Unnerving a persistent thought - Making Biodiversity Finance Tangible by Stimulating (For-Profit) Investments in Biodiversity Conservation
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Unnerving a persistent thought - Making Biodiversity Finance Tangible by Stimulating (For-Profit) Investments in Biodiversity Conservation

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A presentation by Ivo Mulder at TBLI CONFERENCE EUROPE 2008.

A presentation by Ivo Mulder at TBLI CONFERENCE EUROPE 2008.

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  • First, I would like to thank the organizers for inviting me to present at the largest SRI conference so far. Especially in the last decade markets have become popular to address emerging social and environmental problems. Markets for carbon credits have emerged the fastest. And although the EU – ETS hasn’t been very successful in reducing greenhouse gas emissions so far, we know that we more stringent targets the market itself will become bigger and greenhouse gas emissions will very likely reduce. Biodiversity is arguably the most complicated currency in world markets today, even more so than carbon. While the Kyoto Treaty has provided the means for a carbon market to evolve and leapfrog, such a scenario is more difficult to realize for biodiversity. The situation, however, is similar dire!! There is an ongoing ecological crises and we need smart unconventional business ideas to ‘package’ biodiversity in such a sense to make it interested to investors, whether those are donors or consumers or companies looking for a profit.

Unnerving a persistent thought - Making Biodiversity Finance Tangible by Stimulating (For-Profit) Investments in Biodiversity Conservation Unnerving a persistent thought - Making Biodiversity Finance Tangible by Stimulating (For-Profit) Investments in Biodiversity Conservation Presentation Transcript

  • Unconventional ideas to make biodiversity finance tangible Ivo Mulder 14 November 2008 The Nature of Economy and the Economy of Nature
  • Our presentation
    • What is Triple E and what do we do?
    • The biodiversity business case: underlying cause & current situation
      • Ecological context
      • Political context
      • Financial context
    • The challenge to make biodiversity finance tangible
      • Triple E’s FEDS model
      • The investment approach to nature conservation
        • Landscape Auctions
        • Your Good Nature
        • For-profit: The challenge to structure ES into for-profit investment assets
    • How to further expand the biodiversity business market
  • 1. What is Triple E and what do we do?
    • Triple E was set up in October 2006
    • 12 employees / still very much a start-up company
    • Knowledge-driven company
    • The ecological and financial landscape is changing: Triple E is in the business of developing cutting edge financial mechanisms that better visualize and commercialize the economic value of nature.
  • Active in research, advisory and investment Triple E Investment Research Advisory 1) Landscape Auction & Your Good Nature ( www.yourgoodnature.com )
    • Business plans for nature areas – Public Private Partnerships
    5) Market analysis biodiversity-friendly investments 3) FEDS Model : Economic valuation using standard accounting
    • 2) Biodiversity Investments
    • Banking
    • Brokerage
    • Fund manager
  • 2. The biodiversity business case: macro level
    • Ecological context
    • Take things for granted : hardly price biodiversity in global economic system
    • Recognize the problem too late : Major debt with the global planet
    • Need for radical and coordinated effort to halt further destruction
    • Financial context
    • Take things for granted : Savings & economic growth
    • Recognize the problem too late : Iceland / Lehman Brothers, others
    • Need for radical and coordinated effort to halt further destruction
  • 140% increase in CSR reporting by FIs in the G250 over 3 years (KPMG, 2005) The business case climate change well established Biodiversity has characteristics of becoming “the next climate change” Biodiversity: 30% decline compared to 1970 (WWF Living Planet Index) Several direct and indirect drivers leading to degradation & loss (Millennium Ecosystem Assessment) FIs that are not able to identify companies with large footprints/dependency on ecosystems can become exposed to biodiversity business risks themselves 2. The biodiversity business case: company level Shifting consumer preferences Increased investor expectations / Shareholder value Liabilities Regulatory constraints Poor staff morale / Reduced productivity Growing relevance of biodiversity to businesses Reputation risk Vulnerability of assets to natural disasters Continued loss of global biodiversity Disruption of supply chain / Increase in costs of inputs
  • 2. The biodiversity business case: current situation
    • The ecological / scientific / NGO context
      • Portraying the (economic) value of nature in terms of goods and services
      • Developing the business case through looking at corporate risks & opportunities
      • PES is a promising approach – However, so far few successful pilots / cases
      • The WBCSD is working with 20 multinationals
    • The political context
      • After carbon markets, politicians starting to warm up to biodiversity markets
      • UNEP’s Green Economy Initiative
      • TEEB – The Economics of Ecosystems and Biodiversity
      • Legislation on biodiversity offsets (USA, Australia, Canada – Alberta)
    • The financial context
      • The financial crises poses both threats and opportunities
    • A new approach to economic valuation: FEDS model
      • Regard nature areas as ‘firms’: calculate all nature-related cash-flows
      • Contribution to the (local) economy: € and jobs
      • Not a perfect method: but provides a realistic picture to policy makers
    • The investment approach to nature conservation
      • Landscape auctions:
        • voluntary payments to guarantee protection and capital stream for conservation
        • Tapping into market nice to make corporate CSR commitments tangible
      • Your Good Nature:
        • online market place to meet demand to directly and tangibly conserve biodiversity
      • For-profit investments:
        • investments in businesses that deliver value for biodiversity and provide a ROI
        • Structure ecosystem services into for-profit investment assets
    3. The challenge to make biodiversity finance tangible For profit Not-for profit
  • 4. Further expanding markets for biodiversity finance
    • How to move from philanthropy to business focus?
    • Are national laws in combination with voluntary business initiatives sufficient or do we need a global treaty?
    • Role of different stakeholders to stimulate investors to pilot a number of commercial funds / projects ?
      • Governments : Relatively less attention has been placed on public pension funds, bonds, etc. There is a special obligation from a government’s perspective to take biodiversity into account
      • Non-governmental organizations : more a role as watchdog or cooperator?
      • Business / finance sector : how to increase the business rationale to integrate and account for biodiversity in full business models?
  • Thank you! Hartelijk dank! Contact: +41 76 438 1570 [email_address]
    • FEDS model
    • Calculate nature-related cash flows using traditional accounting principles
    • Show how much capital is being generated by nature areas and how many jobs are created and sustained
    • +/- 20 studies carried out in the Netherlands
    Research
    • Landscape Auction
    • Non-profit investment tool to generate extra revenue stream to land owners
    • 9 auctions held, 2 outside the Netherlands
    • 7 proposals with potential clients
    • Your Good Nature
    • On-line marketplace to match demand to contribute to nature conservation with supply from landowners
    • Looking for companies to ‘adopt’ the website
    • 1 proposal with potential client
    Not-for profit investment
    • Structuring into for-profit investment assets
    • Interest to set up a fund that invests in
    • businesses with a positive impact on
    • biodiversity, while being profitable on the long
    • run.
    • Focus:
    • Organic agriculture, aquaculture
    • Sustainable forestry
    • Biocarbon
    • Biodiversity offsets
    • Investment in leasing ecosystem services
    Challenge: For-profit investment Useful sources: 1. Bishop et al 2008: Building Biodiversity Business 2. Mulder, 2007: Biodiversity, the Next Challenge for Financial Institutions?