Political climate doesn't deter Nature Investment's progress, according to a recent report
Investors Increase Focus on Nature-Based Investments
A new study by Pollination, a climate change investment and advisory firm, reveals that institutional investors are increasing their exposure to nature investments. The survey, which polled 500 institutional investors from the UK, US, Australia, Singapore, and Japan, found that 99% of investors are planning to increase their nature-based investments.
Although nature has become a key focus for major investors, structural barriers remain. Pollination identifies several structural barriers institutional investors face in increasing nature-based investments, including complexity and risk assessment challenges, emerging and evolving market mechanisms, the need for integration with Indigenous and local community rights, and the long-term nature and complexity of returns.
To overcome these barriers, Pollination and associated stakeholders recommend several core solutions. These solutions include building robust nature-related risk and dependency assessments, strengthening standards, governance, and market integrity of biodiversity finance mechanisms, embedding Indigenous leadership and financial transparency, aggregating and curating investment pipelines that match nature-positive outcomes with financial returns, and engaging long-term commitment and patient capital.
The appetite for acquisitions was strongest among very large investors and in the UK. Forty-four percent of Australian investors said they would form new partnerships to boost their nature investments, while in Singapore, 52% of respondents said they would continue to focus on bringing in experts to boost their nature investments. Institutional investors in the UK are planning to buy specialist investment firms to increase their nature exposure, with 42% of them expressing this intention.
Investors see clear financial potential in nature-related investments but face practical challenges that limit their ability to act on that conviction. These challenges include a lack of investable opportunities, difficulty in measuring impact, and limited internal expertise. However, there is growing interest among investors in tools such as nature-linked debt, blended finance, and real asset funds, especially in agriculture and infrastructure, according to Cerecina.
The study also found that investors have gained a greater understanding of nature-related risks since the first survey two years ago. Chemicals, materials, and manufacturing emerged as the main concerns in the 2025 edition, replacing agriculture and property as the top sectors perceived to carry the highest amount of nature-related financial risk.
Despite the challenges, the study found that the politicisation of ESG is affecting investment strategies, but 99% of investors are still planning to increase their nature-based investments. However, 0.2% of investors surveyed this year are not planning on boosting their allocation for nature-based investments, down from more than a quarter in Pollination's previous survey. These 0.2% are all small US-based asset managers.
In conclusion, the study highlights the growing interest among institutional investors in nature-based investments and the barriers they face in increasing their exposure. The core solutions recommended by Pollination and associated stakeholders aim to address these barriers and unlock institutional investment at scale for nature-based solutions.
Social impact can be derived from investing in nature-based solutions, as the study by Pollination reveals that institutional investors are increasing their focus on these investments. Financial inclusion in nature-based development is facilitated by blended finance, as investors are showing interest in tools such as nature-linked debt to invest in these solutions. Development finance for nature-based projects requires strong governance, transparent financial systems, and Indigenous leadership, as identified in the study's recommendations for overcoming barriers to investment.
