To find out, I sat down with Peter Stein, Managing Director of The Lyme Timber Company.

Founded in 1976, Lyme Timber focuses on conservation-oriented forestland investment. Managing roughly 1.3 to 1.5 million acres of third-party certified working forests across the U.S. and Canada, the firm has permanently protected over 900,000 acres of land through highly structured, permanent conservation easements and unique ecosystem services, blending timber harvesting with carbon sequestration and wetland mitigation banking.

Peter Stein joined Lyme Timber in 1990. A graduate of UC Santa Cruz and a former Loeb Fellow at Harvard University, Stein is also the co-founder of the Conservation Finance Network and the International Land Conservation Network.

In this candid conversation, Stein pulls back the curtain on how private equity can design long-duration vehicles, navigate changing regulatory landscapes under the Clean Water Act, and manage the delicate balance between high-yield timber production and “forever wild” biodiversity habitats.

Share

1. How does a private equity fund reconcile a short-term, 10-year investor exit timeline with the multidecadal ecological timeframes required for genuine forest regeneration?

That structural tension is actually what catalyzed our shift. We have done five 12-year term funds, but fund six is an open-ended, evergreen fund for exactly that issue. It is a long-duration fund where we expect we will retain the assets and provide liquidity or redemption pathways for the investors.

In the past, if you had a traditional term fund, all of the assets had to be disposed of and sold by the end of the fund’s term. That was how a portion of the capital was returned, while the remaining capital was returned through the operating revenues associated with those assets.

But with the exception of maybe radiata pine in New Zealand, no tree species grows quickly enough to fit that model. There is no natural consistency or connection between biological cycles and a 10 or 12-year term fund. That is why our new flagship capital vehicle is a long-duration fund.

2. Does the pressure to hit an Internal Rate of Return (IRR) target by year 10 ever force harvesting schedules that are suboptimal for long-term ecosystem health?

No, it does not, for two main reasons. First, all of our forestry operations are third-party certified under strict sustainability standards. If we were to adjust our harvesting schedules simply to chase short-term financial targets, we would risk losing that certification status immediately.

Second, the vast majority of the forestland we acquire is also subject to a perpetual conservation easement. These legally binding agreements permanently restrict the intensity and volume of what can be cut, completely eliminating our ability to engage in that kind of suboptimal harvesting.

3. Critics of the voluntary carbon market argue that many improved forest management (IFM) projects over-credit baseline scenarios—essentially paying landowners not to cut trees they were never going to cut anyway. As an asset manager who blends traditional timber harvesting with carbon credits, how does Lyme scientifically prove ‘additionality’ on properties like the newly acquired 2,800 acres in Western Massachusetts without cannibalizing your potential saw-log revenue?

To be clear, the property we acquired in western Massachusetts is strictly for pure conservation purposes. Because of that, we will not be pursuing active forest management on that land, nor will we be pursuing any kind of carbon crediting.

Regarding the broader question on additionality, our historical carbon credit projects have all been built for the compliance California market rather than the voluntary market. We believe the compliance market is quite a bit stronger and more robust, with far stricter requirements dealing with permanence and additionality than even the improved voluntary market. As a result, we have intentionally stayed on the sidelines and have not been a player in the voluntary markets.

4. If baseline standards tighten globally to require stricter proof of an immediate logging threat, does the financial model for blending carbon and timber remain viable?

Maybe. Part of the issue comes down to the price per ton of CO2. I think, and hope, that the quality improvements in the various protocols will make buyers more comfortable paying higher prices per ton. If that happens, there will be a strong economic justification for implementing advanced protocols—like dynamic baseline activities—to rigorously support additionality. However, at current pricing levels, at least within the voluntary market, the math doesn’t quite work. That is precisely one of the primary reasons we continue to stay out of that market.

5. In hyper-remote regions, how much of an easement’s appraised ‘development value’ is a realistic economic threat versus a regulatory lever used to de-risk investments with public funds?

Easements are based on fairly rigorous real estate appraisals, and that appraised development value is discounted for both risk and time. Because of that, I don’t think we get overpaid in any way.

All of the easement valuations that we do have to comply with the very strict requirements of state and federal agencies. It is important to emphasize that these are not syndicated easement donation transactions; these are purchased easement transactions using public money. Consequently, the rigor of the appraisal review process is quite high at both the state and the federal agency level.

6. What did Lyme’s coordinated liquidation of its wetland and stream mitigation bank portfolio across the US South signal about the regulatory stability of ecological credits?

That is another good question. The U.S. Supreme Court narrowed and constrained the definition of what qualifies as a regulated wetland under the Sackett v. EPA decision. While that occurred about two and a half years ago, the wetland and stream mitigation credit market in the U.S. remains highly robust, operating at about a $3 billion a year scale.

The Supreme Court ruling did not eliminate federal regulation; it simply narrowed the specific landforms that qualify. Essentially, it took isolated wetlands out of the compliance regulatory scheme. However, larger, intact wetland systems and connected water systems are still heavily regulated under the Clean Water Act.

Regarding our recent sales across the U.S. South, we did not actively market or put those assets up for sale. Instead, we were approached directly by a Texas-based buyer who had raised a new fund focused principally on those types of assets. One of their team members had previously worked on some of these specific mitigation banks and possessed specialized knowledge about them. Ultimately, it was a smoothly negotiated sale that we were very happy with, though we would have been equally happy to continue owning and managing those assets.

7. In Europe, the conversation around natural capital is shifting toward passive rewilding and letting natural processes take over completely. In contrast, Lyme’s philosophy is rooted in the ‘working forest’—maintaining human management, roads, and timber extractions. From a conservation biology standpoint, what are the ecological limitations of a working forest easement?

There are limitations, and I can give you a clear example of how we address them. We structured a very large working forest conservation easement on the Connecticut River Headwaters property in northern New Hampshire. The Connecticut River starts right at the US-Canadian border and flows 400 miles all the way down to Long Island Sound.

Because some of the land within that massive boundary consisted of high-elevation, ecologically sensitive habitats, the easement actually zoned about 20% of the property away from any kind of active management. You could call it a “forever wild” easement on that 20% portion, while allowing sustainable, active timber management on the remaining 80%.

So, areas with high biodiversity attributes, challenging topography, or critical habitat for threatened and endangered species may not lend themselves to an active logging strategy. When we do acquire those kinds of sensitive lands, we typically execute one of two strategies: we either refine the conservation easement to establish a “forever wild” zone over that specific area, or we sell that portion of the land outright to a conservation organization or a state or federal natural resource agency.

8. What functions do we lose when an investment mandate requires a forest to remain economically productive?

We are managing forests that have already been managed for a very long time. Because of that, I would argue that we are actually, in many ways, improving the ecological function of the forest through active management.

We do not own old-growth forests, nor are we looking to harvest them. The forests we acquire have been managed going all the way back to indigenous times, when native communities shaped them with both active management and controlled fire, and we are essentially continuing that practice.

If we were high-grading the forest, over-harvesting, or failing to abide by the strict sustainability criteria of the Forest Stewardship Council (FSC) and the Sustainable Forestry Initiative (SFI), then I think you would see a loss of function. But under our approach, I am completely comfortable that we are improving the ecological condition of the forests we own.

9. With institutional capital making up a larger share of your latest fund, how do you prevent traditional fiduciary pressure to maximize returns from diluting your strict conservation standards?

We are not owned by a financial institution, so we don’t face pressure to dramatically increase our assets under management (AUM). We have been very consistent with our strategy for the last 30 years.

Because of that track record, we don’t get that kind of pressure from our institutional investors. LPs invest with us with a clear knowledge of our past performance. Furthermore, as limited partners, they have no governance role; they do not get to comment on or influence our specific acquisition plans or forestry methodologies. So far, they have been very happy with both the financial and ecological returns.

10. Lyme recently collaborated with the Sustainable Forestry Initiative (SFI) and university researchers to map songbird habitats and track biodiversity data. As an asset manager, how do you translate these raw biological metrics into financial risk reduction or a premium that institutional investors actually value?

There is actually a modest premium available right now. Some of our log takers and end users pay us a financial premium for harvest products that come off our lands because the vast majority of our acreage is dual-certified under both the Forest Stewardship Council (FSC) and the Sustainable Forestry Initiative (SFI). We see those direct premiums in markets like Michigan and New York.

Beyond direct premiums, this biodiversity data actively shapes our on-the-ground management plans to mitigate environmental risks. For instance, standard state Best Management Practices (BMPs) might only require a 25-foot buffer next to a stream, but we might use our songbird and habitat mapping data to expand that setback to 1,000 feet to protect a sensitive breeding corridor. Similarly, that data helps us identify specific, fragile portions of a property where we should restrict operations entirely to frozen-ground, winter-only harvesting to eliminate any serious risk of erosion or streamside habitat damage.

As for translating these metrics into distinct financial assets, we are still at the very early stages of what you might call “nature credits” or “biodiversity credits” in the United States. That space is far more advanced in Europe and the UK. While this raw biological data could potentially back those kinds of credits in the future, that compliance market doesn’t really exist yet in the U.S.

11. Lyme Timber recently celebrated its 50th anniversary, and you have noted that the conservation finance field is growing highly sophisticated with tools like environmental bonds. Looking ahead to the next 50 years, do you see private capital eventually making public funding for land conservation obsolete, or will public tax dollars always have to serve as the bedrock of large-scale deals?

I think there will always, always, always be a need for public money, particularly for the permanent preservation of land. Even with the emergence of nature credits or biodiversity credits providing an additional income stream, I don’t think they will ever completely replace state, local, or federal government funding.

If you want to dig further into that dynamic, there is a remarkably robust database called LandVote (landvote.org), maintained by the Trust for Public Land, which tracks all the public conservation finance ballot measures and funding available at every level of government in the United States. We use that resource extensively to assess where we should be investing, ensuring that there is a reliable pool of public capital available to fund the conservation easements or fee-simple acquisitions we plan to execute.

#TheLymeTimberCompany #PeterStein #ConservationFinance #Workingforest conservationeasement #Privateequityinconservation #biodiversitycreditsUS market

In the United Kingdom, a nation that has hollowed out its own landscape until it rests in the bottom ten percent of the world’s most nature-depleted countries, this gridlock is fatal. Mainstream politicians treat the environment as a luxury hobby, acting as if the economy can somehow float entirely detached from the dirt beneath their feet.

“Conservation is not about nature, it’s about us,” Ben Goldsmith tells me. “Nature will be fine, it will rewild itself. It’s just a question of whether it does so with us or without us.”

Goldsmith is a walking contradiction. He’s a nature romantic born into a dynasty that straddles radical ecology and elite finance. Yet he deliberately talks like a right-wing financier—all property rights, deregulation, and private equity returns—to pull off environmental victories that usually belong to the left. His company, Nattergal, is built for this middle ground. In the UK, data compiled by the Green Finance Institute reveals a staggering domestic shortfall. Halting and reversing the nation’s nature decline over the next decade requires an estimated £44 billion to £97 billion in total investment. This exposes a massive funding gap, with a central estimate of £56 billion over the decade, or roughly £5.6 billion annually, far above current public sector commitments.

So, Nattergal, a nature-based investment company, buys degraded land to carry out large-scale ecosystem restoration and rewilding projects, generating private carbon and biodiversity credits. The company pools private capital from high-net-worth investors and major financial institutions like Aviva to purchase large tracts of ecologically degraded agricultural land across the UK and Europe. Once secured, they then deploy process-led rewilding techniques—such as restoring natural wetlands and reintroducing keystone species—to transform these dead zones into thriving ecosystems.

To deliver a sustainable financial return to its backers, Nattergal monitors this environmental recovery and sells the resulting ecological data as verified credits. They sell biodiversity credits to corporate property developers who are legally mandated by UK planning laws to offset the footprint of their construction projects, while simultaneously selling the carbon credits on voluntary markets to major blue-chip corporations, such as British Airways, striving to meet net-zero sustainability goals.

Goldsmith’s argument: We cannot wait for a socialist utopia or a post-growth awakening. We must use the financial mechanisms we have right now to buy the biosphere some time.

But the second private equity touches a living ecosystem, the political ecologists push back hard.

Professor Bram Büscher, a political ecologist at Wageningen University, calls this “Nature™ Inc.” To him, it’s a technocratic politics of resignation—the sad assumption that we can only value nature by squeezing it onto a corporate spreadsheet.

Büscher’s research in political ecology reveals an inherent tension between capital, defined as “value in motion”, and the embedded, holistic value of an ecosystem. For an environmental market to work, nature must be transformed into an abstract, liquid asset that stays in motion to generate financial returns. This market logic forces an artificial “unbundling” of the landscape, in which financial engineers mechanically slice a forest’s carbon storage away from its native biodiversity or watershed health, just to invent separate, tradable tokens. But real ecological health is integrated and deeply local; compressing it into an isolated transaction is, as critical economists warn, a violent reductionism.

“The idea that we should [put a price tag on Nature] is actually quite absurd,” says Büscher. Trying to “make nature an investible asset class”—which is Nattergal’s purpose—is precisely the problem, it’s not the solution, stresses Büscher. “It’s the wrong [capitalistic] logic. It’s the same logic of the problem that they want to use for the solution. As Einstein already reminded us, this is foolish.”

Büscher points out that just because nature is managed and conserved relatively well in some places does not mean that somehow the destruction elsewhere is ‘offset’ if capitalists pay for it. The reality is that the global protected area space has increased rapidly over the past 60 years; at the same time, climate, biodiversity, and pollution crises have gone from bad to worse.

Besides, Büscher reminds us of a brutal macroeconomic rule: under capitalism, destruction makes more money than conservation. Extractive industries always command higher margins. If you rely on market mechanisms, restoration will always be a minor, defensive counterweight to a system that is net-destructive.

This standard macroeconomic calculus, however, is precisely what the World Bank is currently attempting to re-engineer. In its recent report on Nature-Based Solutions (NBS) for Climate Resilience, the Bank attempts to legitimize exactly what private outfits like Nattergal are doing on the ground. The World Bank explicitly redefines intact ecosystems as structural, cost-effective alternatives to conventional “gray” infrastructure. If you can standardize the metrics for risk mitigation—proving exactly how a restored wetland prevents millions in flood damages or stabilizes regional farming—you can tilt the macro-fiscal models. The goal is to prove that when you factor in long-term climate shocks, conservation actually beats extraction on a financial ledger.

However, this institutional adoption of nature-as-infrastructure raises a deeper concern within environmental anthropology. Professor Sian Sullivan, an environmental anthropologist at Bath Spa University, provides a warning that cuts straight to the bone of both corporate rewilding and global development frameworks. She calls the whole trajectory “Banking Nature.” Global capital converts intricate, living landscapes into accounting metrics, creating what she calls “numerical fairy tales.”

Sullivan’s work analyzes the core accounting principles required for ecological markets to scale, particularly the mechanism of “geographical substitutability”—the idea that an abstract unit of ecological health generated in a habitat bank in one region can offset the physical destruction of a different ecosystem elsewhere. Once these local realities are flattened to tradeable tokens, financial engineers can build secondary investment frontiers—“Nature Derivates”—where investors speculate on environmental data points completely uncoupled from the dirt.

The result, Sullivan warns, is a form of “Green Grabbery.” To secure these newly minted financial assets for international buyers, the land must be enclosed and monitored. This process alienates the local and indigenous communities who have historically coexisted with and managed those spaces. When a forest becomes a bankable asset class to satisfy a corporate ESG balance sheet, the deeply localized registers of human care, cultural memory, and reciprocal relationship with the land are erased and are replaced by an abstract matrix of tradeable numbers. It’s mathematics, maybe, but it’s not ecology.

But Mark Gough looks at the problem and sees an iceberg. Gough is the CEO of the Capitals Coalition, an umbrella organization representing 13,000 entities trying to standardize how the world measures things outside of pure money. To him, the current system is a structural illusion. “At the moment, everything is bundled into a financial bucket,” Gough explains. “And what we’re not doing is we’re not seeing behind that number… about 80% of it is like an iceberg. We only see the top. We’re not seeing all of the natural capital, the social capital, the human capital that goes into creating that produced capital.”

Gough’s mission is to use capital accounting rules not to shrink nature, but to blow up the financial monolith from the inside. When I push him on the warning raised by political ecologists regarding corporate demands to “unbundle” ecosystems into fragmented, tradeable tokens, he handles it like a data realist. To him, the Capitals Coalition is a framework to organize information, not to invent financial products. But he acknowledges the slide toward shadow pricing and volatile biodiversity credits.

The defense against reductionism, Gough argues, is shifting the definition of the ledger from market price to human value. “By value, I don’t mean money,” he says firmly. “I mean the relative importance and worth of something… If you’re in a desert and you see a glass of water, that has a higher value to you.”

To enforce this, his coalition has just launched the Impact Value Standards Board to harmonize global accounting rules—ensuring any corporate nature pricing is transparent and consistent, like financial reports. If companies are forced to put nature on the books alongside people, Gough argues, you automatically build in safeguards against “Green Grabbery.” The unfair treatment of local people happens when you look at finance or nature in isolation. “There’s no point in putting in renewable energy in an area and kicking the people out,” he notes. “It’s just as bad as putting in oil and gas and kicking the people out.”

But can a voluntary corporate protocol genuinely protect the global commons, or is it just an elite stalling tactic?

Gough views voluntary frameworks as the necessary sandbox to prove the concept before the state steps in. The gap between corporate profit and planetary cost is widening rapidly; he points out that Europe’s top three food and beverage giants pulled in €8 billion in profits last year, while generating a staggering €20 billion in unpriced environmental and health externalities.

The market, as it stands, is failing most people. And that is why the regulators are now knocking on Gough’s door, rather than the other way around. He is currently sitting with the Institute of Chartered Accountants to embed nature directly into internal corporate control mechanisms. Developing nations are no longer begging international lenders for financial mercy. By using this new accounting model, countries are showing up to debt negotiations with a new kind of leverage. They are demanding that institutions like the IMF calculate the economic value of their forests and ecosystems, arguing that their environmental wealth should be used to rewrite the terms of their financial debts.

For Gough, the ultimate goal isn’t making nature fit smoothly into a growth-obsessed economic machine. It’s a subversion strategy.

“If I’m talking to people… on Wall Street, then it’s definitely just an update to their present economic system,” Gough admits with a smile. “But don’t tell anyone, but it is actually a Trojan horse. If we get these things in, the whole system changes. Because if you have to make sure that there is a return in nature as well as in finance and a return on people… the whole economy changes. And these changes will be a jump, will be a leap. It’ll flip overnight.”

This brings the debate back to Professor Robert Costanza, the founding architect of ecological economics, who thinks the competing factions are misdiagnosing the very tools they are fighting over.

In his paper, Misconceptions about the valuation of ecosystem services, Costanza shatters the idea that pricing nature is a capitalist surrender. “Every time we make a decision about how to deal with natural ecosystems, we are implicitly valuing them,” he says. Treating nature as “priceless” doesn’t protect it from bulldozers; it makes it economically invisible. When an ecosystem’s recorded value is zero, it gets paved over for GDP growth every single time.

When I confront Gough with the academic viewpoint that putting a price tag on nature feels absurd and awkward, he points to the reality on the ground. “We already price nature. We price nature every day, and everything is priced to zero,” he says flatly. He points to corporate giants like Olam Food Ingredients, which are already forced to spend millions annually just to buy and truck in artificial pollinators because local ecosystems have collapsed. The price is already hitting the ledger; accounting just makes the corporate authors own it.

Yet, Costanza’s defense of natural capital is also a critique of Nattergal’s corporate structure and the World Bank’s market models. Natural capital is fundamentally a public good. It is non-rival and non-excludable. You cannot treat it like built real estate with predictable depreciation curves. Buying land deeds, enclosing spaces, and trading unbundled credits is a volatile, ill-fitting use of market mechanics. “Markets are not really a good institutional mechanism for managing and allocating natural capital,” Costanza notes. He doubts Nattergal’s conventional business model can even generate the long-term returns its private backers expect.

Costanza suggests a different architecture: the Common Asset Trust. Stop looking for private equity. Stop creating speculative offset markets that let big oil delay decarbonization. Instead, the state declares the atmosphere and biosphere a shared commons held in trust for the public. The state legally charges polluters for the quantifiable damage they do to the commons, and those locked funds go directly into community-led, public ecological restoration.

Which leaves us with the ultimate, haunting question: how does civilization actually work away from a growth-obsessed economy toward a sustainable well-being model?

A genuine shift away from the paradigm of material accumulation would probably require immediate existential crises or a massive civilizational awakening.

But because neither a managed global economic contraction nor a sudden civilizational awakening is poised to occur easily or anytime soon, natural capital emerges as an imperfect, indispensable life-support system. By forcing modern markets to internalize the value of ecosystems right now, operations like Nattergal act as a desperate triage unit. They exploit the financial architecture of the present to buy our species time—keeping habitats intact before everything collapses, while society slowly, painfully figures out how to get its act together.

While Nattergal operates with commercial precision, Goldsmith’s own psychological anchor to the wild has nothing to do with green finance. At his family farm in Somerset, he has spent years restoring the landscape into a biodiverse sanctuary entirely out of private devotion and a raw love for nature. This land became his sanctuary after the tragic loss of his eldest daughter, Iris. To cope with that deep grief, to keep his spirit anchored and stay grounded, Goldsmith has a quiet ritual: he regularly takes a swim in his farm’s wild pond.

“The loss of my daughter… is something that I’ve been able to cope with better because of my love for nature,” he says softly. “The recovery of these natural processes and the return of species abundance… has been the most important thing in my life during these difficult years.”

Can true, unpredictable, self-willed rewilding ever genuinely coexist with the rigid data metrics and quarterly returns of global capital? Or will market forces inevitably pressure entities like Nattergal to compromise the untamed freedom of the wild, pushing it back into a tightly managed institutional framework to guarantee investor yields?

Decades from now, looking at a restored landscape, Goldsmith won’t be measuring success by a bureaucratic spreadsheet. He wants a sensory return to something we’ve forgotten. “Humans have lost touch with what abundance feels like,” he says. “Our landscapes are meant to be full of life. For me, the most important aspect above all else is a return of bio-abundance. If we’re going to save nature, we need to re-enchant.”

Whether that re-enchantment can happen tied to the language of property rights and asset accumulation is the unresolved gamble of modern conservation. Goldsmith’s commercial work offers a fast mechanism to exploit a broken system before time runs out.

But as he steps into his wild pond in Somerset—a landscape protected not by corporate accounting or credit metrics, but entirely by his profound love for the wild—the warnings of political ecology, the frameworks of ecological economics, and the haunting specter of green grabbery hang heavy in the air.

They leave you wondering whether his commercial work with Nattergal is successfully smuggling a Trojan horse into Wall Street to change the global economic system overnight, or if the growth-obsessed system will ultimately win, turning the last sacred uncommodified remnants of our living planet into capitalism’s final financial frontier.

#NaturalCapital #Nattergal #Rewilding #BiodiversityNetGain #BNG #GreenFinance #BiodiversityCredits #EcologicalEconomics #Environmental Anthropology #Political Ecology #CarbonCredits #FinancializationofNature #PrivateCapital #PrivateEquity #BenGoldsmith #BramBüscher #WorldBank #SianSullivan #MarkGough #CapitalsCoalition #RobertCostanza#UK #UnitedKingdom

Like what you read? Subscribe to this free newsletter to get every new post delivered straight to your inbox.

The natural world remains the sole source of every human economic system, yet we have allowed that foundation to fracture. We have forgotten to maintain the ecological balance, and as a result, the whole system has now begun to come crashing down upon us, imperiling our future alongside the millions of other species with whom we share the planet. Having already played a role in the staggering decline of countless species and the disturbance of nearly every ecosystem on the globe, we are now at a crossroads: can the same financial systems that fueled this destruction be retooled to fix it?

The concept of the carbon credit was born out of a global realization that the atmosphere is a finite resource. It began in earnest with the 1997 Kyoto Protocol, which established the “Clean Development Mechanism.” This turned a ton of avoided or captured carbon dioxide into a tradable commodity. The goal was to put a price on pollution, incentivizing companies to aggressively lower their emissions, while providing a mechanism to fund the restoration of carbon sinks for the emissions they cannot yet eliminate.

Over the decades, this evolved into the Voluntary Carbon Market (VCM). Today, it serves as a vital link between the private sector and the massive financial resources needed to protect and restore our remaining ecosystems. While the heaviest industrial emitters are often governed by mandatory compliance markets like the EU ETS, the VCM allows a broader range of companies to fund large-scale restoration.

However, in the climate world, a forest is often described as a “leaky battery” – a temporary storage unit for carbon that could, at any moment, go up in smoke or succumb to a chainsaw. For the world’s most conservative institutional investors, nature-based solutions have long suffered from a lack of scale; reforestation projects were simply too small to provide the robust business model required to attract considerable impact capital.

But Fabio Ferrari and Fabiola Flex, the leadership duo behind aDryada – a French business firm that scales ecosystem restoration across the globe by transforming nature into bankable infrastructure-like assets – are determined to change that narrative.

aDryada functions as a high-stakes developer at the heart of the carbon market. The firm identifies degraded or threatened landscapes, secures 40-to-60-year land concessions, and then applies an industrial lifecycle—”Origination, Feasibility, Design, Development, and Operation”—to restore the land. The company generates high-quality carbon credits, which are rigorous, data-backed proofs of environmental restoration.

Once these credits are certified against international standards, aDryada sells them to corporations seeking to meet net-zero targets. In essence, aDryada acts as the engine that converts corporate climate liability into permanent natural assets.

This industrial approach only functions because corporate sentiment has reached a tipping point; as Flex points out, without corporate buy-in, the model would lack a viable market. Today, demand is driven by companies that view a “nature-friendly” status as a vital competitive advantage for attracting young talent, and firms proactively preparing for a future of more constrained environmental regulations.

“It’s really a lack of an industrialized approach,” says Ferrari, CEO of aDryada, when asked why nature-based solutions haven’t reached the multi-billion-dollar scale of solar or wind power. “Having something that you can finance at scale means that you need to apply this infrastructure approach – to cover the risk, to do large studies, to be in line with the government.”

This strategy is supported by significant funding. In partnership with Ardian, a major global investment firm, aDryada established the Averrhoa Nature-Based Solutions Fund. With a €1.5 billion target, the fund provides the financial scale required to invest in restoration projects covering 500,000 hectares worldwide.

Ferrari rejects a “one size fits all” strategy, opting instead for a biome-by-biome approach. This means tailoring every project to the specific ecological and social realities of the landscape. Their current portfolio includes massive undertakings in the Congo Basin of Gabon, the mangroves of Southeast Asia, and the biological corridors of Brazil. Each project is designed to be a permanent fixture of the local economy.

For aDryada, this “industrialized” model begins with a rigid adherence to what Flex calls the “regulatory stack.” As aDryada’s Head of Public Affairs, Flex is focused on the Core Carbon Principles – the global “quality floor” for credits.

“Quality standards are always the same and always the best ones,” Flex explains. “We will always apply and be in line with these core carbon principles and all the mechanisms they define to increase permanence formally.”

“We are working with insurance companies that can insure these kinds of contracts,” says Ferrari. Through the integration of political risk insurance and multilateral guarantees—often involving the Multilateral Investment Guarantee Agency (MIGA) of the World Bank—aDryada converts what was once a simple “nature project” into a de-risked institutional-grade investment asset. These legal frameworks, including Verified Emission Reduction Purchase Agreements (VERPA), provide the long-term price certainty and security that institutional “big money” requires before entering the landscape of the Global South.

When challenged on the physical risks—like wildfires currently ravaging the planet—Ferrari remains unfazed. He argues that human pressure, not fire, is the only truly irreversible threat. “If you have a fire, you’ll be sure that if you leave the forest like that, it will regrow as it was before,” he says. “The only thing that is not reversible is human pressure.”

While carbon is the current currency, aDryada is already looking toward the next evolution of environmental finance: Biodiversity Certificates. Through the Organization for Biodiversity Certificates (OBC), which aDryada co-founded, they are building a framework to fund the “hidden costs” of conservation that carbon markets often ignore.

“Carbon credits are a perfect tool to help finance reforestation,” Flex notes, “but when we have to preserve a forest for conservation, it’s only a cost for us because we do not generate any carbon credits on any nearby conservation park.”

To reward the implementation of “best practices” for biodiversity–such as leaving dead wood in the forests, generously paying the guards who protect the parks, among others–they are launching a dedicated biodiversity certificate that moves beyond the traditional method of simply counting heads. “We address the point not looking at the insects that you are going to count, but more on the practices that you apply on the land,” Ferrari adds.

One of the most persistent criticisms of carbon projects is the “exit risk.” What happens when the credits are sold, and the developers leave? Who pays for the rangers and the drones in year 50?

aDryada’s answer is a “Capital Endowment Model.” A portion of every dollar earned is funneled into a dedicated trust fund. “What we do is create a trust fund that will generate revenues that will pay for the protection of the park, ad vitam [for life],” Ferrari explains.

This long-term financial sobriety is what aDryada believes will move the needle from localized victories to a global industrial shift. While the world debates whether 2.0°C is a success or a failure, Ferrari is focused on the math of the possible.

Regarding the future of the sector, Ferrari is blunt. For a young entrepreneur wanting to start the “next aDryada,” he suggests studying high finance, not just ecology. Without understanding the math of the possible, restoration remains a small-scale hobby rather than a global solution.

“Once you have transformed a forest into a parking lot, it is much more difficult to have trees again,” Ferrari warns. His mission is to make sure that the “parking lot” never wins by making the forest more valuable – and more bankable – than any concrete slab could ever be.

“There is no success or defeat on the climate,” Ferrari concluded. “Every small part of degrees is a success. Every little thing that is done is good for the planet.”

#aDryada #FabioFerrari #FabiolaFlex #Natureasinfrastructure #ICVCM #Naturebasedsolutions #Makingnaturebankable #VERPAcarbonmarket #Industrialscalereforestation #carboncredits #France

Like what you read? Subscribe to this free newsletter to get every new post delivered straight to your inbox.

Faith’s impact reaches beyond her daily work at Brunel. In 2020, Brunel approved her to devote some of her time to chairing the Institutional Investors Group on Climate Change (IIGCC), helping guide the organisation’s support for investors managing trillions of dollars. She also co-founded the Transition Pathway Initiative (TPI), a practical tool showing which companies are delivering on their climate objectives and which are not. She was also appointed to the UK’s Transition Finance Council, where she serves on the Strategic Steering Committee and chairs its Scaling Transition Finance Working Group.

Her work has also been officially recognised. In 2025, she was awarded an MBE for services to pensions and the environment. Whether speaking at COP or advising the Church of England on ethical investment, Faith is known for a practical focus on transparency and responsible growth.

Share

1. Why is Brunel Pension Partnership closing up?

Part of the government’s pension reform agenda in the UK is to consolidate pension provision across both the defined contribution and defined benefit schemes - including the LGPS. And they’re moving from eight pools of assets to six pools of assets. So, two of the existing pools are being disbanded and their clients are being redistributed across the other six pools. In our case, the assets are going to three of the remaining six pools.

2. You wear many hats: Chair of the IIGCC, CRIO at Brunel, and Working Group Chair for the UK Transition Finance Council. When these roles inevitably have different ‘tempos’ or priorities, how do you decide which ‘Faith’ gets the final say on where to push the hardest?

The roles I accept have strong synergies. The work of the IIGCC and the Transition Finance Council intersects with Brunel’s work because they influence how we can encourage or amplify financial flows across the economy, particularly in hard-to-abate sectors. Brunel is my primary role, in a highly regulated environment with a clear framework—most notably fiduciary duty to the partner funds of the Brunel Pension Partnership. The other roles help us deliver the climate strategy Brunel has defined. When I’m acting as Chair of the IIGCC, I have separate obligations to act in the best interests of IIGCC and its members, and the relevant legal frameworks help you navigate those duties. Fortunately, I haven’t been put in a position where views on any of those issues have been diametrically opposed—but I sometimes don’t get much sleep.

Occasionally, when you want to be clear which hat you’re wearing, and you’re being asked a direct question, I’ll say, “Speaking in a personal capacity…”, or “Speaking as Chair of IIGCC, our members’ views are…”, or “Speaking from Brunel, our views are…”. If I feel that a position is particularly pertinent, or the question relates to one of those roles, I will prefix my answer so there is clarity about which hat I’m responding with, and to eliminate conflicts or concerns. These organisations have complementary but not identical views, and the workload peaks and troughs at different times. It was a good question to make me think about how I do that, often subconsciously.

3. You’ve mentioned the need to regain the narrative on net zero and connect it to people’s day-to-day lives. If you had to explain the Transition Pathway Initiative (TPI) to a pension beneficiary in 30 seconds without using the words ‘carbon,’ ‘alignment,’ or ‘mitigation,’ how would you describe it?

In summary, it creates transparency on the companies with the biggest climate impact: are they doing what they say they will do, and is their pathway credible?

4. How do you reconcile the Financial Markets Law Committee’s view on fiduciary duty with the practical “tracking error” risk of being Paris-aligned while the broader market remains unaligned?

The first thing to say is that we strongly support the FMLC’s definition of fiduciary duty, and thinking about it over a much longer-term, whole-portfolio, more systemic way underpins Brunel’s approach to how it thinks about climate change. That helps when you look at the practicalities and how that rolls down into what you’re doing. Different asset classes will have different degrees of freedom in how they are using tracking error: if it’s a listed product, if it’s active—the cadence will be different for different products and different parts of the portfolio. We believe there’s a market failure in the mispricing, or the inconsistent pricing, of climate risk in assets within an index.

Paris-aligned indices are not a perfect solution to achieving net zero, but they are one mechanism for correcting mispricings and introducing factors that better reflect climate risk. They are a useful reference point, but an index does not always drive the behaviours we need to meet our fiduciary duty, and we take a longer-term time horizon.

This is particularly pertinent given that funds that have a strong climate or sustainability focus have struggled with financial performance because some of those fundamentals aren’t being rewarded by the market at the moment. We have some strange market dynamics underway. But we don’t react by simply changing our managers or changing our strategy. We believe that these products and how we’re investing are consistent with our fiduciary duty. So, in the short term, that looks like underperformance to some of those mainstream indexes. But we think that’s consistent with the risks that we’re trying to manage in a more holistic way, because we think the market itself isn’t capturing the full risk framework and all the risks that are relevant to fiduciary duty from our perspective.

5. Under NZIF 2.0, how do you technically distinguish a ‘transition-aligned’ high-emitter from one that is simply using carbon accounting to greenwash its footprint?

The Net Zero Investment Framework (NZIF) is now on version two. Brunel helped to co-fund and co-create the first NZIF framework. Using the net-zero framework is much more holistic than carbon accounting alone. There are multiple data points that you’re looking at when evaluating a company or a portfolio. The NZIF methodology covers how you think about the portfolio in a much broader sense. While NZIF cannot eliminate the risk of greenwashing across all companies, it ensures you’ve considered many dimensions. It makes it harder for a company to obscure how it’s performing, including by using accounting mechanisms to look better than it is, because the NZIFs surface issues in different ways.

NZIF 2.0 shifted the focus from financed emissions and the climate intensity of a portfolio or an individual company to its level of alignment: how it aligns with its sector, its pathway, and its direction of travel. That forward-looking view matters more than backward-looking metrics, which can be influenced by many factors—not least currency risk, profit margins, revenues, and other dynamics. Those factors can change headline metrics in ways that, if considered in isolation, can be misleading about the risk presented by a company.

Using NZIF as a more holistic approach helps combat that and gives more accurate results. Many of these approaches are still evolving. These frameworks are a useful part of the toolkit, and they will continue to evolve as techniques improve.

6. Brunel prefers “persuasion” over “divestment.” Beyond voting records, what data points do you use to technically prove that Brunel’s specific engagement—rather than broader market pressure—was the catalyst for a corporate strategy shift?

That’s a question that vexes the industry: how do you demonstrate the value of engagement and whether it has delivered real-world change? It’s also one of the challenges TPI sought to address. Tools like the management quality framework set out what robust climate governance looks like. As companies move up that framework, you often see improved transparency and decision-making, which is an engagement outcome in itself.

We also use Climate Action 100+ as a framework as a starting point for assessing the Climate Action 100 companies in which we invest and how they’re progressing on climate indicators. We have a series of indicators that we choose to do more enhanced engagement on, but we also see divestment as part of the toolkit. If we feel that the companies are not progressing in a manner we think is consistent with the risks they present to the portfolio, divestment is one of the options that we will use, but we use it on a selective basis, rather than trying to avoid whole sectors. Those sectors may have many challenges in achieving net zero or decarbonisation reductions at the speed that we might like in other sectors, but they may be critical to delivering the transition. Minerals and mining is a classic example. It’s an industry that has many challenges in decarbonising its own operations—it can, but to a certain point—but it is likely (with the economically viable technology we currently have) that in many instances it’s not going to hit net zero. Yet a lot of the commodities and extractive components that are coming out are vital to the ability of other industries within this value chain to help achieve net zero objectives more broadly.

There are tensions to manage, including how you differentiate what is driving change. We have seen positive shifts, but it remains hard to attribute outcomes—real-world or financial performance—to a single investor or even a group of investors.

7. Given the high volatility and poor quality of Scope 3 emissions reporting, what technical “red lines” have you added to your manager selection and monitoring process to ensure data-driven accountability?

I am not sure I would call it a red line, but we do expect a manager to have the capability to understand a company’s value chain and the risks within it, as for some companies this can be 80% of the climate impact but the data is currently unreliable. For scope three emissions, the key requirement is that the manager has done their own analysis across the full value chain and can evidence those conclusions, so there aren’t hidden climate or other systemic risks being missed.

We expect similar value-chain assessments for human rights, nature, and other material issues—not just a view of a company’s own operations, but the factors that could affect its strategy, future investment needs, and the thesis for owning it.

In selection and monitoring, we also need managers to communicate those assessments clearly and back them with evidence, so we can see they have the competency to evaluate and manage these risks.

8. With the expansion of the ASCOR framework to 85 countries, how does Brunel technically integrate sovereign climate risk into multi-asset portfolios? How do you adjust the “cost of capital” for a sovereign issuer based on their climate performance?

We use ASCOR in our climate progress reporting primarily as a KPI for monitoring our policy advocacy, which is focused on the UK government. We therefore track the UK’s sovereign performance as our ASCOR reference point. We don’t hold significant sovereign debt outside the UK, so we don’t use ASCOR as a portfolio risk tool in that way. Where it is helpful is in understanding the sovereign context in which corporates operate—how robust the underlying state is, and what constraints or opportunities exist—which can affect a company’s capacity to act on climate.

9. You’ve advocated for a “safe space for mistakes” in transition investing. From a risk management perspective, how do you technically define the “boundary of acceptable failure” for an innovative green technology investment?

Not just in transition investing—I made that remark recently in relation to nature and trying to invest more in nature-based solutions. It was recognising that mistakes are an inevitable component of innovation. If we want people to behave differently and invest differently, innovation and new approaches will bring missteps and lessons learned. We need to build on those and create an intellectual safe space for people to experiment in some of those areas.

From an investment perspective, that can be helped with diversification. You could look at more innovative technologies but then have small allocations across a broad list of innovations that are trying to tackle certain problems. You would still use normal investment and financial techniques to diversify and manage the risks to financial performance. When looking at innovative technologies, not all of them are going to succeed. It’s part of that investment that there are going to be winners and losers along the way.

So, it’s recognising that we need to be more compassionate toward those who gave it a try, who attempted to do things differently, and not make it so that the risks are overplayed, particularly reputational risks. We should be encouraging risk-taking, not discouraging it.

10. As Chair of the Scaling Transition Finance Working Group, what is the single biggest regulatory or technical barrier preventing institutional capital from flowing into heavy industries like cement and steel at the required scale?

Capital is flowing into these areas, but there is a financing gap in deploying it at the scale required. The Transition Finance Market Review concluded that the key barrier is clarity on what “credible” transition finance means—without a shared definition, it is harder for institutions to allocate capital with confidence.

That’s been a core focus of the Transition Finance Council: producing guidance that can work across asset classes—banks’ lending, insurers’ underwriting, and asset managers’ activities—so firms are working from a common baseline when assessing transition credibility.

The guidance also recognises that definitions alone aren’t enough: credibility needs a reference point. Sector pathways provide that, because what counts as credible varies by sector and context. A further component is co-created sector transition plans, with finance embedded in how those plans are developed. Together, the guidance and pathways create a way to assess whether a company has an endorsed plan of action and is moving along its pathway, relative to its sector and country.

And transition finance is very focused on heavy industries. That’s where we’re trying to get more money to flow into solutions and to see that as an essential component of a company’s climate strategy and climate risk management: providing capital to decarbonise those hard-to-abate sectors.

11. With the rollout of SDR (Sustainability Disclosure Requirements) in the UK, what is the most significant “technical gap” that pension funds still face when trying to report on nature-related risks versus carbon-related risks?

SDR is there to protect retail investors and to make sure that when they’re being sold a product, it does what it says on the tin, and that it is authentic and meets the expectations of those investing in it. The SDR process is trying to provide robustness to the sustainable finance sector.

On nature-related risk reporting, the challenges—and in climate risk reporting that you flagged—are technical challenges. With climate, you do have a consistent unit of measure: carbon dioxide or carbon dioxide-equivalent, so you’ve got a measure you can utilise across multiple sectors and contexts. Nature is multifaceted and place-based, so the relativity of that risk is different in each context. I think the technical gap is how do you make nature-related risks more easily measurable and comparable? There’s more data to process to come up with an evaluation in the same way you would for climate, but we are getting there.

We have to be aware that quantification alone doesn’t answer the question and can lose nuance. You still need the qualitative narrative to ensure that you’re not focusing on the numbers, but thinking in a more holistic sense about where that company is going, what it’s doing, and how it’s thinking about those risks, to make sure there aren’t unintended consequences.

12. If you could fix one “boring” piece of financial regulation that currently acts as a friction point for climate-aligned capital, which technical mechanism would you target first?

This gave me food for thought because I realised there are many different small things that get in the way. Some of them aren’t boring, and most of them certainly aren’t simple fixes. One of the areas that we’ve been working on within the Transition Finance Council is around clarification of fiduciary duty, particularly for pension funds when they consider climate risk.

One current piece of financial regulation specifies timelines or timescales around which funds should consider investments. Currently, within investment regulations, it could be interpreted that, particularly for defined benefit funds that are trying to move to buyout, their timeframe is constrained by the length of that particular instrument, rather than the beneficiaries of the fund who would benefit from the investments.

So, we are thinking about shifting the investment time horizon to be more linked to the beneficiaries’ lifetimes rather than the instrument in which their investments are being held. This is particularly pertinent for funds where a buyout might be part of the strategy. That is not to say the near-term timeline isn’t relevant, but it’s not the only factor that should be considered when looking at longer-term risks to those invested in the fund.

So in summary, the answer is the definition of investment time horizon—the guidance provided to trustees in looking at that time horizon—that we are advocating be reviewed and clarified. We would recommend that it’s linked to the demographics of the beneficiaries rather than the time at which the fund intends to go to buyout.

13. How does it feel to be managing trillions of dollars in finance? Does it all come naturally with experience, given how long you’ve been working in this sector?

Brunel manages around 45 billion dollars in direct assets. This capital is provided by the administering authorities, which have obligations to pay pensions to members of local authorities and the Environment Agency Pension Fund. That responsibility drives robust risk frameworks and strong internal challenge in decision-making. It’s also a team effort, which helps ensure these risks are shared and managed rather than resting on one person’s shoulders.

Within the IIGCC, that expands to about 65 trillion in assets we are helping members to steward and decarbonise, in line with their fiduciary duty and climate objectives, and for asset managers the client expectations. That brings a strong sense of responsibility: we are investors first, so the investments must deliver returns, while we also make the best use of our ability to support our partner funds and their beneficiaries in investing for a world worth living in.

That said, private capital cannot solve all of the world’s problems. It can make a significant contribution, but it has to be part of a broader ecosystem, working with other bodies, including the companies in which assets are invested, the real economy, policymakers, regulators, and even the consumers buying the goods and services from those companies. Everyone is involved in these decisions and in the effort to transition our economy toward a thriving, long-term sustainable, and resilient system that supports people and society.

To summarise: investing for a world worth living in—that is Brunel’s strapline and vision. That is very much what we are seeking to achieve.

14. How do you see the future of sustainable finance? Do you think it will continue to grow, or could it gradually decline over time?

It’s an absolute imperative. The awareness of the risks that need to be managed effectively in order to make our economy resilient—and to deliver for society, provide jobs, and ensure energy security—requires focus on a much broader set of factors than perhaps had traditionally been considered. That is what sustainable finance is about. At its heart, sustainable finance is about thinking over the long term: what will make the economy resilient and what will actually deliver for society? It feels like a fundamental imperative rather than a choice.

I do think some of the macroeconomic and political challenges we’ve faced will make sustainable finance more robust. It forces a return to fundamentals: checking investment cases are sound and ensuring the industry is authentic, evidence-based, and aligned with the fiduciary duty that underpins it. Sustainable finance will continue because it is an imperative.

15. A friend of mine is pursuing a Master’s in Sustainable Finance in Europe and hopes to build a career like yours. What advice would you give to him and others aspiring to follow a similar path?

Sustainable finance is a field where the scope of topics you need to cover are absolutely immense. We’ve talked a bit about nature and mostly about climate, but human rights are huge, governance, shareholder rights, AI, cyber risks, circular economy—you can go on and on. The range of risks you need to think about to cover what might impact a resilient economy over the long term is enormous. You can’t possibly have the expertise to cover all of that.

My advice is: don’t think you have to know everything. Instead, grow a very strong network of people you can turn to, develop your own area of expertise, and draw on the multi-stakeholder nature of the field. As financial players, we have a role to play, but there are also scientists, actuaries, accountants, and government officials with expertise you can draw on. We have very strong connections with multiple universities and academics who help shape our thinking.

Think of yourself as a sponge, absorbing lots of information and seeing how they connect to financial issues, translating them in that context. Build a fantastic network of very clever people who know a lot about their own areas, because it’s almost impossible to cover all those bases on your own.

16. How are Brunel and IIGCC leveraging AI?

We’ve used AI, particularly in relation to stewardship, to help analyse the voting records of asset managers. It has helped us identify trends and themes within our funds and data. We’ve used it to interrogate that information, and, like most people, we’ve also used it to improve some of our communications by making them more succinct. AI is particularly good at being pithy in writing, researching, testing ideas, and seeing what research might be out there.

It’s a tool that needs to be carefully considered. It can create errors—we know that it sometimes hallucinates information. You might think you’ve found an academic study to support a problem, only to find out it doesn’t actually exist. That said, it might still inspire a really good academic study. Used with care, it can be very useful.

AI and cyber are responsible investment themes in our strategy. We believe guardrails are needed to protect people, creative industries, and vulnerable groups. AI can help us, but we are also very aware of the risks around it, including its energy consumption and the significant cooling requirements. Its impact is substantial and must be managed responsibly.

Like what you read? Subscribe to this free newsletter to get every new post delivered straight to your inbox.

#SustainableFinance #ClimateFinance #ResponsibleInvestment #ESGInvesting #ImpactInvesting #TransitionFinance #NetZero #PensionFunds #InstitutionalInvesting #AssetManagement #FiduciaryDuty #LongTermInvesting #ResponsibleInvesting #PolicyandFinance #FutureofFinance #FaithWard #BrunelPensionPartnership #InstitutionalInvestorsGrouponClimateChange #TransitionPathwayInitiative #IIGCC #TPI#TransitionFinanceCouncil #UK