Summary: Nature-based solutions (NbS) offer remarkably promising opportunities for win-win outcomes, but here’s the catch: much of the private sector capital is arriving with venture capital scale return on investment (ROI) expectations. In practice, this means co-created, community-led, landscape-scale NbS projects are often not considered “bankable” by carbon investors. For those of us working with frontline communities to design these projects with climate resilience and social equity as our north stars, carbon credits are—and quite frankly will always be—simply one part of a wider value proposition. Our conception of ROI spans across time and includes intertwined gains in health, education, intergenerational well-being, climate resilience and biodiversity regeneration, not just carbon avoidance or removals. Ultimately, NbS financing models must embrace a layered understanding of value—spanning tangible revenue streams and intangible benefits—while recognizing that not all forms of worth can or should be monetized.

Financing Justice

Nature-based solutions (NbS) offer remarkably promising opportunities for win-win outcomes: i.e. they are good for climate, good for nature, and good for peoples’ well-being and prosperity. With the accelerating global urgency to address the twin crises of climate change and biodiversity loss, growing pools of well-intentioned climate and nature finance are seeking homes in high integrity NbS projects that can deliver climate mitigation alongside a host of Sustainable Development Goal outcomes.

But here’s the catch: much of the private sector capital is arriving with venture capital scale return on investment (ROI) expectations — often 35% and above. And many NbS projects, particularly those well and truly rooted in social equity, local leadership and long-term resilience as fundamental design tenets, simply aren’t able to deliver financial returns at this level to investors whilst also sharing profits equitably with communities. We see time and again how ethical project developers operating in this space struggle to reconcile truly good project concepts with venture capital ROI expectations – even in the most well-meaning of investor contexts.

So what happens when ROI expectations collide with justice-driven restoration?

Community-Led Solutions are seldom suited to Venture Capital Plays

Community-led nature-based solutions — such as forest restoration and protection, mangrove rehabilitation, or regenerative agriculture — are inherently long-term endeavors. They rely on deep local engagement, trust-building, and culturally aligned processes that prioritize the needs and aspirations of frontline communities who are both stewards of and vulnerable to changing landscapes.

Yet, the financial models most investors apply, even those operating under the banner of “impact”, tend to focus narrowly on carbon credit revenues and short-term ROI metrics. These models usually ignore and consequently undervalue the broader benefits these projects generate, e.g. climate change resilience, biodiversity protection, food security, gender equity and local governance empowerment. They may also fail to account for the interdependence between long-term carbon gains and the realization of locally meaningful benefits. When the value perceived by communities is misaligned with externally imposed ROI metrics, the durability of carbon outcomes is put at risk. Biodiversity credits are only just entering mainstream discourse, and mechanisms for monetizing social and ecological value are missing from most NbS project feasibility assessments and investment cases.

Some of the more forward-looking NbS project developers are attempting to stack value streams: i.e. combining carbon revenue with income from agroforestry products, climate change risk reduction, biodiversity credits, or ecotourism. But such approaches are often considered too complex or speculative to feature convincingly in venture capital financing models, particularly where projects carry high upfront costs and the real financial returns begin to emerge only several years into project implementation. This bias is compounded by the use of high hurdle rates in investment assessments, which significantly discount future returns when calculating Net Present Value (NPV). As a result, NbS projects presenting strong long-term financial potential through value-stacking can appear financially unattractive if financial benefits are realized beyond the near term. This means investors tend to continue to prioritize investing in projects that offer faster paybacks over those that yield returns later – even though they may offer potential for significantly deeper, more sustained impacts.

In practice, this means co-created, community-led, landscape-scale NbS projects are often not considered “bankable” by venture capital investors. For those of us working with frontline communities to design these projects with climate resilience and social equity as our north stars, carbon credits are—and quite frankly will always be—simply one part of a wider value proposition. Our conception of ROI spans across time and includes intertwined gains in health, education, intergenerational well-being, climate resilience and biodiversity regeneration, not just carbon avoidance or removals.

The real constraint is not the quality or viability of these projects, but the availability of project finance that recognizes value beyond venture capital styled ROI metrics. Today, only a narrow slice of such initiatives meet these investment criteria. But if return expectations were recalibrated to reflect a more realistic, resilience-oriented view of value creation—one aligned with long-term planetary and social thresholds—a far greater proportion could become

investable. It begs the question: how many of today’s “unbankable” projects are actually viable, if we evolve our definition of ROI?

Reframing Value in Nature-based Solutions

To unlock the true power of NbS, we must move beyond the narrow logic of Return on Investment (ROI). Instead, we need to adopt a broader framework: Value Beyond Investment—also known as Shared Value (Porter & Kramer, 2011) or Blended Value (Emerson, 2003).

We ultimately need NbS financing models that account for layered value, spanning diverse revenue streams (such as carbon credits, agroforestry products, or sustainable forest yields) and a wide spectrum of benefits (including ecological regeneration, social cohesion, cultural continuity, and spiritual significance). Importantly, these models must acknowledge that not all forms of value are measurable in monetary terms, and nor should they have to be.

The High Road or the Low Road?

We stand at a crossroads: will Nature-based Solutions (NbS) in carbon markets follow the high road or the low road?

Without care, NbS risks becoming just another tool of extractive green capitalism – stripped of its deeper purpose and promise. To fulfil the potential of NbS as a vehicle for repair, regeneration, value creation, resilience and justice, we must consciously choose a different path.

Taking the high road means interrogating the dominant logic of financial ROI that governs so much of today’s carbon project finance landscape. It means asking not just what NbS can yield for investors, but what NbS can restore and create for communities, ecosystems, and future generations.

Communities aren’t simply delivery mechanisms for carbon credits. They are leaders and stewards in the climate transition. Let’s build a finance system that recognizes that — and meets them on their terms.