Bregal Sphere to invest up to $500m in nature restoration projects despite uncertainty in carbon markets

Bregal Sphere, the impact investing arm of London-based private markets firm Bregal Investments, has announced a strategic partnership with Imperative, a carbon credits developer with projects spanning South Africa, Asia, Africa and Latin America.

The agreement gives Bregal Sphere first refusal – meaning the right to invest before any other party is approached – to deploy capital across Imperative's pipeline, taking the company's total earmarked funding to $1.25bn.

The centrepiece of Imperative's portfolio is Beka Emva, a project in South Africa aiming to restore degraded subtropical thicket using spekboom, a succulent plant with an unusually high carbon absorption capacity. The firm also has reforestation and mangrove restoration projects in the works across multiple continents.

Both parties are framing the deal in the language of "high-integrity" carbon removal, a phrase that has become something of a watchword in an industry still grappling with a credibility crisis.

Carbon controversies

A series of investigations in recent years – most notably a 2023 Guardian investigation into Verra, the world's largest carbon standard – found that a 90% of rainforest offset credits had little to no climate benefit.

Meanwhile, an Impact Loop investigation recently revealed that an AstraZeneca-backed startup, Earthbanc, was facing serious accusations of over-inflating the climate impact and sidelining local communities in two large carbon projects in Kenya and India.

Demand for carbon credits has softened considerably since its peak in 2021, with many corporates pulling back amid reputational risk.

Push for 'high quality' credits

However, proponents argue the answer lies in higher quality projects, better verification, and genuine additionality – the principle that a carbon credit should represent emissions reductions that would not have happened anyway.

Agustin Silvani, managing partner, Bregal Sphere, says its approach with Imperative is built around these standards.

“This partnership reflects our conviction that high-integrity, landscape-scale restoration can deliver meaningful environmental impact alongside long-term value," he said.

Bregal Sphere says it intends to make its first project commitment under the agreement within the first half of this year.