Nature-based Solutions (NbS) are among the most cost-effective strategies for advancing climate mitigation, adaptation, and biodiversity protection. NbS are a particularly strong strategy in emerging economies, where they can simultaneously enhance resilience, support livelihoods, and generate environmental benefits.  

Yet despite their significance, NbS remain critically underfinanced. According to the United Nations Environment Programme (UNEP), global investments currently total roughly USD 200 billion per year, only one-third of the amount required to meet 2030 climate and biodiversity targets. In that sense, NbS continue to face persistent barriers, such as project variability and high transaction costs, that limit investment readiness and scale. Addressing these barriers is crucial if NbS is to become a scalable and investable asset class.  

NbS finance can reach scale only when investment processes are transparent, predictable, auditable, and aligned with global standards. These elements form the backbone of investor confidence and enable the sector to mature beyond isolated pilot projects. 

Insights from a Market Study on Barriers to NbS Investment 

To better understand the barriers to investment in NbS and opportunities to reduce transaction costs, the Lab conducted a study based on 10 expert interviews with investors and key stakeholders. The conclusions presented in this blog are based on these interviews with Development Finance Institutions (DFIs), investors, and practitioners, and desk research on investor diligence methodologies and impact assessment frameworks. 

While the study was conducted in the context of implementation support provided to Violet, an NbS‑focused investment platform emerging from the experience of Lab alum Vert Capital, the insights presented here reflect broader market dynamics and are relevant to NbS investors and platforms more widely. 

For readers interested in a deeper look at Violet’s experience and evolution, a separate member spotlight is available.

NbS Investments & Their Persistent Barriers 

Across interviews conducted by the Lab, stakeholders identified a consistent set of obstacles.  

• Project variability: NbS projects differ widely in size, geography, and design, driving up transaction complexity. 
• Lack of standardization: Without harmonized data and due diligence, each project requires bespoke analysis, increasing costs and delaying disbursement. 
• Limited borrower documentation: Producers, cooperatives, and community-led enterprises often lack credit histories and formal financial records, complicating underwriting. 
• Fragmented MRV systems: Providers have limited incentives to harmonize methodologies or automate processes, resulting in inconsistent monitoring and reporting. 
• Low data comparability: Inconsistent and fragmented data make it difficult for investors to compare projects, undermining confidence and slowing investment. 
  It is crucial to move beyond project-level assessments toward system-wide and market-strengthening impact assessments. High-quality finance should not only deliver direct results but also contribute to long-term transformation by improving market functioning, reducing barriers, and enabling scalable investment. 

Lessons from Brazil’s Capital Markets: Standardization Unlocks Scale 

Interviewees repeatedly compared the current state of NbS finance to the early development of Brazil’s Agribusiness Receivables Certificate (CRA) and Real Estate Receivables Certificate (CRI). CRAs and CRIs are asset-backed securities developed to raise funding through capital markets for projects associated with agribusiness or real estate. In both cases, growth accelerated only after processes were standardized, documentation requirements were harmonized, and verification became predictable, reaching the market with an accumulated figure of BRL 95.2 billion, as per Anbima data, in 2025. Standardization lowered risk perception, increased liquidity, and brought institutional investors into the market. 

NbS now requires a similar evolution. Investors do not seek new frameworks. They seek the reliable application of the standards they already trust, such as IFC Performance Standards, Anticipated Impact Measurement and Monitoring (AIMM), and global due diligence guidelines. Operationalizing these standards across all NbS investments reduces uncertainty, accelerates structuring, and increases the likelihood of attracting institutional capital.   

In the words of Violet’s founder, Martha de Sá:    

“Scaling nature-based solutions requires building the market infrastructure that serves the entire sector. At Violet, we’re working to make investing in nature as straightforward as investing in traditional markets, and that starts with standardization, transparency, and collaboration across the ecosystem.” 

Translating Insights into Action: A Framework for Lowering Transaction Costs and Building Confidence 

Based on the interviews and desk research conducted, the Lab produced an integrated set of recommendations that combine international best practices with investor expectations. Four areas emerged as essential for scaling NbS finance, as provided below: 

1. Integrating Investor Requirements: Align internal processes with globally recognized frameworks and harmonize due-diligence procedures to lower transaction costs, reduce analysis duplication, and improve speed and credibility of deal approvals.
2. Developing Auditable and Pre-Approved Protocols: Standardize the entire investment cycle by defining consistent, traceable, and verifiable processes from field assessment to reporting; pilot protocols across multiple deals; and introduce them early in investor engagement, so that investments become more predictable, scalable, and efficient to prepare.
3. Building Investor Trust and Market Visibility: Strengthen confidence through technical outreach, sector convenings, transparent communication, and demonstration of capacity for aggregated institutional-scale deals. This will enhance investor confidence and increase the likelihood of capital commitments.
4. Strengthening Third-Party Verification and Compliance: Ensure integrity through investors-aligned independent consultants, clear compliance and data custody criteria, standardized verification steps, and rigorous on-site checks where required to reduce verification costs, better manage risks, and improve accountability and comparability across investments. 

Broader Insights for Brazil’s Climate and Nature Finance Landscape 

The findings from the interviews and desk research mirror wider discussions on how to accelerate climate finance in Brazil specifically. Scaling NbS requires more than financial innovation. It demands a market infrastructure that supports transparent, reliable, and cost-effective investments. Three lessons stand out: 

1. Investable pipelines depend on well-defined monitoring and measurement frameworks. Clear baselines, robust data requirements, and transparent verification systems reduce uncertainty and enable projects to reach investment readiness.
2. Guarantees and other de-risking mechanisms will continue to play an important role during the early stages of NbS market development. Even with standardized processes, land use investments have unique characteristics that require risk-sharing.
3. The importance of liquidity pathways and secondary markets. As seen in other segments of Brazil’s financial system, standardized issuance platforms and refinancing structures help transition early-stage investments into mature capital market products. 

Conclusion 

Brazil has a unique opportunity to lead the transformation of NbS into a scalable and investable asset class. Achieving this requires more than capital mobilization. It requires a predictable, transparent, and credible investment infrastructure.  

By integrating investor requirements, developing auditable protocols, building investor trust, and strengthening verification mechanisms, NbS can evolve from fragmented, high-cost projects into a stable, institutional-grade investment opportunity capable of generating significant environmental and social impact.