Investment momentum in Nature-based Solutions (NbS) is accelerating. With it comes a growing responsibility: directing capital towards projects that deliver genuine, high-impact outcomes for biodiversity, communities, and climate resilience.

At Xilva, our mission is clear — to forge meaningful connections between investors seeking credible nature-based opportunities and NbS projects with the highest potential for lasting impact.

As part of this mission, we partnered the Biodiversity Investment Researcher and Accelerator (BIRA) program. Following the success of the first cohort, for the second cohort — we began by designing the Red Flag Review — an early-stage evaluation tool to spot critical risks, surface strengths, and identify projects geared for investment readiness.

Following the first round of BIRA red flag reviews, we’re sharing our most important insights, the red flags we see most often, and practical steps for applicants aiming to stand out. The goal: build a pipeline of projects that are not just fundable, but fit for purpose.

The Tool: Red Flag Review

The Red Flag Review merges the pillars of our Xilva GRADE due diligence framework with BIRA’s Accelerator priorities, creating a two-part assessment:

1. Exclusion Criteria (Pass/Fail):
   Screens for non-negotiable risks — reputational issues, lack of social license, or regional conflicts.

2. Suitability Scoring (1–5):
   Evaluates alignment with BIRA’s goals, considering project potential, concept maturity, and team capability.

Projects were first ranked by the number of red flags, then by average suitability score. This allowed comparability across submissions and rapid identification of both risk areas and high-potential opportunities.

The process doesn’t just eliminate weak fits — it aligns promising projects with funders, highlighting those most likely to deliver meaningful biodiversity outcomes and success.

Xilva's Five Key Takeaways from BIRA Submissions

1️⃣ A Coherent Project Rationale is Non-Negotiable

The single most common gap? No clear Theory of Change (ToC). Many submissions had ambitious goals but failed to connect activities → measurable outcomes → long-term impact.
Insight: A sharp problem–solution–impact narrative consistently boosted suitability scores.

2️⃣ Community Engagement = Credibility

Projects with genuine, long-term partnerships with local stakeholders — especially with Indigenous and rural communities — sailed through both exclusion and suitability criteria. Weak engagement, vague benefit-sharing, or documented harm (e.g. media reports of coercion) triggered immediate red flags.
Insight: Community partnership is the foundation of legitimacy and long-term success in NbS projects.

3️⃣ Land Access is a Legal & Ethical Cornerstone

Without secure, transparent land access — or a credible plan to secure it — projects carry serious legal and operational risks. This also raises fairness and inclusion concerns for people and ecosystems involved. Several submissions were vague on this front and Xilva recommends that projects prioritize this if they wish to receive investor funding.
Insight: A documented, transparent land access strategy is critical for funder trust and ethical integrity.

4️⃣ Revenue Diversification Signals Resilience

A recurring question in the review process: is the project built to endure? While pure philanthropic funding wasn’t disqualifying, projects with multiple income streams — carbon credits, biodiversity credits, eco-tourism, non-timber forest products — were seen as more resilient and investment-aligned.
Insight: Financial sustainability is about autonomy and impact, not just investor returns. Revenue models should serve the project and the community.

5️⃣ Alignment with Accelerator Goals Wins

Top-ranked projects didn’t necessarily have perfect proposals. What they did have was deep alignment with BIRA’s biodiversity mission — placing biodiversity and ecosystem restoration and protection at the heart of their model.
Insight: Purpose-driven alignment with BIRA's mission often outweighed polish in scoring.

Where Projects Fell Short

Exclusion red flags were dominated by reputational risks:

• False carbon credit claims or inflated baselines

• Coercive practices or unfair contract terms

• Community land loss and food insecurity

• Lack of contract/payment transparency

On suitability, weaknesses included:

• Vague or unrealistic biodiversity goals

• Weak local engagement

• No validated intervention model or track record

Insight: These failures damage trust — not just in the project, but in the entire NbS space.

What the Strongest Projects Had in Common

• High alignment with BIRA’s biodiversity, community benefit, and investment readiness goals

• Strong local engagement and trusted local/ground partnerships

• Multiple revenue channels and openness to blended finance

• Transparent land access strategy

• High-quality documentation and compelling, credible communication of project vision and theory of change

These projects didn’t simply avoid red flags — they told a credible, investable story of enduring biodiversity impact.

Conclusion: Raising the Bar for NbS Projects

The first BIRA review cycle reaffirmed a truth we see across the sector: credible NbS proposals are grounded in clarity, community, and durability. The Red Flag Review isn’t about gatekeeping — it’s about elevating projects with the vision and structure to deliver real change.

For future applicants:

1. Clarify your Theory of Change — show exactly how your actions create your outcomes.

2. Embed your project in community — make engagement the foundation, not an afterthought.

3. Think long-term — diversify revenue, secure land, align with nature-positive investor goals.

In the rapidly growing NbS investment market, avoiding red flags is only the beginning. The real differentiator for nature-based projects is the ability to inspire trust and demonstrate lasting, measurable impact.