on the potential to help farmers lock in their carbon for a chunk of the profits.


The concept of natural capital is a double-edged sword, because you cannot put a price on everything. The theory is that natural capital exists, but how do we turn that into money so investors can get a dividend? That is the trick we are missing. Manuel: Should you consider nature and climate together? Sometimes yes, sometimes no. The solution has to be bigger than the problem. We cannot go into a room full of pension funds and explain that we are pumping emissions into the sky and the Amazon is disappearing at a rate of several football pitches a week, so let’s try to fix it. We are in the wrong forum to have that conversation. There is no solution those people have to that problem.


What I mean by the solution has to be bigger than the problem is that it is okay to scale a problem so the people in the room can find solutions to it. If that means only thinking about climate from how much you invest in fossil fuel producers, that’s okay. If you are thinking about the extent to which you might have deforestation exposure or climate interdependencies in your portfolio, that’s okay. It will help the people who are faced with a decision to reach an outcome which will have a positive trajectory.


It is important to be careful about how these problems are framed depending on the audience you are trying to interact with and what is within their gift to achieve. de Zylva: The science shows we are running out of time on cli- mate and on nature, whether you treat them separately or together. The problem is that investors are not hearing


sufficiently enough that there is a problem coming down the road. I bet that the risk profile of most investors looks pretty dodgy if you ran it through the science. Tim is right in that the solution has to be bigger than the problem. There are so many solutions in our gift, but we are not backing them enough. Micheli: Usually, if you solve biodiversity loss, you help solve cli- mate change, as they are clearly interlinked. An example is regenerative agriculture. There are companies which are trying to make a connection with farmers by creating credits that will be paid by companies that want to improve their footprint. Unilever and Nestlé are just two companies that have pledged to do more regenerative agriculture. We are seeing companies starting to sell those credits, whose impact should be more car- bon in the soil, better water retention and better food quality. This makes us relatively optimistic that there could be a big change. Then there are consumers and legislation. Companies will adapt quickly if regulation or consumer preferences change. Many of the technologies are there. Some markets have to improve, but farmers have to trust in that change and may not want to change as fast. We are seeing companies using bacteria or microbes instead of pesticides, but adoption is slower than expected. We will probably not see a hockey stick, but there will be a clear acceleration in these things. The technologies are there and a lot of research is happening. It is amazing what solutions com- panies are working on. Hill: Do you see nature-based solutions as an emerging asset class in its own right?


No one is saying that they are a leader in biodiversity because we do not know what a leader in biodiversity


looks like yet. Rebecca Woods, Church Commissioners for England


10 February 2023 portfolio institutional roundtable: Biodiversity


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