Founder of ResponsibleRisk, Richard Peers, moderated a session at Sustainable Finance Live called ‘What is the role of impact and ESG data in ensuring economic profit of nature capital in the marketplace?’, with speakers Cain Blythe, founder of Ecosulis and Credit Nature; Simon Crichton, head of nature, food, and resource at Triodos Bank; Giles D'Souza strategic business lead in remote sensing and GIS at Planet; James Lockhart-Smith, VP sustainable finance at Verisk Maplecroft; and Donna Lyndsay, strategic market lead environment and sustainability at Ordnance Survey.
The panel discussed the transaction journey of natural value, exploring how nature is priced, quantified, and traded. The session outlined how ESG and impact investing leads to profit. Starting off with the perspective of a banker, Crichton stated that Triodos Bank has been working on nature financing since its inception, with an objective to developing wind turbines.
He emphasised the need to be challenging gaps in data, and government gaps in policy and regulation. He added: “ I am really interested in the holistic approach. It's not just about carbon, biodiversity, or gain in nature; it's about community and social impact. However, I ultimately step over from that person being really interested in holistic nature, and I turn on the banker switch to say, ‘how do I get repaid?’ The banker switch, unlike any investor switch, is how we get our money back, and I'm confident that actually we are meeting the buyers’ needs.”
Commenting on the route to financing nature, Crichton highlighted that nature is a solution to many problems with carbon and net zero serving as the starting points of a journey to data collection, but there is a need for data standardisation and policy support moving forward.
D’Souza provided a case study for nature collection solutions explaining what Planet does by pointing to satellite data However, for full data coverage there needs to be correlation between measurements and monitoring from satellites and the ground. Having deployments on the ground is essential to map ecosystems, but there needs to be data points above and below to create a comprehensive and detailed picture of the data.
“From our point of view, satellite data is great because it's homogeneous. We cover the whole world. We cover it routinely. We cover it every day with certain parameters. What we are missing is how that relates into what we've got on the ground.”
He moved on to talking about AI models and how those can identify where and how ecosystems are developing: “AI is now helping us organise that data that offensive, it is accessible so you can look at models through time and space, and then identify where things are changing, how ecosystems stay intact, or whether there is pressure, for example, from droughts or floods. What we're finding, as well as the investors, we want to look at particular projects to map and monitor areas. We're also getting the insurance data coming along and saying, put a buffer of 10-20 kilometers around that, because they want to know what the risks are that might be encroaching on that project.”
Lyndsey explained that Ordnance Survey works in both public and private spaces as a government corporation to address geospatial problems faced by commodity providers. By collaborating with organisations such as Planet, Deloitte, Trace, and ESRI, they trace global supply chains to identify sourcing and processing locations.
“We ran a private concept on Unilever's soy supply chain to see if you could really identify right at the beginning, where they source these materials. Where are they being processed? Where are these physical assets on the planet, using Planet's data and AI capabilities and machine learning to see how much we can automate that process, to say, ‘yes, you are there.’ Is your location identified and then utilised across all these other ecosystems? That means people like Planet can use it to really help them, it means that financial institutions can then also look at their portfolios and say, all these assets are located here.”
Lockhart-Smith spoke on geo-spatial place-based risks for places and corporations, stating that Verisk Maplecroft collects data on risk issues across political risk and unstructured data for human and labour rights issues. They seek to answer the specific question: ‘what do you learn about a risk sustainability profile of an asset because of where it is and what it does, before having any other information about that asset?’
“There is the challenge of creating decision-ready data at scale. Moving from looking at one asset and one issue at a time in a detailed, real asset context, to looking at many issues and millions of assets across a broader investment portfolio. The relevance for today is thinking about what's possible, putting everything together, and then also how to think about all the other sustainability and risk issues which couldn't be required to look at investment beyond first-order nature restoration data.”
From a nature-positive perspective, they bring in a wealth of data on deforestation, degradation, depletion – water pollution, air pollution, local data on ESG risks that are impacting the price of nature. Lockhart-Smith highlighted that the social component is vital in nature restoration, not only do they need local government and community consent, but there has to be interested parties lobbying for change and bringing people together.
Blythe echoed the importance of community, stating that Credit Nature have a socio-ecological model in place to speak to all involved parties on what they can invest in when it comes to restoration processes, so they all have a voice.
He concluded that it is possible to invest in nature, that is being demonstrated more and more: “In terms of restoring nature, the Wildlife Trust has been restoring nature for over 100 years. So the problem is it's not been done at scale. It is appealing enough to the asset managers and the big funds to deploy those sort of sums of money. Like what Triodos are doing with Oxygen Conservation, that's the level of ambition that actually has been lacking, which is now coming into this sector. These different components of a market infrastructure are really important, but so is independence. One of the areas that we've also really focused on is having our system of metrics, our 0-100 scale, being independently accredited by Accounting For Nature, which is the only international standard for making accounts of environmental units. So the ingredients are coming together, and we are not the only ones providing solutions.”