Nature Bonds and the Shift Toward Thematic Biodiversity Finance

The sustainable finance market is growing rapidly, with green, social, and sustainability bonds channeling capital toward environmental and social goals. In 2025, global sustainable bond issuance reached approximately US$1.1 trillion, remaining stable year-over-year despite shifts in regions and sectors.

Investors are increasingly drawn to thematic instruments offering clear, measurable, and location-specific impacts on nature. This demand is set to accelerate following strengthened biodiversity commitments at COP30 in Brazil. Nature bonds present a major opportunity to direct finance toward ecosystem protection and close the estimated US$700 billion annual nature-finance gap.

The original “Nature Bonds” were developed by The Nature Conservancy (TNC), the world’s largest conservation organization. TNC pioneered modern debt-for-nature swaps, starting with the Seychelles in 2015–2016 (initially called “Blue Bonds for Conservation”), which unlocked annual funding for marine protection. In September 2023, TNC rebranded the program to “Nature Bonds” to encompass terrestrial and freshwater ecosystems, as outlined in its May 2024 Nature Bonds Project Toolkit.

Mark Tercek, TNC’s President & CEO from 2008–2019 (formerly at Goldman Sachs), played a pivotal role. He championed Wall Street-style conservation finance through his 2013 book Nature’s Fortune, launched TNC’s NatureVest arm, and led the Seychelles deal—the proof-of-concept for scaling impact investing in nature. Under his leadership and beyond, TNC’s program has grown to six active projects (Seychelles, Belize 2021, Barbados 2022, Gabon 2023, Bahamas 2024, Ecuador 2024, the first terrestrial-focused), unlocking roughly US$1 billion in committed conservation funding via debt refinancing and independent Conservation Trust Funds (CTFs).

In June 2025, the International Capital Market Association (ICMA) released the Sustainable Bonds for Nature: A Practitioner’s Guide, endorsing a secondary “nature bond” label for green bonds. Proceeds must fund exclusively nature-positive projects (e.g., habitat restoration, species conservation) aligned with the Kunming-Montreal Global Biodiversity Framework, with requirements for transparency, impact reporting (e.g., hectares restored), third-party verification, and optional co-benefits.

This market-based approach differs from TNC’s sovereign debt-for-nature swaps: ICMA nature bonds raise fresh capital for diverse issuers (corporates, cities, multilaterals) in liquid markets, while TNC’s focus on debt relief for vulnerable nations creates long-term savings redirected to conservation via CTFs and binding milestones.

The Taskforce on Nature-related Financial Disclosures (TNFD) is likely to enhance interest in both tracks by providing a global framework for organizations to assess, manage, and disclose nature-related dependencies, impacts, risks, and opportunities. Launched in 2021 and finalized in 2023, TNFD recommendations (aligned with TCFD/ISSB structures) encourage integration of nature into strategy, risk management, and capital allocation to shift financial flows toward nature-positive outcomes and support the Global Biodiversity Framework's Target 15 (disclosure of nature impacts).

For nature bonds, TNFD enhances credibility: issuers can use TNFD-aligned assessments to demonstrate materiality of nature KPIs, support transition plans incorporating nature (e.g., halting biodiversity loss by 2030), and provide robust impact reporting to reduce greenwashing risks. In ICMA's 2025 Guide, TNFD is explicitly referenced for nature transition plans and materiality matrices. For TNC-style swaps, TNFD helps sovereigns and investors evaluate nature-related risks in debt portfolios and track positive outcomes via trust funds. Overall, TNFD builds investor confidence, enables better data for verification, and accelerates mainstream adoption of nature-focused instruments.