People cannot survive


without nature. Bruce Jackson, USS


Micheli: If people care about it and create the market, we could have that at some point. Until there is a clear functioning bio- diversity market, we need to decide which metrics to use to define it. A lot of people are working on this. On climate, we have this already, but on biodiversity it is years away.


Vyravipillai: The breadth of biodiversity is huge. With climate, we can use the key performance indicator of carbon emissions to determine the intensity of a project or company. But for bio- diversity there is an abundance of metrics, making it difficult to identify a positive solution, because it is not so clear cut. To Gabriel’s point, we are trying to understand this landscape bet- ter to see where we can have the most material impact in terms of dedicating capital to a particular asset class or solution. Jackson: TNFD will help push that. It also comes down to met- rics. If there is something I can talk to my portfolio managers about which they can grasp, then I’m halfway there. de Zylva: That is an interesting point. There is a danger in look- ing for a single biodiversity metric to sit alongside the climate metric because different sectors will choose different things. An architect would choose embodied carbon, while a farmer would look at how much carbon they are storing. So, it is not straightforward.


In biodiversity there is a danger of reductionism. That is why nature-based solutions is a dirty phrase for me. Someone comes up with a catchy term to get countries to adopt nature- based solutions, like peat restoration. Now that there is a label on it, Heathrow, for example, can add a third runway and put


some money towards peatland restoration. They should be reducing emissions anyway, not using it as a bargaining chip. That is why ‘nature-based solutions’ is, like offsetting, getting a dirty reputation. Jackson: On the point about plantations: it’s a monoculture, it’s not diversity. I’m sick of reading reports saying: “We are going to do carbon capture and storage and if that doesn’t work, we will do nature-based solutions.”


Where appropriate, companies should start the nature-based solutions now and do it properly. Then if their carbon capture and storage works, they are going to get to net zero sooner. It always seems to be a “Plan B” for a lot of companies. They see climate as a man-made problem, so they want a man-made solution. In reality, nature is a solution in itself. Do your nature-based solutions now – making sure they are proper ones, not monocultures of trees – and you will be half- way there. de Zylva: The UK Climate Change Committee came up with an interesting report in October which exposed carbon offsets and nature offsets as unreliable. It called for proper regulation of the bad claims being made for these offsets. That is a massive risk profile for investors. It is in stranded asset territory, but if everyone is going to it there is a risk of people buying into the wrong thing, when money needs to be going into the real solutions. Manuel: These projects need capital, so what’s the appeal to an investor with that capital? What are you going to offer the people making decisions about their capital to direct it towards


February 2023 portfolio institutional roundtable: Biodiversity 11


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