The Lab is a joint initiative between The Business School’s Centre for Business, Climate Change and Sustainability and Edinburgh Centre for Financial Innovations, The School of Geosciences, The Edinburgh Futures Institute, Edinburgh Innovations and the Edinburgh Earth Initiative. The Nature Finance Lab will bring together financial data scientists, environmental scientists and policy researchers to understand how nature-related risks interact with financial markets and economies and more importantly, how financial markets can provide enhanced incentives for long-term nature protection.

Nature Finance Lab Launch

The University of Edinburgh's Nature Finance Lab launch event, hosted at the Edinburgh Futures Institute, brought together academic expertise, financial sector leaders, and innovation specialists to address the critical challenge of mobilizing financial markets for nature protection.

Event Context and Opening Question: The event began with Theodor Cojoianu framing the central challenge: examining how communities of practice, particularly investors in the financial sector, can address nature protection. He posed two key questions: "What are the main use cases that we should focus on?" and "How do we solve this nature challenge?" These questions set the foundation for exploring the intersection of financial markets and nature protection.

Opening Session: Dean Gavin Jack set the context by highlighting the University of Edinburgh Business School's pioneering role in sustainable finance, including launching the world's first MSc in Carbon Finance in 2010. He emphasized the importance of cross-disciplinary collaboration and diverse knowledge sources in addressing climate and nature-related challenges, drawing from his experience at Monash University in Australia.

Keynote Address: Eva Cairns, Head of Responsible Investment at Scottish Widows, delivered a comprehensive keynote that examined nature's significance for asset owners. She presented three fundamental aspects: the economic importance of nature, with $44 trillion of global GDP dependent on natural systems; the critical role of food systems in climate and biodiversity challenges; and practical approaches for asset owners through integration, allocation, and stewardship. Scottish Widows' experience in assessing £150 billion of assets provided concrete examples of implementing these approaches.

Panel Discussion: The panel discussion brought together diverse perspectives on operationalizing nature finance:

Marc Metzger emphasized the necessity of bridging ecological complexity with financial decision-making, cautioning against oversimplification while acknowledging the need for practical metrics.

Craig MacKenzie provided insights into the UK's approach to nature protection, discussing the transition from government grants to market mechanisms. He explored the potential and limitations of applying the UK model globally, particularly regarding biodiversity credits and market structures.

Sam Fleming addressed technological innovation, arguing that while current technology is sufficient for measuring and monitoring nature, the key challenges lie in operationalization and scaling. He emphasized the need for mindset shifts in both scientific and financial communities.

Margarita Skarkou concluded by examining the balance between public and private sector roles, emphasizing the importance of government frameworks in creating proper incentives while highlighting opportunities for data innovation and blended finance models.

The event demonstrated the complex interplay between scientific understanding, policy frameworks, and financial mechanisms needed to address nature protection effectively. It established the Nature Finance Lab as a crucial initiative for developing practical solutions to bridge these diverse perspectives and approaches.

Research areas

Our research spans five areas: quantifying biodiversity and assessing the robustness of emerging credit mechanisms; integrating nature-related risk into mainstream financial products; making the investment case for private capital in nature; developing the data science and remote sensing tools that underpin credible nature markets; and ensuring that communities and social benefits are central to nature finance design.

Quantifying biodiversity and emerging credit mechanisms

Accurately measuring biodiversity is fundamental to building credible nature finance markets. Our research examines how biodiversity can be robustly quantified through ecologically grounded approaches. We critically assess emerging biodiversity credit mechanisms, exploring questions of integrity, additionality, and market design to ensure that financial instruments deliver for nature.

Integrating biodiversity risk into financial products

Nature-related risks are increasingly material to financial institutions, yet they remain poorly integrated into mainstream lending and investment decisions. Work with us to explore how biodiversity and natural capital risk can be embedded into everyday financial mechanisms, including mortgage markets and commercial lending, to help lenders, regulators and investors better understand and price the exposure their portfolios carry to nature loss.

Generating attractive returns from nature investment

One of the central challenges in nature finance is investing in natural assets commercially viable at scale. We investigate if projects can be structured to generate financial returns that are competitive with conventional investments, examining blended finance approaches, revenue stacking, long-term asset valuation and the policy conditions that could make private capital deployment in nature both attractive and sustainable.

Enabling technologies and techniques for nature finance

Effective nature finance depends on robust data, monitoring and analytical tools. Our research into the technologies and methodologies, from remote sensing and earth observation to data science and AI, can underpin credible measurement, reporting and verification of nature outcomes. We focus on how these tools can be integrated into financial mechanisms, bridging the gap between scientific capability and practical application.

Communities, social benefits and nature finance

Nature finance must deliver for people as well as ecosystems. We investigate how community interests, local livelihoods and social equity are meaningfully embedded in the design and governance of nature finance mechanisms. We examine frameworks and approaches that ensure the benefits of investment in nature are fairly distributed, and that the voices of affected communities are central to decision-making in nature finance projects.

If you would like to be an affiliated researcher or wish to contact us, please email naturefinancelab@ed.ac.uk