Newsletter #3: New Lenses

In this edition, Tripp reports back from London Climate Action Week, while Beth reflects on her time at CalPERS and how she sees similarities between energy optimization and ecosystem restoration in terms of unlocking valuable opportunities in real estate.

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Looking back at London Climate Action Week

• AI and data centers are now a central tension in nature finance

  • The theme ran through every day of the week. AI is accelerating the entire value chain, from eDNA-based monitoring to ratings-agency and registry reporting.

  • Hyperscalers face a transparency, community and social-license problem driven by their water, power and biodiversity/land footprint, and the pushback is intensifying.

  • That same footprint is the opportunity: data-center capital can restore landscapes at a scale philanthropy cannot match. Whoever structures the ecological off-set and community model first captures it.

• The NBS market is institutionalizing

  • Banks and institutions are now showing up in force, BNP Paribas, HSBC, UBS, Standard Chartered, Lloyds, KPMG, alongside the WEF, Rockefeller Foundation, TPG Rise, the World Bank and the Environment Agency Pension Fund.

  • The operating ethos voiced repeatedly: don’t let perfect be the enemy of progress. The conversation has moved from whether NBS is investable to how fast it can scale.

• Capital flows are geographically asymmetric

  • UK and European natural-capital allocators are doubling down on nature and climate and explicitly underwrite the longer-term natural-systems return J-curve.

  • US and other non-US real-asset investors remain cautious on climate exposure; the political winds and IRA retraction narrative were cited as a live examples of policy risk chilling allocation.

  • Implication: the better-fit near-term LP pool sits in UK/European natural-capital, not US generalist real assets.

• Water is emerging as a multi-faceted asset type

  • Water surfaced repeatedly, both as a constraint on AI/data-center growth and as an investable asset in its own right. This validates water credits as a business line and a buyer-curation theme.

• Biodiversity Net Gain is the UK’s exportable model

  • BNG has real market traction and is being treated as a role model other countries can adopt, a template worth tracking for replicability in US/other markets.

• Registries are the bottleneck

  • Registries must accelerate throughput while preserving scientific rigor to serve project developers, CORSIA demand and climate timelines. Speed-to-issuance is becoming a competitive variable for developers.

• Product-design signals from developers

  • Peat restoration is acknowledged as imperative; UK Peat Code credits were cited trading at roughly £100 per unit.

  • Developers are blending shorter-duration pathways to smooth return horizons, a structuring cue relevant to portfolio design.

• Environmental inflation made tangible

  • Record London heat and repeated Tube shutdowns turned “environmental inflation” from an abstraction into a lived backdrop for the week.

New Lenses: A finance perspective on nature’s value

By Beth Richtman, COO

For many years I had the privilege of leading sustainable investment efforts at CalPERS, especially within the real assets group focused on real estate and infrastructure. One of those initiatives focused on energy optimization. When we began, our real estate managers weren’t doing much to identify and act on the obvious ways to improve returns — lowering energy use, putting renewables on rooftops and carports, or simply capturing the utility incentives sitting in front of them.

Because I’d come from a renewable energy background, my first reaction was surprise. On behalf of CalPERS pensioners, I was frustrated by the money being left on the table. Then I understood what was really going on: the managers didn’t have “the eyes” to see these opportunities. People in the investment world handle an enormous amount, and no one can be expected to see everything. So, we launched a program that gave them new lenses — and a clear mandate — to look for energy opportunities most of them had simply never been looking for. The value had been there all along. It just needed someone to point.

I’ve been thinking about that lesson constantly over the past few years, because I’ve found myself on the other side of it. This time, I was the one without the eyes. Working alongside the ecologists at Pantheon — Dr Curt Richardson, Steve Apfelbaum, and Jason Carlson with a remarkable combined track record — I watched them read land in a way I simply couldn’t. Their deep ecological lenses, paired with the Stratifyx software we use, kept surfacing land-based opportunities that real estate owners routinely miss. Not because the owners are careless, but for exactly the reason my CalPERS managers missed the energy wins: they don’t have the right lens.

Here is what that lens reveals. Stratifyx reads a parcel through its ecological data layers to uncover what we call its Highest and Best Value — and it turns out there is significant, bankable economic opportunity in the ecological potential of land. Historically, landowners have seen dollar signs in one place only: what they could capture if they cleared, paved, and built, or planted the ground in non-native commercial crops or livestock. The value lived in the transformation. What I’ve learned is that there is a whole second economy in letting land do what it does best — cleaning air, cleaning and managing water, and sequestering carbon. Pantheon’s peatland restoration carbon project, the first in the US, is a prime example of how restoring land can be the business model.

As an investor, I don’t take generalizations on faith. I take them to the proforma. And that is exactly where this stopped being a nice story and became a thesis investors can underwrite. Redesign the same development around nature-based solutions and you routinely save 10 to 30 percent off the most expensive money in any deal — the upfront investment and the construction loan. I’ve now seen this in our team’s historic work in residential, commercial, and high-density urban redevelopment alike. The proformas speak even louder on the revenue side: premiums documented as high as 50 percent above competitive market pricing, because open space and park land does triple duty — it satisfies dedication requirements, it’s an amenity buyers pay for, and it manages stormwater, all at once. This is documented on real projects: greenfields, brownfields, reclaimed mines, capped landfills, parks, and even highways and airports.

Activate these conservation and restoration opportunities alongside traditional development — even on corporate campuses, even data centers — and nature itself becomes the amenity, raising property value while delivering dozens of separate functions, the ecosystem services that flow from restored habitat. Through an ecological-opportunity lens, landowners and developers gain genuinely new ways to lower infrastructure and operating costs, increase revenues and property values, and help otherwise controversial projects earn their social license to operate.

One lesson from the ecologists reshaped how I think about sequencing entirely: bringing in ecologists early enables possibilities to be understood ahead of engineering design that might otherwise be overlooked, locking in costlier options and/or ones that miss more nature-based opportunities. For instance, conventional engineering instinctively adds impervious surface — more pavement, larger parking fields, concrete channels and lined detention ponds. A nature-first approach asks a different question at the outset: how do we protect and promote the land’s own permeability? Infiltration areas planted to native species, biofilter ponds instead of concrete-lined ones, integrated bioswales that slow and filter and soak in runoff, working wetlands left intact — each lowers Capex and Opex while building resilience against both storms and droughts. Members of this team have designed communities this way and documented savings upward of 30 percent against conventional development costs.

Two more reversals surprised me, and both matter to anyone underwriting risk. First, degraded and difficult land — the brownfield, the floodplain, the worn-out parcel everyone discounts — is often the best place to deploy revenue-producing natural infrastructure, replacing costly maintenance and underperforming designs while opening new income from water-quality trading, flood mitigation, recreation, and habitat value. Second, a floodplain or drainage corridor is not a liability to be managed down. Treated well, it becomes a community asset — trails, habitat, open space, and amenities that lift surrounding property values and build the public support a project needs.

Zoom out from a single parcel to the watershed and it gets more compelling still. Stratifyx lets the team identify water-quality pain points across a watershed and then allows the user to look upstream to find restoration opportunities that could improve outcomes downstream. Working with upstream landowners to restore parts of their land can generate ecosystem-service revenue — riparian buffer credits, nutrient banking, wetland mitigation credits, direct water-quality credits — which in turn gives those landowners the means to maintain their land and grow its conservation value and biodiversity over time. From where I sit, that is restoration that pays for itself, then keeps paying.

Many of these opportunities are new, and many genuinely require an ecological background to even recognize. People who’ve spent their careers in real estate and finance don’t usually see them unaided — not for lack of capability, but for lack of the lens. Which brings me right back to my CalPERS managers and the energy wins they’d been walking past for years. The pattern is similar. The value is real and it is sitting in the land today. Someone simply has to point. The best decision I’ve made lately was letting a team of ecologists point for me.

The views expressed here are the author's own and do not represent those of CalPERS or any current or former employer. References to past work at CalPERS are illustrative and do not imply any endorsement of, or affiliation with, Pantheon Regeneration or Stratifyx.