The role of the private sector in scaling nature finance through sustainable investing and supporting the global transition to a net-zero, nature-positive economy is increasingly vital. PE and VC firms are uniquely positioned to drive this transition by aligning their investment strategies with sustainable practices. Developing a talent base ready to leverage new opportunities in nature-based solutions and circular economies may prove vital. At The Small Consultancy, we recognise that building resilient teams with ESG knowledge and adaptability will be essential for companies to make meaningful progress in this space.
Private Sector Responsibility for Sustainable Investing
COP16 highlighted the need for the private sector to play a proactive role in closing the nature finance gap through sustainable investing, a pressing challenge that will continue to grow if left unaddressed. Over the past year, the private sector has increasingly embraced mandatory nature-related regulations. This momentum raises critical questions on how to align these measures with broader net-zero goals, while also prioritising nature-positive strategies that support biodiversity and ecosystem resilience.
The concept of a circular bioeconomy offers a promising approach. Unlike traditional models that rely on extracting and depleting resources, a circular bioeconomy promotes sustainable production and consumption, minimising waste and enhancing social and environmental outcomes. This model has gained traction across industries and is emerging as a tangible framework for businesses committed to achieving the Paris Agreement targets. While COP16 introduced this topic, it is expected to take centre stage at COP30 next year, underscoring its relevance to a sustainable future through sustainable investing.
For PE and VC firms, this framework presents a valuable opportunity to reimagine traditional investment models and align portfolios with circular principles. Yet, realising this vision will require dedicated talent skilled in ESG, sustainable finance, and the nuances of circular economy initiatives.
The Rising Importance of Nature-Based Solutions
The Global Biodiversity Framework, established at COP28, emphasised that climate action cannot succeed without nature protection and restoration (UN, 2022). Nature-based solutions—actions that protect, restore, and sustainably use nature—offer a compelling approach to tackle biodiversity loss, climate change, and desertification. Despite their promise, sustainable investing in nature-based solutions is critically underfunded (Bapna, 2021). According to the United Nations Environmental Programme, annual global investments in nature total approximately $200 billion, with the private sector contributing only 20% of this figure (UN, 2023). This gap reveals the untapped potential for private investors to support nature-positive initiatives, which, if scaled effectively, could significantly boost efforts to protect biodiversity-rich areas around the world.
For PE and VC, this shortfall presents a dual challenge and opportunity: firms can help bridge the nature finance gap by increasing their commitment to nature-based sustainable investing , while also strengthening the long-term resilience of their portfolios.
However, such an approach demands talent that not only understands the complexities of sustainable finance but can also navigate the emerging nature-focused regulatory landscape and anticipate future shifts in policy and market demand.
Building Talent to Lead the Sustainability Transition
To address these challenges, PE and VC firms must focus on developing teams that are not only skilled in financial analysis but also possess expertise in environmental science, biodiversity, and circular economy principles. As COP16 calls for action-oriented commitments, a talent strategy aligned with these sustainability goals is essential. Here’s how firms can prepare:
Nature-Focused ESG Expertise
With nature-based solutions and circular economies gaining attention, PE and VC firms should prioritize hiring talent that understands these frameworks. Professionals with ESG credentials and experience in sustainable development will be well-positioned to identify and nurture investments that align with the net-zero, nature-positive objectives.
Resilience and Adaptability
The landscape of sustainable finance is evolving quickly, and firms must foster a culture of adaptability. Teams that are encouraged to continually learn and stay informed on emerging trends and regulations will be able to pivot as needed, ensuring that firms remain agile and responsive to changing demands.
Cross-Disciplinary Collaboration
Achieving sustainable investment outcomes requires cross-functional expertise. Fostering collaboration among professionals with backgrounds in finance, environmental science, and policy can enhance a firm’s ability to evaluate nature-positive opportunities comprehensively.
Looking Ahead: COP16 and the Future of Sustainable Investing
As COP16 calls for the private sector to step up in the sustainability transition, the importance of sustainable investing in PE and VC cannot be overstated. While political and economic volatility will likely continue to impact market confidence, the demand for nature-positive, sustainable business models is only increasing. By focusing on nature finance and talent strategies that support circular bioeconomies, firms can align with a broader movement towards a net-zero, resilient global economy.
At The Small Consultancy, we are committed to helping our clients navigate these shifts, equipping them with the talent and strategies needed to drive sustainable impact. COP16 marks an inflection point in sustainable investing; with the right talent and focus, private equity and venture capital firms can play a pivotal role in building a future that balances profitability with environmental stewardship.
