The Sustainable Finance live section session of the day entitled 'Showcase of the Art of the Possible' aimed at showing potential journey of discovering natural capital to making it tradable.
Richard Peers, founder, Responsible Risk: “This journey from the field through to the trade, and it's complicated. Now it doesn't mean that everybody has to go through all of these steps, but I think what we found was not a lot of people fully understand the spectrum of data, decision making, and then the fundamental issues”
The presentation took the audience through each stage of this proposed journey of gain value from nature, with each section presented by a different expert.
Observing and monitoring natural resources
The first step was presented by Giles D'Souza, strategic business lead in remote sensing and GIS, Planet, a company which provides global daily satellite imagery and insights about the planet.
D’Souza explained: “The platform allows us to look deeper, look broader, back through time, and zoom into particular things. It allows us to look at broad area changes which can be detected at regional scale.”
He gave the example of visually looking at deforestation in the Amazon or development in Indonesia where you can see forest disappearing.
This allows for the earth’s land to be monitored up to a scale of three meters resolution. D’Souza commented: “We can look for areas that are maybe more pristine, areas worth preserving.”
He added that they are working hard to “identify what we can see on the ground, relate that to the number of trees or the amount of biomass, and how that can be monitored on a daily basis from satellite data.”
D’Souza concluded: “All of that information is becoming accessible is usable by guys who they want to build models or measure or monitor things at the scale and the resolution that we can identify things at the individual level.”
Verifying nature monitoring data
Regarding D’Souza’s presentation, Donna Lyndsay, strategic market lead environment and sustainability, Ordnance Survey said: “We can see all this wonderful stuff, but how do we know who has what and where. That is what we've been trying to do in terms of what we call gold pin.”
Gold pins, Lyndsay explained, are used to verify the location and ownership of certain assets across the globe. She said it’s asking companies to “upload all the information, get independently verified, give those surety that actually you know where those assets are on the planet. So you're not buying into an asset that's going to get stranded, for example.”
Lyndsay added that they are working closely with the Global Legal Entity Identifier Foundation, which is important in understanding who owns the assets in the areas of the field you want to invest in.
Investing in nature’s baseline
Cain Blythe, founder, Ecosulis and Credit Nature stated that the next step involves how to “start to think about restoration strategies, design a mechanism that can enable investment, start to think about the longer the long term MRV, and also then optimise and learn as we go along. What we're experiencing at the moment, from a client perspective, is how do they work out how many of these assets to invest in, what scale, and what level of investment is there.”
Blythe added that when looking at restoration strategies: “It's very much a codesigned and a co-created process. It's a big mistake to try and do these things in isolation, without talking about the intermediaries, the landowner, or the different teams in the in the corporation.”
Blythe discussed that from the companies they work with they are seeing net zero requirements, water improvement projects, biodiversity, and looking to be aligned with frameworks like the TNFD and CRSD.
Blythe concluded: “This is a journey. I don't think anyone at this point can claim that they have a net positive strategy that is guaranteed. I think things are still fluid and quite dynamic at the moment. So there is an expectation that this is a journey towards nature positive, not an end point in and of itself.”
Aggregating data to make it accessible
“How do we bring an ecosystem of open source, plug and play code that everybody can access?” was the question Matthew Sandoe, chief of staff, OS Climate explored during his section.
Sandoe explained they take raw data from satellite or geo-active information, and process it into hazard information such as chronic heat measurements. He stated their aim is to “make date easier to find, consume, share, and trust.”
The blueprint behind all of this is to create a “marketplace where you can search data, combine it, aggregate it to analytics, pass it through to deliver your use cases,” with the ultimate goal of allowing “banks and asset managers to make a controlled calculation.”
Analysing nature risks and regulations
“In the overall landscape, particularly when it comes to assurance and rating agencies, is a really difficult one to be able to see who is actually making progress,” said Musidora Jorgensen, chief impact officer, World Wide Generation.
“The goal is to have real time, trusted, comparable data that everybody can access, in order to then be able to share and ensure that the overall strategies are being aligned,” she added.
Jorgensen explained that companies often get “carbon tunnel vision”, when there are many other aspects to consider.
Jorgensen added that there are an increasing number of global standard and frameworks: “The most recent one that's causing concern is what CSDDD is going to do for global supply chains, and the implications of getting data wrong from that perspective as well.”
Regarding a way forward for managing this data and regulations, Jorgensen stated, “having an automated, digital way of doing that is key. Trying to do that on a spreadsheet is just impossible.”
Making nature an asset class worth investment
The final step led by Andrew Creak, founder, Kana Earth, looked at the end goal of all the other sections - making a nature based project an asset to invest in.
Creak said this starts with getting a valuation price: “I really need a valuation price that then gives me the evidence to say, because those sort of projects historically given me a 30 pound unit or 75 pound unit, or 100 pound unit, I can put it on my books at that and I can get my accountants to sign that off as well.”
The next step is the risk discount, he stated: “If the risk discount is too big, it may be worth me insuring against some of these things, especially as I put it together in a big portfolio.”
Creak further added that this is complicated further by the time threshold: “Are those things in the future going to be worth more, because we all think the supply and demand curves can drive us up, or do we think there's more risk in here because things in climate will actually change those where they still have embedded risk that they may not already have.”