finance the sustainable use of maritime resources and the promotion of related sustainable economic activities (International Capital Market Association et al., 2023[32]). In addition to driving financing towards the blue economy, blue bonds hold numerous advantages for issuers, including the opportunity to tap into new business categories, investor base diversification, reputational benefits and internal alignment (International Capital Market Association et al., 2023[32]). In certain regions, they have already played a tangible role in supporting marine conservation and the development of blue economies including for marine-focused businesses. For example, in the Caribbean, blue bonds reached USD 385 million between 2019 and November 2024 (OECD/IDB, 2024[33]).
Like all thematic bonds, blue bonds are complex instruments throughout the pre- and post-issuance process and present additional complexities pertaining to their relationship with the ocean economy. In particular, structuring blue bonds typically entails high transaction costs and requires specialised technical expertise, a strong understanding of marine and coastal value chains, and robust metrics to credibly measure impact on the ocean economy. To address these challenges, supporting tools are emerging, including ICMA’s practitioner’s guide on bonds to finance the sustainable blue economy (International Capital Market Association et al., 2023[32]).
Biodiversity bonds are another relatively new label for bonds that are specifically structured to finance projects that address the key drivers of biodiversity loss. These bonds offer financial incentives based on measurable ecological results.
The world’s first biodiversity bond in the financial sector was issued in 2024 by Banco Bilbao Vizcaya Argentaria (BBVA) Colombia with support from both IDB Invest and the IFC. The USD 70 million bond was structured in two tranches – one subscribed by the IFC and the other by IDB Invest. While its returns are fixed, the bond’s proceeds are earmarked for activities that address the key drivers of biodiversity loss including reforestation, regeneration of natural forests on degraded lands, climate-smart and regenerative agriculture and habitat restoration. The IFC, acting as a structurer and investor, provided advice to “establish eligibility criteria and reporting indicators for activities that help protect, maintain, or improve biodiversity and ecosystem services, as well as promote optimal sustainable management of natural resources” (IFC, 2024[34]). IDB Invest also provided technical advice to support BBVA Colombia in developing a biodiversity strategy and a model for managing nature-related risks.
Although biodiversity bonds are a promising way to drive financing towards biodiversity, the actual allocation of proceeds can be very different from their intended use. This creates a risk that issuers can claim biodiversity-related use of proceeds without necessarily delivering commensurate ecological outcomes in practice (Christiansen et al., 2025[2]). This reflects a broader need to strengthen commitments and enforceability regarding the use-of-proceeds of GSS bonds, which is critical to ensuring their credibility (OECD, 2023[25]). In the context of biodiversity, the allocation challenge may be due to the difficulties of identifying and reporting on biodiversity-related key performance indicators (KPIs), especially in developing countries with more limited reporting capacities. These challenges can be particularly relevant in small island developing states (SIDS), where biodiversity assets are economically and socially critical but structural constraints limit access to capital markets (Box 4.1). While such bonds do help align use of proceeds with biodiversity or green outcomes, further research is needed on their financial additionality. Relatedly, the ICMA, in its practitioner’s guide on sustainable bonds for nature, recommends that nature-themed bonds “go beyond a ‘business-as-usual’ scenario”, with clear indicators to measure improvements resulting from the issuance (International Capital Market Association, 2025[31]).
Biodiversity-linked bonds align closely with SIDS’ natural endowments, development priorities and vulnerability profiles. Many SIDS are custodians of globally significant biodiversity assets that deliver both local livelihoods and global public goods, including coral reefs, mangroves, seagrass meadows and coastal wetlands. SIDS are also among the most vulnerable countries to natural disasters and climate-related impacts, making nature-positive investment particularly relevant for resilience and sustainable development. This makes biodiversity-linked bonds potentially attractive for SIDS as a way to connect financing with nature and development priorities.
At the same time, scaling sovereign thematic bond issuances in SIDS can be challenging given structural financing and institutional constraints. These include limited and volatile fiscal space, relatively high risk premia and difficulties accessing finance, even at higher income levels. In practice, only a small number of SIDS have sovereign credit ratings, which are a prerequisite for bond issuance but are costly to obtain and maintain for administrations with constrained capacity.
Transaction costs can also be proportionally higher for SIDS because issuance volumes are often smaller and fixed costs – such as external reviews, verification, legal services and investor engagement – do not scale easily. Even after issuance, the strict eligibility, reporting and verification requirements associated with use-of-proceeds bonds can further complicate the effective disbursement of funds, especially where domestic sectors and local beneficiaries lack the capacity to comply with sustainability standards. Overall, the feasibility and impact of biodiversity-linked bonds in SIDS depend on how well the instrument is tailored to country context and supported by complementary measures – such as project pipeline development, capacity support for reporting and verification, and partnerships that reduce transaction costs and improve market access.
Source: OECD (2025[35]). Innovative Finance for Small Island Developing States: Guidance on innovative finance for small island developing states, DCD/DAC(2025)37.
Overall, by supporting different stages of the GSS bond issuance process,8 donors can help increase the mobilisation of private finance for biodiversity. For example, donors can support the issuance process of GSS bonds through technical assistance programmes, and they can also help de-risk issuances through credit enhancement (OECD, 2025[36]). The world’s first sovereign blue bond, issued in 2018 by the Seychelles government, is an example: it benefitted from a partial guarantee from the World Bank and a concessional loan from the GEF that lowered the cost of capital and helped mitigate risks for investors. Private bond holders included Calvert Impact Capital, Nuveen and Prudential (World Bank Group, 2018[37]). Proceeds of the bond are used for marine and ocean-related activities that contribute to the transition to sustainable fisheries and for the conservation of Seychelles’ marine ecosystems. While the long-term impact of this issuance has been questioned (Hunt and Hilborn, 2025[38]), others argue that it contributed to innovation in the market and gave blue bonds greater visibility. Two other developing countries followed suit, with Fiji and Indonesia both issuing sovereign blue bonds in 2023 (OECD, 2025[36]). The OECD’s “Five Is” framework identifies areas of donor support for GSS bonds (OECD, 2023[25]; OECD, 2024[28]) that can also be applied in the context of biodiversity (Box 4.2). Sustainable bond frameworks and pre- and post-issuance monitoring and reporting are particularly crucial to improving transparency, strengthening market credibility, and making these instruments more attractive to issuers and investors alike (OECD, 2024[39]). As for biodiversity bonds, further research is needed on the financial additionality of GSS bonds with respect to unlocking additional investments that would not have been undertaken without the issuance of such bonds.
Green, social and sustainability (GSS) can be used to mainstream and address biodiversity outcomes and thus increase the mobilisation of private finance towards these objectives. The OECD’s “Five Is” framework is used to support the growth of GSS bonds, and can therefore be directly used in the context of biodiversity. It focuses on five major policy areas that donors can target: investment, insurance, (market)-infrastructure, issuance and impact (Figure 4.1).
GSS bond issuers in developing countries face several significant, often interrelated obstacles. These can be technical and related to different factors – including the underlying project pipeline itself, the overall structuring of the bond, or the broader enabling environment. Donors have a unique role to play in supporting developing countries to advance their access to the GSS bond market through targeted and coherent support across the Five Is key policy dimensions.
Source: OECD (2023[25]), Green, Social and Sustainability Bonds in Developing Countries: The Case for Increased Donor Co-ordination, https://doi.org/10.1787/1cce4551-en.
For mainstreaming GSS bonds for biodiversity objectives in particular, the “Five Is” framework can be particularly relevant in the following ways:
Investment. Through anchor investments or first-loss structures, donors can establish confidence in a bond issuance by adjusting the risk-return profile for investors and also due to their own widely recognised understanding of the market. In 2025, IDB Invest, IFC and Itaú Unibanco announced Brazil’s first bond focusing on biodiversity and social initiatives. IFC was the anchor investor and IDB Invest as complementary investor in this privately placed USD 250 million transaction. Private placements can play an important role in market creation, and in building the institutional and technical capacity for repeat transactions.
Insurance. Donors can help de-risk GSS bond issuances through credit enhancement. The Seychelles sovereign blue bond, for example, benefitted from a World Bank partial guarantee that contributed to lowering the cost of borrowing by approximately 2% per year.
Issuance. Especially for use-of-proceeds bonds, donors can provide technical assistance to support the quality and development of the investment pipeline. ADB’s blue bond incubator, for example, helps build the pipeline of projects for blue bonds to address one of the main barriers to the growth of the GSS bond market in developing countries: the lack of bankable projects.
Infrastructure. Bond issuance requires a mature market infrastructure, and GSS bonds add an additional level of complexity. Donors can support training of regulators and debt management offices on the advantages and challenges of these instruments and the development of local qualified external reviewers and/or second party opinion providers.
Impact. Donors can provide technical assistance in support of ambitious, material and harmonised KPIs that are relevant to biodiversity. Post-issuance, donors can also provide support for the collection and analysis of these data to help issuers meet necessary reporting requirements, which ultimately help investors better understand and compare issuances and facilitate investment. The UNDP, for instance, provided technical advisory support to the Development Bank of Latin America and the Caribbean (CAF) to develop the post-issuance impact report on its first blue bond.
Source: OECD (2023[25]), Green, Social and Sustainability Bonds in Developing Countries: The Case for Increased Donor Co-ordination, https://doi.org/10.1787/1cce4551-en; OECD (2024[28]), Sustainability-Linked Bonds: How to make them work in developing countries, and how donors can help, https://doi.org/10.1787/7ca58c00-en; OECD (2025[36]), Promoting Sustainable Ocean Economies: Guidance for Development Co-operation, https://doi.org/10.1787/72055d7f-en; IDB Invest (2025[40]), “IDB Invest, IFC and Itaú Unibanco Announce Brazil’s First Bond Focused on Biodiversity and Social Initiatives”, https://idbinvest.org/en/news-media/idb-invest-ifc-and-itau-unibanco-announce-brazils-first-bond-focused-biodiversity-and; UNDP (2025[41]) “CAF Issues Landmark EUR 100 million Blue Bond with UNDP as Technical Coordinator”, https://www.undp.org/latin-america/press-releases/caf-issues-landmark-eur-100-million-blue-bond-undp-technical-coordinator.
While the direct mobilisation of private finance for biodiversity investments is constrained by a range of barriers, financial mechanisms can generate returns or unlock finance in other ways. Private finance can be mobilised into non-biodiversity-related sustainable investments that already generate revenue and thus can also generate funding for biodiversity.
Development co-operation providers can support the financing of sustainable investments while also ensuring that biodiversity co-benefits are delivered. Development actors are increasingly linking institutional investor preferences with biodiversity outcomes to mobilise private finance.
Approaches under this pathway include mobilising private finance for biodiversity through debt-for-nature swaps, sustainability-linked bonds and impact-linked financing approaches, and other innovative financial approaches.
Raising funds for biodiversity through debt-for-nature swaps
For biodiverse countries and in the context of elevated debt and fiscal constraints, debt-for-nature swaps enable countries to restructure existing sovereign debt to free up resources to fund nature-based investments (OECD et al., 2024[42]). Where appropriate, these can offer a way to relieve financial strain resulting from high indebtedness and also increase much-needed investment towards development objectives (IMF/World Bank, 2024[43]). In this way, the debt swap model can also mobilise private finance. Studies of external debt stocks and previous debt-reduction schemes have found that over USD 100 billion could be freed up from debt relief for climate and nature, for example through debt-for-climate and nature swaps (Patel, 2022[44]).
The term debt-for-nature swap is commonly used to refer to two types of similar but distinct financial transactions: bilateral and commercial debt swaps. The former involves the direct exchange or write-off of official bilateral debt for commitments on nature expenditures and commercial debt swaps, which can be an important instrument to generate fiscal space including for biodiversity-related activities – although it does not mobilise private sector actors, and so will not be further discussed here.
There are, however, approaches to debt-swaps that can generate participation by private investors: Commercial debt swaps are targeted at debt owed to private creditors and involve a form of credit enhancement – a guarantee, risk insurance or additional equity – for a debt refinancing at more favourable terms in exchange for commitments on nature expenditures (IMF/World Bank, 2024[43]). The difference between existing and new or additional debt servicing costs can be used for public investments into conservation efforts, offering a means to increase funding available for biodiversity investments. The bonds’ use of proceeds can, however, be used for financing eligible new or existing assets across the issuer’s balance sheet, and not necessarily linked to biodiversity. 9
Private investors that buy the restructured debt may engage in commercial debt swaps for a number of reasons. Such transactions are attractive because of their impact – for instance in connection with the investor’s environmental, social and governance (ESG) strategy, in consideration of the positive implications of sustainable projects, or their impact on the issuer’s debt sustainability. Beyond these attractions, the benefits of debt swaps can derive from risk-related incentives due to credit enhancement for new investors or from a reduction in the country risk exposure for the original creditors (UNDP China, 2025[45]). Since debt swaps normally have some type of credit enhancement to reduce the cost of new debt, they are also a promising way to crowd in and diversify private investors (Raih, 2025[46]). More generally, and as discussed, (sovereign) bonds are well-known, highly standardised, transparent and publicly traded instruments that institutional investors in particular are familiar with. Since debt swaps link such bonds to biodiversity outcomes, issuers can leverage the track record and accessibility of the instrument with respect to the private sector. Biodiversity objectives are commonly embedded through the credit enhancement or related covenants rather than the bond itself.
Commercial debt-for-nature swaps have the potential to attract private capital for biodiversity activities that would otherwise struggle to do so. The Caribbean region specifically has helped pioneer debt-for-nature swaps, including some with specific biodiversity objectives, with four executed to date that resulted in more than USD 400 million destined for marine conservation (OECD/IDB, 2024[33]). Another recent example is a debt conversion project for conservation in El Salvador, in which the US International Development Finance Corporation (DFC) and the CAF provided credit enhancement for a debt issuance of USD 1 billion to buy back USD 1.03 billion of outstanding sovereign bonds (US DFC, 2024[47]). Similarly, the purchase of the outstanding sovereign bond of the government of El Salvador resulted in savings on debt and debt servicing costs of about USD 352 million over the bond tenure (White & Case, 2024[48]), with these savings channelled into conservation efforts.
Given the recent fundamental changes in the composition of many developing countries’ sovereign debt stock, with much more debt owed to private creditors and non-Paris Club members (Chuku et al., 2023[49]), commercial debt swaps are now viewed as a potential remedy for addressing the challenge that many developing countries face in financing biodiversity conservation and restoration against the backdrop of a lack of fiscal space. However, multiple debt-swap frameworks note that on their own, debt-for-nature swaps are not an adequate instrument to address debt sustainability issues as the volume of public debt that is exchanged remains limited (IMF/World Bank, 2024[43]; Albinet, Chekir and Kessler, 2024[50]). Potentially good candidates are those countries at a moderate or high risk of debt distress, facing temporary liquidity pressures, and having previously undergone a debt restructuring (IMF/World Bank, 2024[43]). Considering transaction costs and the need to effectively meet financing goals, the scale of the transaction is important – although there is no universally agreed minimum size for debt-for-nature swaps (OECD DAC, 2025[35]).
Since these instruments are associated especially with contexts experiencing some level of debt distress and lacking finance generally, it is also important to ensure that spending commitments are flexible and designed to adequately reflect both donor and debtor priorities as well as the debtor’s implementation capacity (IMF/World Bank, 2024[43]). Although spending on conservation provides a global public good, it typically ranks relatively low among countries’ spending priorities. Yet authorities in debtor countries may view the resources freed up by a debt swap as “additional” since these would otherwise have been spent on debt service, which creates a greater willingness to commit to such spending (IMF/World Bank, 2024[43]). Implementation arrangements and monitoring and verification mechanisms are essential to ensure that the debt-for-nature swaps go beyond pure debt relief and effectively deliver on biodiversity outcomes (chapter 2). A number of analysts have proposed stronger involvement of local actors in the monitoring and the use of clearly defined performance indicators as a means to better achieve this10 (Kelly, Ducros and Steele, 2023[51]; Drutschinin et al., 2015[52]). In addition, while the complexity of each debt-for-nature swap limits replicability, the instrument structure could be streamlined.
Mobilising private finance for biodiversity through sustainability-linked bonds and impact-linked financing approaches
As outlined previously, debt instruments such as bonds or loans can be provided for specific activities through the definition of their use of proceeds. Beyond earmarking proceeds for specific activities, some debt instruments can mobilise private finance by linking financial conditions to the achievement of pre‑defined sustainability objectives. These include results-based and impact-linked financing approaches that can support the achievement of previously agreed and verifiable biodiversity outcomes or targets.11 In these cases, private finance is mobilised to support biodiversity outcomes subject to the overall performance, rather than through earmarking specifically for biodiversity-related projects or activities.
Sustainability-linked bonds (SLBs) are forward-looking performance-based instruments whose structural and/or financial characteristics may change depending on whether the issuer achieves pre-defined sustainability objectives (International Capital Market Association, 2024[53]). SLBs can be adapted to a variety of areas, including biodiversity, by using a relevant KPI. Such KPIs could refer to the maintenance of tropical forests, the sustainable use of natural resources, or preserving wildlife and marine ecosystems (OECD, 2024[28]). The rentability for investors, which is conditioned on reaching these sustainability targets, also changes. For example, high development impact can be linked to lower financial returns (and lower cost of debt for the issuer). As such, unlike biodiversity or GSS bonds, SLBs are not necessarily linked to specific underlying assets; instead, they finance the issuer’s overall operations while creating incentives to improve sustainability performance.
This characteristic makes SLBs particularly relevant for sectors or areas with strong financing needs but lacking pipelines of bankable investments, which is often the case for biodiversity-related projects (OECD, 2024[28]). Likewise, they offer issuers a way to demonstrate commitment to nature-related strategies and can incentivise changes in practices or business models in order to meet the bond’s targets. Such changes do not necessarily require large capital expenditures, and can result in quantifiable improvements in addressing biodiversity loss (International Capital Market Association, 2025[31]).
Despite this potential, the share of SLBs with biodiversity-specific KPIs remains very limited at approximately 1% of global issuances as of 2023 and 6% when water-related KPIs are included (Sustainable Fitch, 2023[27]). More broadly, this limited uptake reflects challenges facing the relatively new SLB market, including concerns about the robustness and greenwashing of issuers’ chosen KPIs, which contribute to investors being cautious (OECD, 2024[28]). In this context, the World Bank highlights the importance of setting SLB targets that strike an appropriate balance between feasibility and ambition. Highly feasible yet unambitious targets risk greenwashing accusations, while excessively ambitious targets that are unlikely to be met can also pose a reputational risk (Wang et al., 2023[54]).
Nonetheless, several SLBs have targeted biodiversity. In January 2026, Chile announced a new SLB with a biodiversity KPI, making it the world’s first sovereign SLB aligned with KMGBF targets. The bond’s KPI relates to the protection, expansion and management of protected areas in terrestrial and inland water ecosystems. Previous SLB issuances by Chile have enabled it to broaden its investor base and achieve favourable rates; now, having biodiversity embedded in the sovereign SLB framework strengthens its capacity to meet its biodiversity commitments (Chile Ministry of Finance, 2025[55]). Over the long term, linking KPIs to international biodiversity targets also helps the market price the likelihood of achieving these targets12 (David, 2026[56]). Donors can support different policy areas to increase the issuance of SLBs – for example through support in selecting appropriate KPIs, or via the provision of credit enhancement to mitigate investor risk-return considerations. These are outlined in Box 4.2 relative to GSSS bonds.
Outcome bonds rely on a different underlying mechanism that “directs finance to a specific project or activity and in turn makes a portion of the return on the bond contingent on the success of that project or activity” (Bennett and Jain, 2023[57]). Unlike GSSS bonds, which are backed by the full credit of the issuer and where the investor does not take on any project risk, outcome bonds allow for project risk to be shared among with private investors. Project owners can tap into needed capital and upfront financing (Bennett and Jain, 2023[57]). There are numerous challenges to the use of outcome bonds due to their complexity, degree of tailoring of the instrument and the need to track project performance.
Issuances such as the so-called rhino bond, discussed in Box 4.3, have received attention for their approach to funding conservation efforts. Conservation and private finance are causally and indirectly linked in this approach, and financial returns are causally linked to biodiversity outcomes. The structuring of the instrument and the transaction cost associated with it, as well as the outcome-based nature of financial returns, may pose difficulties for scaling these issuances and attracting private finance at scale.
The Wildlife Conservation Bond is the first outcome-based bond that supports the financing of conservation activities, and together with financing from the GEF, it transfers project risk from donors to investors. The transaction mobilises private capital to facilitate financing of black rhino conservation activities in two protected areas in South Africa, the Addo Elephant National Park (AENP) and Great Fish River Nature Reserve (GFRNR).
Biodiversity challenge
Rhinos are considered an umbrella species that play a crucial role in shaping entire ecosystems in Africa, thus benefiting other species and contributing to South Africa’s economy, mainly through tourism. However, black rhinos are critically endangered due to poaching and habitat loss.
Finance providers and instruments
The five-year rhino bond is a combination of existing financial products, including a bond with an investment grade credit rating (AAA for World Bank-issued bonds), that are paired with a performance-based grant funded by the GEF. The result is a new financial structure that can successfully harness investment from capital markets to directly support conservation of endangered species.
Finance solution
Through the Wildlife Conservation Bond, investors are financing initiatives to protect and increase the population of a critically endangered species with specific conservation targets, including by generate conservation-related employment in a rural and underserved area of South Africa. Instead of receiving traditional coupon payments from a World Bank Group bond, investors agree to forgo these payments in exchange for a potential success payment at maturity. At maturity, bond holders receive compensation conditional on the success of rhino conservation efforts, with financial compensation derived from GEF grant funding. Hence, the compensation is not generated through the use of proceeds, which remain in the World Bank and potentially feed into its portfolio assets, but by the GEF as the donor. The GEF only provides grant funding if the initiatives succeed, with the bond holders bearing the risk of project failure or success (World Bank, 2022[58]).
The foregone coupon payments finance conservation activities in the AENP and GFRNR that aim to grow the black rhino population, improve the management of over 150 000 hectares of parkland, reduce poaching, and provide over 2 300 jobs for local communities in and around the protected areas.
Source: Benchimol Dominguez (2022[59]), “A new lifeline for wildlife conservation finance”, https://www.thegef.org/newsroom/blog/new-lifeline-wildlife-conservation-finance; Green Finance Institute (2024[60]), Case Studies (Revenues for Nature): "The Rhino Bond", https://www.greenfinanceinstitute.com/casestudies/therhinobond/; World Bank (2022[58]), Case Study: Wildlife Conservation Bond mobilizes private capital to protect critically endangered rhinos, https://thedocs.worldbank.org/en/doc/7039bd837e60e484fb3a93ea63951306-0340022022/original/CaseStudy-WildlifeConservationBond.pdf.
Redistributing conventional financial returns to biodiversity through other innovative financial approaches
Innovative instruments that aim to redistribute financial returns to biodiversity are emerging. One key innovative approaches is the Tropical Forest Forever Facility (TFFF), launched by Brazil on the occasion of its COP30 Presidency in 2025. The objective of the TFFF is to pay developing countries a certain amount per hectare of forest that is preserved or restored each year to promote the conservation of tropical rainforests (Government of Brazil, 2024[61]). In this way, the facility overcomes a market failure by monetising conservation and restoration efforts and assigning a value to the ecosystem services that tropical forests provide (Tropical Forest Forever Facility, 2025[62]). The underlying instrument is a blended finance fund that sources funds that are relatively low in cost from governments, multilaterals, pension funds and other investors; these are then channelled to and deployed into green assets that are not necessarily directly funding biodiversity. The financial returns generated through the investments are then partially used to refund the fund’s investors and partially converted into grant funding for conservation and restoration efforts in countries with tropical forests. Fund investors forgo (some of) the financial returns generated through their provision of finance while creating positive impact on biodiversity and conservation (Tropical Forest Forever Facility, 2025[62]). Box 4.4 explores the innovative approach behind the TFFF, including the role of donors in its blended approach.
The TFFF, launched at COP30 in November 2025, seeks to compensate countries for the conservation and restoration of their tropical forests and also support the local populations in maintain forest biodiversity. Through financing from sovereigns and institutional investors, the facility presents conservation as an investment opportunity.
Blended finance solution
While the final structure of the fund is still being developed, it will combine different sources of capital. Sovereign governments and philanthropies are expected to provide approximately 20-25% of the capital in the form of long-term loans, grants or guarantees. The remaining 75-80% will be in the form of highly rated senior debt issued on international capital markets and targeting institutional investors.
The capital from the fund will be invested in (sovereign and corporate) bond markets, including in ODA-eligible countries. While these assets do not have to be directly related to biodiversity, they must support the overarching objectives of the TFFF. The aim is for these investments to have a weighted average of BB+. As such, the weighting allows the TFFF to include debt purchased from developing countries, thereby increasing demand for these securities.
At the same time, returns can be used to compensate commercial investors while leaving extra returns for biodiversity payments. The financial returns will then in part be used to pay back the fund’s investors, and as grant-funding for national forest programmes in developing countries. For the former, it is therefore a unique way to combine fixed income returns with large-scale positive impact on nature. For the latter, it will serve as a source of large-scale, predictable and long-term funding. In addition, 20% of the fund’s payments will go to Indigenous people and local communities, a special focus of the TFFF.
Current status and next steps
At the launch, a total of 34 tropical forest countries, representing over 90% of the tropical forests in developing countries, endorsed the TFFF. It also received endorsement from 53 countries, including 19 potential sovereign investors, and over USD 5.5 billion were pledged – marking the beginning of the capitalisation. The aim is for the fund to reach a target size of USD 125 billion. The World Bank is the trustee and interim host of the TFFF.
Source: Tropical Forest Forever Facility (2025[62]), About TFFF, https://tfff.earth/about-tfff/; COP30 Brasil (2025[63]), “Over USD 5.5 billion Announced for Tropical Forest Forever Facility as 53 Countries Endorse the Historic TFFF Launch Declaration”, https://cop30.br/en/news-about-cop30/over-usd-5-5-billion-announced-for-tropical-forest-forever-facility-as-53-countries-endorse-the-historic-tfff-launch-declaration.
Existing market mechanisms – including carbon markets and financial instruments – offer an additional pathway to integrate biodiversity considerations into investment structures. The creation of nature markets can help internalise the value of biodiversity and its ecosystem services, support economic efficiency, and enhance the potential to generate revenues (Box 2.1). Biodiversity-positive activities can be incentivised through instruments such as biodiversity offset programmes (i.e. with overarching no net loss or net gain objectives, and embedded in the mitigation hierarchy), and payments for ecosystem services programmes. Voluntary biodiversity credit mechanisms are also being considered (OECD, 2025[64]). However, as discussed in chapter 2, for example emerging (voluntary) biodiversity credit mechanisms are at a nascent, piloting stage, with constraints regarding scalability, demand and environmental integrity. In this context, opportunities to mobilise private finance for biodiversity can arise from integrating biodiversity objectives into existing market mechanisms, rather than relying on stand‑alone biodiversity-related nature markets.
Carbon credits13 can be used as a source of revenue streams that can be leveraged to mobilise private finance for biodiversity, provided that project design delivers biodiversity co-benefits. Additional revenue generated through the origination and subsequent sale of carbon credits in the carbon markets can strengthen investment attractiveness for the private sector by improving return profiles. In this sense, integrating biodiversity into nature-based carbon projects can strengthen both ecological outcomes and financial viability. Through the world’s first blue-carbon sovereign carbon securities transaction, the Bahamas utilises natural seagrass as a source of income by creating carbon credits, mobilising private finance while supporting marine conservation, sustainable development and economic growth (Laconic Global, 2025[65]; CVF V20, 2025[66]).
In the context of climate change mitigation projects, economic instruments are already shaping investment incentives. Carbon markets, which can help with climate action, present an opportunity to mobilise funds for both development (UNCTAD, 2024[67]) and biodiversity sectors, including marine biodiversity (AFD, 2024[68]; AFD, 2021[14]). This potential is driven by the additional revenues generated through the origination and sale of carbon credits of projects that integrate biodiversity considerations into their design. These credits are generated through specific mitigation activities such as reducing emissions from deforestation and forest degradation (World Bank, 2022[69]), and when they are traded, the buyer pays another company to take action to reduce its GHG emissions and buyer gets credit for the reduction (Toffel and Ramesh Walsh, 2023[70]). As carbon credits are issued, monitored and verified according to internationally recognised standards, they allow businesses to compensate for their unavoided emissions.
At the same time, carbon credits have received considerable criticism as the underlying carbon assets often do not perform (Greenfield, 2023[71]). Carbon credits also require significant upfront investments and are exposed to market price volatility and to vulnerability of the underlying assets due to the unforeseen effects of climate change (Global Environment Facility, 2023[72]). The immaturity of the carbon credit market, alongside uncertainty around methodologies, verification streams and long-term revenue streams, also means that private sector players remain cautious. These constraints tend to be greater in developing countries that are more vulnerable to climate shocks. In many cases, the underperformance is linked to solutions or practices that do not integrate biodiversity dimensions.
Integrating biodiversity objectives into carbon credits may offer a way to address some of these weaknesses, as biodiverse ecosystems – such as natural forests – tend to be more resilient and reliable carbon sinks relative to e.g. the planting of monocultures. Such integration may also create opportunities to generate biodiversity‑specific revenue streams alongside carbon finance, while potentially increasing the credit’s value and sustainability. This could be the starting point to carve out specific biodiversity proceeds from the carbon scheme. By attaching a monetary value to the carbon stored in forests, wetlands and other ecosystems, carbon credits create income streams for projects that protect or restore these ecosystems. This effectively incentivises those who benefit from a stable climate to invest in the natural systems that underwrite it, and can help align climate action with biodiversity goals (UNEP, 2021[73]).
Development co-operation can support the design, structuring and de-risking of investment opportunities that integrate biodiversity co-benefits, including by supporting nature-based carbon credits to repay or incentivise investors. It can also support the development and financing of projects and funds that leverage carbon finance while delivering multiple co-benefits. For example, the World Bank launched the Amazon reforestation-linked outcome bond, involving the participation of HSBC, Nuveen and other institutional investors, to support the reforestation activities of Mombak, a Brazilian based company, linking investor returns to the generation of carbon removal units from reforestation (Box 4.5) (World Bank, 2024[74]).
In 2024, the World Bank launched the Amazon Outcome Bond, a USD 225 million debt instrument that links investor returns to verified carbon removal from reforestation in Brazil (World Bank, 2024[74]). The bond supports large-scale native tree planting, integrates both climate and biodiversity benefits, and is held by institutional investors such as pension funds and asset managers (World Bank, 2024[75]).
Investors receive a fixed coupon payment, with additional returns tied to the number of carbon removal units (CRUs) achieved. CRUs are verified credits representing one tonne of carbon removed from the atmosphere through activities such as reforestation, with CRUs generated by planting native trees that sequester carbon while supporting biodiversity. Microsoft agreed to pre-purchase the CRUs generated by the Brazil project, providing a guaranteed off-take of the CRUs. While Microsoft is not a direct investor in the bond, its commitment helps secure the revenue stream tied to performance, making the bond more attractive to other investors.
Bond holders get a fixed annual coupon in addition to a variable compensation conditional on the production of CRUs from the project. Bond holders thus accept a lower-than-usual fixed coupon, which is turned into project or grant funding for the CRU production company. Parts of the CRU revenues paid by Microsoft are then channelled by the World Bank to investors as variable coupons. The proceeds of the bond fund the World Bank’s sustainable development activities.
Source: World Bank (2024[74]), "Investors support Amazon reforestation through record-breaking USD 225 million World Bank World Bank outcome bond”, https://www.worldbank.org/en/news/press-release/2024/08/13/investors-support-amazon-reforestation-through-record-breaking-usd-225-million-world-bank-outcome-bond; World Bank (2024[75]), Case Study: World Bank Outcome Bond Accelerates Reforestation of the Amazon Rainforest, https://thedocs.worldbank.org/en/doc/d193f2f326d510eb475259ec46aa91dc-0340022024/original/Amazon-Reforestation-Linked-Outcome-Bond-Case-Study.pdf.
In conclusion, the fundamental challenge for mobilising private finance and investment towards biodiversity is its public good characteristics, and investors struggle to link revenue or cash-generating streams with positive biodiversity outcomes. The persistent market failures and limited revenue streams associated with biodiversity mean that some biodiversity-related investments will continue to depend on public and development finance [see also (OECD, 2025[64])]. Still, opportunities exist to directly invest into activities that further biodiversity objectives and also unlock additional financing sources that can be used for biodiversity.
As discussed in this chapter, three concrete pathways exist to mobilise private finance towards biodiversity. The first, mobilising private finance into investments that generate financial returns from biodiversity-related operations, may have limited scope but is an effective way to directly finance biodiversity. The success of this pathway hinges on identifying projects and companies with sufficiently robust cash flows and risk-adjusted returns to attract private capital as well as appropriate risk mitigation. More broadly, scaling such investments also requires a strong enabling environment and private sector engagement (chapters 2 and 3) to create more nature-related investment opportunities linking financial and biodiversity returns. The second pathway, integrating biodiversity into non-biodiversity related sustainable investments, holds potential to (indirectly) support biodiversity outcomes at larger scale through the optimisation of sustainable investments for positive biodiversity outcomes. The third pathway entails exploring options to integrate biodiversity into existing market mechanisms to help assess the value of biodiversity and create additional sources of revenue streams, with a specific focus on carbon markets.
Development finance providers can support all three pathways for mobilising private finance for biodiversity, in this way addressing market failures or risk-return considerations through the strategic use of development finance to unlock private finance in revenue-generating opportunities that are linked to biodiversity outcomes.
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← 1. Biodiversity-related assets or activities relate to those that contribute directly, or aim to contribute, to the conservation, sustainable use and restoration of biodiversity (including through reaping multiple benefits across sectors such as agriculture, fishing or water and sanitation). See: https://www.oecd.org/en/publications/a-decade-of-development-finance-for-biodiversity_e6c182aa-en.html
← 2. The OECD considers shares in CIVs to be a leveraging mechanism, defining shares in CIVs as “those invested in entities that allow investors to pool their money and jointly invest in a portfolio of companies. A CIV can either have a flat structure – in which investment by each participant has the same profile with respect to risks, profits and losses – or have its capital divided in tranches with different risk and return profiles, e.g. by different order of repayment entitlements (seniority), different maturities (locked-up capital versus redeemable shares) or other structuring criteria”. See DCD/DAC/STAT(2025)25/REV1.
← 3. The OECD DAC Blended Finance Guidance distinguishes CIVs from other portfolio approaches (such as securitisation) that mobilise private (institutional) investors into large existing asset portfolios, for example loan portfolios of MDBs. This report does not consider securitisation of biodiversity-related assets given their limited availability, though securitisation of broader development assets is increasingly observed in the development finance space and viewed as holding potential to scale private finance mobilisation. For more detail, see https://doi.org/10.1787/e4a13d2c-en.
← 4. Such finance can also come from private investors, including asset managers on a stand-alone basis without the need for unlocking from development actors. An example is the Global Sustainable Food and Biodiversity Fund launched by Principal Asset Management, which invests in companies that are committed to sustainable agriculture and food security and that achieve biodiversity outcomes through their products and practices. For details on the Fund, see https://brandassets.principal.com/m/58b89871792d09d7/original/9-7-24_Sustainable-Food-and-Biodiversity-Fund-launch-release_FINAL.pdf.
← 5. CIVs can target specific investments and use different types of instruments, including funds. A fund is a pool of capital that can contain a mixture of development and commercial resources. A fund can be either flat or structured, the latter implying a layered structure where risks and returns are allocated differently across investors. For more details, see https://doi.org/10.1787/fb282f7e-en.
← 6. Most of the private finance mobilised through development finance interventions is targeting economic infrastructure and services. See https://www.oecd.org/en/data/dashboards/mobilisation-of-private-finance-for-development.htm.
← 7. According to Sustainable Fitch, “terrestrial and aquatic biodiversity conservation correspond most closely to biodiversity as a theme” within the eligible use of proceeds included in the ICMA Green Bond Principles. See https://www.sustainablefitch.com/corporate-finance/biodiversity-in-esg-state-of-sustainable-finance-market-09-10-2023
← 8. Ongoing OECD work focuses on how mobilisation efforts through bonds can be measured in the amounts mobilised from the private sector through official development interventions.
← 9. Similar deals exist with commitments on climate mitigation, adaptation or other development objective expenditures, and these instruments are therefore referred to broadly as debt-for-development swaps. An IMF/World Bank report defines debt-for-development swaps as “agreements between a government and one or more of its creditors to replace sovereign debt with one or more liabilities that entail a spending commitment over time towards a development goal, for example, nature, conservation, climate action, education, nutrition, support to refugees, among others”. For further information, see https://doi.org/10.5089/9798400284625.007.
← 10. Measurement of impact on biodiversity is generally complex, which is true as well for all the pathways discussed in this report. See also Annex A.
← 11. The concepts of results-based, outcome-based and impact-linked financing approaches are generally used interchangeably. For the Global Partnership for Results-Based Approaches (GPRBA), a programme supported by the World Bank Group, results-based financing “includes a range of financing mechanisms where financing is linked and provided after the delivery of pre-agreed and verified results”. See the GPRBA website at https://www.gprba.org/who-we-are/results-based-financing. For discussion of how the concept of outcome-based financing approaches is often used interchangeably with results-based financing, see https://golab.bsg.ox.ac.uk/the-basics/frequently-asked-questions/#outcomes-based-contracting.
← 12. In another instance, the US DFC and the IDB, in partnership with the government of Ecuador, supported the issuance of the Galápagos Marine Conservation-Linked Bond to finance a debt-for-nature swap (described at https://www.dfc.gov/media/press-releases/financial-close-reached-largest-debt-conversion-marine-conservation-protect). This initiative was combined with a complementary structure supported by the Dutch Fund for Climate and Development (DFCD) and the EU, which provided risk capital through an early-stage development blended finance fund, Climate Investor Two (CI2), to unlock additional funding for marine conservation in the Galápagos. For more information, see https://climatefundmanagers.com/2023/05/09/climate-fund-managers-announces-largest-debt-for-climate-conversion-in-history-to-protect-the-galapagos-islands/.
← 13. A recent study for the OECD defined carbon credits as “tradeable intangible instruments that represent verified” [GHG] emission reductions or removals, with each credit representing one tonne of carbon dioxide equivalent (Wetterberg, Lanzi and Gómez, 2025[76])