Triodos Investment Management and Fondaction Asset Management have launched Value Nature Fund I, a €300 million closed-end fund that aims to convert farmland and forests to regenerative practices across Europe, Canada, and the United States. What makes this fund unusual: part of the manager’s performance-based pay will be tied directly to hitting biodiversity and climate impact targets, not just financial returns.

Why it matters

Natural capital investing has long been treated as a niche corner of sustainable finance, often associated with small pilot projects or grant-funded conservation. A €300 million target with institutional structure, a dual-continent strategy, and an intended Article 9 classification under the EU’s Sustainable Finance Disclosure Regulation (the highest sustainability category for investment products) signals something different. This fund is being packaged as a real-assets vehicle meant to attract larger pools of capital into land-use transition. For CDR, the relevance is clear. Regenerative agriculture and closer-to-nature forestry are among the primary land-based pathways for removing and storing carbon. Scaling these practices requires exactly the kind of institutional capital this fund is designed to mobilize. But the usual caveat applies: land-based carbon removal addresses residual emissions that can’t be eliminated through decarbonization. It is not a substitute for cutting fossil fuel use.

The details

Fondaction, a Canadian labor-sponsored investment fund manager, is anchoring the strategy with a C$25 million commitment. That gives the fund its cornerstone backing as it enters the market. The partnership pairs Fondaction’s experience in North American environmental markets and natural capital with Triodos IM’s track record in European sustainable food and agriculture systems. The fund’s strategy spans two geographies (Europe and North America) and two land-use systems (regenerative agriculture and closer-to-nature forestry). According to the launch materials, the stated aim is to fully convert all portfolio assets to regenerative practices over time. The managers say this structure diversifies exposure across cropping systems, forestry models, climates, consumer markets, and regulatory environments. On impact measurement, the fund will track KPIs across three pillars:

  • Biodiversity and ecosystem services
  • Climate mitigation and adaptation
  • Social wellbeing The governance design that stands out most is the link between manager compensation and those impact KPIs. Part of the performance-based remuneration will depend on achieving measurable environmental and social outcomes, not just generating financial returns. That is a structural incentive alignment you don’t see in most funds, even those marketed as sustainable. The fund intends to classify as Article 9 under the EU’s SFDR, meaning sustainable investment is the fund’s core objective, not a side benefit. Article 9 is the most demanding classification under the regulation, and funds that pursue it face real scrutiny on whether their investments genuinely contribute to sustainability goals.

Implications

The managers are framing natural capital as both an impact strategy and a portfolio strategy. They argue that investing in natural real assets can create value through more sustainable food and timber supply chains, hedge against inflation and volatility, improve resilience in critical sectors, and support climate and biodiversity objectives simultaneously. They cite a figure worth noting: 65% of asset owners are now incorporating nature and biodiversity into their sustainability strategies. Yet nature-positive investment still falls far short of what’s needed to reverse biodiversity loss. If the fund delivers on its ambitions, it could help demonstrate that regenerative land use is investable at institutional scale. That matters because one of the persistent barriers to scaling land-based CDR is the difficulty of attracting large, patient capital into what has historically been fragmented, small-scale activity. The compensation structure tied to impact KPIs is perhaps the most interesting design choice. For institutional investors who have grown skeptical of greenwashing, linking manager pay to measurable ecological outcomes goes beyond reporting language. It puts skin in the game. If other funds follow this model, it could raise the bar for what counts as credible impact investing in natural capital. Fondaction’s statement that ecosystem-related financial risks “can no longer be overlooked by institutional investors” reflects a broader shift. Nature risk is increasingly being treated as financial risk, not just reputational risk.

Caveats

A few things this launch does not tell us. First, the fund has a €300 million target, but targets are not commitments. Beyond Fondaction’s C$25 million anchor, we don’t yet know how much additional capital has been raised or committed. Second, the fund intends to classify as Article 9, but that classification is not yet confirmed. Article 9 status has been subject to regulatory tightening, and several funds have been downgraded in recent years. Third, and most important for CDR: the fund’s carbon removal potential is not quantified in the launch materials. Regenerative agriculture and closer-to-nature forestry can sequester carbon, but the amounts vary enormously depending on soil type, climate, management practices, and baseline conditions. Without specific measurement, reporting, and verification (MRV) commitments for carbon outcomes, it’s hard to assess how much actual removal this fund will deliver versus how much it will improve land management practices more broadly. Finally, the big open question the managers themselves acknowledge: whether funds like this can deliver both measurable ecological transition and competitive long-term returns at scale. That remains unproven. The structure is promising. The results will take years to evaluate.

Source: onestopesg.com