Gather the ingredients.

Preheat the oven to 350°F. In a large enameled cast-iron casserole, melt the butter in 1 tablespoon of the olive oil. Arrange the meat in the casserole in a single layer and season with salt and pepper. Cook over moderately high heat, turning occasionally, until browned on all sides, 8 minutes.

Add the chopped onion and garlic and cook over moderate heat, stirring occasionally, until the onion is softened, 5 minutes.

Add the flour and stir to coat the meat with it.

Add the wine, bay leaves, and thyme; season with salt and pepper. Bring to a boil, stirring to dissolve any brown bits stuck to the bottom of the pot. Cover the casserole and transfer it to the oven. Cook the stew for 1 ½ hours, until the meat is very tender and the sauce is flavorful.

Meanwhile, in a saucepan, cover the pancetta with 2 cups of water and bring to a boil. Reduce the heat and simmer for 30 minutes.

Drain the pancetta and slice it ½-inch thick, then cut the slices into 1-inch-wide lardons.

In a large skillet, combine the pancetta, pearl onions, mushrooms, and carrots. Add the remaining 1 tablespoon of olive oil, ¼ cup of water, and a large pinch each of sugar, salt, and pepper.

Bring to a boil, cover, and simmer until almost all of the water has evaporated, 15 minutes. Uncover and cook over high heat, tossing, until the vegetables are tender and nicely browned, about 4 minutes.

To serve, stir some of the vegetables and lardons into the stew and scatter the rest on top as a garnish. Top with a little chopped parsley.