Meanwhile in Exeter, a group of four passionate environmentalists came together to form Oxygen House, with a mission to deliver positive impact across a range of business and investment models. After a visit to Tompkins Conservation in Chilean Patagonia, set up by The North Face founders Douglas and Christine Tompkins, they became inspired by what an impact-led approach to the ownership and management of land could bring to tackling climate change and reversing biodiversity loss.

In parallel, Triodos Bank was ahead of the rest of the banking sector,  starting to invest resources and expertise into the same area – which by 2017 was becoming known as nature-based solutions. Triodos Bank UK used its headline sponsorship of the first Natural Finance UK Conference in 2018 to seek out pioneering projects, and not long after delivered a £2 million charity bond for Trees for Life in 2021, a new investment model into natural flood management in Lancashire with The Rivers Trust in 2022, and a first of its kind commercial loan to Heal Rewilding in late 2022 to fund the purchase of 460 acres in Somerset.  

In 2023, that Oxygen House Patagonian inspiration led to Oxygen Conservation, a limited company ‘committed to scaling conservation to deliver positive environmental and social impact in an attempt to save the world’, teaming up with Triodos Bank UK. In what is believed to be the largest conservation-focused debt package in the UK at that point, Triodos provided a £20.55 million loan funding the purchase of 23,000 acres of land in Scotland.

This was a complex arrangement made possible thanks to Triodos Bank’s flexibility and willingness to explore unconventional structures to make a financial product suitable for this emerging sector. Critically the Bank’s lending team recognised the need to shift from the conventional loan repayment models to one linked to the development of ecosystem services, carbon credits in this case.

A pioneering approach: impact before profit

Oxygen Conservation works to protect and improve natural assets. Its efforts are focused on native broadleaf woodland creation and peatland restoration, ecotourism (where appropriate), and renewable energy regeneration. Its model will create carbon credits and new biodiversity credits.

The Oxygen Conservation approach means different things to different people. Environmentalists or agents of social change see what Oxygen does as delivering positive impact first and foremost, and profit can come as a result of that. But those who come in from an investment perspective see a logical, informed approach based on land acquisition, improving the quality of that land, and creating goods and services.

Founder and CEO Rich Stockdale says: “We’re now about to complete our eleventh acquisition, which will take us to almost 45,000 acres spanning Cornwall to the Highlands, the Welsh coast to Norfolk, and everything in between, a portfolio of more than £150 million. Whatever the landscape, you can make a positive impact for people and wildlife and generate a profit.”

Financing nature-based solutions

The financing of Oxygen Conservation’s work by its very nature requires a deeper understanding and appreciation of the potential in nature-based solutions.

“I believe that what we don’t price, we don’t value," said Rich. "We are helping create this entire market, this entire ‘nature as an asset class’ or ‘natural capital’ model, if you will. And if you want to do that you have to make that proposition bankable. Well, if you're going to do that why not talk to the best, most ecologically, most appropriately minded bank?"

Simon Crichton, Head of Nature, Food and Resource at Triodos Bank takes up the story: “We tried to be helpfully challenging, interrogating the business plan, asking how we might model certain aspects, and what the future would look like. But we could see the huge potential, and the commitment to deliver positive environmental and social impact as a priority while generating a sustainable financial return – which meant the values alignment was there. We brought our long experience of pioneering finance in other sectors to what Oxygen Conservation is doing.

“Flexibility is key -  natural processes don’t follow spreadsheets, and nature markets operate in a nascent but increasingly popular space with potential volatility. Therefore our arrangement triggers variable repayments based on the sale of carbon credits over 25 years. In terms of transformational impact, if we can show that carbon is something you can borrow against on commercial terms, we will create a new bankable asset class and really shift the system. All this work has relied on early investment from us as a bank in understanding new specialist criteria in the space, such as the Peatland and Woodland Carbon Codes.”

The carbon market that currently exists uses carbon credits – to be generated by companies such as Oxygen Conservation – to offset emissions that cannot be eliminated. Effective carbon markets would ensure that the true cost of environmental damage is paid by businesses, motivating them to reduce their carbon footprints and, through structures like England’s new Biodiversity Net Gain (BNG) market, their effect on biodiversity.

So have we reached that point? Rich Stockdale says the sector is poised for take-off: “It's a very, very privileged position to be at such an early start of an industry. Do you remember dial up internet? That's what it feels like from a natural capital perspective. It's so early. Everyone's really excited about it.

“The evidence that the sector is on the cusp of transformation comes from two sources – the quality of people being hired into the industry, and the deals being done between long-standing players and natural capital startups. The natural capital sector is entering a new phase of maturity, professionalism and ambition.”

Protecting the natural environment for wildlife and local communities

Triodos has set internal principles for investing in projects or companies that are active on the voluntary carbon market. These principles relate to the quality of the project but also who the carbon credits may be sold to, to ensure that only companies with credible and ambitious climate strategies and actions can use the credits from projects financed by the bank.

The carbon market is still subject to a lot of change and uncertainties but the central factor in any market is the interaction of demand and supply to produce a price.

Rich Stockdale believes that as the price rises, the flow of social and environmental benefits will increase: “The investment, the scale, the ambition, the talent. It's all coming... I think in the next year or so we'll see high quality premium carbon credits go for £100 a tonne. Nattergal secured a sale at £84 a tonne this year on a small scale batch, which is great. The price point for premium Biodiversity Net Gain units of high quality is going to fly too. This means that the incentive for change gets stronger. By failing to assign value to our natural environment, we have allowed for its wilful, unchecked degradation and destruction.”

When the deal was announced, there was some criticism of the motivation behind natural capital investments and land ownership. Oxygen Conservation has stated that it is open to such criticism and is keen to take feedback on how to best create benefits for local communities. For example, at the Blackburn & Hartsgarth site in Scotland the company is working in collaboration with its neighbours in the Tarras Valley Nature Reserve on conservation of the threatened Hen Harrier, and farmland will be transitioned to organic and regenerative agriculture, with the food produce sold locally.

Triodos Bank has recently announced its commitment to provide at least EUR 500 million in investments, loans and contributions to the nature-based solutions sector by the end of 2030 as part of its biodiversity targets.

“We’ve always been determined to think and act differently as a bank – and we have really committed to financing nature recovery with this natural capital approach and understand the financial modelling and stress-testing required,” says Triodos Bank UK CEO Bevis Watts. “We believe the work we are doing is not about exploiting nature but putting nature at the heart of our economy – and that is key to humanity’s prosperity and wellbeing. Back in 1990 we made our first investments in Biodynamic farming, so our support for nature goes back decades. Now carbon credits and the newer Biodiversity Net Gain units challenge the principle that in our current economic system businesses do not pay for the harm they do to nature and the environment.”

We return to the idea that what we don’t price, we don’t value. “By integrating environmental assets into financial markets, we can change capitalism’s priorities to avoid catastrophic environmental and social collapse” says Rich Stockdale. “The need to use price to value and protect our indispensable natural assets has never been more paramount.”