On June 17, 2024, the European Union (EU) members voted to approve the Nature Restoration Law after a group of 11 countries made a last-minute swing to vote in its favor. This law aims to protect and restore natural ecosystems and create a mandated target for EU countries. 

The law is expected to create new investment opportunities for private equity and private credit firms to invest in restoration projects, ecosystem services, nature-based solutions, and companies that act as suppliers or implementation managers. The finance industry has recognized the potential for this law to catalyze hundreds of millions of Euros in private financing.

Let’s explore the Nature Restoration Law in detail. 

What is the EU’s Nature Restoration Law? 

The Nature Restoration Law, proposed on June 22, 2022, is a landmark legislation approved by the European Union that was made to restore damaged ecosystems across the EU. The law is built to contribute to the long-term recovery of damaged nature across the EU’s land and sea areas to achieve the EU biodiversity and climate objectives. 

With the development in restoration, the EU plans to establish a "10 billion € natural-capital and circular economy investment initiative" building on InvestEU. The Nature Restoration Law can spur the development of new green equity, bond, and debt instruments to finance nature restoration activities, which private investors may be able to leverage or invest in.

The primary tenets of the EU’s Nature Restoration Law

The EU’s newly-approved Nature Restoration Law: 

• sets a target for the EU to restore at least 20% of the EU's land and sea areas by 2030. 
  
  

• calls for the restoration of all the ecosystems in need by 2050. 
  
  

• demands a positive trend in several forest ecosystems, including the conversion of at least 25,000 km of rivers into free-flowing rivers and the planting of an additional three billion tree billion trees. 
  
  

• aims to restore at least 30% of covered ecosystems, including rivers, coral beds, lakes, forests, grasslands and wetlands, from poor to good condition by 2030. This number will increase to 60% by 2040 and 90% by 2050. 

Next Steps

The law has to be formally adopted by the European Council, and it will be enforced 20 days after its publication in the EU Official Journal. Within a year of the law coming into power, the European Commission is planning to identify a range of sustainable financing measures for supporting the implementation of the law. 

While you’re here…

The Nature Restoration law presents good deal flow opportunities on restoration projects for asset managers, private credit and equity investors. Firms should be able to identify opportunities quickly in order to be in an ideal position to take advantage of them .

This presents a significant data challenge for private credit and equity firms — an area where Auquan can help. 

Auquan uses advanced AI to generate material insights on any entity worldwide — public or private — and fine-tuned for your individual investment and lending workflows. Auquan sources and processes information from dozens of languages, including Mandarin.

Let’s explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best: making strategic decisions ahead of the market.