The next step for nature finance

Debt financing that incorporates nature is finding its feet in markets around the world. The growing practice has the potential to help accelerate the injection of capital in nature — based outcomes — and protect a critical element of the global economy.

Leveraging practices already seen in modern sustainable finance, nature-based funding incentivises companies to install and support nature strategies, focusing on measurable improvements in areas such as biodiversity, water management, or land use. But that’s just the start.

The next step is the emergence of structures around nature that align with market standards, including loan market (such as the Asia Pacific Loan Market Association) and bond market (such as International Capital Market Association) principles and taxonomies.

The success of that step will be important for the global economy as a whole. According to a PwC report, , more than half of global economic output, about $US58 trillion, is moderately or highly dependent on nature.

At ANZ, we see embedding nature into debt instruments as a natural evolution of the sustainable-finance market. The bank is already working with, and learning from, customers interested in the impact and dependencies of nature on their business.

Demand for nature support is clearly growing. United Nations research from 2024 suggests private finance for nature had grown from less than $US10 billion to more than $US100 billion in just four years.

But according to BloombergNEF, the distance between today’s biodiversity support and what will be needed in the future has grown to $US942 billion. The market has a key role to play in closing that gap.

Close

It won’t be easy. The same Bloomberg report suggests $US1.15 trillion of investment annually will be required to close the gap.

Building more formal financing structures may help. But a key challenge is the limited availability of nature data, which would typically be used for setting, measuring, and reporting requirements for loan and bond structuring in the sustainable-finance market.

While climate-related targets and performance indicators are more established, nature metrics are less mature, and consistent data harder to obtain. There is also complexity in tailoring instruments to specific sectors and regions, as nature impacts and dependencies vary widely.

Encouragingly, collaboration on practical standards and approaches which support both borrowers and banks is increasing, helping define and track the nature-related indicators and investment beginning to emerge in the marketplace.

Understanding

For business, understanding their own nature impact and dependencies can help them take advantage of the emerging range of opportunities, both corporate and financial, that come with a developing market. It can also help derisk supply chains, ensure ongoing market access, and even get ahead of shifting market expectations and future regulatory changes.

In some cases those changes are already happening. The European Central Bank has been open about plans to ‘stress test’ banks for their nature impact, a significant development in the space.

Industry bodies like the Taskforce on Nature-Related Financial Disclosures (TNFD) are taking steps to help increase market confidence and capabilities around nature-related issues, including issuing guidance to support the assessment, management and disclosure of nature-related issues.

Businesses that can get informed - and be a step ahead of competitors - have the potential to increase revenue through nature-friendly products, customer segments with sustainability preferences, or income from nature-based credits.

As the sector continues to develop, they could also open themselves up to new financing opportunities, including sustainability-linked debt with nature targets, use-of-proceeds nature finance, sustainable trade finance and financing for projects which generate revenue from or trade on environmental markets.

Now

ANZ views nature as something for businesses to consider now, not later. We’re encouraged by the conversations we have with investors looking for opportunities in nature and clients drawing up nature action plans.

At ANZ, we’ve already supported Artemis, a station in far-north Queensland that helps protect an endangered species of parrot. We’re also helping Tidal Moon, an Aboriginal marine business based in Western Australia, which is developing a commercially sustainable business that leverages both traditional activity and environmental markets. The latter has taught us a lot about supporting nature restoration projects.

There's an increasing recognition by markets that nature and climate are intimately linked – and sustainability strategies need to address both. Mandatory climate reporting, which came into force in Australia in January, is expected to improve consistency in disclosures around corporate decarbonisation plans.

At ANZ, we see potential for markets to support nature through the stapling of biodiversity to carbon in the credit market. Standards for carbon projects have been evolving, and we’ve seen increased interest in projects that have additional benefits for nature.

All of this points to a carbon market that will play a critical role helping facilitate investment in nature the future.

ANZ and its customers operate in many diverse and ecologically important locations. We all have our part to play to help protect and restore nature, and mitigate biodiversity loss, in the locations in which we operate.

Katharine Tapley is Global Head Sustainable Finance at ANZ

This is an expanded extract from Katharine Tapley, published in the Pollination report “Nature Finance Focus 2025: tracking global trends in nature investment”, from June 2025