Quantifying nature's success

During New York Climate Week, Baringa hosted an engaging discussion amongst leaders within financial services, products, nonprofits, and academia. The speakers focused on the metrics and timelines for financing solutions to address the nature crisis. Baringa’s nature practice lead Simon Connell led the conversation which highlighted three key takeaways: 

Define measurement approaches  

Global alignment is necessary as nature measurement matures 

Tim Whitehead, Managing Director of Sustainable Finance at Goldman Sachs, set the stage, “We need a common language of how to use large data sets in a way that is easy to understand.” Davida Heller, Director of Sustainability Strategy at Citi, shared, “You can’t manage what you don’t measure. Nature is challenging to measure due to its complexity of metrics and new frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are helpful to companies in figuring out what the metrics could be.” 

There are key points in the supply chain to focus on when dealing with complex value chains – Sophie Beckham, Chief Sustainability Officer at International Paper, highlighted, “The most important relationship is with landowners and understanding their objectives. Through these relationships we can encourage decision making on the landscape that lend towards sustainable management.” 

Tools and technology are drivers of successful measurement practices 

Sophie gave an example from International Paper, “We are using an internally developed geospatial information system (GIS) mapping tool, ForSite, that allows us to map the biodiversity before purchase and working with knowledge partners on things like bioacoustics monitoring.” 

The bottom line

Having a clearly defined strategy and alignment on metrics will inform your measurement approach. Publicly available frameworks and tools enable companies just getting started to understand key metrics and define their baseline. Measurement is an opportunity for investment in enhanced data handling with tools being developed that enable higher resolution measurement specific to a sector or company’s operations. 

Enhance carbon markets to include nature 

There are significant opportunities and challenges to nature markets 

Melissa Weigel, Managing Director of Investment Capital Raising at The Nature Conservancy, shared, “It is tough to find capital that is patient and willing to take a risk in emerging markets. Data measurement here is expensive and localization is critical.” With Tim emphasizing, “There is a market gap because we recognize there’s value in ecosystem services. When thinking about the potential for biodiversity credits there is a coalescence around a standard framework but it requires more effort. It is increasingly more important that you have engagement of a broad set of stakeholders with buy in from government.” 

Our history in carbon provides learnings that should be approached scientifically to inform nature iterations 

Melissa introduced, “The history of carbon markets not being successful and carbon projects not actually sequestering what we think should be captured is both a measurement issue and a science issue. We need to listen to the scientists and leave room for the evolution of the science as we learn more. We have to go through this scientifically driven process to get to a biodiversity market.”  

Carbon markets and nature markets should not be treated as a separate structure 

Sophie underscored, “The concern is siloing biodiversity and carbon because they really go hand in hand. We can envision a system in which a carbon credit has a stackable biodiversity credit – it’s hard to picture one without the other” 

The bottom line 

Collaboration and thought partnerships are critical to a successful nature market. Attention turns to COP16 in Cali, Colombia this October where international governments will convene and have the opportunity to thoughtfully define and support the nature market. 

Frameworks support action and are increasingly required by investors 

Disclosure frameworks are important to driving action through the investor community 

Sophie remarked on the difference between investors and customers, “We have heard more from investors than customers today about TNFD” and Melissa offered an alternative, “The private sector can take action before TNFD. Companies asking where to start should first develop a strategy.” 

Investors increasingly find frameworks valuable 

Davida noted that the Corporate Sustainability Reporting Directive (CSRD) brings together multiple stakeholders across the company to understand their business and do a double materiality assessment. 

Include nature restoration and conservation in impact investing 

Melissa provided an example from the Nature Conservancy, “Our way to scale impact on nature and biodiversity is through private markets via impact-focused deal teams like NatureVest. Investment can and is a big part of nature strategy and how organizations can take action now.” 

The bottom line 

Once your company has its nature strategy, voluntary disclosures like TNFD can be used as a capability-building initiative to establish a working language across an organization and its value chain. As investor-driven initiatives to respond to Carbon Disclosure Project (CDP) questionnaires increase and the CDP scope expands to include nature, aligned to TNFD, organizational readiness grounded in robust capability will be critical to organizational health.  

Baringa works side by side with organizations looking to get started on their nature journey. If you are interested in learning more, please contact Ryan Bohn, Simon Connell, or Maureen Bossi.