As the world grapples with the twin crises of climate change and biodiversity loss, financial markets are increasingly recognizing the importance of investing in nature. Nature-based solutions (NbS) offer a powerful way to address these challenges by leveraging ecosystems to deliver climate resilience, carbon sequestration, and biodiversity benefits. However, for NbS to attract large-scale investment, they must be recognized as legitimate and investable assets within the financial system.

A New Zealand Sustainable Finance Taxonomy presents a critical opportunity to do just that—by defining clear criteria for what qualifies as a sustainable investment, it can help mobilize capital toward nature-positive projects. For charity organisations like Pure Advantage, which has long championed the role of nature in economic development, the development of this taxonomy represents a vital tool in scaling up investment in NbS and positioning natural capital at the heart of the country’s transition to a low-emission, climate-resilient economy.

Why Nature-Based Solutions Need a Place in the Taxonomy

Despite their enormous potential, NbS often struggle to attract financing due to unclear definitions, lack of standardized impact measurement, and perceived financial risks. A well-designed sustainable finance taxonomy can overcome these barriers by:

• Defining NbS as Investable Assets: The taxonomy can explicitly recognize NbS—such as native forest restoration, regenerative agriculture, wetland rehabilitation, and blue carbon initiatives—as eligible investment categories.
• Providing Clarity for Investors: By setting clear criteria for what constitutes a high-integrity NbS investment, the taxonomy reduces uncertainty and improves investor confidence.
• Aligning Finance with Climate and Biodiversity Goals: Integrating NbS into the taxonomy ensures that financial flows contribute to New Zealand’s Emissions Reduction Plan, National Adaptation Plan, and global commitments like the Kunming-Montreal Global Biodiversity Framework.

Unlocking Capital for Nature-Based Investments

The taxonomy can directly influence financial markets by:

• Guiding Green Bonds & Sustainability-Linked Loans: Financial institutions could issue green bonds or loans tied to NbS investments, enabling projects such as large-scale native afforestation, soil carbon enhancement, and sustainable land-use transitions.
• Attracting Institutional and Private Capital: Superannuation funds, impact investors, and corporate sustainability funds will be more likely to invest in NbS if a taxonomy provides a clear framework for assessing their financial and environmental returns.
• Supporting Public-Private Partnerships: Government and private sector collaborations can be structured more effectively when there is a shared taxonomy that defines eligible projects and ensures financial flows are aligned with national sustainability objectives.

Measuring Success: Creating a Framework for Impact

To be effective, the taxonomy must include metrics and reporting standards that demonstrate the tangible benefits of NbS investments. Key performance indicators (KPIs) could include:

• Carbon Sequestration Potential: Measuring CO2 absorption in native reforestation and regenerative farming projects.
• Biodiversity Gains: Tracking species recovery and habitat restoration in funded projects.
• Climate Resilience Contributions: Assessing how NbS reduce flood risks, improve water retention, and protect coastal communities from extreme weather events.

Positioning New Zealand as a Global Leader in Nature-Based Finance

Countries such as the EU, Singapore, and Canada are already incorporating NbS into their sustainable finance taxonomies, recognizing their role in delivering long-term economic and environmental value. By following suit, New Zealand can become a global leader in nature-positive finance, demonstrating how an economy built on natural capital can thrive while meeting climate and biodiversity commitments.

A Taxonomy for the Future

For Pure Advantage and other advocates of sustainable finance, the development of a New Zealand Sustainable Finance Taxonomy is a crucial step toward making nature-based solutions a mainstream investment class. By defining, measuring, and incentivizing NbS within the financial system, the taxonomy can unlock the capital needed to restore ecosystems, enhance resilience, and build a truly regenerative economy.



Now is the time for policymakers, financial institutions, and sustainability leaders to work together in ensuring that New Zealand’s natural capital is fully valued within the financial system—not just as a resource to be exploited, but as an essential pillar of a sustainable and prosperous future.