Microsoft commits to a decade-long contract for carbon removal, sealing a deal with Brunel's nature-focused agreement
In the rapidly evolving landscape of climate action, the corporate world's growing demand for carbon credits is significantly influencing investments in nature-based solutions. This trend is particularly relevant to funds like Brunel's third vintage Infrastructure Portfolio, which focuses on decarbonisation through a broad range of themes including natural capital.
Carbon credit retirements reached a record high at 95 million in the first half of 2025, marking the highest total ever recorded for a half-year and a 9% increase compared to the same period in 2024. This surge in demand is outpacing supply, with issuances rising 39% in Q2 2025 compared to the previous quarter, but still lagging behind the growth in retirements, indicating a tightening market.
Buyers exhibit a sharp preference for high-quality, verified credits. In fact, 57% of retired credits in H1 2025 hold ratings of BB or above, reflecting a market shift toward integrity and real climate impact, especially from nature-based solutions. Corporations are increasingly relying on carbon credits to meet ambitious net-zero pledges, driven by ESG pressures, investor demands, and reputation management goals.
The global carbon credit market is projected to grow from about USD 933 billion in 2025 to over USD 16 trillion by 2034, at a CAGR of nearly 38%, signalling massive expansion and investment opportunities.
Nature-based solutions, such as reforestation, soil carbon sequestration, and biodiversity projects, are favoured because they generate high-quality carbon credits with additional co-benefits like biodiversity protection and watershed preservation. The increased corporate demand incentivises project developers and investors to channel capital into scalable nature-based projects that can issue verified credits meeting stringent standards.
The surge in quality-focused credit retirements pushes funds to prioritise projects with measurable climate impacts and ESG credentials, attracting more institutional capital. While specific performance data for Brunel’s third vintage Infrastructure Portfolio is not available, the broader market trends suggest that infrastructure funds with exposure to nature-based carbon credit projects are well-positioned to benefit from strong demand driving credit prices higher and reducing supply risks, increasing investor appetite for sustainable infrastructure backed by verified environmental outcomes, and enhanced portfolio resilience against regulatory and market shifts favouring climate-positive investments.
Brunel, being a sophisticated institutional investor, is likely to leverage these dynamics by incorporating high-quality carbon credit projects within its infrastructure portfolio to capture growth and meet sustainability mandates. The third vintage of Brunel's infrastructure portfolio, launched in 2022, does not include a dedicated 'renewables sleeve'. However, it does include more traditional infrastructure investments such as those necessary for decarbonisation of transport or energy efficiency.
One of the early backers of Aurora Sustainable Lands, the climate-focused manager that has acquired over 1.7 million acres of US forestland, is the LGPS Pool Brunel Pension Partnership. Aurora Sustainable Lands, a joint venture between Anew Climate and a group of equity investors led by Oak Hill Advisors, AB CarVal, EIG, and GenZero, manages these forests using a carbon stewardship management strategy.
Microsoft, which has seen its carbon footprint grow by more than 23% over the past five years, has signed a 10-year agreement with Anew Climate and Aurora Sustainable Lands for the delivery of 4.8 million nature-based carbon removal credits. Microsoft aims to become "carbon negative" by 2030.
The carbon credit market is on track for negative issuance, indicating the first signs of a rebound. This development, coupled with the growing corporate demand for carbon credits, underscores the potential for continued growth in nature-based solutions investments.
The NZI Climate Solutions Summit, scheduled for 11.09.2025 in London, will provide a platform for further discussion and collaboration on climate action and the role of carbon credits in achieving a sustainable future.
- The demand for high-quality carbon credits, particularly from nature-based solutions like reforestation and biodiversity projects, is driving a shift towards integrity and real climate impact in the global carbon credit market.
- As the carbon credit market anticipates a massive expansion from USD 933 billion in 2025 to over USD 16 trillion by 2034, investment in infrastructure funds with exposure to nature-based carbon credit projects is expected to become more attractive to institutional capital.
- Sophisticated institutional investors, like Brunel, are positioning themselves to capitalize on this growth by incorporating high-quality carbon credit projects within their infrastructure portfolios, such as investments in climate-focused managers like Aurora Sustainable Lands.
