Latest / Second Nature / E166 Martin Berg: Nature Is Becoming a $1BN Business

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E166 Martin Berg: Nature Is Becoming a $1BN Business · Second Nature

• 0:07
  SPEAKER_00: How much are you personally using AI at the minute?
• 0:10
  SPEAKER_00: And how much is it impacting what you're doing?
• 0:13
  SPEAKER_01: We're using it a lot for internal stuff, right?
• 0:15
  SPEAKER_01: So personally, I use it a lot now for what I write.
• 0:20
  SPEAKER_01: Or I mean it's really useful, right?
• 0:22
  SPEAKER_01: You can dictate something.
• 0:24
  SPEAKER_01: So do you go voice a lot?
• 0:26
  SPEAKER_01: I do both.
• 0:27
  SPEAKER_01: Or sometimes I just kind of a couple of thoughts, or I'm in the train and I'm writing some bullets, and then I need now, I don't know, an email to my shareholders with that, right?
• 0:36
  SPEAKER_01: It's great.
• 0:36
  SPEAKER_01: It's been fantastic for you.
• 0:38
  SPEAKER_01: You can even do that in the train, right?
• 0:39
  SPEAKER_01: And then you come to the office and then you review full emails.
• 0:42
  SPEAKER_01: It's like an assistant, basically, right?
• 0:43
  SPEAKER_01: So I use it as almost like someone who can sumvise, research something for me and all these things.
• 0:50
  SPEAKER_00: Are you do you move move across multiple platforms or are you specific to one?
• 0:56
  SPEAKER_01: So privately I use um chat GTP.
• 1:00
  SPEAKER_01: And then for what we do copilot.
• 1:02
  SPEAKER_01: And the nice thing on Copilot is that you can also do internal things.
• 1:06
  SPEAKER_01: And that's really good, actually.
• 1:07
  SPEAKER_01: So for example, for internal communications or internal things, ideas.
• 1:12
  SPEAKER_01: I sometimes please go through all my um I have you have do you use Copilot?
• 1:18
  SPEAKER_01: They have a button, they have a web button and an internal button, work button, basically.
• 1:23
  SPEAKER_01: So if you go on the work button, then it kind of goes through your entire SharePoint and emails.
• 1:28
  SPEAKER_01: And sometimes it's really good.
• 1:29
  SPEAKER_01: Like I have like I had to give a speech for somebody leaving.
• 1:31
  SPEAKER_01: It's like, can you get me some, give me three ideas of some things that that that came up?
• 1:37
  SPEAKER_01: And like, I mean, two of the three ideas were complete rubbish and made up, but one was really good.
• 1:42
  SPEAKER_01: And it's like, oh yeah, that's a good idea.
• 1:43
  SPEAKER_01: So sometimes it kind of really helps you to prompt your things, right?
• 1:47
  SPEAKER_01: And then to kind of it just cuts down a lot of time, right?
• 1:50
  SPEAKER_00: Probably the ratio of ideas we have, bad to good as well.
• 1:52
  SPEAKER_00: Like we just be the same, right?
• 1:54
  SPEAKER_01: If you asked, if I asked around, but then then you have to wait, and people have to answer and all these things.
• 1:59
  SPEAKER_01: Sometimes that so that's good.
• 2:01
  SPEAKER_01: Where we use it more systematically is we created a few, I mean, not too sophisticated, but we we created a few agents.
• 2:09
  SPEAKER_01: For example, for investor material.
• 2:12
  SPEAKER_01: Um when we have a when we have a PPM and when we have a DDQ, and uh when we have kind of investor information which we put in the data room, then we then created agents that allow you to answer questions really quickly.
• 2:25
  SPEAKER_01: So an investor comes, uh, I have this and this question, you literally just type the questions, and then the agent only it only uses the material, the authorized, compliant, uh that went already through compliance, right?
• 2:39
  SPEAKER_01: So you have like like a approved um information, and for that, AI is brilliant, right?
• 2:44
  SPEAKER_01: Because I think in 95% of the cases the answer is spot on, right?
• 2:48
  SPEAKER_01: Because it doesn't, and you say no, you're not making up anything, you just only rely on the information that we put into into that.
• 2:56
  SPEAKER_01: So you're not making up anything, or and for that it's brilliant, right?
• 3:00
  SPEAKER_00: And then so um if you had to put a monetary value on AI, so if AI was an employee and you could take your current AI abilities and you could swap it for an employee of a certain value, what do you think it's worth to you as a person?
• 3:15
  SPEAKER_01: At the moment, yeah, I don't think that we would.
• 3:17
  SPEAKER_01: I mean, all this talk about that we were kind of reduced or something.
• 3:22
  SPEAKER_01: We haven't we're we're not there yet.
• 3:24
  SPEAKER_01: So it's so I think I think at the moment it's a it probably makes me more efficient.
• 3:29
  SPEAKER_01: It's difficult to put a value on that, right?
• 3:30
  SPEAKER_01: So like an intern level type person?
• 3:33
  SPEAKER_01: More.
• 3:33
  SPEAKER_01: It's more like a it's more like a I I don't really have a personal assistant, right?
• 3:37
  SPEAKER_01: I haven't, I mean, we have like in two EAs which are doing our travel booking and conference room booking, right?
• 3:43
  SPEAKER_01: But I don't have somebody who kind of will like I always have to go to individuals and then to be honest, sometimes I have to be careful at the moment because they're all really up to here with work anyway.
• 3:53
  SPEAKER_01: So if I'm, you know, if I'm going to speak to you, for example, right?
• 3:56
  SPEAKER_01: Then this is like I I have to be kind of like, is this really worth their time now?
• 4:00
  SPEAKER_01: And for that, I'm using it a lot, right?
• 4:01
  SPEAKER_01: So it helps me a lot to be more efficient in a way.
• 4:04
  SPEAKER_01: And I have to do less in some of the own prep work.
• 4:07
  SPEAKER_01: I don't know how you put a value on that.
• 4:09
  SPEAKER_01: And I think a lot of I see a lot of people there where I see the huge values on communication, but then you can argue now.
• 4:16
  SPEAKER_01: You see like a lot of the communication is similar because everybody uses the same tools, but so that kind of in the beginning it was like, whoa, now it kind of starts to weigh off, right?
• 4:24
  SPEAKER_01: You need to oversee it, you need to still make it your own and kind of thing, right?
• 4:27
  SPEAKER_00: So how um so so if you'd have asked me, um, I I'm a big tech geek, right?
• 4:33
  SPEAKER_00: I I love this.
• 4:35
  SPEAKER_00: Um, and I almost feel like I've been waiting for AI to get to this level and arrive.
• 4:40
  SPEAKER_00: And if you'd have asked me autumn last year, I would have said AI gives me as much functionality as most interns, most sort of entry levels straight out of university interns.
• 4:53
  SPEAKER_00: Around Christmas time, I would have said, This is a junior analyst, like 30 to 40,000 pounds a year person.
• 5:00
  SPEAKER_00: If you said to me, take all the AI away, you could have this one extra person, would you do it?
• 5:04
  SPEAKER_00: Yes, I would.
• 5:06
  SPEAKER_00: As of today, the last week has really changed the world for me.
• 5:08
  SPEAKER_00: So I was away last week, which meant traveling a lot.
• 5:11
  SPEAKER_00: So I was able to play with lots of different.
• 5:13
  SPEAKER_00: I don't know if your work pattern's the same, but I'll get sort of a run of three days in a week, maybe, and then the weekend at home, but then I'll be on the road for three or four days and things like that.
• 5:23
  SPEAKER_00: So if I have a period behind my desk where I can lock in, screen bulletproof Wi-Fi, I can really challenge my own systems and processes.
• 5:31
  SPEAKER_00: And um, I've moved from I use multiple platforms, so I'll use GTP, I'll also use Claude now, and then new co-work functionality is legitimately I wouldn't swap it for a 70,000 to 80,000 pounds a year person.
• 5:46
  SPEAKER_00: And it's gone from being able to chat to it and interact with it to literally automating things within your desktop and your environment and making things happen.
• 5:55
  SPEAKER_01: So but you you you don't have the money either at the moment to hire that person anyway, Web.
• 6:00
  SPEAKER_01: Correct.
• 6:00
  SPEAKER_01: Yeah, so so you're like me.
• 6:01
  SPEAKER_01: So it's kind of difficult to to like we're not there yet where where I take the.
• 6:04
  SPEAKER_01: I think I think I can see it.
• 6:06
  SPEAKER_01: Like if you're ENY or if you're uh 25 billion fund manager, right?
• 6:11
  SPEAKER_01: You have these more systematic programs where you bring in junior analysts, and I think then you would really start thinking, okay, can I optimize that?
• 6:17
  SPEAKER_01: For me, it's at the moment, it's kind of it's it's a lot of the work I had to do myself, otherwise, right?
• 6:21
  SPEAKER_01: Yeah, you're probably too.
• 6:23
  SPEAKER_00: I kind of the last 48 hours, everyone's been hysterical about what what the negative impacts of AI will be about the future.
• 6:31
  SPEAKER_00: And I'm a really optimistic person about technology.
• 6:33
  SPEAKER_00: I I I read a lot on history, and um one of my favorite anecdotes is is the first um organized protest in New York was against people being replaced by horses to pull fire engines.
• 6:48
  SPEAKER_00: Yeah, so every technological change someone's got upset about.
• 6:52
  SPEAKER_00: But we've found new jobs, and we're we're sat recording a podcast which didn't exist 10 years ago.
• 6:57
  SPEAKER_00: So it will get opportunities.
• 6:59
  SPEAKER_01: Well, it well, the same I find actually the best example I find is uh when Gutenberg invented the press, that you went through a phase to what we are now going through with social media and with um it was the same revolution, right?
• 7:12
  SPEAKER_01: From a sudden, you could well for that time, yeah, and it was the 15th century, right?
• 7:18
  SPEAKER_01: You could mass produce text.
• 7:21
  SPEAKER_01: We would laugh about it today, but for them it was like that's revolutionary.
• 7:25
  SPEAKER_01: Same scale of jobs, and and they had the same thing that um it was obviously brought huge amount of wisdom and wealth of knowledge and all that stuff, but it also a lot of crap, right?
• 7:36
  SPEAKER_01: People were just able to to to publish all their kind of what whatever they you know theories they had.
• 7:43
  SPEAKER_00: Well, they never thought it would turn into tabloid newspapers, right?
• 7:46
  SPEAKER_00: When they were printing them.
• 7:47
  SPEAKER_01: But it's uh but it's it's quite interesting, right?
• 7:48
  SPEAKER_01: So I think I think we are now with every time you have this tool, you see that too, right?
• 7:52
  SPEAKER_01: So it's just like the people are really nervous that they're being displaced.
• 7:56
  SPEAKER_01: And then the other one that you see this face where you need to kind of land somewhere, right?
• 8:00
  SPEAKER_01: What is now real, what is not real, right?
• 8:02
  SPEAKER_01: And and and yeah, it's just I guess it's not the first time we've seen this in history.
• 8:06
  SPEAKER_00: So completely.
• 8:07
  SPEAKER_00: Yeah, but I think the last week has been the first time I've gone.
• 8:12
  SPEAKER_00: The potential of this is quite scary, the ability for it to automate, do things itself completely.
• 8:17
  SPEAKER_00: If you give it permission to, it will just run on your laptop by itself, changing things.
• 8:22
  SPEAKER_00: Uh, an illustration.
• 8:23
  SPEAKER_00: Um I I write a lot and I'm not the best at filing.
• 8:27
  SPEAKER_00: So I'll have multiple versions of a historic document as I've written an article and gone through things.
• 8:32
  SPEAKER_00: In in the space of 20 seconds yesterday, I asked it to collate all copies of all previous articles, and it gave me a beautifully organized file structure, like 30 folders.
• 8:41
  SPEAKER_01: That's what they do.
• 8:42
  SPEAKER_01: That's what that's what I do now as well.
• 8:44
  SPEAKER_01: For internal and and we have this SharePoint system which now the um and you probably have the same, the more you advance in the organization, the less you have control of.
• 8:54
  SPEAKER_01: Like in the beginning, I remember I knew I when I was managing one fund, I knew where to find every single document for fund.
• 9:00
  SPEAKER_01: Now I'm like, I can't find anything any longer.
• 9:03
  SPEAKER_01: So I'm using I'm using basically Copilot for that.
• 9:05
  SPEAKER_01: It's like find me the latest number boom.
• 9:06
  SPEAKER_01: And then it gives you, I mean, you know.
• 9:08
  SPEAKER_00: How do you think about um one bit I'm stuck between is so I love this, it's tools and techniques that I want to be part of.
• 9:15
  SPEAKER_00: And part of my brain goes, I want to role model this for the business and I enjoy it and I'm excited about it.
• 9:20
  SPEAKER_00: But the other bit goes, I'm the chief exec.
• 9:22
  SPEAKER_00: I shouldn't, I shouldn't be playing on the tools and techniques.
• 9:25
  SPEAKER_00: I should be out talking to people and purely focused on that bit.
• 9:27
  SPEAKER_00: How do you think about the balance of those two things?
• 9:29
  SPEAKER_00: No, but you you have to you have to show it.
• 9:31
  SPEAKER_01: I mean, you have to give I give um we have um changing it now.
• 9:35
  SPEAKER_01: We used to have a we have a bi-weekly meeting for the team.
• 9:39
  SPEAKER_01: Now we're kind of moving the team part to a monthly one.
• 9:42
  SPEAKER_01: And I always give the five-minute AI Eureka moment.
• 9:46
  SPEAKER_01: So what has somebody discovered last in the last month?
• 9:50
  SPEAKER_01: And do you ask that in the room?
• 9:51
  SPEAKER_01: Are you going to be able to do that?
• 9:52
  SPEAKER_01: Well, I always like we have a tech guy who's very much behind it, right?
• 9:54
  SPEAKER_01: So he's like, oh, it's like we have one tech person and it's just like, can you find like what's like how do you have an idea what you want to present?
• 10:00
  SPEAKER_01: Something and also kind of the negative sometimes, right?
• 10:04
  SPEAKER_01: Like also when you tried something and it came up with complete rubbish or was a risk, actually, right?
• 10:08
  SPEAKER_01: Because it was wrong information, right?
• 10:09
  SPEAKER_01: So that we have that a few times now as well.
• 10:11
  SPEAKER_01: That you, if you were it's it's it's critical that you kind of in between, right?
• 10:16
  SPEAKER_00: So there's a human in the loop.
• 10:18
  SPEAKER_01: Yeah, and you and the human has to really critically check it because I think, I mean, you're probably the same.
• 10:23
  SPEAKER_01: You look first time you read it, it's like, this is fantastic, and then you read it, yeah, okay.
• 10:28
  SPEAKER_01: But then it's like if you really critically read it, it's like, yeah, it sounds good, but it doesn't say anything, right?
• 10:33
  SPEAKER_01: So then you have to kind of go again, go again, go again until you until you kind of uh get what you want, right?
• 10:38
  SPEAKER_01: And sometimes it's just flat out wrong, right?
• 10:40
  SPEAKER_01: So you need to be really careful with that.
• 10:42
  SPEAKER_00: Um we should probably tell people who you are and what you do.
• 10:45
  SPEAKER_01: Yeah, okay.
• 10:47
  SPEAKER_01: All right, so I'm Martin Burke.
• 10:49
  SPEAKER_01: I'm the chief executive officer of climate asset management, and we are an asset manager focused on natural capital.
• 10:56
  SPEAKER_00: Love it.
• 10:57
  SPEAKER_00: Can you um can you bring that to life for people?
• 10:59
  SPEAKER_00: Can you give people um an idea of how long the business has been around, the scale, the number of people, things like that?
• 11:05
  SPEAKER_01: Yeah, so we are now in business for five years, a bit more than five years.
• 11:10
  SPEAKER_01: We started out out of an idea of two companies on the one hand, side Polynation, which is a smaller investment advisory um firm, mainly based in Australia, but also has offices here in London and and in the US.
• 11:23
  SPEAKER_01: And uh, I mean, for full disclosure, that's where I worked for a few months.
• 11:28
  SPEAKER_01: And uh back then in Polynation, we had the idea that we wanted to bring this whole investment field of natural capital forward.
• 11:36
  SPEAKER_01: This was 2020, so it wasn't really as much on the forefront of the discussions as it is today.
• 11:41
  SPEAKER_01: I think 2020 was still a lot about climate, much more than nature.
• 11:46
  SPEAKER_01: Um, and so we said, like one of the investment themes, in addition to transition we were looking at, we were looking at natural capital.
• 11:54
  SPEAKER_01: And we tried to find partners.
• 11:56
  SPEAKER_01: And actually, even before I joined, um the first contacts that the pollination team made was with HSBC as a management.
• 12:03
  SPEAKER_01: And they said, well, why don't we talk?
• 12:05
  SPEAKER_01: Um, we would like to find a field for us, HSBC that is, where we also can lead in the whole world of climate transition.
• 12:15
  SPEAKER_01: Um, and so um I still remember that.
• 12:17
  SPEAKER_01: So I was still my with my previous employer, the European Investment Bank, was finishing up, um, supposed to start in June.
• 12:24
  SPEAKER_01: And just after Easter, we had a big meeting with with HSBC where we're presenting and we were speculating what does HSBC want to do?
• 12:32
  SPEAKER_01: Do they want to do transition?
• 12:33
  SPEAKER_01: Do they want to do nature?
• 12:35
  SPEAKER_01: And the more transition-focused people in Polynesian said, well, they definitely want to do transition.
• 12:39
  SPEAKER_01: Nature is way too that's way too new.
• 12:41
  SPEAKER_01: Um and we said, well, we should not give up on that.
• 12:43
  SPEAKER_01: We should actually have also that as an option in there.
• 12:45
  SPEAKER_01: So we presented an options paper, first transition and second nature.
• 12:49
  SPEAKER_01: And uh I wasn't because I hadn't joined, I wasn't in in that meeting, but uh apparently the CEO of uh of um HSBC as a management said, no, transition, everybody's now doing transition.
• 13:00
  SPEAKER_01: I want something new.
• 13:01
  SPEAKER_01: Um, we've done a lot of work on nature and natural capital.
• 13:04
  SPEAKER_01: We think that's the next theme.
• 13:06
  SPEAKER_01: Why don't we focus on natural capital?
• 13:08
  SPEAKER_01: Make us a suggestion how we can work together on that.
• 13:10
  SPEAKER_01: And that was the idea of this joint venture between pollination and HSBC as a management.
• 13:15
  SPEAKER_01: And then from April.
• 13:17
  SPEAKER_00: Did Did you ever have the opportunity to ask that person where their conviction came from or why they were bullish on the No, I think um they well, I think it was there were there were a few factors.
• 13:29
  SPEAKER_01: One was that um I think they wanted a distinct topic.
• 13:33
  SPEAKER_01: And then back then, HSPC, also from their research side, they have done actually quite a bit of work on early primers on on nature.
• 13:40
  SPEAKER_01: Why nature is important?
• 13:42
  SPEAKER_01: What is the environment or why why is it important in the context of climate?
• 13:46
  SPEAKER_01: Why is it something that is a big topic that could be kind of coming as a next topic in addition to climate?
• 13:52
  SPEAKER_01: So they've done a lot of work on that from the research side.
• 13:55
  SPEAKER_01: And and I think they felt they wanted to, if they are now do something new, they want to do something where they are where they're actually leading something rather than copying other players on the market.
• 14:05
  SPEAKER_01: I think that was kind of the main, that's at least my my impression back then, how how they kind of decided on that.
• 14:13
  SPEAKER_01: Yeah, so then they took the decision to do that, and um we had to come up with a proposal how we do that.
• 14:19
  SPEAKER_01: And um, and it was actually, I I think the other anecdote I like to tell is that this all happens during COVID.
• 14:26
  SPEAKER_01: So the first meeting between HSBC and Pollination happened in March, immediately thereafter, shut down.
• 14:32
  SPEAKER_01: Everything else was done virtually.
• 14:34
  SPEAKER_01: And my own personal theory is without COVID, this wouldn't have happened.
• 14:38
  SPEAKER_01: Because I think there was an ambition to show in COVID you can still do business, you can work on new ideas.
• 14:44
  SPEAKER_01: And from a pure practical perspective, senior management was available.
• 14:49
  SPEAKER_01: I mean, we all remember that, right?
• 14:50
  SPEAKER_01: We were sitting at home.
• 14:51
  SPEAKER_01: What do you do, right?
• 14:52
  SPEAKER_01: Late at late at night, early in the morning, and especially the senior people in in big organizations, they were traveling a lot.
• 14:58
  SPEAKER_01: So they were not traveling.
• 15:00
  SPEAKER_01: So when we said, Well, can we discuss this again?
• 15:02
  SPEAKER_01: I said, Well, yeah, you can call us anytime, early morning, late evening, or we're we're actually available.
• 15:07
  SPEAKER_01: But we're sitting, we're all sitting at home, right?
• 15:09
  SPEAKER_01: So we we negotiated this in five months, and then in August 2020, we we formed the company, had the capital to um to then to think about uh the strategies.
• 15:21
  SPEAKER_01: And we can probably talk about that in a minute to start the first off with uh what we call the natural capital strategy.
• 15:26
  SPEAKER_01: Um, but yeah, that was kind of the the birth of climate asset management.
• 15:29
  SPEAKER_01: I mean, we had a few people from Polynation, a few people from HSBC asset management, were probably 10, 12 people at that point.
• 15:37
  SPEAKER_01: And then we're starting to hire the first outside people at the end of 2020.
• 15:42
  SPEAKER_01: And in terms of scale now, how many people and how much assets under management?
• 15:46
  SPEAKER_01: So now we have three funds.
• 15:47
  SPEAKER_01: We have two broad strategy, we can discuss those a bit more in detail.
• 15:50
  SPEAKER_01: Three funds, um, a bit more than 50 people and a bit more than a billion under under management.
• 15:55
  SPEAKER_00: That's an incredible achievement in five years.
• 15:58
  SPEAKER_00: Well done.
• 15:58
  SPEAKER_01: No, thank you.
• 15:59
  SPEAKER_00: I love it.
• 16:00
  SPEAKER_00: Okay, um, take us to the basics.
• 16:02
  SPEAKER_00: What does natural capital mean to you?
• 16:05
  SPEAKER_01: Well, natural capital is to create investment strategy in very simple terms that transform the economic value that nature provides in a financial value for me.
• 16:19
  SPEAKER_01: So we have the problem that we all know nature is providing services for all of us.
• 16:24
  SPEAKER_01: Um well documented, lots of studies where they try to put a dollar value in that.
• 16:29
  SPEAKER_01: But um, the truth is we are not really valuing it from a financial perspective.
• 16:34
  SPEAKER_01: The services that bees to provide for us at the moment, they do this for free, right?
• 16:38
  SPEAKER_01: Even though there are probably whole organizations that uh that that that profit from that, and we as a uh as a as a species uh profit from that that uh with a pollination we probably couldn't survive.
• 16:49
  SPEAKER_01: So I so I think for me is I'd like to- I love that example.
• 16:51
  SPEAKER_01: Yeah, so and so how can we how can we transfer that economic value that's completely undisputed in the financial value and convince investors that there is a real financial value in doing that?
• 17:04
  SPEAKER_00: Love it.
• 17:04
  SPEAKER_00: Um and choose to explain this however you wish, but take us through the themes and the funds and the structuring of it.
• 17:12
  SPEAKER_01: Okay, so we we have two strategies.
• 17:15
  SPEAKER_01: One is what we call natural capital, and then we have also uh a nature-based carbon strategy, and and we've structured vehicles around these these these two strategies.
• 17:25
  SPEAKER_01: I think overall we start at the premise, and that's probably a little bit different than other players in the natural capital um um fund management industry, is that we we want to we want to reach scale.
• 17:37
  SPEAKER_01: So the investment thesis is how can we get large-scale institutional and corporate investors to invest in nature?
• 17:45
  SPEAKER_01: That's kind of the exam questions for us as an organization.
• 17:48
  SPEAKER_01: And the background for me personally is like my entire career, um, I worked on on various different ways, mostly more on energy climate before I actually come in came into like nature biodiversity.
• 18:03
  SPEAKER_01: But um, a lot of the things we were doing were focusing, let's do something small and perfect, try it out, and and then somebody will pick it up.
• 18:12
  SPEAKER_01: And I think the lesson I had is if you're not having in mind how a large-scale investor can actually engage in whatever field you're you're proposing, you will not get them there.
• 18:23
  SPEAKER_01: And um, and so we're we're trying to kind of that's that was kind of the starting point for us.
• 18:27
  SPEAKER_01: And so on the natural capital side, we thought about how can we get large institutional capital into nature investment.
• 18:33
  SPEAKER_01: So the the logical first way is to focus on agriculture and forestry.
• 18:37
  SPEAKER_01: So we created a global vehicle for agriculture and uh forestry investment.
• 18:42
  SPEAKER_01: We are in North America, in Europe, in Australia, New Zealand.
• 18:46
  SPEAKER_01: In a nutshell for that strategy, we are buying land, we're improving something, so we're making it more sustainable.
• 18:53
  SPEAKER_01: And by going more sustainable, we are also creating not only better environmental outcomes, but also over longer term, a better financial outcome.
• 19:03
  SPEAKER_01: Um and that is achieved the better financial outcome is by changing something, um, maybe have a complete um land use change uh um change, um, and then um creating more sustainable, higher yield, and then also um creating an uplift in land value, and then we're selling the land.
• 19:20
  SPEAKER_01: So, in a as an example, our flagship project is a project in in Australia, in Queensland, in Bandaburg, where we converted 1700 hectares of sugarcane to macadamia.
• 19:33
  SPEAKER_01: The sugarcane, they maybe see monoculture, they require a lot of pesticides, there's a lot of runoff in the ocean.
• 19:41
  SPEAKER_01: The Great Barrier Reef is only 20 miles from that site.
• 19:44
  SPEAKER_01: So one of the causes of the bleaching of the Great Barrier Reef is this runoff from pesticides from agriculture.
• 19:50
  SPEAKER_01: So, what we did there is we changed the sugarcane planted now um macadamia trees with cover cropping.
• 19:58
  SPEAKER_01: They're two national parks that we're combining.
• 20:00
  SPEAKER_01: So there's a biodiversity story by connectivity.
• 20:02
  SPEAKER_01: But ultimately for the investors, we're saying by actually doing that and you allowing us to have a longer-term horizon for our financial return, we're also achieving a better financial outcome over the 15 years of the project.
• 20:15
  SPEAKER_00: I love that.
• 20:16
  SPEAKER_00: So, in terms of the structuring of that vehicle and that asset, how long do you intend to hold that particular asset for?
• 20:23
  SPEAKER_00: And what's the duration of the investment around it?
• 20:25
  SPEAKER_01: So there's a 15-year fund.
• 20:27
  SPEAKER_01: So the duration of the investment will probably be somewhere ranging some of 12 years plus normally in this fund.
• 20:35
  SPEAKER_01: And especially, I think, um, when you and it will depend on the assets, right?
• 20:39
  SPEAKER_01: There will be some, we've, for example, also have some brown field assets where we still believe we can achieve uh better environmental outcomes.
• 20:46
  SPEAKER_01: But there could obviously, there could be the holding period could be, could be shorter.
• 20:50
  SPEAKER_01: But for for these green field assets, you need some time.
• 20:53
  SPEAKER_01: So and I think that's one of the, I'm sure we talk about it a little more, but it's one of the key challenges to convince investors because you have to tell them, look, you have got to wait now seven years for yield because we're ripping out that sugarcane, which is really environmentally um not a good thing.
• 21:07
  SPEAKER_01: Yeah, we're replacing it with something which is much more sustainable, also higher yielding, but it takes us seven years to grow these trees.
• 21:13
  SPEAKER_01: Are you with me on that?
• 21:14
  SPEAKER_01: And that's that's basically the key challenge that you have to invest, the convince the investors, yes, okay, I'm I'm happy to wait for for for the for that yield.
• 21:22
  SPEAKER_01: I'm seeing what you're trying to do here.
• 21:24
  SPEAKER_00: And how many individual investments will be in that particular fund?
• 21:28
  SPEAKER_01: So that's a fund.
• 21:29
  SPEAKER_01: Um the the overall strategy has nearly half a billion.
• 21:33
  SPEAKER_01: And uh we uh we'll end up in like eight or ten investments.
• 21:37
  SPEAKER_00: Interesting.
• 21:38
  SPEAKER_00: And and are they phased so that you you have a sort of a wavelength to them in terms of you're looking to have two or three per year, so they're coming in and out, or do you go as quickly as possible to get those in for the duration?
• 21:52
  SPEAKER_01: So um you mean for the exit?
• 21:54
  SPEAKER_00: Yeah.
• 21:54
  SPEAKER_01: It no, we will we obviously also want to create yield.
• 21:58
  SPEAKER_01: So we need some assets that are creating yield.
• 22:00
  SPEAKER_01: yield earlier um and then be holding them until the end of the of the fund and then we'll define the the exit strategy.
• 22:07
  SPEAKER_01: So I think it it it will be very much that that is very much skewed towards the end of the of the of the life of the fund.
• 22:13
  SPEAKER_00: What what I think is fascinating about the flagship project you described there, many of the positives you're delivering, there isn't a market for you to be paid for yet.
• 22:24
  SPEAKER_00: So if we fast forward 10 or 20 years, hopefully you ever met John Elkington, the gentleman who wrote um amazing author he was on our 99th podcast as a gift to me because he's one of my favourite literary guys.
• 22:37
  SPEAKER_00: And um he wrote the book Green Swans.
• 22:39
  SPEAKER_00: And I said on there oh in 10 or 20 years and he went stop it Richard in the age of AI that's two to three years not 10 to 20.
• 22:46
  SPEAKER_00: So every time I say 10 to 20 I remember John telling me off so sorry John.
• 22:50
  SPEAKER_00: In two to three years it's going to be longer hopefully you are going to be paid for the positive impacts on that barrier reef.
• 22:57
  SPEAKER_00: You are going to be paid for the positive impacts on pollinators on soil preservation.
• 23:01
  SPEAKER_00: But at the moment you can't generate a yield off those you are purely using the better performance of the agriculture and the farming system to generate the yield.
• 23:10
  SPEAKER_01: So the way we position this to our investors is about saying there is some environmental upside but we are not going to quantify this for you.
• 23:17
  SPEAKER_01: But we I mean for some projects it's it's very intuitive and it's actually part of the return.
• 23:21
  SPEAKER_01: So we have some forestry projects where we have a carbon return which where we already have the the off take is already contracted.
• 23:30
  SPEAKER_01: So I'll give you an example so New Zealand we have a um a forest project where where we can sell credits into the New Zealand emissions trading scheme.
• 23:40
  SPEAKER_01: Regulated market so quite quite a certain return profile but uncertain is the price obviously fluctuations in the price and we have a another forest project in the Pacific Northwest in the US and there um with our project partners we are selling carbon credits to Meta and Microsoft.
• 23:55
  SPEAKER_01: So there they're I think that's very intuitive but where you're right is um all the other things where we're doing biodiversity measurements it's very difficult to water quality pollination itself.
• 24:06
  SPEAKER_01: Where you can get some payments at the moment is um other carbon markets.
• 24:10
  SPEAKER_01: So for example on that project in Australia possibly we could we we could qualify for for acuce in Australia but TBD and then in some markets in in the US for example we can we can look for conservation easements other biodiversity payments but they depend very much on regional schemes.
• 24:28
  SPEAKER_01: So if we we we haven't managed to do anything in in in the UK but I know you active in the in the BNG market here right that's that would be kind of the the equivalent of that so you the where we can we we are we're trying to to put this into the the capital stack but I think we're trying to be quite prudent to our investors are saying you can't at the moment and you shouldn't remind from an investment from the from the from the investment thesis it should be something it should be kind of the the cherry on the top of the cake.
• 24:55
  SPEAKER_01: And I guess we'll come to this later that's obviously the crux at the moment to move the whole nature forward because you need to find these opportunities at the moment where you have other revenue streams to to get large scale investors interested.
• 25:06
  SPEAKER_00: The the sort of um what's it called concurrent evolution of our two models is fascinating.
• 25:13
  SPEAKER_00: So very similar time period so our our first idea came in 2020 in COVID we started middle of 2021 but the principle of wanting to get to scale the principle of having uh the underlying land aspect of it I think we're the only two organizations that went in with those two ideas.
• 25:32
  SPEAKER_00: Now it came from very different perspectives.
• 25:34
  SPEAKER_00: You came with significant uh institutional finance already in terms of your background whereas I came from a pure data tech and environmental side of it.
• 25:42
  SPEAKER_00: So it's so interesting the similarities that are there but we did seek to build an investment based on things people could genuinely quantify already.
• 25:50
  SPEAKER_00: So the land itself built properties you know we've got a renewable aspect of it because there is an already proven track record of renewables and yes we're now accessing carbon and biodiversity and nature credits but they're still the things we're reaching for and all those other markets will come in time just not yet.
• 26:06
  SPEAKER_01: Yeah I think the the the land aspect is an important one.
• 26:09
  SPEAKER_01: So the moment you have a strategy where you can buy land and you actually hold that land, it makes it makes things a bit easier.
• 26:16
  SPEAKER_01: It's real in real in developed markets.
• 26:19
  SPEAKER_01: And when we when we talk about our second strategy the carbon strategy there it's actually sometimes not as straightforward to own the land.
• 26:27
  SPEAKER_01: Actually there we don't want to own the land because it it it also in in in some markets it really can also create some complications.
• 26:33
  SPEAKER_01: But in the markets we are talking about now here in Europe or in in in North America Australia New Zealand I think it's for and you when you go to the investors that's that's really a strong argument.
• 26:41
  SPEAKER_01: Look I have a real asset here and I'm optimizing the asset and I can create additional value from the use case that was on that piece of land before.
• 26:51
  SPEAKER_00: I also love the way that you used agriculture and forestry as conceptually accessible vehicles for people because people understood what they are day to day people can recognize the time periods, the type of investments whereas if you'd led with a pure nature based strategy, you wouldn't have got the traction or the the capital that allowed you to um move forward at the pace you have no I agree and I think this is sometimes the no I can understand that people are impatient you know like what you said like this should actually not be a 20 year this should be moving in in the next two years.
• 27:28
  SPEAKER_01: But we also know how slow financial markets are moving in particular institution investors they are not they are not the ones that will drive um completely new markets.
• 27:38
  SPEAKER_01: I think they're willing to take certain they they they they want to follow key trends but they want to see see that there's some some track record some real revenues before they before they allocate a larger amounts and I think that's that's that's that they're not going to take a leap.
• 27:54
  SPEAKER_01: Exactly so cool take us to the next aspect so on the other strategy.
• 27:59
  SPEAKER_01: So the other strategy um is is probably a bit more unique which is um focusing on corporates that have a need for high quality carbon credits.
• 28:10
  SPEAKER_01: And I think the background for us to develop this was that um on the one hand side with pollination as one of our shares we had a lot of expertise in in the firm I personally have a lot of expertise from my from my from my from my previous live but we actually when we started the the whole endeavor on on climate asset management we were very focused on no, we want to do natural capital investing and the carbon piece will come later.
• 28:32
  SPEAKER_01: But then in from 2021 on it was actually the corporate that came to us and said well we're not really interested to invest in a vehicle for natural capital that's not here but we really need someone that helps us to procure high quality credits.
• 28:46
  SPEAKER_01: And we don't want to buy this from another party we're very worried about reputation risk.
• 28:51
  SPEAKER_01: We have our own ideas and standards how these projects should be structured.
• 28:55
  SPEAKER_01: So we're actually looking for someone that can help us to invest in the projects and we would be very happy to take these carbon credits.
• 29:01
  SPEAKER_01: And so we thought a lot a long time about how we could structure a vehicle that that makes sense.
• 29:06
  SPEAKER_01: We wanted to launch a fund because we believe this is the same argument for for the for the scale that I discussed in the beginning.
• 29:13
  SPEAKER_01: But it's a bit trickier because we felt the market wasn't ready to have an investment vehicle that would invest in carbon projects and then sell the carbon we felt that the risk of on the on the one side you have the just generation risk of the credits and on the other side you have the market risk.
• 29:30
  SPEAKER_01: When you overlay that it's very difficult to to see that you could find a risk reward structure that is really attractive for investors to come in and scale.
• 29:40
  SPEAKER_01: And at the same time we had all these corporates trying to talk to us and so then we said well why don't we create a vehicle for corporates where they provide us with the financing we invest that in the underlying projects and then instead of delivering instead of selling the carbon deliver financial return we're delivering them the carbon in kind and took us some time to to to structure that but ultimately now we have a have a fund um of 445 million that is basically pooling corporate demand in investments in natural capital projects that generate high quality carbon credits in emerging markets.
• 30:18
  SPEAKER_01: There's so many questions I've got for this um what do you think the corporate saw in your model that gave them the confidence and the credibility to say to you please help us solve this problem well I mean firstly it as you can imagine it it took some convincing as well it was not like that uh as as you can imagine it was new I think um I I think there were there are three things.
• 30:42
  SPEAKER_01: So one as I said is they felt very some of them felt uh quite nervous to buy it from another party in the market with all the reputational risk and all the stories that they know once the next Volkswagen scandal is exactly you you get these credits and whatever due diligence you can do you own that risk so they've said well maybe maybe it's much better actually to to um to just go straight to the source and and get the credits at least I know everything it is in there.
• 31:10
  SPEAKER_01: There may still there may still be issues but including that the other one is safety numbers a lot of the corporates felt if we find a group of like minded um investors then we can help to shape the the criteria that are being used in order to to procure the carbon so that's the number two and then I think the third one is it would really help that we had HSPC as a shareholder.
• 31:35
  SPEAKER_01: So I think that's that's probably so when you when you look at the market in carbon credits, natural carbon tend to be very small companies and when the discussion within these big corporates moved from the environmental experts, the carbon offset uh the people that measure the carbon offset to the sustainability when it moved to the financial side they're we're then asking so who are you dealing with?
• 31:57
  SPEAKER_01: It's like oh yeah this is you know the HSPC.
• 32:00
  SPEAKER_01: Okay yeah we know HSPC there then so that was kind of a good combination so I think that was kind of probably what what helped us to to put this together.
• 32:07
  SPEAKER_00: It's building layers of confidence right throughout the throughout the stack.
• 32:11
  SPEAKER_00: And when they started talking to you about high quality carbon credits what did that mean in real terms well in in real terms it means whatever that person has in mind right so that's that's a challenge.
• 32:24
  SPEAKER_00: So is it it was a is a it's a very challenging yeah that is an answer that only a person that understands the question gives because everyone else would start reeling off things but I completely agree everyone has a different interpretation a different prioritization um you know we were really fortunate to break the world record for the highest price paid for voluntary carbon credits um uh with Woodland with Burgess Sam and the law firm and we've just done a transaction with the national grid on Peatland at a world record price what they both want is different.
• 32:53
  SPEAKER_01: I I can imagine and and that was that was one of the biggest challenges to put this vehicle together that we have 13 corporate investors in there we probably don't have 13 opinion but we have quite a few 14 but it's a you probably have more than 13.
• 33:09
  SPEAKER_01: And and and yeah and there's still some we still did not manage all of them to do exactly the same so there's some exceptions for certain um investors or certain certain group of investors which we believe we can manage.
• 33:24
  SPEAKER_01: But I think that yeah that that that is a big strategy.
• 33:27
  SPEAKER_01: And I think there is I mean there's I there's some clearly things that you need to have right you need need to have an a credible standard you need to uh you need to have a solid baseline you need to make sure the local community is involved you need need to have stakeholder engagement I mean there they're like probably a long list that you don't you normally hear that that you that that uh that are must in a way but then there's also a lot of them where it depends a bit on on on the attitude and I I think what I um found is that a lot of the corporates they actually um a lot of them are really they're they're thinking about this a lot and they have their own views and um I I think sometimes especially in the media they're not they're not given any credit for that right that they they actually do think about this and they do care about this internally and they they do see some of the risks um but they obviously have their different starting points right and often it's it's linked to what industry they're in and that makes it so challenging in in in a way but I think we landed on a on a on a on a good set of of criteria that allow us enough flexibility but also that be that we can kind of ensure that that these kind of the key criteria are made so in terms of the the actual types of um and are they all nature based carbon credits in that fund so woodland peatland soil yes mangroves yet we could do them we looked at them we haven't we haven't done a project yet so the main project at the moment um that we are looking at is effest affair station reforestation um bamboo agroforestry mangroves is is is part of the impedance is is something uh we we we're assessing we have soil carbon projects we have um rotational glass grassland projects we have one in kenya so that's probably quite one of the more innovative methodologies that that we are using um and then we're looking in in any other um fast growing species basically in that that they can put into their strategy um have you been to visit any peat one projects yet um no i haven't the team has especially here in the UK come to the KNOMs and come and see it they loved it you can come and see what we're doing it is it is super cool up there um pricing of those carbon credits so in a market that um is moving is forming is changing every day when you're structuring that especially when you're providing a credit in place of a return how did you begin to think about the pricing of those individual credits yeah so we set basically a price with with our investors for rightly or wrongly in a way because we had to had to agree on something what year were you setting that um when we when we launched a fund in 2022 basically so and things have changed so much since then things have changed um and we had to adapt our strategy a few times I think what um we see is because we also can provide upfront capital so I think the the we have an ability to to be quite flexible in in in the way we invest in projects and um and that allows us then basically to structure around um some of these issues.
• 36:41
  SPEAKER_01: But yes there is there's an issue but what we are actually looking for is mainly not necessarily the the the price that you could get um on the market when you have an issued credit but we're looking for really like our due diligences is what does it cost to generate a carbon credit?
• 36:57
  SPEAKER_01: So that that's that's really the the most important one.
• 36:59
  SPEAKER_01: And so that allows us then to go into projects where we believe we can actually achieve the price that we're looking for.
• 37:07
  SPEAKER_00: There's a real clarity to that approach because if you'd have pegged it against EU ETS or against some kind of equivalent market, you'd have had to have dealt with so much volatility and that market is changing at a rate so much faster than you can develop a project and move it around.
• 37:23
  SPEAKER_00: So I I really like the elegance you brought to play with that and getting everyone to agree with it.
• 37:27
  SPEAKER_01: Well and also we need to demonstrate that we're creating some value for our investors.
• 37:31
  SPEAKER_01: So they have to take a view on the price.
• 37:33
  SPEAKER_01: So and and and that's supposedly important for us that we have an investor that says look okay for this price I'm very happy to take in a portfolio of credits and and and use them.
• 37:44
  SPEAKER_01: And it provides them with planning certainty.
• 37:47
  SPEAKER_01: That was also one of the reasons why a lot of them went in there they're saying okay at least I know what I'm paying perhaps I'm overpaying we don't know but how this market will develop in the long term but at least I have planning certainty for a certain number of credits.
• 37:59
  SPEAKER_00: And there there is a financial value to that planning certainty whether it's expressed in the return or not in their mind they're they're recognizing that.
• 38:07
  SPEAKER_00: Yeah and uh and yeah I I I think that's that's right because I think ultimately they they see of oh well so how much do we have to set aside for that and so rather than expressing a targeted financial return on that fund did you literally express a credit number return?
• 38:21
  SPEAKER_01: Yes that's what's right and and and also so we are incentivized then if if if we are able to procure these or invest in projects that now generate these crampers at a lower price then we also have a financial and in in an incentive built in into into that structure.
• 38:35
  SPEAKER_01: And then they they take the risk that the market is either lower or or they benefit from the market being higher at the time at the time when they when they receive the credits.
• 38:46
  SPEAKER_01: I love it and I think that's that was important for us because I think this is this is the real difficulty at the moment to structure um larger vehicles around voluntary carbon credits unless you have a secured offtake you don't really have a market price and the volatility is just enormous right and you I mean I've I've just looked again when you look at the the Bloomberg range from five to two hundred dollars that's not really helpful right so it's like so so it's uh so you need I think you need at least for a portion of these credits being fully logged in.
• 39:19
  SPEAKER_01: I think we're seeing now new structures developing that some of the corporates are saying I don't want to put dollars into it but I'm very happy to provide off takes so we're seeing now a few structure um in in the market where that is the case and I think that that's it that's an alternative model.
• 39:32
  SPEAKER_01: Chessnut JP Morgan Microsoft deal that they've done with that long term for exactly or or Rubicon carbon with with Microsoft right where they're basically saying uh Microsoft buys 17 million credits from them and they agreed on an overall portfolio price for that and allows Rubicon now to originate into that so I think there are definitely structures that that that can work there and um but the alternative for us was if we wanted to do a fund, we basically said the investor has to be willing to take that price risk.
• 40:03
  SPEAKER_00: Really interesting.
• 40:05
  SPEAKER_00: How in terms of the structuring with it being carbon based how do you align a management team in in that basis as well?
• 40:11
  SPEAKER_00: How do you adapt or or build the incentification to make sure everyone's mutually aligned?
• 40:16
  SPEAKER_01: So that the management team is so we as a managing being we're incentivized to um to deliver carbon below whatever portfolio price we we agreed and then we receive a share of the carbon credits um if if if that's okay so we we kind of aligned also our own um incentive in in in carbon credits for a few reasons a that we're comfortable that these are credits that have some some value and B that we are fully aligned i in a situation where we're now doing a great job we're delivering below the portfolio price but the market is actually tanking way below the portfolio price we're getting a lower incentive if the Bloomberg scenario comes in these are worth$100 or$200 at at delivery so we're creating in enormous value for investors then also we have a higher value.
• 41:04
  SPEAKER_01: So I think the investors felt then you're fully aligned with the and I think that's that's an always important when you structure vehicles that you find ways where to the investors and say look the team's incentivized and um benefits in the same way the investor benefits.
• 41:19
  SPEAKER_01: That's usually I think the the best way how to structure things.
• 41:22
  SPEAKER_00: And your ability to achieve liquidity from those credits is your plan that they're just open market sale or is there a mechanism that they're also sold to the original to be honest we haven't we're not so far off there we're not there yet but I think there's a good chance that we could also probably go to some of our LPs and saying look what you microscope.
• 41:39
  SPEAKER_01: Over deliver.
• 41:39
  SPEAKER_01: Yeah exactly and uh and and pay as a price so I think I think that's that that's that's that's too early to to to talk about that and we haven't really we haven't really thought about that.
• 41:49
  SPEAKER_01: But I mean like that's was my not the previous job I had before this but one of my previous jobs was exactly that.
• 41:55
  SPEAKER_01: So I think we have enough expertise and in in in the company to when the time comes to think about what is it what is the right strategy here.
• 42:03
  SPEAKER_00: What were so I I love the simplicity the elegance and what you've just beautifully described it is not one solution.
• 42:10
  SPEAKER_01: You've solved like 50 problems to arrive at that solution because the structuring that you described hadn't been done before you were the first people to structure things in that ways what are some of the ideas and designs that ended up on the floor that you were like oh we might do it this way no that won't work so I mean firstly I think to be fair this was done before when you when you think back at the Kyoto market under the Kyoto Protocol you had the CDM market and before you had the EU ETS and you had a liquid market for the CRs which were the credits under the Kyoto Protocol in the really early days you had similar arrangements where European utility companies were working with fund managers and they're just saying you you we're giving you mostly through through to managed accounts are saying go out find us these projects deliver us the credits and and then if if you deliver under certain price there was some some some benefit in there.
• 43:01
  SPEAKER_01: So I think so it's my awareness of the market so it's not it's not I don't and and and from a commodity perspective I think they're um they're uh there are very similar structures okay what what didn't work I mean so we I think it's complexity because we um you said it is actually quite a simple structure and we try to keep as simple as possible so we had lots of ideas how you could make this a lot more complex.
• 43:27
  SPEAKER_01: I think the key one was really that is saying should we the key decision was because from a from an let's say from an fund management as a management perspective I think you could say um the like in in the in the beginning is like why would you give all the upside so to speak to your to your investors in a way right if you're really bullish on the carbon market then you should actually finance the projects sell them and find investors that um that that come along with that.
• 43:57
  SPEAKER_01: And I think that's the idea that that we are then in the end saying that that we don't think that will work because we we thought that the return expectations that any investors in such vehicles would have would be so high that would be very difficult to structure something because the the price volatility of of the of the of the voluntary carb market is just too high.
• 44:15
  SPEAKER_01: So I think we we felt very, very quickly you need to eliminate one of the key risks in your in your structure and and we thought the it is easier, it's not without challenge, but it's easier to focus on the delivery risk as a as a core expertise than on the market risk because the market risk is completely out of your hand, right?
• 44:33
  SPEAKER_01: You can't control that.
• 44:35
  SPEAKER_00: How was your if if you'd have shown me your personal risk register five years ago in the one you've got now, what's moved up and down the list of risks?
• 44:44
  SPEAKER_00: What are the things on your mind that are bigger challenges today and and what were the ones that historically were issues?
• 44:50
  SPEAKER_01: Yeah so I think we we're all learning a lot about um I I I think we all underestimated how long it takes that the standards adapt to them to the methodologies.
• 45:01
  SPEAKER_01: I think we had we all thought this would go much quicker that we had good solid methodologies, probably more consolidation.
• 45:09
  SPEAKER_01: Optimism risk.
• 45:11
  SPEAKER_01: Yeah there is a bit of optimism risk there.
• 45:12
  SPEAKER_01: So and and I think that's one of the key challenges I think we underestimated the market infrastructure even on the voluntary markets just when you think about validation um for both for validating projects and then also validating issuance um that's the key.
• 45:27
  SPEAKER_01: I think um the other thing that we um I wouldn't say we underestimate we're learning the hard way is like finding the right partner is absolute key.
• 45:38
  SPEAKER_01: So the implementation partner on the ground is is is kind of the the the key to success and um yeah so I think I would say those are kind of the key risks.
• 45:49
  SPEAKER_00: And if you were to project ahead and we were to sit here in another five years, what do you think will be on the risk register then?
• 45:55
  SPEAKER_01: For for carbon across the board.
• 45:58
  SPEAKER_01: Across the board um well I I I think we the I think the other thing we we probably always underestimated was the whole point of how quickly the the revenue streams from natural capital will come available.
• 46:13
  SPEAKER_01: I think we wish to probably still talk in five years about that.
• 46:15
  SPEAKER_01: It's like it's like it comes tomorrow that's what we might be that will probably uh move move move much slower.
• 46:22
  SPEAKER_01: Let's see what we think about just physical risk.
• 46:25
  SPEAKER_01: I think we see I mean we just talked about it before before our podcast right you were up in Scotland and saw some interesting weather I was down in Portugal in Spain and we saw some some some very extreme weather so I think maybe that's that's let's see how that develops right that's obviously a key challenge and it's not necessarily that um it's just a change in in temperature it's it's just these these very sudden weather winds right very very kind of regionally localized.
• 46:52
  SPEAKER_00: I think that's that's something um with with increased climate change is very difficult to predict right where it is you all of our analysis on climate risk for specific sites are done on historical data and on averages but I think what we're seeing now the real risk is that you're just hit by one of those freak events right that that often often are on very small then they're not they happen they can happen on a on a very small parcel of land right so these type of things I think will I'm sure I'm sure we will continue to discuss that some yes I I saw some stats on the impact of storm events on uh forestry funds versus wildfires everyone wants to talk about wildfires because they get traction in the media and they're iconically visible and yes if one like happened in California happens it is horrific but cumulatively the impact of storm events was greater for lost value than wildfire was yeah but because they're smaller they're localized they don't get the attention people's awareness of risk and the actual impact of risk are very different.
• 47:57
  SPEAKER_01: Well and and also I think against fire is you can do something so your your silver culture and the way you set up the forest project and then you you can build in some protection for that don't you want to and and that's one of the key messages that you hear over and over a lot of the forest fires are particularly severe on on public land where not enough money is available to do basically proper maintenance but a properly sustainably managed forest then you you I mean that's what every manager in forestry will tell you is like the the the rates of forest fires are actually quite low.
• 48:32
  SPEAKER_00: So it's so fascinating.
• 48:34
  SPEAKER_00: When you think back to how language has changed over the last five years so there's a lot of discussion at the moment in the UK context and and Rob Gardner's group at Rebalance Earth have very much led this with Rob coming from a pension background.
• 48:47
  SPEAKER_00: He's talking a lot more about natural infrastructure rather than natural capital because that infrastructure word is more easily accessible to the allocators have you found the language has changed over the last five years and and what has helped you in terms of releasing capital?
• 49:02
  SPEAKER_01: Yeah for us that hasn't changed as much I'm actually coming from that side.
• 49:07
  SPEAKER_01: So the way I got involved in natural capital is that I came via the infrastructure side so I um I background wise I'm actually much more of an energy person.
• 49:18
  SPEAKER_01: So in my the early days of my career I would say the first 10-15 years I focused entirely on climate mitigation projects which were mostly in the energy industrial gas um area for example like methane because those were the big emission reductions the low that were achievable at low costs or the low-hanging fruits and only when I worked at the European Investment Bank in Luxembourg which is one of the largest infrastructure finances in in Europe we were starting to think what other infrastructure investments could we actually do and how should we look at forestry agriculture?
• 49:53
  SPEAKER_01: Can't we see this as green infrastructure?
• 49:54
  SPEAKER_01: Can't we replace some of the built infrastructure some of the services that the built infrastructure provides with with uh with natural solutions and so we were starting to look into that yeah more than 10 15 years ago even had a small facility with the with the European Commission in 2014-15 natural capital financing facility which we were exactly trying to to to demonstrate that this was was possible so I'm actually I but I also realized how difficult that at least back then was to to really find there are always some examples so that water filtration is a fantastic um example where where we can use natural solutions at the same or maybe even at a better price but for others it's a bit a bit more challenging.
• 50:39
  SPEAKER_01: So we the whole infrastructure argument um is well I'm I'm I'm feeling a bit more mixed about then and and we haven't had as much um success with with uh investors on that.
• 50:52
  SPEAKER_01: Well we had success with investors is to basically just more pointing out when you look at investment opportunities um that are outside of renewable energy and you want to continue working on transition strategies, then low focusing on agriculture and forestry is very attractive not only for the environmental outputs, but also when you look at market trends, demand for more um sustainable agricultural products, um less land available growing world population.
• 51:24
  SPEAKER_01: And then when you overlay it and at the same time these asset classes are actually linked and uncorrelated with other asset classes that's actually where we where we had a bit more of an um a kind of a breakthrough with some of the investors that they're realizing okay there is a growth market there um that allows me to have a long-term stable investment which is uncorrelated to to other markets I'm investing in which is inflation linked so that's probably we had a bit more success on that side.
• 51:54
  SPEAKER_00: I love it um you mentioned before about um having to explain to people and get them comfortable with the seven year delay in in liquidity um how did those conversations begin and how are they different now?
• 52:09
  SPEAKER_01: I think they're still to be to be honest they're still trying challenging I I think if we had a whole fund that would only generate yield after seven eight years it would be a very difficult um discussion.
• 52:21
  SPEAKER_01: So what we're trying to do on an overall portfolio basis to find a good medium of that.
• 52:26
  SPEAKER_01: So we actually start creating yield um immediately after the investment period that is obviously a growing yield but uh so we are trying to also find what's the fastest asset the world it's it's like already we have a couple of brownfield assets for example in in Portugal and Spain we have some some some olives and almonds that are where we are basically on existing already producing assets um where we're introducing more sustainable harvesting practices um and and and more sustainable overall but where we already have ongoing yield and I think that's that's helpful so I think from from so that I think investors still want to want to you still have to kind of relate to them that that they see okay this is an investment opportunity that is comparable to some of the other things I'm doing.
• 53:15
  SPEAKER_01: But I think overall the more you link it to infrastructure the more they're understanding that there's a ramp up period because a lot of them investing in in core and some core and core plus and core plus plus infrastructure where you have this the same the same situation.
• 53:29
  SPEAKER_00: So when you invest in offshore wind it will take you some years before that offshore wind um uh project is completed it can take three four years five years in some instances so do you ever still encounter and I'm particularly thinking about in the investment community here um do you ever encounter the two sort of classic arguments that if something relates to carbon this is just a license to pollute um do you ever hear that narrative still?
• 53:56
  SPEAKER_01: We do also find some corporates so I think not every corporate wants to be seen uh in in in in this market um we heard from a few investors that are quite wary about that um they they just think reputationally that's something where they want to stay away I think there's certain markets where where where they are more cautious about that I would say in Scandinavia and parts of the Netherlands um so yes you you you you can hear this yeah and how do you meet that challenge when you do?
• 54:26
  SPEAKER_01: Well I think from um it's I like in our view we're seeing this as transition strategies.
• 54:36
  SPEAKER_01: So if similar to what we're doing on the energy side you can't jump immediately from fossil fuels to completely renewable so you have to have a transition period and and then in our view the the carbon credits are bridged to that and and and I think it's um if you do it rightly if you if you can demonstrate um that that um you use the right standards um that you use the right measurements then then I think it's it's it's quite credible and if it's part of the if it's part of the investment um strategy and not the only purpose then I think it's also easier for some of the investors to say okay we we we can see that.
• 55:16
  SPEAKER_00: I had one of those um excuse me I had one of those realization moments where um it suddenly occurs to you that you are too close to something to see the wider reality.
• 55:28
  SPEAKER_00: So I remember a conversation with um someone in a statistical analysis firm that we know really well and and they were really critical of carbon credits saying well these are just a license for big engineering firms and and aviators to pollute and I was like well no of course they're not look at the the delivery we're producing on the ground trees have been planted peatland's being restored.
• 55:47
  SPEAKER_00: You can't just create and I was like oh they're talking about regulated carbon emissions credits they're not talking about voluntary markets.
• 55:57
  SPEAKER_00: But because I exclusively work in voluntary markets what I heard was voluntary carbon credits of this what they meant was no no we're talking about allocations and mechanisms that are meant to try and reduce emissions in that way and it it was striking that I hadn't recognized the difference because we were so close in the voluntary so when I do hear that narrative now I go cool let's talk about that.
• 56:18
  SPEAKER_00: What's your experience and perception and this is what we do to deliver a credit and also the fact that we can go would you like to come and see the project most people have never been offered that question so that's really helped us.
• 56:29
  SPEAKER_01: Yeah I think I think the argument is mainly on the corporates right that they're saying okay they're just doing this and they don't do anything else and and there are enough studies that demonstrate that those firms that are engaging on voluntary carbon credits, they're not just doing then they're not having a discussion internally saying oh we don't want to do anything on climate why don't we just buy these credits they usually assess there and they the first step is actually that they're saying okay what do we have a problem can we first can we first measure what actually our footprint is um what are the options for us to do it um what are the internal options what are the low-hanging fruits and our experience has been that the discussion to purchase carbon credits is really one of the later decisions in the discussion and and I think that's that's something in my least that's overlooked and I think where some of these firms that are doing that, they're not getting credit at least they're really caring about this because in the in the current environment they could just say we're not dealing with this at all right yeah um we don't even have to look into this issue any longer.
• 57:29
  SPEAKER_01: And I and I think that's that's something that I like to point out that and and there are a few good studies out there that that actually demonstrated that and tried to quantify that.
• 57:40
  SPEAKER_00: I think there's also a a fundamental misunderstanding of what it's like to get a corporate to sign a large check.
• 57:46
  SPEAKER_00: So I think people don't realize unless you've ever asked a corporate to sign a check for millions of dollars for things they don't want to buy no bot wants to do that.
• 57:55
  SPEAKER_00: So the idea the board should sure have another one the answer will be we don't want to sign this if we have to we're not signing it next year.
• 58:02
  SPEAKER_00: So I think there's a fundamental misunderstanding of how we're saying like what can we do internally?
• 58:06
  SPEAKER_01: Should we not rather use this these funds this is a lot of money should we not invest this somewhere in our in our supply chain or should we not invest this somewhere in our operations in order to have the same output and then somebody will say well we could but that will be at five ten times the price or it will take us some time to actually make the changes over time.
• 58:24
  SPEAKER_01: That's what I'm saying I like that for many of them they see it as a bridge to get there to then saying okay at some point in time we the cost will come down on some of our from other activities.
• 58:33
  SPEAKER_01: But then I think some of them are quite honest for some of our activities it would be very very hard in the foreseeable future to to make changes.
• 58:40
  SPEAKER_00: Agreed.
• 58:41
  SPEAKER_00: So the other interesting argument we hear sometimes is the moral argument that it's not appropriate to price nature or to make a profit from nature because nature is priceless.
• 58:51
  SPEAKER_00: Do you ever hear that challenge?
• 58:52
  SPEAKER_01: I do a lot yeah and then I make my argument about the economic and the financial side right where I'm saying yes I hear you from I can understand that actually and I have some sympathy for that but ultimately that is actually part of our problem because if if if we are continuing to say well nature is just plodding along and providing all these services for free, we're benefiting from it and we're not even paying to then do the opposite i destroying nature there's something there's something wrong right we got to find the right mechanism there.
• 59:23
  SPEAKER_01: And I'm not saying that we should start trading nature or mammals or other species like we're trading other commodities.
• 59:31
  SPEAKER_01: I think that's that's not what what what you know what is intended here.
• 59:35
  SPEAKER_01: But I think we we gotta look into that right how how we can create some mechanisms.
• 59:40
  SPEAKER_00: And the the moral argument annoys me a lot because my quick answer is no no no you think it's priceless you're treating it as worthless that's not the same thing.
• 59:50
  SPEAKER_00: Yeah um I thought it was really fascinating it's the same thing right yours is more eloquent mine was just true it's true but it's um um what I thought was really interesting so we spent quite a bit and you were out there as well in New York Climate week the arguments depending on and I'm generalizing massively here so we would hear that moral argument quite a lot in the UK we would hear the uh license to pollute argument a little bit more in Europe whereas in the US the license to pollute and the moral argument not mentioned at all.
• 1:00:21
  SPEAKER_00: I spent a lot of time with Chestnut carbon's leadership team and I asked them those questions they were like we've never heard either of those the argument they get all the time is prove it's permanent.
• 1:00:30
  SPEAKER_01: We just want the permanency argument do you hear that a lot as well the permanence argument I hear a lot from from the US as well.
• 1:00:38
  SPEAKER_01: I wonder where do you think that comes from as a uh the genesis of it it comes that I think a lot of the corporates are now making up their plans and it's almost like a spreadsheet exercise now how can we reduce things and if they're then saying well now we are investing in this nature things but they're actually not there forever what do we do then when these emissions reverse so I think this is this is where this is this is coming from right so and um I mean from a from a pure carbon accounting and I think some of the systems and organizations that advising these corporates that they're obviously the ones that are also pushing some of these arguments and they're probably to blame for that they're saying like like everything has to be you know absolutely thousand year permanent I think that they they're overseeing that um yes some of the nature stuff will not be not be permanent by if but it is a bit of a transition strategy right so if we're not now tackling and and uh using the opportunities we're having in in the next 10-15 years on on the nature side I think the problem would be so much more worse right before we have those perfect um uh emission reductions opportunities and I think there's a there's a bit of a you know the perfect is the enemy of the good kind of um ongoing in in in in the market that everybody's rather doing something very small and perfect than saying okay but this is something that is now at least in the short term reducing significant amount of emissions and it buys us some time to be in a position then to have other mechanisms that that that are fully permanent.
• 1:02:13
  SPEAKER_00: I think you're in my view on how that develops are very similar also the thing that nature-based solutions gives us whenever the super genius develops the carbon scrubbing technology that ultimately solves this problem because we're gonna need a mechanical technological solution I'd still like a nice world to live on at the time and without the nature based solutions that bit doesn't exist either we might be living in a dystopian wasteland with really efficient carbon scrubbing.
• 1:02:39
  SPEAKER_00: Well then we're gonna have to try and rebuild the nature we've lost along the way so no no agree um unintentionally I've segued beautifully into technology there.
• 1:02:47
  SPEAKER_00: So talked a little bit about AI how much is technology part of um how you look at an investment and and have you made any specific technology investments peripheral to what you're doing?
• 1:02:58
  SPEAKER_01: No I mean we haven't we haven't done any specific uh technological in investments or invested in companies that can can can provide certain services but obviously we're looking at this quite closely I think that the the trouble for the moment at least in particular on the carbon side with many of the standards is that they're actually not very open to use technology and that's a big that's a big problem.
• 1:03:23
  SPEAKER_01: And then also for we're assessing a lot of tools that are around there so far we haven't really found many tools that can solve more than one specific sub-issue or submeasurement and then they're often not as helpful.
• 1:03:40
  SPEAKER_01: So I think that's that's for us kind of the um the the big challenge what we're doing now at the moment is up is setting up our own internal system in a way that we have a seamless reporting ability from our projects to our own systems.
• 1:03:56
  SPEAKER_01: So at the moment and that system now allows for both manual um collection of data but in the long term it would also allow just to put something else that measures it for us and then have a direct feed to the system.
• 1:04:10
  SPEAKER_01: So that's the vision we're having at the moment we're still testing quite a bit but when you think about we're doing some some biodiversity surveys for some of our impact measurements that's all done by hand at the moment right we still haven't seen anything from a cost perspective that really says okay that that provides us with the same rigor and also with the same cost.
• 1:04:30
  SPEAKER_01: And so yes we are looking at it and I think we would say like you said like how it's a question more how many years will it take that that we are there and we can see that there should be we should be able to at some point no longer use any any human inputs for the measurements but I think at the moment we're we're still not there.
• 1:04:48
  SPEAKER_00: So um we've had uh early 26 we've had the biggest breakthrough on our MRV-based approach so we're now able to combine um drone data uh with lidar surveys on the ground for individual tree carbon measurements and we've got that fully integrated into a machine learning loop that allows us to quantify organic carbon storage tree by tree and below canopy level and that's automated and what we've found from the we've pilot tested it on um our Beyond Carbon partnership with Burgessam and the law firm and we've found that it overesti sorry that it identifies 20% more carbon than the traditional methodology.
• 1:05:29
  SPEAKER_00: And what's really exciting um for for those people who are not as geeky in this space as you and I, your your sentence about how the existing methodologies are not particularly open to technology, you could write 10,000 words on that that is such a an insightful observation.
• 1:05:43
  SPEAKER_00: But I saw earlier this week I think Vera recognized their first digitally verified credit.
• 1:05:48
  SPEAKER_00: And I know isometric are doing so much on this as well.
• 1:05:51
  SPEAKER_00: So hopefully in the next however many months or years that will accelerate at a pace because I think the opportunity for technology is transformative.
• 1:06:00
  SPEAKER_00: Really exciting on that.
• 1:06:01
  SPEAKER_00: Companies like Super Organism and Sand River Capital are taking minority, they're sort of nature-based venture funds who are taking minority positions in all these cool companies.
• 1:06:11
  SPEAKER_00: Like have you come across a group called Rhizocore?
• 1:06:14
  SPEAKER_01: No.
• 1:06:14
  SPEAKER_00: So they make organic mushroom-based uh pellet form fertilizer for tree planting.
• 1:06:21
  SPEAKER_00: Um, because you can't use any form of pesticide or chemical fertilizer, sorry, on an organic tree planting scheme.
• 1:06:27
  SPEAKER_00: But this micro rhizome pellet is improving carbon yields by 20 to 30 percent, which is super exciting.
• 1:06:33
  SPEAKER_00: So, what I love about the sector now, five years ago, there was you, there was us in a very different way, too, through it's quite a lonely sector.
• 1:06:41
  SPEAKER_00: Whereas now it's so exciting, it feels like all these peripheral businesses, whether they're insurers or debt providers or technological friends.
• 1:06:48
  SPEAKER_01: Do you feel sometimes overwhelmed by that as well?
• 1:06:50
  SPEAKER_01: It's so exciting.
• 1:06:51
  SPEAKER_00: Yeah, yeah.
• 1:06:52
  SPEAKER_00: I um I like the complexity and the variety and the range of what we're doing.
• 1:06:58
  SPEAKER_00: Um, I think the only element of overwhelmingness was about 10 minutes this morning when I realized the real impact of AI is gonna have on businesses.
• 1:07:07
  SPEAKER_00: But then that just made me go, oh, cool, let's get out in front of this.
• 1:07:11
  SPEAKER_00: Um, does does I sense you do a little?
• 1:07:15
  SPEAKER_01: Well, sometimes I do a bit because I've there there are so many service providers that that try to offer now um exactly like measurements and that.
• 1:07:24
  SPEAKER_01: And it's really difficult to kind of understand and and uh assess, okay, what can you do?
• 1:07:30
  SPEAKER_01: And obviously the first side that looks always like, wow, this is amazing.
• 1:07:33
  SPEAKER_01: And then you think, well, yeah, but we're still underpiloted, so we can only do one thing at the very but in the future we maybe we may be able to do this, and we may be able to do that, and and and and that's really we're becoming a bit institutional there as well.
• 1:07:45
  SPEAKER_01: Like the other, I feel sometimes like a yeah, okay, come back when when when you actually can offer me the entire suite of services that that that you enlist, right?
• 1:07:53
  SPEAKER_01: So because it's interesting.
• 1:07:55
  SPEAKER_00: So I uh do you think about recruitment in a similar way?
• 1:07:59
  SPEAKER_00: So when you're identifying a talent to bring into the business, do you want them at the fully formed stage where they can do every aspect of the role and hit the ground running straight away?
• 1:08:09
  SPEAKER_00: Is that what you would look like?
• 1:08:10
  SPEAKER_01: Um it depends.
• 1:08:13
  SPEAKER_01: I think we have both.
• 1:08:14
  SPEAKER_01: So we we had a lot of where we build up from from from the bottom.
• 1:08:20
  SPEAKER_01: And um, but I think for some roles you need someone that has done that and and seen that.
• 1:08:25
  SPEAKER_01: And uh it's what we find is that it is easier sometimes to have somebody who has a lot of industry experience, maybe in a completely different sector, to explain to them and train them what we are doing than someone who comes outside of the sector then then then and and knows everything about maybe some of the underlying natural capital side to train them, then some of the kind of the asset management kind of uh things.
• 1:08:50
  SPEAKER_01: So that I think we we tried both, but I think you you need a couple of them that that immediately can go down and and and and and get running.
• 1:08:58
  SPEAKER_00: I I want I want the idea or the person as early as possible.
• 1:09:04
  SPEAKER_00: So I love our intern program.
• 1:09:06
  SPEAKER_00: So we have an intern program that we're super, super proud of.
• 1:09:10
  SPEAKER_00: We had 2,000 applicants in a two-week window, and we've taken eight interns for this year that they come for three month periods, but these are not people that come for a short period.
• 1:09:19
  SPEAKER_00: It's a trial three months with the intention that we keep you.
• 1:09:22
  SPEAKER_00: Um we've got 12 people who've come through this program in the business now who are abundantly clearly future six-figure employees, future MDs.
• 1:09:32
  SPEAKER_00: I've said to four of them now, when you are ready to go on your own, I will be your first investor.
• 1:09:37
  SPEAKER_00: Like, let's go.
• 1:09:39
  SPEAKER_00: Um, and I want the ideas at that point as well.
• 1:09:41
  SPEAKER_00: So I want to hear the idea or the concept that I can borrow a millimeter from and apply it.
• 1:09:47
  SPEAKER_00: So, like you've I you'll have seen me scribble, I've scribbled three or four things that you've said that are going to make our business better tomorrow.
• 1:09:52
  SPEAKER_00: So I'm not felt it overwhelmed by the number of ideas.
• 1:09:55
  SPEAKER_00: The number of LinkedIn messages, yes.
• 1:09:58
  SPEAKER_00: That one gets quite a lot.
• 1:09:59
  SPEAKER_00: Yeah.
• 1:10:00
  SPEAKER_00: Um, that's really interesting.
• 1:10:01
  SPEAKER_00: I I'm I'm as excited about the technological advancements of the sector as I am any part of no, that's not true.
• 1:10:08
  SPEAKER_00: I'm most excited about the talent coming to the sector.
• 1:10:11
  SPEAKER_00: So five years ago, you and I wouldn't have been able to, uh you might have done because you had a long career ahead of this, but the sector in general wouldn't have been able to attract the talent it does now.
• 1:10:21
  SPEAKER_00: We have people now who are turning down investment banks and big four consultancies because they want to work in data tech and environment.
• 1:10:28
  SPEAKER_00: And in the UK, oxygen is about the only place you can you can do that.
• 1:10:32
  SPEAKER_00: Um, so we're really fortunate for that talent.
• 1:10:34
  SPEAKER_00: So talent number one, I'm most excited about, and then technology is number two, and one plus two equals 10 in this world.
• 1:10:41
  SPEAKER_00: So I love that.
• 1:10:43
  SPEAKER_00: Um just to dive into you and your process a little bit.
• 1:10:46
  SPEAKER_00: Um, what is what does a working day or week look like for you, the person?
• 1:10:51
  SPEAKER_01: Um it it it really depends.
• 1:10:55
  SPEAKER_01: So I'm we are we're obviously having now lots of vehicles, so a lot of our time is is is is uh focused on on uh uh managing that.
• 1:11:05
  SPEAKER_01: So I do spend a lot of time actually in committees now.
• 1:11:07
  SPEAKER_01: We're becoming much more institutional.
• 1:11:10
  SPEAKER_01: I'm a little outside London.
• 1:11:11
  SPEAKER_01: Yeah, so I'm I'm here.
• 1:11:12
  SPEAKER_01: Um I'm most of the days if I'm not traveling, I'm I'm in the office.
• 1:11:17
  SPEAKER_01: And um, it's a combination of I've reoccurring things where I just um I manage my ex co, I manage uh part of the senior leadership team, I'm also responsible for the distribution.
• 1:11:28
  SPEAKER_01: So they're kind of ongoing things that I'm doing.
• 1:11:31
  SPEAKER_01: Um country direct reports?
• 1:11:33
  SPEAKER_01: Um at the moment I have six direct reports.
• 1:11:36
  SPEAKER_00: Okay.
• 1:11:37
  SPEAKER_00: And you meet with them at what frequency as a collective?
• 1:11:40
  SPEAKER_01: Um well as a collective, and then then also have bi-weekly.
• 1:11:44
  SPEAKER_01: Well, with some I have weekly and with others have bi-weekly um meetings.
• 1:11:47
  SPEAKER_01: These were different, right?
• 1:11:48
  SPEAKER_00: Yeah, need to be.
• 1:11:49
  SPEAKER_00: Exactly.
• 1:11:49
  SPEAKER_00: So and you're you're so I love the detail of this stuff.
• 1:11:51
  SPEAKER_00: So you're what what time do you what do your time's your day start?
• 1:11:54
  SPEAKER_00: Do you have a lot of people?
• 1:11:55
  SPEAKER_01: So I'm I'm usually taking in in relatively early train, so either just before or just after seven o'clock.
• 1:12:02
  SPEAKER_01: Um that allows me then to be in the office either.
• 1:12:05
  SPEAKER_00: What do you do on the train?
• 1:12:06
  SPEAKER_01: Oh, on the train.
• 1:12:07
  SPEAKER_01: So you have to, I'm becoming now um a seasoned commuter.
• 1:12:11
  SPEAKER_01: You always go in the last car.
• 1:12:12
  SPEAKER_01: So because they're usually uh uh uh seats with a table, and that allows you then to put your laptop out.
• 1:12:18
  SPEAKER_01: And I usually depend.
• 1:12:19
  SPEAKER_01: So most of the time I just I try to have kind of the emails overnight kind of done, or sometimes I reserve something to just like I have to do something, I have to read something.
• 1:12:29
  SPEAKER_01: Reading is probably better than writing in in the train.
• 1:12:32
  SPEAKER_01: Yeah, but I usually would say I'm sitting usually in a compartment with eight people, and they're all everybody has a headphone, are not we all know each other now, you're not to each other, everybody has something to do in the morning.
• 1:12:41
  SPEAKER_01: So it's uh it's actually quite a good environment.
• 1:12:44
  SPEAKER_01: And for me, it allows us to kind of get ready for the day.
• 1:12:46
  SPEAKER_01: Most of the time I have my emails kind of done, so I can come to the office other than 8 and 8:30, and and and I would be ready for anything new, for a meeting, or and sometimes we have a situation that we have to use.
• 1:12:59
  SPEAKER_01: So that's that's what I noticed as well.
• 1:13:01
  SPEAKER_01: So I I need to usually I get involved, and you're probably the same when something happens, right?
• 1:13:07
  SPEAKER_01: So uh and and usually it's uh you're not involved when the nice things happen, it's usually when the problem um emerges.
• 1:13:13
  SPEAKER_01: So you have to kind of reserve time for that in in order to do that.
• 1:13:16
  SPEAKER_01: And I said then there's a lot of reincurring things on on in investment committees, other committees.
• 1:13:21
  SPEAKER_00: So do you um do you plan for when you want particular activities in particular times of the day?
• 1:13:27
  SPEAKER_00: So like are you better in a morning or an afternoon or an evening?
• 1:13:31
  SPEAKER_00: Do you structure your time that specifically?
• 1:13:33
  SPEAKER_01: I'm trying now not to do too much in the evening.
• 1:13:36
  SPEAKER_01: I used to because it's um so I'm trying to to carve out some time.
• 1:13:40
  SPEAKER_01: If I have to do some work on my own that I'm that I'm doing it actually at work, or I can finish it up in on my commute back because I I notice otherwise you're saying, oh yeah, I have the whole evening to finish that, then then you're actually just eating in the in the evening, and I'm just trying to kind of say no when I come home, then then then I actually don't work.
• 1:13:59
  SPEAKER_01: I don't always manage that because obviously sometimes some deliverables or issues that you have to deal with.
• 1:14:05
  SPEAKER_01: We have people in the US, um, I have some shareholders in Australia, so sometimes it's just easier to do something in the evening, but I'm trying to avoid that.
• 1:14:12
  SPEAKER_01: And what's the family situation?
• 1:14:14
  SPEAKER_01: So I'm I'm married, have two kids.
• 1:14:16
  SPEAKER_01: How old are the kids?
• 1:14:16
  SPEAKER_01: They are uh they will be 16 and 18 this year.
• 1:14:19
  SPEAKER_01: Wow.
• 1:14:19
  SPEAKER_01: Yeah, yeah.
• 1:14:20
  SPEAKER_01: So that's quite there now.
• 1:14:23
  SPEAKER_01: They're independent, right?
• 1:14:24
  SPEAKER_01: Yeah, they're independent.
• 1:14:25
  SPEAKER_01: Well, I mean, we we still have to drive them sometimes somewhere, but but ultimately I I don't have small children at home, which which I think is a is a big difference, right?
• 1:14:33
  SPEAKER_01: So I've I've been minus seven and nine.
• 1:14:35
  SPEAKER_01: Yeah, yeah.
• 1:14:36
  SPEAKER_01: Then then it's a completely different.
• 1:14:38
  SPEAKER_01: I used to very religiously, so before when they were smaller, we always made sure that one of us was home either 5.30-ish.
• 1:14:47
  SPEAKER_01: So and and then we would basically block out until they're back in in bed, in order to kind of just have that time.
• 1:14:53
  SPEAKER_01: And that worked really well for us as a family.
• 1:14:55
  SPEAKER_00: What um as a leader in in the business, what is what is the strength you're most proud of?
• 1:15:02
  SPEAKER_00: What do you like about your leadership style?
• 1:15:05
  SPEAKER_01: I I hope that I'm I'm trying to be very inclusive, um, um motivational.
• 1:15:10
  SPEAKER_01: So I'm um and um I'm trying to kind of lead by action.
• 1:15:17
  SPEAKER_01: So I think that's that's important.
• 1:15:19
  SPEAKER_01: So I I don't want to be someone who's saying, well, I expect to do this, that you do this, but I don't have to do it, kind of thing.
• 1:15:24
  SPEAKER_00: So I think that's an leading my example is in is and is is in a very important part, I think of my if you're really honest with yourself, what's the leadership trait you wish you were better at or didn't have?
• 1:15:37
  SPEAKER_01: Honestly, I mean, um you for me really from my personality is like the ability to say no more quickly uh and seeing this as a strength and not as a weakness.
• 1:15:47
  SPEAKER_01: I still to this date saying that if I say no sometimes for someone that I'm saying, oh they that's probably not the right way.
• 1:15:54
  SPEAKER_01: But I realize no, sometimes actually people are really happy with a no, they just want to know, right?
• 1:15:57
  SPEAKER_01: So the the worst part is to kind of uh prolong a decision, right?
• 1:16:01
  SPEAKER_01: It's uh so you're you're better off saying, look, this is not going to work, we're not going to do this.
• 1:16:07
  SPEAKER_01: Uh and and then they're actually saying, no, thanks.
• 1:16:10
  SPEAKER_01: That's that's all I needed to know, and then move on.
• 1:16:11
  SPEAKER_00: So love it.
• 1:16:13
  SPEAKER_00: And how do you think, or how would you like you to improve from a learning and development perspective over the rest of this year?
• 1:16:20
  SPEAKER_01: I well, I would I'm very much still involved in a lot of operational parts of that.
• 1:16:25
  SPEAKER_01: So I I sense you enjoy that as well, though.
• 1:16:28
  SPEAKER_01: Like knowing that.
• 1:16:29
  SPEAKER_01: I do.
• 1:16:29
  SPEAKER_01: I I think look, my I I would not want to lead an organization that I don't understand.
• 1:16:34
  SPEAKER_01: It's obviously this a fine line.
• 1:16:35
  SPEAKER_01: You can't understand every single detail.
• 1:16:37
  SPEAKER_01: But I think I have a I I I would think I have a good understanding what kind of is going on in the organization, where our key challenges are, where our key success stories are.
• 1:16:47
  SPEAKER_01: And and that's important for me, to the kind of to to be involved in that.
• 1:16:51
  SPEAKER_01: But I think I would like to step up much more in thinking what comes actually next for us.
• 1:16:56
  SPEAKER_01: And I think I'm I'm feeling we are we are a lot in the in the in the here now.
• 1:17:00
  SPEAKER_01: Uh, there's always something we um need to achieve where a problem needs to be solved.
• 1:17:05
  SPEAKER_01: And uh I had one of my first independent chairperson he always said that uh when he was CEO, he always blocked out one day a week where he had no meetings, and where he sometimes half a day was staying home, the other half a day was staying in the office, where he was just saying, okay, this is my day where I'm thinking about what comes next for the company.
• 1:17:27
  SPEAKER_01: And I'm I'm I think that's something where I don't think I will ever get there as as religiously as that, but I think I think that's that's something I would like to achieve more to having that space.
• 1:17:37
  SPEAKER_01: Because I I usually do this on a Friday.
• 1:17:39
  SPEAKER_01: I'm working from home, and um, especially Friday afternoon, then kind of slows down.
• 1:17:44
  SPEAKER_01: Then you have these moments where you're like, oh, this is really interesting.
• 1:17:46
  SPEAKER_01: Now you read a couple of things, you probably have this and you have all this long reading list, you lead something really interesting, and you kind of start thinking and you get in this in in this mood where you're thinking, okay, oh, that's actually interesting.
• 1:17:57
  SPEAKER_01: Why don't we do this?
• 1:17:58
  SPEAKER_01: Why don't and then you immediately have some ideas also that relate to today?
• 1:18:01
  SPEAKER_01: And I think that's I'm I'm not doing that enough.
• 1:18:04
  SPEAKER_00: I've sort of formed this view of different roles within a business of um uh so and every business says this, but I actually mean it because I've worked in corporates where it was horrible.
• 1:18:14
  SPEAKER_00: We have a very flat structure.
• 1:18:16
  SPEAKER_00: So I start every week with a whole team call.
• 1:18:19
  SPEAKER_00: So 10 till 11:30, I chair a call for the entire business.
• 1:18:23
  SPEAKER_00: Anyone can ask everything from interns through to directors, the whole business.
• 1:18:27
  SPEAKER_00: And I get grumpy when they don't ask questions because I'm like, I would have killed for this opportunity early in my career.
• 1:18:32
  SPEAKER_00: I wasn't allowed to talk to the chief exec.
• 1:18:34
  SPEAKER_00: What do you want to know?
• 1:18:35
  SPEAKER_00: Ask me anything.
• 1:18:36
  SPEAKER_00: How many people are you?
• 1:18:37
  SPEAKER_00: Uh we're 40 people in the central team now.
• 1:18:39
  SPEAKER_00: Okay, and then there's another 20 across the estate, but in the central team, we're looking on that call.
• 1:18:45
  SPEAKER_00: Um, and I've sort of formed the idea that it's the heads of job.
• 1:18:50
  SPEAKER_00: So everyone below a head of, it's a heads of job to manage this week and maybe this month.
• 1:18:56
  SPEAKER_00: It's the director's job to manage this month and the next three months, and it's my job three months into the future.
• 1:19:03
  SPEAKER_00: And we've had a couple of situations whereby I've I've known where we were going to be in 18 months, and I've had to draw the root map back from 18 months and piece together the different the chip the chessboard of how we get to that endpoint, and that's been the thing that's given me the most pleasure and enjoyment in terms of drawing that root map.
• 1:19:23
  SPEAKER_00: And and of course, you you start off with like 20 different scenarios, and the further you get into the future, the less clear it is and things.
• 1:19:30
  SPEAKER_00: But I I love setting things in motion, a bit like the end of a guy Ritchie movie.
• 1:19:33
  SPEAKER_00: You set things in motion and they come together at the end of the movie.
• 1:19:37
  SPEAKER_00: When you can get it like that, it feels awesome.
• 1:19:39
  SPEAKER_00: You can't be like that all the time, though, right?
• 1:19:41
  SPEAKER_00: Um, I I do my best thinking.
• 1:19:44
  SPEAKER_00: So if I'm at home, I get up, I'm in the gym for six till eight thirty in the morning is my that's my happy place.
• 1:19:50
  SPEAKER_00: Um, and often I'll talk to our directors when I'm in the gym, I'll we'll have conversations back and forth.
• 1:19:55
  SPEAKER_00: But I do my best thinking in there.
• 1:19:57
  SPEAKER_00: Where is your best thinking?
• 1:19:58
  SPEAKER_00: Where do you put yourself to do your best thinking?
• 1:20:00
  SPEAKER_01: Yeah, I I think it's also exercise.
• 1:20:02
  SPEAKER_01: I think it's it's uh usually like to like to go out um um different things, running.
• 1:20:09
  SPEAKER_01: Uh you're a runner.
• 1:20:10
  SPEAKER_01: Yeah.
• 1:20:10
  SPEAKER_01: I also like uh um and and I play golf.
• 1:20:13
  SPEAKER_01: I actually like playing golf by myself.
• 1:20:14
  SPEAKER_01: That's actually the really nice thing to do.
• 1:20:16
  SPEAKER_01: That's unique, isn't it?
• 1:20:17
  SPEAKER_01: Yeah, so yeah.
• 1:20:18
  SPEAKER_00: I was gonna offer you to play with our general counsel who loves golf, but by the sounds of it, you'd rather play something.
• 1:20:22
  SPEAKER_01: No, no, no.
• 1:20:22
  SPEAKER_01: I mean, I like playing with other people as well, but I think that's a that's a nice time where you you're really out, you do something, you walk.
• 1:20:29
  SPEAKER_01: Um, it's a bit mechanic, right?
• 1:20:30
  SPEAKER_01: What you're doing, and then then you can think about other things.
• 1:20:34
  SPEAKER_00: Uh well, they say that's what meditation is, right?
• 1:20:36
  SPEAKER_00: It's a mechanical, repeatable process.
• 1:20:38
  SPEAKER_00: So golf, my thing is monotonically lifting weights, it's exactly the same thing.
• 1:20:42
  SPEAKER_00: It allows your brain the freedom to to wander off.
• 1:20:45
  SPEAKER_00: Um, Martin, you've been so generous for your time, and I've absolutely loved the conversation.
• 1:20:49
  SPEAKER_00: I I always end our podcast on the same way.
• 1:20:52
  SPEAKER_00: Um, what's the one question I haven't asked you?
• 1:20:54
  SPEAKER_00: You wish I had?
• 1:20:56
  SPEAKER_01: What's the one question?
• 1:20:57
  SPEAKER_01: Well, we didn't talk uh all about kind of how we can get uh institutional allocation going, but that's probably cool too technical.
• 1:21:05
  SPEAKER_01: No, outside that, I I don't think there's anything.
• 1:21:07
  SPEAKER_00: Thank you.
• 1:21:08
  SPEAKER_00: If if um what what what let's answer it in short, what what can we do?
• 1:21:14
  SPEAKER_00: What can all of us do collectively that perhaps we couldn't do alone?
• 1:21:17
  SPEAKER_01: It's it's it's a weird question because I'm a big believer in um say my predecessor always uh said, he said, like when I'm when we said, Oh, there's so many more, because we were the only ones in in nature at the beginning.
• 1:21:30
  SPEAKER_01: It's like, well, they're all of them coming now, and they are every all these mainstream agriculture and forestry people are saying now, um uh we're also doing nature capital.
• 1:21:39
  SPEAKER_01: We always did nature capital.
• 1:21:40
  SPEAKER_01: It says they all become competitive.
• 1:21:42
  SPEAKER_01: You say, well, that's good.
• 1:21:43
  SPEAKER_01: Um, because in the end, without competition, there is no market.
• 1:21:47
  SPEAKER_01: And I think we're still at the stage where we need we need a much bigger pie.
• 1:21:50
  SPEAKER_01: And I think we need to work more as um as asset manager and and as other investors in the in this place to actually articulate much more strongly to institutional investors why we're doing that.
• 1:22:02
  SPEAKER_01: So it would be great to um, and we're trying to do this in in different in different fora to kind of say, like, how do you actually do this?
• 1:22:08
  SPEAKER_01: We're I told you earlier, we're trying to do this more from an um kind of the the wider financial argument.
• 1:22:13
  SPEAKER_01: Like, this is an uncorrelated asset class, but I'd I'd love to hear more from others how they're doing that.
• 1:22:18
  SPEAKER_01: And I think it could help us all together because I think we we need to make the case jointly and and not in competition to to the to the same kind of players in order to be successful.
• 1:22:28
  SPEAKER_00: Exactly the reason why we wanted to do this podcast to you know to have on the people who uh are doing it and uh moving the market forward.
• 1:22:36
  SPEAKER_00: We have a slide in our deck that um in place of the who are your competitors, it says these are our collaborators.
• 1:22:43
  SPEAKER_00: Because in the absence of these, there isn't a market.
• 1:22:44
  SPEAKER_00: And we need to.
• 1:22:45
  SPEAKER_01: I call them all your friendly peers.
• 1:22:46
  SPEAKER_00: Friendly peers, yeah.
• 1:22:47
  SPEAKER_01: And it's it's true.
• 1:22:48
  SPEAKER_01: I think I think everyone I meet in the market, yes, we do compete, right?
• 1:22:52
  SPEAKER_01: From but some of them very directly even.
• 1:22:53
  SPEAKER_01: And sometimes we lose out against them, and it's not pleasant, but ultimately still um um almost all of them I really respect.
• 1:23:01
  SPEAKER_01: And uh and I think we all kind of can agree, we're better off if this if this becomes a more established market.
• 1:23:07
  SPEAKER_00: I think US sport does that really well.
• 1:23:09
  SPEAKER_00: So if you look at the the NFL, the American Football League, yes, they're all they're all competing on the field, but their model is a profit share arrangement.
• 1:23:17
  SPEAKER_00: So if they grow the entire league successfully, they all financially benefit as a result.
• 1:23:22
  SPEAKER_00: Yes, it's ranked on where they finish and performance, but collectively, the better the whole enterprise does, the better each of them does, which I love.
• 1:23:29
  SPEAKER_00: Um, Martin, thank you.
• 1:23:31
  SPEAKER_00: I think what you've achieved um already is awesome.
• 1:23:34
  SPEAKER_00: I I can't imagine that we'd be a business if you hadn't have um started the process and you've solved so many of the challenges that have got this market going.
• 1:23:43
  SPEAKER_00: So, A, from all of us, thank you.
• 1:23:45
  SPEAKER_00: And B, we're super excited to see how we can work together and help scale this moving forward.
• 1:23:49
  SPEAKER_01: Well, perfect.
• 1:23:50
  SPEAKER_01: Well, thanks for the kind words and thanks for having me.