Milestone 07

Oxygen Conservation

Identify and Work with Investors

Project Summary

Oxygen Conservation is a UK-based company that invests in land to protect and restore natural capital. Acquiring land across the UK, it aims to deliver positive environmental and social impacts, generating a financial return as a result and not as the purpose. Its income streams include high quality natural capital credits (carbon, water, and biodiversity), as well as renewable energy, regenerative agriculture, ecotourism, and sustainable property development.

In 2023, Oxygen Conservation acquired two estates in Scotland; Blackburn and Hartsgarth, and Invergeldie, which cover 23,000 acres. These acquisitions were completed through the use of a £20.55m loan facility from Triodos Bank UK. The loan has been used together with Oxygen Conservation’s own capital and will be repaid over 25 years through a flexible repayment plan. Income is based on the sale of high-quality carbon credits generated through the Peatland and Woodland Carbon Codes.

Milestone 1: Initial Project Scoping

Often the initial task is to understand the site(s) you want to use and the land use change needed for nature restoration or creation. This includes considering the goals of the land managers involved, the vision within the wider catchment or neighbouring area, and whether there are permits or planning consent needed for any proposed changes.

At this stage, you can also conduct a high-level assessment to determine which revenue streams can be generated from ecosystem services , e.g. carbon credits, flood reduction cost savings, or biodiversity units, which will be crucial for identifying buyer interest.

Finally, it is useful to have an idea of the costs of the project and potential grant funding that may be available to support initial development.

Milestone 2: Identify and Work with Sellers

Initial ownership of the ecosystem services will belong to the landowners or, in some cases, the tenants of the sites that the project is using. However, these can be passed onto others, such as third-party project developers, with appropriate legal arrangements and compensation. In some cases, there may be a sole seller of the ecosystem services, where the site or landholding is large enough that it delivers the volume of ecosystem services needed to cover the costs of the project and attract buyers.

However, in order to achieve scale and impact, a project will likely involve multiple sellers, such as neighbouring farmers and estate managers. Scale of land is often needed to deliver significant environmental outcomes, and also to attract private finance. Project developers must plan how they initially contact and engage with these sellers going forward, building their wants and needs into the project.

Milestone 3: Baseline and Estimate Ecosystem Services

At this point, you will have understood the vision for the project and identified a particular ecosystem service or set of services to be sold. The next step will be to carry out detailed analysis – baselining each ecosystem service and quantifying what will be able to be delivered from the interventions, as well as planning how to monitor and maintain these interventions. You will need to rely heavily on ecological expertise for this more scientific Milestone.

At this step, standards, verification and accreditation methods will be considered in more depth.

Milestone 4: Identify and Work with Buyers

Based on your earlier market analysis in initial project scoping, you will have identified one or more groups of beneficiaries who may be willing to ‘buy’ or pay for the ecosystem service(s) to be created, restored or maintained. Buyers vary – as do their requirements – but at this step, greater buyer engagement is now needed to develop a deal that channels money towards the nature-positive outcomes that your project wants to deliver.



Milestone 5: Develop Business Case and Financial Model

You’ll have started building your business case and financial model in earlier steps – laying out your vision, the market proposition and estimating costs and income. This step offers a review, in addition to providing details on information needed to build out the financial model and business case more fully. Both of these key documents will be iterated throughout project development, and may be altered during project delivery as new information emerges. These documents are interlinked and, if developed correctly, will ensure your project’s viability and also help you with discussions with stakeholders including sellers, buyers and future investors.

The financial model will also enable you to better understand the type of structure your project may take to attract investment (i.e., an environmental bond, a loan, an equity investment) and what sort of returns you can afford to pay/offer.

Milestone 6: Develop a Governance Structure

A governance structure will inform the way in which the project is run when fully operational and for what purpose. It identifies appropriate decision making processes, who is responsible for what actions, and what controls are in place to make sure that the project is meeting its stated goals, all while abiding by the risk appetite of its engaged stakeholders. The legal entity to host the project will be a key driver in this, and the appropriate choice of entity will be dependent on several factors that are outlined below.

Your governance structure should align with and underpin your business case, as a necessary component of how the project will deliver its environmental outcomes and other strategic targets.

Milestone 7: Identify and Work with Investors

It is important to note that not all projects will need up-front investment, but for those that do, this section provides a framework for thinking around the development of the investment model. This does not constitute financial advice – as the GFI is not licensed to do so. However these considerations are based on the insight offered by project developers and other market stakeholders.

An investor will be a new core stakeholder in your project, and it’s just as important to think of what you require from investors, as much as what they require from you – so that you can build a positive and collaborative relationship with them.

This entails defining the investment ask (in line with the financial model), the strategy for approaching the right investors, and the negotiation of terms that can then be formalised in contract development (Milestone 8).


Milestone 8: Establish Legal Contracts and Closing

When all relevant stakeholders have been engaged and their terms of engagement are clarified as much as possible, this is the time to develop the legal contracts and close the deal. This stage is last because legal fees are expensive, and it is generally advised to determine as much as possible in previous stages before

Note: The information in this Milestone does not constitute any form of legal advice but instead serves as practical advice on how to manage engagement with lawyers and the process of contract development.

The Green Finance Institute is not a firm of solicitors or connected in any way with the courts. The information and opinions we provide in this section and across the Toolkit do not address your individual requirements and are for informational purposes only. They do not constitute any form of legal advice. We recommend that appropriate legal advice should be taken from a qualified solicitor before taking or refraining from taking any action.

Community Engagement

Community engagement is highly advisable for any project that aims to sell ecosystem services, to ensure fair outcomes for local communities and the long-term success of the project. Project developers can build connections with local stakeholder groups early on to spot both risks and opportunities.

Policy and Regulation

Project developers and enterprises will need to keep a continuous check on how current and future policy may affect the project, and also opportunities for the project to inform policy. The role of private finance for nature across the UK is being encouraged by the UK government and its devolved administrations, and new rules, standards and markets are being developed.


With many thanks for their time and insight:

Chris White, Director of Natural Capital, Oxygen Conservation

Elly Steers, Marketing Manager, Oxygen Conservation


Simon Crichton, Head of Relationship Management, Triodos Bank UK

Nathalie Ackbar, Public Relations Consultant, Triodos Bank UK


Date Published: 09/10/2023

Next Milestone

Background and Investment Needs

Oxygen Conservation is a member of Oxygen House Group, an investment group focussed on scaling solutions to climate change that deliver positive environmental and social impact.

Oxygen Conservation was set up in 2021 with a mandate from the Group to scale conservation across the UK. To date, ten sites have been acquired, each of which have different business models tailored to the unique landscapes of those estates.

Oxygen Conservation is targeting the acquisition and management of 250,000 acres of land for nature restoration by 2025. To help reach this scale, the team looked for additional financing from outside of the Group to secure two large estates in Scotland – Blackburn & Hartsgarth, and Invergeldie

An estimated £20.55m was needed for the acquisition and extensive nature restoration works. The debt package would be underpinned by carbon finance – with future revenues raised through the sale of high-quality carbon credits.


Approaching the Investor

Oxygen Conservation first approached Triodos Bank UK (‘Triodos’) in early 2022, before identifying the two estates in Scotland for acquisition. Oxygen Conservation’s intention was to identify potential lenders with a strong position on natural capital and a shared commitment to scaling the UK nature finance sector.

Oxygen Conservation was introduced to Triodos’ commercial lending team via their professional network. It was clear from the initial in-person meeting that both organisations shared a similar set of values and commitments towards scaling conservation.

Following this meeting, the Oxygen Conservation team invited Triodos for a walk, talk, and organic lunch made from food produced on site at the Leighon Estate in Dartmoor. This provided an opportunity to further demonstrate Oxygen Conservation’s work and allow Triodos to get a sense of the practical challenges and opportunities of nature restoration projects in the UK.

Simon Crichton, Head of Relationship Management at Triodos, comments that one of the key factors that stood out was the company’s demonstrable commitment to environmental and social outcomes above financial return.

For example, Oxygen Conservation showed how it was working with stakeholders in the area to improve the condition of natural capital at the Leighon Estate, and some of the practical environmental actions the team had taken in their initial six months of management. These positive actions were being undertaken prior to any registration of natural capital credit schemes that would provide financial gain. Crichton says this was a powerful message – “Oxygen’s approach was to ask what can we do on Day One to improve the land, rather than leaving the land in poor condition and starting implementation once baselining had occurred to maximise returns.”

Later in the year, Oxygen Conservation identified two large estates of interest in Scotland –  Blackburn and Hartsgarth, located in the Scottish Borders, and Invergeldie located in Perthshire, Scotland.

In order to help secure the funding needed for acquisition and restoration of these two sites, Oxygen Conservation asked for a term loan agreement with Triodos. The Oxygen Conservation team presented their vision for the two estates with details on the key environmental and social targets, a proposed structure for the debt package (combined with capital from Oxygen Conservation), and the details of the underlying business model predicated on the sale of high-quality Woodland Carbon and Peatland Code carbon credits.


Negotiations and Due Diligence

Oxygen Conservation and Triodos spent the following several months exploring the scope of this arrangement and determining the details of the debt package.

Oxygen Conservation supplied the outputs of the extensive natural capital modelling work done across the two estates and its management plans. These plans included areas of degraded peatland identified for restoration, areas suitable for large-scale native woodland planting, as well as agricultural land that could support organic and regenerative farming.

Financial modelling of the potential returns from the sale of carbon credits were provided for a 50-year period, showing the potential cashflows across a range of different scenarios. These models were analysed by Triodos, as well as independent advisors Strutt and Parker and John Clegg & Co who were engaged by Triodos to provide a further level of assurance. The Triodos team also ‘stress tested’ the modelling across a range of key factors such as unforeseen delays to upfront works, fluctuations in carbon pricing, and failure of woodland planting projects due to environmental factors.


Repayment Profile

Instead of a fixed repayment schedule, Triodos offered a flexible arrangement that would trigger repayments based on the sale of carbon credits via the Peatland and Woodland Carbon Codes, varying the amount repaid per credit across the 25-year timeframe. This gave Triodos the option to change the figure on an annual basis, and react to developments in the carbon markets.

Crichton comments that this flexibility is important to both the loan agreement and to the project for several reasons.

“Firstly, natural processes do not follow spreadsheets, so it is important to build in flexibility for that reason alone – if there was a fire or a storm that destroyed some of the estates’ habitats, we could lower the amount taken to account for remediation works at certain points and raise future amounts to cover the difference. Secondly, nature markets operate in a nascent but increasingly popular space with potential volatility. For example, what if there is a shortage of tree saplings when Oxygen wants to do most of its planting? This might mean it needs to create tree nurseries onsite that again would necessitate more funds freed up in the near term,” says Crichton.

Overall, Triodos and Oxygen Conservation agreed to a £20.55m term loan over 25 years, with an interest only period for the first five years. Triodos expects to take around £10 per credit sold for the first tranche of credits but can vary this amount annually at its discretion.

Elly Adams, Finance Director of Oxygen Conservation said, “From the first time we met Triodos we were hugely impressed by their commitment to financing nature recovery in the UK. They have been a fantastic partner to work with on this complex, and sometimes groundbreaking, arrangement, thanks to their flexibility and willingness to explore unconventional structures to make a financial product that works for this new and exciting sector.”


Security and Ongoing Reporting

As security for the term loan, Triodos has taken first charge of both estates. It has also set up guarantees and debentures in line with Triodos’ standard lending criteria and in common with traditional project finance, meaning that Oxygen Conservation was comfortable with the security requirements.

In terms of reporting, Oxygen Conservation is required to submit quarterly management accounts. However, the teams are regularly having ad-hoc catch ups around progress, including their ambitions on delivering environmental and social impact beyond carbon.

Triodos and Oxygen Conservation will undertake an annual Business Review, with a full update on Oxygen Conservation’s business plan. Oxygen Conservation also expects to reach Net Zero within three years and will be reporting on this as part of the process. Crichton comments that while the Business Review is a standard requirement for its commercial lending, it will also be important to reflect on the learnings and  developments from the Oxygen project, as well as  other nature-based finance programmes as the sector continues to grow.


Post Completion and Next Steps

The deal was completed and announced to the public in April 2023. It was believed to be the largest conservation-focused commercial debt package in the UK to date.

There was a generally positive response from the media and the public, although there was some pushback on the fact that this was a private company acquiring land, which ties into the ‘green laird’ narrative of land not being under local ownership or concerns around profit maximisation being prioritised over nature conservation. Both Oxygen Conservation and Triodos expected this response, and Oxygen Conservation has stated that it is open to such criticism and is keen to take feedback on how to best create benefits for the local community.

Post completion, Oxygen Conservation has recruited an estate manager at Invergeldie from the local area and is working with a number of stakeholders and strategic advisors to develop ambitious strategic plans for each site that will set out a long-term vision for building a more sustainable future.

“We need leaders like Oxygen in the sector to develop the financing approach,” adds Crichton. “Just as we saw in the renewable energy sector in the 1980s, where Triodos developed approaches that, in maturity, enabled community engagement, benefit and ownership. We hope we can accelerate this learning in the natural capital field.”


Lessons learned

Triodos Bank offers the below lessons learned from the financier’s side:

  • It is important for all parties (including legal teams) to understand that these projects rely on natural processes that do not function perfectly in line with a spreadsheet or financial model.
  • Financiers need to build trust with their clients on the best terms they can offer – Oxygen Conservation had to trust Triodos to get the best value, which necessitated sometimes restrictive yet flexible clauses in negotiations – such as the flexible repayment schedule based on carbon sales and Triodos’ discretion.


Photo Credit: Josh Craddock