Purpose lives in action, not intent. It is with this in mind that the Natural Capital Investment Alliance (“NCIA”) held the inaugural Nature Investment Summit in London on October 18. Posaidon co-hosted this industry event together with Climate Asset Management, the Green Finance Institute and Lombard Odier.
The summit brought together a full room of 85+ of the world’s leading asset owners and asset managers with business leaders in the field to discuss the defining questions about how nature-based investing can be scaled to move the trillions urgently required. Five panel sessions throughout the day focused on the macro environment for nature markets, equities, fixed income, real assets and tech supporting nature-based investing.
Our summit key take-aways have been:
- Nature finance is asset class agnostic. We‘ve heard of functioning examples across equities, fixed income and private markets
- Carbon is the driver of current growth – and arguably future growth in the short-to-medium term. But beyond carbon, it still gets tough. There is a perceived conflict between the need for better carbon market standards and accountability and the desire of bigger corporates to inset under their own rule set
- A key thread has been around the ambition level of investments and transactions. Are we linking pricing to material impacts, are ratchets symmetric with the challenges, and are the annual SBTs appropriate? One area of focus should be to spend more efforts on what fair value is
- Pricing of nature assets is still a challenge. Intellectually valuable concepts such as the time value of carbon and the irrecoverability of some ecosystems assets are not really priced into deals
- We definitely have some valuation challenges. A question we ponder about: do we need to apply different discount rates for future carbon values versus the values of underlying commodities generating that carbon?
- With valuation being a challenge, we should be aiming to drive down the cost of capital, in analogy to other industries
We look forward to co-organizing with our partners the next edition of the Nature Investment Summit in autumn 2023.
