Nature Investment Hub and Carolinian Canada recently co-designed and delivered an Impact Bonds for Nature workshop, hosted by EY Canada. This two-blog series aims to advance the conversation on impact bonds in Canada by sharing learnings from the workshop. These insights can inform future applications of this and other nature finance instrument. The second blog looks at three important conversations that were held at the workshop.
Within nature finance markets, impact bonds are an instrument that can crowd in private finance for nature. But what are they, how can they be implemented in Canada, and what needs to be done to unlock their full potential?
This top of mind question prompted a collaboration between the Nature Investment Hub and Carolinian Canada hosted by EY, to dig deeper into how this instrument can be effectively deployed. On June 9, 2025, we co-hosted a workshop with participants representing key parts of the nature finance ecosystem—from Indigenous leaders and ENGOs to philanthropy, the financial sector, and government. These participants brought a diversity of perspectives, and varying levels of familiarity with impact bonds.
(Photo credit: Lisa Grbinicek)
Impact bonds for nature are privately-financed performance bonds in which a payout only occurs when certain outcomes are reached. These outcomes are usually linked to pre-determined metrics that can cover a range of social and environmental criteria. This financial instrument works by structuring an upfront investment that is used to improve or conserve habitat, and a payout is usually derived from an “outcome payer” who benefits from the nature-related targets achieved. The viability of impact bonds relies on bringing together groups that are willing to pay for nature-based services with impact investors that provide the upfront funds for conservation, restoration, and stewardship activities. The specific partnership models and rates of return to investors can vary depending on the design of the bond.
The Conservation Impact Bond (CIB) in Southern Ontario is a first-of-its-kind, place-based collaboration and financial instrument to accelerate healthy landscapes in the spirit and practice of reconciliation. Many are looking to the CIB as a model for what’s possible in Canada. It teaches us lessons we can apply elsewhere—like in the development of a salmon impact bond or a wildfire resilience bond. Readers will find a few of these lessons reflected throughout this piece.
The workshop opened with an introduction to Natural Law from Samantha Whiteye, Indigenous Leadership Director at Carolinian Canada, and a grounding in Ethical Space. Leadership from the Nature Investment Hub, Carolinian Canada and EY shared insights on emerging trends in nature finance in Canada and introduced the concept of impact bonds for nature, using the CIB as an example of this financial instrument in play in the Canadian context. There were small group discussions to consider outcome payer and investor perspectives on impact bonds, and conversations around three topics that are explored in our companion blog.
Centre Indigenous leadership
(Photo credit: Samantha Whiteye)
Indigenous leadership and reconciliation needs to be deeply and meaningfully centered in discussions around how impact bonds for nature are designed and governed in Canada.
Participants surfaced key points from jurisdiction and land tenure to capital sovereignty that are critical for Indigenous partners in nature-related impact bonds. These must be carefully considered by all to ensure equitable and effective outcomes across the broader nature finance sector.
We heard about the deep cultural significance of salmon to the Wuikinuxv Nation and its members, as well as other Nations across British Columbia, and the community’s view of the impact bond model as a potential means of economic and environmental reconciliation. For impact bonds to be meaningful and effective in Indigenous contexts, the definition of success must be driven by Indigenous leadership, with outcomes reflecting cultural, ecological, and community well-being as determined by the Nations themselves.
Frameworks such as the Shaping an Indigenous Sustainable Bond Framework and surfacing learnings from Raven Outcomes’ experience in housing, clean energy, healthcare, and workforce development can provide valuable guidance on how to advance reconciliation principles in practice.
As exemplified through the CIB, centering Indigenous leadership by adopting Ethical Space can lead towards a Two-Eyed Seeing approach to habitat restoration and successfully shift dominant colonial approaches that tend to fragment landscapes. The CIB tracks co-benefits in addition to the pay-for-success outcome through a Two-Eyed Seeing Impact Framework. Workshop participants suggested this approach may resonate with outcome payers, particularly as trust-based philanthropy gains traction and there is growing familiarity with relational approaches that underpin emerging instruments like impact bonds for nature.
Creating distinct spaces for Indigenous partners to bring capital, knowledge, and authority to guide investment toward ecological and cultural priorities is essential when structuring an impact bond and other nature finance solutions. In some cases, holding these conversations alongside broader dialogues, allowing for side-by-side processes that can eventually converge, may ensure Indigenous perspectives and priorities lead rather than follow.
Take whole-landscape approaches
With 85% of the Carolinian Zone in Southern Ontario already cleared, the CIB uses a “whole landscape” approach working to protect and restore across diverse landscapes (private, public and working lands e.g. agriculture and industry). Not only does this approach avoid fragmented outcomes, but it offers workable options to tackle declines in biodiversity and habitat loss and enables a suite of interconnected co-benefits that achieves results for a diverse group of outcome payers.
Focus on outcome payers - they catalyze capital flows by committing to pay for measurable results
Outcome payers serve as the catalytic capital that unlocks investment into Impact Bonds. Their commitment to pay for results achieved reduces investor risk and underpins the financial model. Thus, the scalability of impact bonds depends on the ability to attract and align public and private capital through grants, donations, and contributions to reward successful outcomes.
Make it easier for granting organizations to support outcome payments
(Photo credit: Jen van Overbeeke)
While grants can be used to fund outcome payments, many foundations are unfamiliar with pay-for-success structures. Bridging this gap will require both aligning internal policies to recognize outcome payments as eligible grant disbursements and building knowledge about how such mechanisms advance mission-aligned outcomes. Allowing grantmakers to commit future payments as part of their annual distribution quotas would further enable participation and unlock more flexible, impact-oriented capital.
Align pay-for-success outcomes with business objectives to achieve scale
In many cases, outcome payments are made through grants or contributions from governments and philanthropic foundations, rather than being treated as business transactions. However, workshop participants noted that models relying solely on government backstops face limitations in scalability. To unlock larger pools of capital, it is essential to engage not just the philanthropic arms of corporations and financial institutions, but also their core business units. At this nascent stage of market development for nature-focused impact bonds, if it is still premature to engage certain business units directly, then at a minimum insights and opportunities identified by foundation teams must be effectively shared across the organization to align strategic interests and drive broader investment in the future.
Build the value proposition for outcome payers to commit to the pay-for-success outcomes
Motivations for becoming an outcome payer vary by sector:
Understanding and articulating these diverse motivations is essential to building a compelling value proposition that secures outcome payer commitments and enables the success and potential scaling of the impact bond model.
Given the place-based nature of most outcomes, payers are often local beneficiaries. Applying the model to new regions - especially northern and remote regions - may require more creative approaches to identify who benefits and align with their priorities to outcomes.
Build internal capacity to connect nature-based outcomes with organizational priorities
Workshop participants emphasized the need to build internal capacity within governments, foundations, corporations, and financial institutions to better understand and align nature-based outcomes with their organizational priorities. Currently, the responsibility of making that connection and advocating for investment often falls on Indigenous organizations and ENGOs, many of which operate with limited resources. But why should they bear that burden alone? Potential outcome payers should develop the capability to interpret the outcomes communicated by implementing partners and assess how these align with their own mandates, motivations, or strategic goals. This shift is essential for scaling collaborative finance models and fostering more equitable partnerships.
Photo credit: (Jen van Overbeeke)
Investors showed strong engagement alongside all other workshop participants, demonstrating growing appetite and commitment to advancing impact bond solutions across Canada. We are already seeing new relationships from the workshop taking root. There are meaningful opportunities to become actively involved in helping practical opportunities like impact bonds pilot and scale in Canada. Capital providers who are interested are encouraged to connect with the organizations leading this and other important work taking shape across the country.
This co-convened workshop is one way the Nature Investment Hub continues to deliver on our mandate of building capacity and fostering relationships required to increase capital allocation for nature.
To learn more about impact bonds, read part two that reflects conversations on the Conservation Impact Bond in Southern Ontario and Salmon Impact Bond, and the role of government.