Investing in Nature Is Gaining Traction. Will It Be Enough? - Kanebridge News
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Investing in Nature Is Gaining Traction. Will It Be Enough?

By ABBY SCHULTZ
Wed, Jan 10, 2024 9:57amGrey Clock 4 min

Investing in nature to address climate change, support biodiversity, and protect ocean health—and more—is expected to reach record levels this year in response to more regulation and market demand, according to Cambridge Associates, a global investment firm.

Still, the amount of private capital invested to support natural systems will fall far short of what’s needed, according to the annual “State of Finance for Nature” report published in December from the United Nations Environment Programme.

A big reason is that nearly US$7 trillion in public and private finance was directed to companies and economic activities in 2022 that caused direct harm to nature, while only US$200 billion was directed to so-called nature-based solutions, or NbS—investments that protect, conserve, restore, or engage in the sustainable management of land and water ecosystems, as defined by the United National Environment Assembly 5, or UNEA5, the report said.

“Without a big turnaround on nature-negative finance flows, increased finance for NbS will have limited impact,” it said.

But the report also said that the misalignment “represents a massive opportunity to turn around private and public finance flows” to meet targets set by the United Nations Rio Conventions on climate change, desertification, and biodiversity loss.

The conventions aim to limit climate change to 1.5 degree Celsius above pre-industrial levels, protect 30% of the earth’s land and seas by 2030, and to reach “land degradation neutrality” by 2030. Reaching those goals will require more than double the amount of current levels of nature-based investing by 2025, to US$436 billion, and nearly triple today’s levels to US$542 billion by 2030, the report said.

Most of the US$200 billion invested in NbS today is by governments, but private investors contributed US$35 billion—including US$4.6 billion via impact investing funds and US$3.9 billion via philanthropy. The largest source of private finance was in the form of biodiversity offsets and credits. [An offset is designed to compensate for biodiversity loss, while a credit is the asset created to restore it].

Many wealthy individuals and families concerned about climate change and the environment so far have focused their investment dollars on climate solutions and innovations in technology and infrastructure, or in technologies supporting food and water efficiency, says Liqian Ma, head of sustainable investment at Cambridge Associates.

But “increasingly there is growing awareness that nature provides a lot of gifts and solutions if we prudently and responsibly manage nature-based assets,” Ma says.

Investments can be made, for instance, in sustainable forestry and sustainable agriculture—which can help sequester carbon—in addition to wetland mitigation, conservation, and ecosystem services.

“Those areas are not in the mainstream, but they are additional tools for investors,” Ma says.

Finance Earth, a London-based social enterprise, is among the organizations working to make these tools more mainstream by creating a wider array of nature-based solutions in addition to related investment vehicles.

Finance Earth groups nature-based solutions into six themes: agriculture, forestry, freshwater, marine/coastal, peatland, and species protection. Supporting many of these areas are an array of so-called ecosystem services, or benefits that nature provides such as absorbing carbon dioxide, boosting biodiversity, and providing nutrients, says Rich Fitton, director of Finance Earth.

Each of these ecosystem services are behind existing and emerging markets. Carbon-related disclosure requirements (at various stages of approval in the U.S. and elsewhere) have long spurred demand for carbon markets, the most mature of these markets.

Cambridge Associates, for instance, works with dedicated asset managers who have been approved by the California Air Resources Board to buy carbon credits, Ma says.

In its annual investment outlook, the firm said California’s carbon credits should outperform global stocks this year as the board is expected to reduce the supply of available credits to meet the state’s emission reduction targets. The value of these credits is expected to rise as the supply drops.

In September, the G20 Task Force on Nature-Related Financial Disclosures released recommendations (similar to those put forward several years ago by the Task Force for Carbon-related Financial Disclosure) that provide guidance for how companies can look across their supply chains to assess their impact on nature, water, and biodiversity “and then start to understand what the nature-related risks are for their business,” Fitton says.

The recommendations will continue to spur already thriving biodiversity markets, which exist in more than 100 countries including the U.S. In the U.K., a new rule called “Biodiversity Net Gain” went into effect this month requiring developers to produce a 10% net gain in biodiversity for every project they create.

Though developers can plant trees on land they’ve developed for housing, for example, they also will likely need to buy biodiversity credits from an environmental nonprofit or wildlife trust to replace and add to the biodiversity that was lost, Fitton says.

This new compliance market for biodiversity offsets could reach about £300 million (US$382 million) in size, he says.

Finance Earth and Federated Hermes are currently raising funds for a U.K. Nature Impact Fund that is likely to invest in those offsets in addition to other nature-based solutions, including voluntary offset markets for biodiverse woodlands and for peatlands restoration.

The fund was seeded with £30 million from the U.K. Department for Environment, Food and Rural Affairs—money that is designed to absorb first losses, should that be needed. The government investment gives mainstream investors more security to step into a relatively new sector, Fitton says.

“We need the public sector and philanthropy to take a bit more downside risk,” he says. That way Finance Earth can tell mainstream investors “look, I know you haven’t invested in nature directly before, but we are pretty confident we’ve got commercial-level returns we can generate, and we’ve got this public sector [entity] who’s endorsing the fund and taking more risk,” Fitton says.

Since December 2022, when 188 government representatives attending the UN Biodiversity Conference in Montreal agreed to address biodiversity loss, restore ecosystems, and protect indigenous rights, several asset managers began “creating new strategies or refining strategies to be more nature or biodiversity focused,” Ma says.

He cautioned, however, that some asset managers are more authentic about it than others.

“Some have taken it seriously to hire scientists to do this properly and make sure that it’s not just a greenwashing or impact-washing exercise,” Ma says. “We’re starting to see some of those strategies come to market and, in terms of actual decisions and deployments, that’s why we think this year we’ll see a boost.”

Fitton has noticed, too, that institutional investors are hiring experts in natural capital, recognizing that it’s a separate asset class that requires expertise.

“When that starts happening across the board then meaningful amounts of money will move,” he says. “There’s lots of projects there, there’s lots of things to invest in and there’ll be more and more projects to invest in as more of these markets become more and more mature.”



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Savvy travellers who plan their trips around dining at their destination’s most in-demand restaurants know that securing a reservation at a top Paris eatery isn’t an easy proposition on any given day.

Come the Olympics in July, when the city is flooded with tourists, one would expect the jockey sport to snag a table to be that much more intense. But that’s not necessarily shaping up to be the case. As of mid-May, Parisian insiders such as hotel managers, restaurant owners, and local luxury concierges reported that inquiries at sought-after spots were no higher than usual, foretelling a potential opportunity for visitors looking for a fine-dining experience during the games.

The time to book falls over the next few weeks given that many top spots don’t take reservations until one month before the dining date.

The Michelin-starred Jean Imbert Au Plaza Athenee and Le Relais Plaza, both at Hotel Plaza Athenee and helmed by the renowned French chef Jean Imbert, are two examples.

Francois Delahaye, the COO of the Dorchester Collection, a hospitality company that includes the Plaza Athenee and a second Paris property, Le Meurice, says that his regular guests who are visiting for the games and Parisians who frequent the restaurants know not to call too far in advance of when they want to dine.

Further, he doesn’t foresee reservations being a challenge at either venue or at Le Meurice’s two-Michelin-starred Restaurant Le Meurice Alain Ducasse.

“Booking for the restaurants won’t be an issue because people are planning meals at the last minute,” Delahaye says. “Also, the people who are in Paris specifically for the Olympics are here for the games, not to eat at restaurants. They’re not the big-spending clientele that we usually get.”

Delahaye doesn’t expect the kinds of peak crowds that descend on fine dining during Fashion Week each spring and autumn, for example, when trying to land a seat at the three eateries is nearly impossible. “People are fighting to get in,” he says. “You need to book through your hotel’s concierge, have an inside source, or be a hotel or restaurant regular.”

Several Paris luxury concierge companies echoed Delahaye’s perspective

Manuel de Croutte, the founder of Exclusive & Private, says that Paris regulars probably aren’t planning a trip when the Olympics transpire—from July 26 to Aug. 11—because they want to avoid the tourist rush. “We’ve gotten some reservation requests from people who’ve heard about us but not nearly as many as we usually get when the very wealthy travellers are here,” he says.

During peak periods like the French Open or Fashion Week, de Croutte says that his job entails making bookings for travellers who don’t have any other way to get into buzzy or Michelin-starred establishments.

“You’re unlikely to get a table at a see-and-be-seen place without knowing someone,” de Croutte says. “No one picks up the phone or answers email.” He says his team has established relationships with managers and owners of many of the hot spots in Paris and often visits them in person to land tables.

Exclusive & Private’s Black Book of Paris restaurant recommendations for Olympic visitors span a broad range, from casual bistros to fine-dining.

Michelin eateries include the three-star Le Gabriel at La Reserve, the two-star Le Clarence near the Champs-Elysee, and the two-star Le Taillevent.

Spots without a Michelin star but equally notable are also on de Croutte’s list: L’ Ami Jean offers traditional and flavourful southwestern French cuisine, Allard is a brasserie from Alain Ducasse, and Laurent serves French food to a fashionable set.

“My favourite neighbourhood for restaurants is Saint Germain de Pres,” de Croutte says. “You’ll find unassuming but chic names with excellent food and a great vibe. You can book with these places directly if you’re here for the Olympics, but don’t wait until the last minute because they will get filled.”

He also cautions that some Paris eateries are asking for nonrefundable prepayments for reservations during the Olympics.

“Be sure you want to go before committing and ask about the refund policy if you are charged,” he says.

Stephanie Boutet-Fajol, the founder of Sacrebleu Paris, says her bespoke travel company charges a lump sum of about US$750 to make all the restaurant bookings for the Olympic period, though the price varies depending on the dates and the number of restaurants that a client requests. “Reservations around the closing ceremony are harder to come by because that’s when more elite travelers are coming to Paris and want the chic restaurants that are always difficult to get a table at,” she says.

Meanwhile, chefs at some Michelin-starred restaurants share that they have tables available during the Olympics and welcome travellers to their establishments.

Thibaut Spiwack, for one, behind the Michelin-starred Anona, serving modern French cuisine, and the culinary consultant for the popular Netflix series Emily in Paris , says that he is open for reservations.

“My team and I look forward to sharing a culinary experience with new clientele that I hope will remain in their memory,” he says.

Spiwack suggests that travellers check out other worthwhile restaurants where he himself dines. For terrific wine, there’s Lava, and for Italian, he likes Epoca where the pastas are “divine.” Janine is the best bistro in town, and Prima wins for a pizza fix, he says.

“You have a lot of restaurants in Paris to pick from,” Spiwack says. “You just need to determine where you want to go, and book as soon as you can.”