Why Climate Capital Isn’t Flowing – and How to Fix It with Sean Penrith of Gordian Knot Strategies

Kim Allchurch Flick: Hello everyone. Welcome to the podcast. I’m here with Sean Penrith, the CEO of Gordian Knot Strategies, GKS, a climate finance consultancy, serving multinational corporations and endowments, agencies, project developers, consortiums, and impact investors across the us. South America, Africa, and Europe.

GKS goal is to ignite climate solutions by mobilizing a billion dollars in impact investment per year by 2030. Sean was a senior technical advisor to the Integrity Council for the voluntary car carbon Market. This I-C-V-C-M and an observer to the green bond principles. Sean presents frequently on topics that include conservation, finance, business scaling.

Climate, smart agriculture, carbon mechanisms, policy and markets, the future of sustainability and climate change. Our topic today is why climate capital isn’t flowing and how to fix it. What an incredible topic. Thank you so much for being here. 

Sean Penrith: Thanks for having me. 

Kim Allchurch Flick: And I understand you are in Europe.

We’re recording across several time zones and it’s just a delight to have you, and I admit this is a topic I don’t fully grasp well in terms of climate and finance but having concerns about the climate and being able to talk with somebody who’s trying to fix those concerns, to me is a great pleasure and a privilege.

So what has been your journey and the inspirations that have shaped. Where you are today? 

Sean Penrith: Yeah. Let’s see if I can condense that for you. Kim. So when I was young, I was always very entrepreneurial and I started a business after I sail the yacht across the Atlantic in Argentina. And the business was very lucrative.

But it was one where. I began to question like what the purpose was for making the money and. It wasn’t that we had an illegal business or anything, it was in Argentina where, things are a little bit loose and when the phone would ring, I ring, I would jump wondering, oh my gosh, is there some issue at customs or what’s going on?

And. I decided I needed to do something about it, so I went home to register. I’m from Cape Town, South Africa, so I went home to register for an MBA and while I was there, I started a sustainable glass company with my co-founder. And the reason that I wanted to do it was because I had this sense that if I did something with real meaning and with real purpose, it would satisfy me and make me more comfortable with what I was devoting myself to. So it was really an inner sort of calling or message, if you will. And so I was the CEO for that company for 14 years. We set up factories in different parts of the world, and then we sold that and I moved to Portland, Oregon, which.

As you well know is the Center for Sustainability and everything that is happening on the energy efficiency and the green movement. And I got heavily embedded in the world of climate change, climate policy, carbon markets, impact finance. I actually started with our team a, an impact investment fund, which in 2015, which was really the early forerunner for.

What you see now, there’s a deluge of impact funds around the world. But in those days was a newish thing. And I left in 2018 to start strategies basically because I had I’m married to an American. Beautiful American, and she was due with our second boy and I just wanted to be more, more present have more availability.

And so I thought I’ll start this consulting company because I recognize there was a need for a translator between those that have capital and those that need capital. And it, I have to say it wasn’t. It wasn’t like I did a huge go-to-market strategy and then decided there was a need in the world.

I just moved into it because I had existing networks and relationships that all needed help. And we started with one or two clients at first and that grew. And the more I got involved in this, the more what’s the word? Rewarding it has been, even though it’s hard work. I’ll, and we can get into that in a minute, but to do something, to devote your life to doing something where you know that it’s greater than you is a very humbling thing.

But it’s also rewarding in the sense that you feel like you’re fighting for the right team. 

Kim Allchurch Flick: I, it’s so incredible and it’s been time and ever evolving as well. What. With Gordian Knot what are the goals and what are some of the challenges? 

Sean Penrith: Our goal is to mobilize a billion dollars a year by 2030 in climate finance.

We’ve currently mobilized $1.67 billion. So we are a little short of our target. What are the challenges? At a very, at a macro level. You’ve got a nature negative economy that is essentially moving $5 trillion a year into the extractive world, and then you’ve got around $35 billion in nature positive trying to change the paradigm.

So that’s a 140 to one disparity in the way money moves. So that’s the major obs obstacle is that we’ve got we’ve been challenged with a financial engineering arena of the way capital flows, which underwrites, extractive and doesn’t recognize the value of climate solutions. What does that mean?

It means that. The clarity that you need in terms of being, investing into a climate solution, whether that’s protecting a forest in Borneo, or promoting regenerative agriculture in Ghana or whatever it is it is not very clear to the mainstream investor how to assess that opportunity, what the risk profile is, or how to be managed.

I think at the end of the day, through no fault of mainstream capital allocators it’s a fragmented arena to move into because there’s no standardization. If I said to you, Kim, you should really invest in tree planting, your first question would be how do I do that? Exactly.

If I said to you, if I said to you, you should invest in property, you gotta. Pretty good idea where you can go and find those resources. And I think that’s really what the major obstacle is that it’s not part of our vernacular, it’s not part of our financial systems. And the main thing is that what we’re attempting to do through climate finance is really protect the things that deliver planetary stability.

But while we do that, those things, whether it’s a clean ocean or a functioning forest, are essentially viewed as a public good. We as citizens of the globe, believe that we have a right to a green space. We have a right to fresh water. We have a right to breathe clean air. And because we haven’t put a price on that priceless ecosystem, we have a disconnect.

So that is the major challenge is how can we, knowing all of that, how can we turn climate solutions into viable investment opportunities where mainstream capital starts realizing there is potential and start changing the way they allocate capital. So that was a long answer to what’s the obstacle, but that’s the challenge.

Kim Allchurch Flick: And are there sectors that you work with more than others? How where do you find some of the places where you can see the needle move? 

Sean Penrith: Yeah, that’s a good question. So we predominantly have and tend to focus on what we call nature-based solutions. So anything involving natural ecosystems, whether that’s watersheds.

Forests or regenerative agriculture or mangroves or algi. Anything to do with nature is what we tend to focus on. And to be honest, it’s quite difficult because it’s difficult to create a value proposition. I shouldn’t say it’s difficult. What is difficult is to address the perceived risk. That people who are interested in investing in climate solutions, in the nature-based arena to make them feel comfortable enough that this is not a gamble.

And the thing that I hear so often, Kim, is can we really invest in a forest? Because is it really stable? Is the forest gonna be there or is it gonna burn down? And the thing I always remind people is. Our natural biomes have sustained this planet for eons that actually do their job extremely well, better than any mortgage industry, better than any banking industry, better than a host of other industries, and yet we are questioning the efficacy.

Of our natural ecosystem, it’s almost laughable. But, so to answer your question, we focus on natural climate solutions, although we also spend time looking at energy efficiency, renewable energy, and what we call technological solutions like direct air capture and storage or more technological solutions, which people tend to gravitate to because they feel like it’s safer.

But the work. Look, if we don’t, if we don’t protect our natural ecosystems, this planet’s done for, it doesn’t matter how efficient we become at ai there won’t be much left. 

Kim Allchurch Flick: Oh, concur. And I, since there must be some frustrations along the way, but yet I still hear the joy in your voice and the positivity that can happen with that.

How? How can you speak also to consumers who want to make good choices and may not have enough money to invest yet, but want to support those who can which industries, which kind of products which companies should we be exalting in a way as saying thank you for doing something that helps the planet instead of being extractive so that we can help you as well.

Sean Penrith: Yeah, I think the number one place that people can individually deliver huge undeniable weight to the argument is, and I forget the exact website it’s called, I just looked at it the other day. It’s a website that tracks the most responsible banking entities in the world and basically compares the, carbon intensity of one bank versus another. And of course, all the ones you and I know well in, in the US are right up. But there at the top is not being that great. They’re funding the extractive. Side of things. And so to me, if there’s one place that you can make a difference, it’s choosing a responsible bank.

There’s one just opened up in Florida called First Climate Bank. We’re actually thinking of moving our entire business checking account over the first climate, but they really, they walk their talk. So that’s number one. I think the other one is a little bit different from where I know the spirit of your question, but to me.

When you look around the world, there are a few shining examples of policy makers or politicians that understand the severity of what’s. Planet’s going through whether that’s Al Gore or Mark Kearney or Gavin Newsom in California. Regardless of what you think about his policies, understanding that Ahmed is a structural necessity for human survival.

And so to me, people can make a difference obviously by voting for the, for people that put environment or sustainability or climate. First, and I think, it’s, that has not been happening, which is why we have a lot of folks in power that continue to carry the extractive industry flag. Which is just amazing to me.

It’s just irresponsible 

Kim Allchurch Flick: Indeed. I love. Listening to you and learning about something that I know a little about, which is large finance. And yet what I’m seeing is also how what you’re saying is being helped by people doing small things, but collectively. And one of the examples is a trip we made to Costa Rica last year that I did after 30 years and 30 years ago.

I thought it was beautiful, but I didn’t realize. Was that it had been pretty severely deforested and going back in 2025, staying in eco lodges and to a naturalist guide, every one of them said, over the years, Costa Rica has reforest up to 50%. A lot of it on small hectares, like four to 10 hectares, privately owned that people don’t like.

The monocrop pineapple industry that does the exports. They’re growing organically and they’re doing it with biodiversity, so nothing’s monocrop. They’re all integrated, and it was really, really encouraging to see that and around us. I also see media is pitching in a way too. Over the years, there have been some films.

That are really good. Kiss the ground And common ground. 

Sean Penrith: Don’t look up. Yeah, 

Kim Allchurch Flick: exactly. Tho those types of films that help us understand that agriculture can change and it can change on a small scale, but collectively it builds up. And what I’m hoping that happens as people learn is that the consumer drive will also.

Push industries toward what you’re doing as well and yet sometimes things feel daunting. 

Sean Penrith: Totally. And I think we underestimate because it’s easy to feel overwhelmed and hopeless. If you look at what’s happening in the us, people are finding a voice to. Express whatever sentiment they believe about the efficacy or the trajectory of where this country’s going.

But I think for a long time people have underestimated the power of their collective voices coming together. Because truthfully, I’m from South Africa. I was born in Zimbabwe. We had, growing up, we. Lots of strife. We had to overcome apartheid. We had to there, there was lots of challenges.

And when I came to the US in 99 it’s, it’s a lot easier to live there because there’s not a call to arms, if you will. There’s not a rallying cry. We are seeing it now, and I’m not happy about it because it’s. Divisive. But but I think we underestimate it.

And as you say, the it is the people on the ground who have the ability to aggregate and collectively change things, I don’t, I am optimistic, like you said, Kim, but I’m also a bit aghast at our inability to, i’m not even saying take a long view. I’m not saying take a hundred year view. I’m talking about just take a 10 year view. We just, nothing we’ve got in our current modern day society allows us the luxury of taking a five to 10 year view, everything’s next year, and so on, and that’s. Which is the difference between Asia and the west.

They do plan for a hundred year cycle. They understand intergenerational wealth and transfer. They really do. We don’t, we have absolutely lost sight of it. And I work with a lot of communities in Africa right now. We are advising a newly established agency in the country of Liberia. So we are advising them on standing up.

A sustainable financing mechanism for the country to help aid the small landowners that, that really are subsistence living. And, these people, if there’s anyone that needs help, it’s these people who are protecting the carbon sink baskets of the world, and we just don’t price it.

It’s really worrying 

Kim Allchurch Flick: the carbon sink baskets of the world. That’s an interesting, an important way to think about it as well and how the first climate banks owns amazing for people like me who are small business owners, how can we look to companies to help you and how can we connect with you to make investments?

Sean Penrith: Just to be clear, we don’t make investments. We advise impact investors and impact funds and corporations and agencies and endowments on how to this is the part of the work I really love, so for example the US Endowment for Communities and Forests is a impact investing program that we worked closely with.

The endowment had this idea of, exploring whether or not they could use a portion of their corpus to put into impact investing. So we did. We did the research, we helped design the pilot. They started scaling up every year. Putting more and more capital in. And I love that we can help direct capital at scale.

That’s the part that really I love doing it when you get people to understand that there’s real opportunity here. And the endowment is a terrific example of people like that. So my point is that we don’t invest, we advise other people to invest. And most people just find us on our website strategies.

But I think for consumers generally, there’s a couple of ways, right? And we’ve talked about the one, one is banking. How can you change where you bank? The second is fossil fuel companies, like what do you drive? How do you getting your power? Is it, is there a green component to it?

And then the third is being aware enough to, I’m not saying take to the streets or be a belligerent activist, no business is gonna change unless they hear the voice of the consumer asking them to change. They’re just not gonna do it. There’s no value proposition for them to do it.

And it requires us to say to people, where is your sustainability strategy? Where is your impact investing strategy? And that’s what I mean, is I think we’ve lost that voice in the US where we haven’t had to. But now it’s more urgent than ever. So those are the things that I think would help help us.

And I think as there’s a. Whatever you want to call it, like a a blanket over the country which the rest of the world is watching in terms of how is the US gonna continue to respond to ESG or sustainability or carbon or whatever it is. And again it’s not going to respond if consumers don’t do anything, don’t say anything about it.

So I think being vocal is important. 

Kim Allchurch Flick: Absolutely concur with that. And I, my company is a B Corps company and yesterday started B Corps month across the US and Canada and the world. The B Corps movement is global and it seems like that might also be an opportunity that 

Sean Penrith: totally. 

Kim Allchurch Flick: And particularly with new standards coming out, there’s such an emphasis, deep dive emphasis on environmental components.

Including carbon accounting. That’s becoming the measurement of the progress or lack thereof that’s being made with companies that choose to go through that assessment is, it might, one might say improving, which also means becoming more stringent. And becoming more difficult. And yet some of the solutions are companies popping up who know how to do carbon accounting in scope one, two, and three, and help translate it so that more and more people can understand something that might feel quite big.

But it also helps companies from small, medium and industrial size companies to really think about what to do. And I think there’s opportunity there because the other parts of. The assessment to focus on is also how do we improve the lives of employees? How do we improve lives in the community? How and it all is tied together.

They become almost inseparable even though they’re measured in different ways. And that makes me somewhat optimistic. And the other thing that makes me optimistic is there are people with. Values like yours who are running companies that are not certifying as B Corps, they’re not getting a stamp on anything, but yet the values are still there.

One of the frustrations I find is we know from Nielsen studies that two thirds of consumers and. It’s millennials, 73% are willing to pay more for products and services when they know a company has good values. And that includes business owners that are, working B2B. 

And yet the frustration is how do they find each other.

And without being able to express those values and what impacts are being made, it becomes more difficult. So I really encourage companies to. Express, improve and write benefit reports and have the receipts that show it, but to show what they’re doing so that they can be found more easily and start to build a stronger network.

That help, hopefully helps you as well. And it, and that can start with consumer push also. And I see it as a big net that doesn’t have great communication, but it has possibility. 

Sean Penrith: I agree with you. So we’re a benefit corporation for good. So we’re. Wonderful. The other. Yeah. But I, it’s an interesting movement because nobody ever asked us, are we a B Corp or Benefit Corp, or whatever it is.

It’s just something that we felt was really important to be aligned. And ’cause when you talked about the messaging side it’s, that is a, that is an open space, right? We don’t. Like we, we do our reports, we put it on our collateral, but it’s really driven internally. There’s no push for it from the outside.

And I think that’s the opportunity for companies to it’s exactly what happened with organic, right? Organic was fragmented. It had different standards. Slowly we got to some standardization of what organic means, and now people have a degree of comfort that if they buy an organic banana that it’s, better. And that’s what we need when dealing with companies. 

Kim Allchurch Flick: Indeed. What else is relevant that you’d like to share? Because this is arguably a very large topic, being compressed into a shorter conversation and yet critically important. I think everything you’re talking about is really critically important to understand and grasp and find out how we can help and.

Those with the money, those working in companies that can make changes and work with you to be able to move that needle forward. 

Sean Penrith: Yeah, I think the thing I wanna say what 

Kim Allchurch Flick: is relevant? 

Sean Penrith: Yeah, what’s relevant. It’s unfortunately, Kim the equation has flipped where, there, there are a lot of corporations that do actually want to do good. They do but the environment has changed to the point that when they look at engaging us so let’s say a company says we want to develop a, an investing program. We wanna allocate some resources to. Whether it’s investing in carbon credits or regenerative farming or whatever it is, ’cause it’s in our supply chain, doesn’t matter.

The thing that’s flipped is that these people who want to do well are now operating under a veil of incredible caution. It’s not whether they think it’s good or not, that’s not the issue. It’s how do I ensure that I don’t make a mistake? Because the cost of making a mistake reputationally and in the media is huge.

If I can draw a parallel, so as you probably know, the carbon market has taken a beating. A massive beating for integrity. And I’m not saying there aren’t justifiable reasons, but the irony that people who are attempting to do something as compared to people who do nothing, are the ones that are getting beaten up and the people that do nothing, they get a pass that, that seems like wrong.

That’s wrong. And so because of that. Corporate leaders are incredibly aware of the type of of media sentiment that might castigate them. If they invest in something, God forbid, it goes barely upward. And if you take any industry, whether again the mortgage industry or the solar, the renewable industry, all of these is, these industries have had major implosions.

Look at the 2008 crash. Did that stop mortgages? No. Did it stop you having. An account at a bank. No. And yet everybody turns to the carbon market and says, you need to be purer than the driven snow. Now, I’m not saying that the market doesn’t need to improve and it has improved. We’ve been part of that with our colleagues in this space, but it just seems that our.

Perspective is the wrong way around. We should be applauding people who, even if they make errors along the way, are actually trying to do something compared to the people that are doing nothing that are involved in the extractive industry and they get a free pass. And the thing, the one point I would make here, and again, being born in South Africa, Southern Africa, I’ve been exposed across the continent to.

The successes and failures of international aid, and while I understand all the motivations behind aid, one of the challenges with aid is that it delivers no leverage. And what I mean by that is it doesn’t create, it’s very rare, I should say that it’s rare that aid beat flywheel effect. But what can create a flywheel effect is if you help people create a business, right?

If you help them develop a value proposition where they can be architects of the output that they then get paid for, that has incredible leverage. So why am I telling you that? Because when you take the carbon market for all of it, all of its challenges, there really isn’t a mechanism.

It takes capital from the west, from the rich countries and puts it into developing countries because developing countries have an asset for the first time. Developing countries have got an asset, what is it? These carbon sink baskets that what? That’s what they’ve got. They can generate very high quality carbon credits and they can sell them to the companies in the west who have a need for them.

And so to me. Channeling capital from the west into these emerging economies to drive tree planting or regenerative agriculture or protecting a mangrove is extremely powerful. No other mechanism does that other than aid, but aid doesn’t create the leverage. And so when people are like I can’t stand carbon markets, they’re completely missing the point.

The point is we, for the first time, we have a conduit. To move capital from the west to emerging or the global south where we need it. It’s not charity. We need climate mitigation. And these emerging countries have the biomes that are worth protecting. They are worth us investing in them. So I think, that’s a long answer to your question, but it’s like our math is all upside down.

We punish the people that take steps. We don’t punish people who do nothing, and then we take a market to task because it’s driving capital to the carbon sink baskets of the world, which we need desperately. This seems madness to me, 

Kim Allchurch Flick: and yet everything you’re saying reminds me that this is so critically important and.

Even the small areas, and there are some examples of, one is there’s a recent book called Land Healer by Jake Fines, who used to work at the Net Farm in England, which was a dying farm southern England about 20 years ago. And they weren’t making any money. It was just collapsing. And Isabella Tree and her husband decided to regenerate that.

Farm by bringing animals in, having grazing animals, having more biodiversity, no more mono crops. They really looked at how tilling the soil is, but just it’s a book worth reading. And now 20 years on, they have a enormously biodiverse beautiful place that is open to the public to learn from as well.

I grew up in England and I remember, and this is a bit about what we know, when we know it and how we think of things, it’s about what is perception. When I grew up in, in the Cotswolds in England, it was beautiful to see pastures and walls. And, but turns out that England. Had been a very forested island and it’s not large.

The square mileage is probably about the same as state of Oregon, and yet it is so over farmed that’s why a book like Land Healer really shows what they’re trying to do to also feed people, to also have the food source, but to change the paradigms of how that is done. And to do it in a way that is biodiverse.

And when it starts to happen, it happens quickly. And also that the film kiss the ground shows two farms side by side. 

Sean Penrith: Yeah. 

Kim Allchurch Flick: They’re both almost going broke. One of them decides this isn’t working I’m gonna change. And it becomes very biodiverse and he is not using fertilizers anymore and he is not creating dust tilling and the line between the neighbor.

And it’s not only how broadly different they are, but how fast. And in California, there were four dams taken down on the California, Oregon border and one in WashU Washington, although Wild Boy Creek. And the thing that it took years to take those dams down and it took a lot of tribal input as well.

The thing that the people are astonished by is that particularly the. The Native Indians who had been from the salmon tribes said they were finding salmon DNA in as early as four to six weeks. 

So some of these examples helped me be optimistic to say, if we can just cross a line and say, let’s start doing this, nature rises up and nature moves quickly.

And I loved what you said about how. The planet’s done well without us, we are a very invasive species and if we can pull back and give nature enough room there, the speed at which things happen is really relevant. And that’s why, coming back to what you do, encouraging companies to do good things with their money to help these things happen in those carbon baskets that are everywhere.

They are on every continent. There’s it’s carbon, if 

Sean Penrith: every Yeah. 

Kim Allchurch Flick: It could do wonderful things in a short period of time, sometimes still within our lifetimes to actually be able to see it, like taking a dam down has brought back a species that hasn’t been able to be there for, in some cases 60, 70 years, and they came back in four to six weeks.

It’s encouraging and it takes money to do that. 

Sean Penrith: It does. I think your point about in our lifetime, maybe it’ll be a combination of this, but it’ll either be something cataclysmic that, you know, like COVID where everyone had to respond or or some political enlightenment. It’s gonna be, because I, I think one of your questions was, what is the community that I work in and what’s the worldview? It’s, I think you picked it up. There’s a, there’s definitely a sense of optimism and a drive to succeed at what we do, but we do it clear-eyed and very aware that if you just look at what we need by 2050 in nature finance, that’s $8.1 trillion a year.

Yeah, eight 8.1 trillion and 70% of that must come from the private sector. 70%. ’cause the public balance sheets are too thin. We just, we can’t rely on the public finance system. So where do we get that from? We know there’s enough money in the private markets. We know that there’s trillions and trillions and trillions of dollars in all sorts of sectors.

So what we need to do is create the focus, the urgency, the will to put a value on planet stability. That’s either gonna be a crisis or enlightenment. Hopefully not, but the incremental pace at which we’re going is definitely challenging for me. 

Kim Allchurch Flick: Yes, indeed. Crises we’re seeing if they’re recognized.

Enlightenment, there is some bill McKibbon wrote a book called, here Comes the Sun. About the solar industry and how the Chinese are leapfrogging wind and others, and yes they have done a lot with coal but the speed at which they are switching over to solo and solar, making it affordable, but.

Sean Penrith: Yeah, but that’s political leadership, right? They see the value proposition in being dominant in that industry. We don’t see that in the us. We don’t see that in Europe. We’re so concerned about keeping the status quo. I think when I say enlightenment, I mean to me Mandela is the, is the epitome of somebody who understood. How to care for community, how to care for land, right. We need more people like that. 

Kim Allchurch Flick: I hope a lot of people listen to this because I think you’re amazing. As we wrap up how can people reach you? 

Sean Penrith: Easy. I think I’m the only Sean Penrith on LinkedIn by my recollection.

So LinkedIn’s pretty easy. Or our website, Gordian, not strategies, that’s plural.com. Those are the two easy ways 

Kim Allchurch Flick: and everything is in the show notes. And also the final question is, if you could have dinner with up to three people living or deceased, who would they be and why? 

Sean Penrith: I mentioned one, Madiba Mandela would be one.

Yeah. Why? I was just a legend. Just the ability to have such incredible humility and vision. It’s breathtaking. So that’s one Second, I would love to have dinner with Richard Branson. I find him. I find his maverick ways and his story very inspiring. And the third would be w Chan Kim, who’s the Blue Ocean strategist the mastermind of management thinking.

I’d love to have dinner with him. 

Kim Allchurch Flick: Oh, it sounds so delightful. You are s an inspiration to me. I’ve learned a lot. I’ve admitted carbon and financial markets have not been my bailiwick. I’m but learning to understand them is one of those Im important things because I do work with businesses and I am a community member and wanna reach as many people as possible with these messages.

So thank you. Thank you for doing it. Thank you so much. Everyone. Thank you for being here.