Navigating nature investments - the case for a common approach

This paper sets out the case for a practical translation layer that allows any nature investment be described, compared and risk-flagged consistently, regardless of label or marketing material.

Nature is a growing priority for institutional investors, driven by increasing recognition of growing risks, and opportunities, across asset classes. Almost half of global institutional investors now rate nature loss as a top five economic risk, and over half of UK asset owners are already investing in natural capital.

To realise the potential investment and societal opportunities of a resilient and healthy environment, structural constraints, including policy uncertainty, limited revenue models, and the absence of pricing for ecosystem services, must be addressed at a systemic level. These systemic barriers will take concerted effort by stakeholders across sectors and the wider ecosystem.

This paper focuses on a parallel and compounding issue: market frictions arising from inconsistent terminology and categorisation, and inadequate visibility on nature investment-specific risks. These are avoidable and can be addressed without waiting for regulatory change or global consensus.

In discussions with investors, we’ve identified three market frictions which recur:

1. Terminology: The same asset is described in several ways or the same label is applied to very different assets, with the decision-relevant information beneath the label shared inconsistently or not at all.
2. Categorisation: An impact-only view hides risk-management and growth aims, over-concentrates the market on nature-based solutions, and leaves pressure-reducing investment and non-impact capital on the sidelines.
3. Risk visibility: Risks specific to nature investment, such as permanence and reversal, sovereign exposure, and ecological appropriateness, sit outside standard risk frameworks and can surface late in the transaction.

A practical translation layer would allow any nature investment to be described compared and risk-flagged consistently. It should build on existing frameworks, make decision-relevant information more accessible and integrate into existing investor processes.

The IIGCC Nature Investment Working Group is looking to develop practical guidance and a member-only tool to this end. We welcome any further input and feedback on this work during the consultation period, planned for Q4 2026.