US Innovative Financial Institutions for Nature

New Leaf’s mission is to accelerate the transition to a sustainable future through blended finance investments. Nature-based solutions (NbS) play a critical role in this mission, offering opportunities to expand natural capital while addressing critical challenges like decarbonization, community resilience, biodiversity loss. While private and philanthropic capital has begun to flow into NbS, there is a pressing need to scale up and accelerate these efforts. Public finance can play a crucial role in de-risking investments and leveraging private capital to advance state priorities. 

Responding to this context, the Capstone team partnered with New Leaf to identify opportunities to unlock public financing for NbS. The team analyzed enabling policies in the U.S., particularly the IRA and the BIL, that create positive conditions for catalyzing private capital. The team also held consultations with stakeholders at four key financial intermediaries – Green Banks, Community Development Financial Institutions (CDFIs), Small Business Investment Companies (SBICs), and Rural Business Investment Companie (RBICs) – to identify partnership potential. 

Based on the Capstone team’s analysis, New Leaf should consider the CDFIs and SBICs certification process as its strongest options to leverage current public funding for NbS investments. While New Leaf’s immediate goals are to identify new structures to raise and allocate capital to NbS projects, the team advises that broader advocacy efforts with all of the financial intermediaries and federal agencies explored remain important.