Advising on the launch of a biodiversity fund in Europe

THE BACKGROUND

A leading EU investment firm, in collaboration with a Canadian pension fund, is establishing a joint fund platform to mobilize private capital for investments with a positive biodiversity impact. This initiative seeks to bridge the financing gap for regenerative agriculture, sustainable forestry, and other nature-based solutions in the European Union (EU). Despite growing commitments to biodiversity conservation, key barriers remain, including limited access to large-scale investments, inconsistencies in project execution, and a lack of standardized impact metrics.

The proposed fund will invest in projects that promote sustainable land use, focusing on ecosystem restoration, agroecological farming, and sustainable forest management. The overarching goal is to transition agricultural and forestry sectors towards models that enhance biodiversity, improve carbon sequestration, and support resilient rural economies.

To support this vision, the investment firm has engaged advisory services under the Green Assist program managed by CINEA to conduct a market study, identify investment opportunities, and develop a robust framework for fund structuring and investor engagement.

THE PROJECT

The advisory project aims to enhance our client capacity to attract institutional investors and direct capital towards impactful projects in regenerative agriculture, sustainable forestry, and other nature-based solutions. The key tasks included:

1. Market analysis and investment mapping

Regenerative agriculture:

• Assess market demand and price premiums for organic and regenerative crops.
• Identify existing payment schemes for ecosystem services (e.g., carbon credits, biodiversity credits).
• Review EU and national-level subsidies, tax incentives, and policy frameworks supporting regenerative agriculture.
• Analyze risks such as climate impacts, regulatory changes, and socio-political challenges.

Sustainable forestry:

• Evaluate market opportunities for sustainable timber and other forestry products.
• Investigate subsidies, tax incentives, and carbon market mechanisms supporting sustainable forest management.
• Assess risks, including climate vulnerabilities, social conflicts, and regulatory shifts.

Other Nature-Based Solutions (NBS):

• Identify high-potential sub-sectors and investment models within nature-based solutions (e.g., wetland restoration, carbon farming).
• Analyze financial incentives, market dynamics, and corporate interest in biodiversity-positive investments.

2. Prioritization of investment opportunities

• Develop a ranked list of 10-15 priority investment opportunities across key EU geographies.
• Use data-driven criteria to evaluate business models, environmental impact, and alignment with fund objectives.
• Map opportunities against regions with strong policy support and existing investor interest.

3. Investor engagement and fund structuring

• Build a database of 30-50 potential institutional investors, detailing their investment strategies, financial capacity, and ESG priorities.
• Assess co-investment potential with other funds and financial institutions.
• Develop fiscal and legal structuring recommendations for the fund, considering tax implications, regulatory requirements, and the feasibility of different financing instruments.

4. Capacity building and stakeholder alignment

• Conduct workshops and training sessions for our client’s investment team on sustainable finance strategies and impact measurement.
• Facilitate discussions with policymakers, corporate partners, and financial institutions to strengthen the fund’s market positioning.

THE RESULTS

Through this project, our client achieved to:

• Expand investment opportunities in regenerative agriculture and sustainable forestry.
• Strengthen institutional investor engagement in biodiversity-positive finance.
• Develop a scalable financial model to support nature-based solutions.
• Enhance the impact measurement and reporting framework for sustainable investments.
• Align with EU sustainability goals and contribute to the broader transition towards a regenerative, low-carbon economy.