BlackRock: Impact requires realistic consideration

July 24, 2025

_{This article was originally written in Dutch. This is an English translation.}

Nature is crucial to the economy, and damage to ecosystems leads to increasing financial risks. Investors can play a role by financing nature restoration or limiting damage to nature. However, real-world impact requires balance, says Cherry Muijsson, Director, Multi-Asset Strategies and Solutions at BlackRock. Financial Investigator spoke with her.

By Esther Waal

How big is the universe of investments with a real-world impact on biodiversity and nature at this moment?

‘To define the investable universe, you need to understand the concrete threats to nature and biodiversity. According to IPBES, there are five direct causes of nature loss: changes in land and sea use, direct exploitation of organisms, climate change, pollution, and invasive alien species. These causes vary by location and ecosystem type. It is important to understand which activities cause these threats; the ENCORE framework is a useful tool for this.

Our investment vision is based on a theory of change that aims to reduce pressure on nature through four types of solutions: 1) more efficient use of natural capital – such as precision agriculture, 2) supporting a circular economy by reducing and recovering waste – for example, companies that use waste to make new products, 3) restoring nature – such as reforestation, and 4) utilising natural capital for new products or business models – for example, by using emerging alternatives from synthetic biology.

There are investment opportunities within restoration and conservation, mainly through the market for green bonds and funds that are positive for biodiversity in forestry and agricultural land. We are also looking at nature-based solutions. In 2024, sustainable bond issuance reached $1 trillion, and the cumulative market is expected to exceed $5 trillion in 2025. A growing share of this market is focused on biodiversity and nature-related themes. In 2024, 16.5% of sustainable bonds issued related to nature-related themes.

We are also aware of the financing needs. The Global Biodiversity Framework (GBF) estimates that more than $1.2 trillion is needed annually to halt biodiversity loss and restore ecosystem services by 2030. Currently, biodiversity financing amounts to approximately $208 billion per year. The majority of this is expected to be financed by governments through restoration programmes.

How will the market valuation of nature and ecosystem services develop?

‘We expect nature and ecosystem services to be increasingly priced by markets. The loss of ecosystem services poses a real financial risk, and that risk is likely to materialise sooner than some climate-related impacts. The World Bank estimates that, under a “business as usual” scenario, the annual economic loss from 2030 onwards will be between $90 billion and $225 billion. This loss is caused by declining pollination rates, the disappearance of natural carbon storage, and the loss of fisheries and timber production. If a wider range of natural resources is taken into account and the rate of depletion accelerates, this economic loss could be even greater.

As far as markets are concerned, we do not yet see all ecosystem services being priced. But some are – particularly the more tangible ones, such as water. For example, our analysis shows that companies that use water efficiently have historically achieved higher returns than companies with more intensive water consumption. Greater transparency, including through the TNFD, could lead to a revaluation of nature-related risks and opportunities.’

Can you give examples of investments with a real-world impact on biodiversity and nature?

‘One question investors should ask themselves is: are you focusing on financing what is already planned, or are you financing what no one else is financing?

For example, it is possible to reduce pressure on nature by investing in green bonds that specifically finance restoration projects. Brazilian commercial bank Itau announced a $250 million private bond issue for biodiversity and social initiatives in Brazil, together with the IFC and IDB Invest. The proceeds will be used to restore degraded land, preserve native vegetation and promote good agricultural practices.

However, it is also possible to invest directly in nature conservation, for example through concessional loans or mechanisms, or to invest in private markets for new initiatives. In the UK, Biodiversity Net Gain was introduced, which is mandatory for developers. They must guarantee a net gain of 10% in biodiversity at the site, and if this is not possible, they must purchase credits from the government. The government acts as an intermediary by facilitating restoration projects that generate biodiversity units, which are then purchased by developers to meet their obligations.

How can you steer towards both impact and financial objectives?

Investors need to be aware of where they want to make an impact and whether they are prepared to use concessional financing terms or take on riskier investments.

Nature restoration programmes are often implemented in emerging economies. Investors can play a role by providing concessional capital for project financing activities, for example through capacity-building grants, which can attract additional investment to scale up projects. This role is often played by multilateral development banks through blended finance structures.

It is also possible to invest in nature and agricultural technology, but these companies are often in the venture capital market with higher risk profiles.

Investors can balance impact goals and financial objectives through a multi-asset approach. Riskier asset classes can be combined with fixed-income solutions to mitigate overall portfolio risk and return profiles.

What risks are involved and how do you deal with them?

Risks are both financial and performance-related. Many impact funds have a limited track record and some asset classes may not be well understood from an institutional perspective. Gaining insight into the implementation risks and setting up mitigating measures is essential.

Risks related to results should not be ignored either. For example, reforestation projects are affected by forest fires or other project-related risks, which may prevent the intended results from being achieved. Biodiversity is even more complex, as the time horizon for recovery can be decades – often longer than some investment horizons. And the restorative impact of regenerative agricultural practices is continuously being researched, with actual results uncertain.

How important is collaboration with NGOs?

NGOs have a wealth of knowledge from actually implementing nature conservation projects on the ground. They can identify which practices are most likely to promote positive biodiversity outcomes and act as advisors to operational partners to avoid unintended harm.

They are also a crucial partner in engaging local communities and indigenous peoples and ensuring that their voices are heard, which contributes to the long-term sustainability of an investment.

What advice can you give investors in terms of portfolio analysis and impact investing solutions if they want to take biodiversity and nature into account?

‘Real impact starts with identifying truly investable opportunities in your portfolio. This requires in-depth knowledge of managing complex projects and the challenges involved. It also requires the courage to embrace new investment categories and review your portfolio approach. Understand the impact and dependencies, deploy the right expertise and combine a “greening finance” mindset with a “financing green” approach.