Latest / Second Nature / E182 Luke Baldwin: Rarer Than Diamonds

Transcript

E182 Luke Baldwin: Rarer Than Diamonds · Second Nature

• 0:06
  SPEAKER_02: The echo chambers of people being in in every room.
• 0:10
  SPEAKER_02: I I've I I go to conferences constantly and it's they're boring.
• 0:12
  SPEAKER_00: Mate, it's why I won't.
• 0:13
  SPEAKER_00: Yes.
• 0:14
  SPEAKER_00: I won't.
• 0:15
  SPEAKER_00: So climate weeks are different because well, even climate weeks, the events we went to were risk, investment, tech.
• 0:22
  SPEAKER_00: Yeah.
• 0:23
  SPEAKER_00: I'm not going to environmental events because you're just in an echo chamber.
• 0:26
  SPEAKER_03: Yeah.
• 0:26
  SPEAKER_00: Because everyone I I message Ben McDonald's about this.
• 0:28
  SPEAKER_00: Do you know Ben at Restore?
• 0:30
  SPEAKER_00: Yeah, yeah.
• 0:30
  SPEAKER_00: Love him.
• 0:30
  SPEAKER_00: Amazing guy.
• 0:31
  SPEAKER_00: Been on the podcast.
• 0:32
  SPEAKER_00: Love what they're doing.
• 0:34
  SPEAKER_00: He's the most amazing orator when it comes to environmental stuff.
• 0:37
  SPEAKER_00: I was saying to him the other day, and he agreed.
• 0:39
  SPEAKER_00: We're just talking to each other on a lot of these things when you go to an environmental conference.
• 0:42
  SPEAKER_00: So I'm like, not doing it.
• 0:42
  SPEAKER_00: It's not adding any value whatsoever.
• 0:44
  SPEAKER_00: Like, there are other people better place to do that.
• 0:46
  SPEAKER_00: Let the NGOs do it.
• 0:48
  SPEAKER_00: There was a real thread of that through Zurich as well, actually.
• 0:50
  SPEAKER_00: So I think it was the Was it the chief executive at UBS that did the whole thing we've had enough of disclosures, enough data?
• 0:59
  SPEAKER_01: It was in the opening ceremony, wasn't it?
• 1:06
  SPEAKER_01: Uh yeah.
• 1:07
  SPEAKER_00: And maybe it was the um it was the panel that had the amazing lady from uh responsibility on, wasn't it?
• 1:13
  SPEAKER_00: So they went, we've had 10 years of disclosures, you've had all the data, there's no more data, there's no more information.
• 1:22
  SPEAKER_00: So I I kind of have this playful article I'm gonna write, why I'm not talking to environmentalists about data anymore.
• 1:27
  SPEAKER_00: Because the person who goes, Oh, just need more data.
• 1:29
  SPEAKER_00: Have you looked?
• 1:30
  SPEAKER_00: Well, no, no, I haven't.
• 1:32
  SPEAKER_00: We don't need any more data.
• 1:33
  SPEAKER_00: We need demand and solutions.
• 1:35
  SPEAKER_00: And Zurich, I met um Nick Mayer, who was the guy who was the chairman of Zurich Climate Week.
• 1:39
  SPEAKER_00: So he came up to us uh for the opening ceremony and was he was very sweet.
• 1:42
  SPEAKER_00: He was like, Love what you guys do, love the podcast and stuff, thank you for coming.
• 1:45
  SPEAKER_00: I was like, Nick, what is this one gonna be about?
• 1:48
  SPEAKER_00: Yeah.
• 1:48
  SPEAKER_00: I was like, because I did my whole thing about uh capital, tech, etc.
• 1:52
  SPEAKER_00: And he's like, I want it to be about delivery, yeah, I want it to be about actually doing things, and ironically, I want it to be about stopping conversations and about outcomes.
• 2:00
  SPEAKER_00: And it literally was the whole essence of it was on the demand side of things.
• 2:06
  SPEAKER_00: So I was at I was at a dinner that Gowling's put on before we went out to Zurich, and they had what they do.
• 2:12
  SPEAKER_00: Uh Ben Stansfield uh at Gowling, shout out to Ben.
• 2:15
  SPEAKER_00: What I love what they do, they genuinely bring the different constituent parts together.
• 2:20
  SPEAKER_00: So they brought some delivery organizations, they brought actual investors, so they had Zurich there, they had L and G there, they had Gresham there.
• 2:29
  SPEAKER_00: So we're having conversations about um there was like a round table discussion around dinner about what is required to stimulate markets and things like that.
• 2:37
  SPEAKER_00: And my thing was everyone spoke about their respective sectors, and I pointed back on us and went, I think we need to stop yelling at people that this is a moral tirade and you should do the right thing, you must do the right thing and just give us money.
• 2:52
  SPEAKER_00: I think every time we get an NGO coming out going, I want investment, and when the investment goes, Oh, what's the return?
• 2:58
  SPEAKER_00: They go, Oh no, no, it's not like that.
• 3:00
  SPEAKER_00: Yeah, you mean you want a gift, you want philanthropy.
• 3:03
  SPEAKER_00: Exactly.
• 3:04
  SPEAKER_00: And and every time we do that moral, oh, it's terrible to make a profit out of the environment, that just makes the investor, well, I'm not dealing with that then.
• 3:10
  SPEAKER_00: Why would I get involved?
• 3:11
  SPEAKER_00: And also, you then get, and this narrative did come through in Switzerland, when I try and invest with an NGO or a charitable, I'm not getting the rigor, the professionalism, the reporting, speed of response that I need.
• 3:23
  SPEAKER_00: Language.
• 3:24
  SPEAKER_02: Because I think this is the thing, you know, like I've got so integrity is is a word that I think is really important across across the market.
• 3:36
  SPEAKER_02: We need high integrity projects.
• 3:38
  SPEAKER_02: But I think when we were on that stage together, you know, I made this point, which is when does anyone invest in any other asset that is high integrity because it's high integrity?
• 3:48
  SPEAKER_02: You don't go buy a house because it's high integrity.
• 3:50
  SPEAKER_02: You go buy a house because it's low risk.
• 3:52
  SPEAKER_02: You want to live in that place and it's you know, you get the deed and all of the qualifications.
• 3:56
  SPEAKER_02: And so, you know, when you're again, you know, I'm not gonna use that analogy that I was using a second ago, but you know, if you're looking at trader bros who are making hundreds of millions of dollars a year, you know, they don't understand that word.
• 4:09
  SPEAKER_02: And therefore you're taking to them, it's it's like chalk and cheese.
• 4:11
  SPEAKER_02: You're you're walking into that conversation, going, we've got the most high integrity projects.
• 4:15
  SPEAKER_02: Now, of course they need to be a high integrity, but that's the benchmark.
• 4:18
  SPEAKER_02: That's you don't need anything else there.
• 4:20
  SPEAKER_02: What you need is good quality, high governance, well-managed data you need ultimately.
• 4:25
  SPEAKER_02: But if you can provide that, then you can provide something that is of value to that, to that organization.
• 4:30
  SPEAKER_02: Because again, when you're going from into a boardroom and you're trying to unlock demand, you go and you explain why you should be doing this.
• 4:38
  SPEAKER_02: Like, what is the underlying question of why?
• 4:39
  SPEAKER_02: Why should I go and buy this unit?
• 4:41
  SPEAKER_02: What will that mean for me?
• 4:42
  SPEAKER_02: Is it talent acquisition?
• 4:44
  SPEAKER_02: Is it um because you know ultimately you're hedging against future price risk associated with your net zero journey?
• 4:50
  SPEAKER_00: Both those two points are the exact reason why Ross Fairley, who's the managing partner at Burgess Salmon, he sat on stage with me at London Climate Week last year and said, I've paid the highest price anyone's ever paid for a carbon credit because it gives me talent acquisition, it gives me future hedging.
• 5:07
  SPEAKER_00: And he said, I might have paid that number.
• 5:08
  SPEAKER_00: I think I've got a steal for those reasons, exactly for that.
• 5:12
  SPEAKER_00: My thing at the wrap up that Gowling story, my thing was the environment sector is not yet offering a compelling product enough.
• 5:20
  SPEAKER_00: We, outside of a few organizations, we are not offering Tesla Model S.
• 5:24
  SPEAKER_00: We're still trying to shame people into buying a Prius.
• 5:27
  SPEAKER_00: We're still trying to say, no, no, no, you must buy this thing and you must sacrifice to do it and you must settle for something less.
• 5:32
  SPEAKER_00: No, no, we need to sell a premium, high quality, actual asset.
• 5:37
  SPEAKER_00: Capital is agnostic.
• 5:38
  SPEAKER_00: It will not care if it can find a return on it.
• 5:41
  SPEAKER_00: We just haven't offered it yet.
• 5:42
  SPEAKER_00: And the rumor's like, yeah, he's kind of right.
• 5:45
  SPEAKER_02: You know, like what does someone want if if you if you're if you're really selling, you go out to an investor, most of them wants a 15% return.
• 5:52
  SPEAKER_02: Yes, they do.
• 5:53
  SPEAKER_02: Like, actually, if we start with that as our basis, then everything else is kind of superfluous.
• 5:58
  SPEAKER_02: As long as it's gonna deliver a 15% return and deliver, because ultimately those are the two things.
• 6:02
  SPEAKER_02: What's the risk associated with it?
• 6:03
  SPEAKER_02: What's the the ret the rate of return?
• 6:05
  SPEAKER_02: Of course, capital will move to it.
• 6:07
  SPEAKER_02: Like, why would it not?
• 6:08
  SPEAKER_02: You know, I'd happily put it on the demand, right?
• 6:11
  SPEAKER_02: But that's demand for investment.
• 6:13
  SPEAKER_02: It's the other side is can you actually create demand?
• 6:16
  SPEAKER_02: You know, why does someone see if someone's gonna get 15%, if you're putting 100 quid into a project, you need to get 115 quid back, who's gonna pay the 115 quid?
• 6:24
  SPEAKER_02: And at the moment, for me, solutions have been quite, I guess, like quite simplistic.
• 6:30
  SPEAKER_02: It's been this kind of like you should do this because it's the right thing.
• 6:32
  SPEAKER_02: As you say, it's we're like, of course it's the right thing to do.
• 6:36
  SPEAKER_02: The world is burning.
• 6:36
  SPEAKER_02: We know that.
• 6:37
  SPEAKER_02: But actually, when you look at like the Companies Act, for example, the Companies Act is around financial return for your shareholders.
• 6:43
  SPEAKER_02: You and me, we're both owners of businesses.
• 6:45
  SPEAKER_02: We have a financial fiduciary duty to our stakeholders or to our shareholders to make a return.
• 6:52
  SPEAKER_02: And that is crucial.
• 6:54
  SPEAKER_02: So if we keep that in mind, the world is driven by money as much as we want there to be natural capital uh accounting, as much as we're as we want there to be social accounting.
• 7:02
  SPEAKER_02: At this point in time, you know, GDP per capita is the thing that we push for, and therefore growth is in is felt in monetary terms.
• 7:09
  SPEAKER_02: So, how are we creating value for the companies that we're working with?
• 7:12
  SPEAKER_02: And as you say, it can be value from it can be value from the point of view of of people, as in it could be value from talent acquisition, marketability benefit, or it can be actual value, you know, and whether that's a land asset that you own, because that has value, because land has value, or whether that's a carbon credit that's capitalized as an asset on a balance sheet, making it you know an intangible asset, it creates value.
• 7:37
  SPEAKER_02: So that's where I think for me is it's like how do we look at this through the lens of the CFO?
• 7:42
  SPEAKER_02: Because that's the lens that's gonna unlock scale.
• 7:45
  SPEAKER_00: Have you come across Will folks and what they're doing at stability?
• 7:48
  SPEAKER_00: Yes.
• 7:49
  SPEAKER_00: So love Love Will, he was on the podcast a few years ago now.
• 7:54
  SPEAKER_00: February.
• 7:55
  SPEAKER_00: Um he kind of prompted a thought that's kind of sat at the back of my head and came to fruition a little bit in in Zurich.
• 8:01
  SPEAKER_00: A bit like your point on language again.
• 8:04
  SPEAKER_00: We like to sell carbon in tons, right?
• 8:08
  SPEAKER_00: If you if you go to buy and again, not the best analogy, you go to buy milk, you don't buy it by the tanker or the cow.
• 8:16
  SPEAKER_00: You buy the amount you need to use.
• 8:18
  SPEAKER_00: Yeah.
• 8:19
  SPEAKER_00: And I and I think you look at two factors occurring here.
• 8:22
  SPEAKER_00: So one, increasing awareness of the climate and nature, and yes, we've had a a US bounce back with Trump and things, but I don't actually think it's punctuated individuals' perspectives of the world.
• 8:34
  SPEAKER_00: I think there's a um really great analogy we had out in San Francisco the conversation and we saw it in Zurich as well, the conversations are exactly the same.
• 8:41
  SPEAKER_00: It's just people are talking about resilience and um adaptation now, not climate and data.
• 8:45
  SPEAKER_00: But the the rest of the conversation is is identical.
• 8:49
  SPEAKER_00: So people are still aware, environment's not getting any better, we need to push money there, we need to create demand.
• 8:54
  SPEAKER_00: Every single thing you talked about is the backdrop to a world of AI that is teaching people to talk about tokens and is teaching people that you might pay a penny for a token of compute.
• 9:07
  SPEAKER_00: We're now looking at how we offer as well as off takes, as well as commercial relations.
• 9:13
  SPEAKER_00: What is the direct to customer premium offering we can put in place the cost?
• 9:17
  SPEAKER_00: My flight to Zurich was about 100 kilos of carbon here and back.
• 9:23
  SPEAKER_00: No one's gonna buy a tanker of milk to get their pint.
• 9:27
  SPEAKER_00: Yeah, I'm not gonna buy a ton of carbon to offset my 100 kilos.
• 9:32
  SPEAKER_00: However, at£100 a ton, like that's£10 for my 100 kilos.
• 9:40
  SPEAKER_00: Would I pay£10 if I could have a verified, high quality, auditable, data-backed, genuine carbon product?
• 9:48
  SPEAKER_00: Yes, I would.
• 9:49
  SPEAKER_00: So we're literally looking at the build-out now.
• 9:51
  SPEAKER_00: What is that tokenized, fractionalized?
• 9:54
  SPEAKER_00: Because, and and we haven't got the numbers exactly right.
• 9:56
  SPEAKER_00: Maybe it's not£10 a kilo, maybe it's a penny a gram or something like that that allows someone to go, even if on my family holiday, I'm going to do this, or on this particular journey or this particular environmental impact, I want to offset.
• 10:11
  SPEAKER_00: I'm going to a festival this weekend.
• 10:13
  SPEAKER_00: I want my festival to be net zero.
• 10:15
  SPEAKER_00: I'm going to do that side of it.
• 10:16
  SPEAKER_00: Because we get so much inflow on LinkedIn, or we'll go to a conference, and people will say, How can I get involved?
• 10:21
  SPEAKER_00: How can I invest?
• 10:22
  SPEAKER_00: We don't offer a retail investment thing.
• 10:24
  SPEAKER_00: It doesn't make sense.
• 10:25
  SPEAKER_00: But we could say, well, if you enjoyed this speech, hit that QR code and offset your travel here for today.
• 10:32
  SPEAKER_00: So on the demand side of things, yes, we're still we're talking had some amazing conversations with tech companies and hyperscalers, but we're also thinking about trying to bring in that direct uh customer model as well.
• 10:42
  SPEAKER_02: I think I mean the direct to customer model, I think, is interesting because I think ultimately it's been, I mean, you get done on you can buy, you can buy a fractionalized credit on your airline website when you buy it.
• 10:53
  SPEAKER_02: But you know, what the impact is going to be.
• 10:56
  SPEAKER_02: And I think that's where stability's model comes in, which is you can fractionalize it and then you can tell where your um your impact has been had, and maybe even choose where your impact has.
• 11:07
  SPEAKER_02: But it has to be made more efficient.
• 11:08
  SPEAKER_02: You know, again, we talk about the carbon markets as a market.
• 11:12
  SPEAKER_02: It's not a market, in my opinion.
• 11:13
  SPEAKER_02: It's a it's a fractionalized series of projects trying to meet with demand.
• 11:17
  SPEAKER_02: So, you know, if you look at the spaghetti mess that is like all of the relationships that were there, there's no you don't have exchanges, you don't have you know standard market facilities, people don't like second secondary markets for some reason.
• 11:29
  SPEAKER_02: You know, there's no financial infrastructure that you have across there.
• 11:32
  SPEAKER_02: So I think that you know, direct to consumer is fantastic, but it's about choice and it's about efficiency and it's about the technology to be able to go to get some capital.
• 11:41
  SPEAKER_02: Because ultimately, all we do is we take capital in point A and we move it to good stuff in point B.
• 11:46
  SPEAKER_02: If you strip back, you know, I call it my the how do you explain to your friends what you do in the pub who don't know the sector, and move capital from point A to good stuff.
• 11:56
  SPEAKER_00: That is absolutely more people like you in the sector and less evangelists.
• 12:04
  SPEAKER_00: Because I think the the era people know now we needed the campaigners, we needed the evangelists to say there's a problem.
• 12:11
  SPEAKER_00: Everybody knows, continuously yelling at people, there's a problem, there's a problem, there's a problem.
• 12:15
  SPEAKER_00: Yeah, I'm here to help, I'd like to help, there's a problem.
• 12:18
  SPEAKER_00: I know.
• 12:18
  SPEAKER_00: Can I help you in any way?
• 12:19
  SPEAKER_00: There's a problem.
• 12:20
  SPEAKER_02: Okay, great.
• 12:20
  SPEAKER_02: They just leave.
• 12:21
  SPEAKER_02: Well, and then people turn around and go, I am trying to help, and then you get lambasted in the media.
• 12:26
  SPEAKER_00: So what other sector does that?
• 12:29
  SPEAKER_00: So, like you've got Elon Musk trying to do an IPO to mine the moon, and he's not also going, well, as well as mining the moon and trying to put people on Mars, I'm also gonna let anyone who lives next door to the factory have a go on the machines.
• 12:44
  SPEAKER_00: I'm not also gonna give money away to anything peripheral with it.
• 12:47
  SPEAKER_00: I'm not gonna then um people don't yell at him for the fact that he's doing well, I suppose maybe they do, he just ignores it.
• 12:55
  SPEAKER_00: I just think as a sector, we overcomplicate everything.
• 12:58
  SPEAKER_00: We try and, well, your environment impact isn't enough.
• 13:01
  SPEAKER_00: You also need to do all these other things as well, and you have to solve every uh every ill in society with the same tool as opposed to can't we just offer a really amazing, compelling carbon or nature product and have a clarity to it?
• 13:14
  SPEAKER_00: It's hard enough to do that way without complicating it with every other iteration.
• 13:18
  SPEAKER_02: I think this is I guess this is one of the challenges, isn't it?
• 13:20
  SPEAKER_02: There's still with you know, there's so much infighting in the world of carbon.
• 13:25
  SPEAKER_02: And it's you know, there's infighting just be, you know, on what the best pathway is, what sort of permanence we need to be looking for.
• 13:32
  SPEAKER_02: What's the you know, if you grandstand, you go, okay, well, there's a microcosm of people who understand this, and it's you know, in in the sort of grand scale of the world, it's probably three people and a dog, right?
• 13:42
  SPEAKER_02: It's not a huge number of people.
• 13:44
  SPEAKER_02: And actually, when you expand that out, why are we fighting over small things?
• 13:48
  SPEAKER_02: Why are we not just sitting here and just having a conversation of going, we know that we've got a pretty existential issue, you know, like genuinely potentially you know extinction level kind of events that we're looking at.
• 14:00
  SPEAKER_02: Um, and you know, I want to have kids.
• 14:01
  SPEAKER_02: I don't want my kids to grow up in a world that's gonna be gonna be worse.
• 14:05
  SPEAKER_02: So why are we not throwing the mud at the wall?
• 14:07
  SPEAKER_02: Like everything, you know, why are we not trying to embrace everything?
• 14:10
  SPEAKER_02: And if it doesn't work, whoop-de-doo, you know, that's the world of startups, you know.
• 14:14
  SPEAKER_00: The um I I finished there was a there was a piece in book one I wrote where the last line was, didn't someone say this was an emergency question?
• 14:22
  SPEAKER_00: Why is no one behaving like it?
• 14:24
  SPEAKER_00: Uh do you remember when we we did that thing at the shard with the Forsyth guys who were brilliant?
• 14:28
  SPEAKER_00: Uh James Cameron's in this afternoon.
• 14:30
  SPEAKER_00: Is he?
• 14:30
  SPEAKER_00: Is that he's coming?
• 14:31
  SPEAKER_02: I'm getting a taxi back with him, I think.
• 14:33
  SPEAKER_00: Um yeah, so perfect.
• 14:34
  SPEAKER_00: So but you and him both uh like was an invite reminded as a result of that thing.
• 14:39
  SPEAKER_00: So and um that's the that's why this podcast exists, to actually embrace those conversations and showcase everyone, because we're only going to succeed with a collaborative sector.
• 14:52
  SPEAKER_00: And also, and also because I don't like being on my own, so I get to hang out with interesting people and talk.
• 14:58
  SPEAKER_02: But I think this is the again, I think the the core is we've got a tiny and fragmented market, and unless we can all work together, you know, why are we fighting over a small pie when actually we could work together to create a massive pie?
• 15:12
  SPEAKER_02: And I'd rather take 0.02% of a massive, enormous market that has the ability to be diverse, has the ability to kind of pivot into new sectors and to change and to move around as an organization, versus trying to take 20% of a pie that's not worth that big.
• 15:27
  SPEAKER_00: But the finance sector's better at that.
• 15:28
  SPEAKER_00: Yeah, so in the five years I've been with OC, so OC turned five in June.
• 15:34
  SPEAKER_00: You go to the start of that, the environment sector was so again so in much in fighting, it was ridiculous.
• 15:41
  SPEAKER_00: And I I played a lot of sort of niche sports as a kid.
• 15:44
  SPEAKER_00: They were always like that as well.
• 15:46
  SPEAKER_00: They were always in fighty because they were struggling for their own identity, and so few people played, it was like, no, no, no, we're gonna keep this, yeah.
• 15:54
  SPEAKER_00: Yeah, very protectionist.
• 15:56
  SPEAKER_00: Whereas you never got that in rugby or football or cricket because everyone was playing, so because it was a figure it was fine.
• 16:01
  SPEAKER_00: And I always remember pre-Craig Bennett in the Wildlife Trust, even the Wildlife Trust wouldn't talk to each other, like really, and Craig's done an amazing job of sort of getting them collaborating.
• 16:10
  SPEAKER_00: But I think the the arrival of serious, sophisticated, professional investors has helped the environment sector massively.
• 16:17
  SPEAKER_00: So I think about Martin Berg at Climate Asset Management, I think about Rich and Robert Forsythe, think about Peter Batman at Gresham, Rob Gardner as well, coming from his background.
• 16:27
  SPEAKER_00: I think they have genuinely all made the sector way more collaborative, way more professional, and probably progressed things more in five years than we had in the 20 before that.
• 16:36
  SPEAKER_00: So I think it is changing and it is coming.
• 16:38
  SPEAKER_00: And where were we?
• 16:40
  SPEAKER_00: I don't know if it was Zurich, it was somewhere and someone had a real oh, that was it.
• 16:44
  SPEAKER_00: It was it was Zurich in the opening ceremony.
• 16:46
  SPEAKER_00: There was a well, why is the sector achieved nothing?
• 16:48
  SPEAKER_00: I was like, Well, hold on.
• 16:49
  SPEAKER_00: Yeah, it we all want it to go faster and further, but the world's very different than it was five years ago.
• 16:54
  SPEAKER_00: But think about the companies in like how long have you guys been going?
• 16:57
  SPEAKER_00: Three years now.
• 16:58
  SPEAKER_02: So there's companies that are growing to the sector.
• 17:01
  SPEAKER_02: There's m many more people than there was even when we started out.
• 17:04
  SPEAKER_02: You you probably were you maybe still in year one when you first came on the podcast.
• 17:08
  SPEAKER_00: I was really early, yeah.
• 17:08
  SPEAKER_02: Yeah.
• 17:09
  SPEAKER_02: I can't remember.
• 17:09
  SPEAKER_02: That was when where was it?
• 17:11
  SPEAKER_02: It was in um probably in Camden.
• 17:14
  SPEAKER_02: Camden Blue and White South.
• 17:15
  SPEAKER_00: Yeah, yeah.
• 17:15
  SPEAKER_00: So it's Penny, can you check when when Luke's episode was last on?
• 17:19
  SPEAKER_02: Pretty sure it was about June 24, would be my bet.
• 17:22
  SPEAKER_02: Really?
• 17:22
  SPEAKER_02: Okay.
• 17:23
  SPEAKER_00: That was when it was, but I think we recorded a little bit before then.
• 17:25
  SPEAKER_00: A little bit before.
• 17:26
  SPEAKER_00: So what what has changed in your world over that period?
• 17:29
  SPEAKER_00: How is how has everything nature broken got different?
• 17:32
  SPEAKER_02: I think we focused, like as an organization, we're now very focused.
• 17:36
  SPEAKER_02: You know, we started off, you know, as of as with everything, I come from an insurance background.
• 17:41
  SPEAKER_02: My business partner, co-founder, comes from a um risk and compliance banking background.
• 17:46
  SPEAKER_02: And so we kind of we were oscillating.
• 17:49
  SPEAKER_02: I don't know.
• 17:49
  SPEAKER_02: I remember in my civil engineering degree, we used to have dampened curves, which used to have this oscillates like that.
• 17:55
  SPEAKER_02: And then you end up with something that says why your shop good shock absorbs on your car are really, really um powerful because you go over a bump and it goes da-da and then it stops, and that's the whole purpose of them.
• 18:04
  SPEAKER_02: And so we've oscillated and we've just had thousands of thousands of conversations to allow us to build a picture of what people actually want.
• 18:11
  SPEAKER_02: You know, we founded a carbon credit business in 2023, it's the world's most stupid idea.
• 18:17
  SPEAKER_02: But actually, because 2023 was the worst possible time that you could start a carbon credit business.
• 18:22
  SPEAKER_02: So ultimately, there's naivety there.
• 18:24
  SPEAKER_02: That naivety allowed us to kind of go, okay, well, give this a shot.
• 18:27
  SPEAKER_02: So we did.
• 18:28
  SPEAKER_02: Um, so what's changed?
• 18:30
  SPEAKER_02: I think we've worked out our identity as an organization, and we're very focused on unblocking the institutional blockers that are blocking wide-scale demand for the carbon market.
• 18:39
  SPEAKER_02: Our view is very much how do we how do we build scale of demand?
• 18:43
  SPEAKER_02: How do we understand what corporates want?
• 18:45
  SPEAKER_02: How do we unlock that?
• 18:46
  SPEAKER_02: Because our opinion is the thing that we can be most impactful in is if we unlock demand, capital flows.
• 18:52
  SPEAKER_02: Because with demand comes return and so on and so forth.
• 18:55
  SPEAKER_02: And the more demand you have, the better.
• 18:57
  SPEAKER_02: But looking at starting in 2023 meant that we had to look at it through the lens of how do we make this so compelling that someone's going to actually purchase this against a really dodgy reputation that the carbon markets had.
• 19:10
  SPEAKER_02: So, you know, what's changed for us?
• 19:13
  SPEAKER_02: We announced our landmark deal with Leidenco.
• 19:16
  SPEAKER_02: Um, we're, as far as we're aware, I might be wrong on this, but as far as we're aware, it's the first organization in the world to capitalize future investments in carbon removals, future delivery of credits and carbon removals as an asset, intangible asset on their balance sheet.
• 19:29
  SPEAKER_02: And that changes the narrative because suddenly you're going from a profitability penalty, which is what carbon credits were seen as before, um, where they were turning around and going, I'm buy-I bought a credit.
• 19:40
  SPEAKER_02: When I buy that credit, that is then cap uh gets put expensed to the PL.
• 19:45
  SPEAKER_02: When that gets expensed to the PL, it directly affects your profitability.
• 19:48
  SPEAKER_02: So there's no wonder why people weren't spending loads and loads of money on carbon credits, because if you're buying a carbon credit and it's being expensed to the PL, then you're directly affecting the profitability of an organization.
• 19:59
  SPEAKER_02: That stops people.
• 20:00
  SPEAKER_02: That's that's a huge institutional blocker.
• 20:02
  SPEAKER_02: And by being able to showcase that not with funny accounting, but actually just using standard accounting rules that was fully audited, you can capitalize credits, and that creates a real catalyst for change.
• 20:14
  SPEAKER_02: So we're now starting to see more organizations are going, okay, well, the impact that you can have is massive.
• 20:20
  SPEAKER_02: So we can come in and say you've got a 2030 net zero target.
• 20:23
  SPEAKER_02: Okay, well, here's forward pricing curves associated with where we think the price is going to be in 2030.
• 20:29
  SPEAKER_02: So if you start now, be cheaper.
• 20:31
  SPEAKER_02: Then we can then say, well, look, why don't we de-risk it?
• 20:34
  SPEAKER_02: And let's not use de-risking in terms of like other forms of de-risking, let's use it from the point of view of um actual insurance.
• 20:42
  SPEAKER_02: So an insurance product that sits around it.
• 20:44
  SPEAKER_02: Let's diversify because don't buy from a single project.
• 20:47
  SPEAKER_02: That's risky, because we know that we don't all go put our money into Bitcoin as an example.
• 20:52
  SPEAKER_02: Not that carbon and Bitcoin are related, but you don't go and invest just in Apple shares.
• 20:56
  SPEAKER_02: You invest in an ISA that invests in hundreds of different shares, or you invest in an SP tracker, which invests in the stock market.
• 21:03
  SPEAKER_02: So you create that diversification because that's a risk management tool.
• 21:08
  SPEAKER_02: So by doing that, you've now got a when I'm making a saving and you can guess what the saving is on this organization.
• 21:14
  SPEAKER_02: You can de-risk it and de-risk it with an insurance.
• 21:17
  SPEAKER_02: There's also the benefits of putting the risk onto the insurance balance sheet.
• 21:19
  SPEAKER_02: So it's taken off your balance sheet.
• 21:22
  SPEAKER_02: Um, and then if you can capitalize it, your narrative, your ability to speak to someone and to speak to someone within the organization goes from please, sir, can I have a bit of money to do some things?
• 21:32
  SPEAKER_02: To well, look, uh it's a good, it's a prudent financial decision to hedge because you're just hedging against future price risk.
• 21:39
  SPEAKER_02: It's a it's de-risked, no longer have it on your balance sheet.
• 21:42
  SPEAKER_02: Uh sorry, it's de-risked, so diversified.
• 21:45
  SPEAKER_02: You're investing in lots of projects.
• 21:47
  SPEAKER_02: Also, those projects that you're purchasing from are the related to your business.
• 21:51
  SPEAKER_02: It has the most amount of impact, underpinned by market leading due diligence, and it's underpinned by um by an insurance product.
• 21:58
  SPEAKER_02: So we're hedging.
• 22:00
  SPEAKER_02: There's no risk to me as an organization, and I'm capitalizing it, i.e., I'm creating value for my entity, the narrative changes then.
• 22:08
  SPEAKER_02: Because you're not suddenly saying, hey, look, you know, aren't we doing, you know, we should do this because, you know, to the point of our earlier conversation, because it's the right thing to do.
• 22:16
  SPEAKER_02: You're doing this because this is a prudent financial decision.
• 22:19
  SPEAKER_02: And that is a completely different story to be able to go out.
• 22:22
  SPEAKER_02: And if we can, as that narrative, as that expands, if that can then become the norm, which, you know, the conversations we're having is starting to become the norm.
• 22:30
  SPEAKER_02: And suddenly you go, okay, well, actually, why would people not get in?
• 22:33
  SPEAKER_02: Why would you not have a secondary market that actually has liquidity within it?
• 22:37
  SPEAKER_02: Suddenly you're then bringing in large capital flows because demand is not going, I'm going to have to buy a credit.
• 22:42
  SPEAKER_02: Take the Woodland Carbon Code as an example.
• 22:45
  SPEAKER_02: The Woodland Carbon Code, once a credit reaches an end buyers account, that's it.
• 22:49
  SPEAKER_02: There's no, there's no that that that ultimately, from a purely accounting perspective, that has absolutely no value.
• 22:56
  SPEAKER_02: So why are we stopping organizations?
• 22:59
  SPEAKER_02: Let's say an organization decarbonised faster than they did.
• 23:02
  SPEAKER_02: Should they be able to sell on that unit?
• 23:04
  SPEAKER_02: Probably.
• 23:05
  SPEAKER_02: Because actually that's a penalty to them.
• 23:07
  SPEAKER_02: Why would they buy more?
• 23:08
  SPEAKER_02: Like we want people to have impact for sure.
• 23:10
  SPEAKER_02: But it needs to be done with sensible financial decisions.
• 23:13
  SPEAKER_00: We've had multiple sophisticated international investors say the Woodland and Batland Codes are unviable from a commercial perspective.
• 23:23
  SPEAKER_00: They're essentially a almost a socialist instrument that they're uh purely aimed at an NGO or charitable sector, then they're not facilitating commercial interactions and markets.
• 23:34
  SPEAKER_00: And um I have some sympathy to that perspective for what you just described.
• 23:39
  SPEAKER_00: I I think we need secondary markets.
• 23:41
  SPEAKER_00: I think if you're trying to encourage people to decarbonize faster, of course you should do that.
• 23:46
  SPEAKER_00: Um so but I I do think there is some conversation about that changing through their working group.
• 23:50
  SPEAKER_00: So hopefully it evolves and I'm sure it will.
• 23:53
  SPEAKER_02: I mean, you know, I think they're aware of the fact that you know we need to the Woodland Carbon Field is an incredible mechanism.
• 23:58
  SPEAKER_02: It's one of the earliest carbon market instruments, formed back in 2011, backed by government, it's run by Scottish Forestry.
• 24:06
  SPEAKER_02: Like as far as I'm aware, there's not that many carbon registries and carbon codes that are run by government.
• 24:11
  SPEAKER_02: You know, that's a de-risking thing.
• 24:13
  SPEAKER_02: But I think the world is evolving really rapidly, and I think the standards and the registries need to evolve too.
• 24:19
  SPEAKER_00: That's my problem with regulation.
• 24:21
  SPEAKER_00: That everyone likes the idea of it, but the reality of it is just so unbelievably slow that it can't keep pace with the world.
• 24:28
  SPEAKER_00: So, like you had um Dario Amade being asked about was he pro-regulation for large-scale AI models, he immediately went, Yes, I am.
• 24:37
  SPEAKER_00: I just don't know how.
• 24:38
  SPEAKER_00: Because you look at a model like the Food and Drug Administration in the US that sit on a new drug for three years to decide whether they can use it or not.
• 24:46
  SPEAKER_00: And then by the time they decide, the technology has moved on 10 iterations, so it's completely out of whack.
• 24:51
  SPEAKER_00: I always remember um hearing it's one of the great reasons why James Cameron's coming this afternoon.
• 24:57
  SPEAKER_00: So I will admit, I had no idea prior to that event the role James had played in building these markets.
• 25:02
  SPEAKER_00: And he'd be on the Mount Rushmore of influence.
• 25:04
  SPEAKER_00: Like you were brilliant, you called him out of the room and said, you know, we shouldn't be having this conversation, like James should be answering these questions.
• 25:09
  SPEAKER_00: He literally was in the room while like Article 6 was drafted and things like that.
• 25:13
  SPEAKER_00: And I think this set, I don't know if it's this sector, I'm certainly guilty of it.
• 25:17
  SPEAKER_00: Haven't learned enough from history in the past.
• 25:19
  SPEAKER_00: You almost act like you're inventing something for the first time, and you go, No, no, no, we've got the David Hills of this world who were campaigning for BNG for 20 years, and James, who literally wrote a piece on the precautionary principle in 1990.
• 25:32
  SPEAKER_00: So um, Dario, uh the example I was thinking of was um I saw a historic thing about how government in the UK was debating regulation around the use of tractors 10 years after every farm had them.
• 25:45
  SPEAKER_02: Interesting.
• 25:45
  SPEAKER_00: Because there's just that phase shift, because it works so slowly.
• 25:48
  SPEAKER_00: And now you apply that in a world of AI.
• 25:51
  SPEAKER_00: What on earth would they regulate?
• 25:53
  SPEAKER_00: Who's qualified to have the conversation?
• 25:55
  SPEAKER_00: And the same thing applies to natural capital.
• 25:57
  SPEAKER_00: You know, we're still talking about look at BNG and it's still being kicked around and adjusted in the same way.
• 26:04
  SPEAKER_00: The market's moved on five years since the idea even came in.
• 26:08
  SPEAKER_00: The founder of the BNG sector founded a business, has sold it and exited, and moved on to his next one by the time it came into being.
• 26:15
  SPEAKER_00: So just don't know how we get regulation at the pace we need.
• 26:18
  SPEAKER_00: I think it depends on what regulation you're looking at.
• 26:21
  SPEAKER_02: Um I want to be a regulated business because I think if in order to, again, to precipitate large-scale capital flows into natural capital, it needs to be regulated.
• 26:31
  SPEAKER_02: You know, you don't even junk bonds are regulated.
• 26:35
  SPEAKER_00: Yeah, you're right.
• 26:35
  SPEAKER_00: So I'm speaking I'm very much talking about regulation from an environmental perspective, not from a financial perspective.
• 26:40
  SPEAKER_00: So I agree.
• 26:41
  SPEAKER_02: So if we have financial regulation, I want my business to be regulated.
• 26:44
  SPEAKER_02: We're looking at it because ultimately it's from a regulatory point of view, it's really, really useful because there's an it's trust.
• 26:53
  SPEAKER_02: It's ultimately your trust, you know.
• 26:55
  SPEAKER_02: If we mess up, I go to jail.
• 26:57
  SPEAKER_02: We go to jail as founders.
• 26:58
  SPEAKER_02: You know, that's a pretty good incentive to do the right thing.
• 27:02
  SPEAKER_02: You know, why is the carbon market gone through these boom and bust cycles of three times now?
• 27:06
  SPEAKER_02: I think 2008, 2015, 2021, uh sorry, 2023.
• 27:11
  SPEAKER_02: You know, it's because there's not been regulatory guardrails around what is trying to be a financial market, which is, you know, and I think if we can bring that in, you're right about the regulation that's required or could be required around the environmental sector.
• 27:25
  SPEAKER_02: Because I think everyone hopes and dreams of of regulation coming in and forcing people to do things.
• 27:31
  SPEAKER_02: And I think it will over time, but the problem is it's very easy to politicize.
• 27:37
  SPEAKER_02: Yeah.
• 27:38
  SPEAKER_02: You know, everyone likes a you know, a black sheep to kick.
• 27:42
  SPEAKER_02: And, you know, you can turn around, you see what reform are doing.
• 27:44
  SPEAKER_02: Reform are coming in and saying net zero is nonsense, it's costing us too much, let's drill, baby, drill.
• 27:50
  SPEAKER_02: You know, that's the the whole thing of it is being politicized.
• 27:54
  SPEAKER_02: And so is there going to be regulation?
• 27:56
  SPEAKER_02: Is it going to become politically tenable to do it?
• 27:59
  SPEAKER_02: I I question whether it will.
• 28:01
  SPEAKER_02: And if it's not going to be politically tenable to do it, I think we should be looking at markets.
• 28:04
  SPEAKER_02: How do we make markets work in a really effective manner?
• 28:08
  SPEAKER_02: And if we can do that, then I'm not sure we need regulation because actually financial regulation will cover it.
• 28:13
  SPEAKER_02: An example being that, you know, there's there's a question, which is is a PIU a forward or a future?
• 28:18
  SPEAKER_02: And uh, if it's a future, we all need to be regulated.
• 28:22
  SPEAKER_02: I'm not sure if you are regulated, but we would all need to be regulated because the future is a financial derivative.
• 28:28
  SPEAKER_02: It's a forward that's being used for commercial use.
• 28:31
  SPEAKER_02: It's it does, it's an unregulated asset.
• 28:33
  SPEAKER_02: So it's quite an you know as we sit here today, uh what is it in your view?
• 28:39
  SPEAKER_02: It's because primarily it's being used for commercial use, it is a forward contract, that's not a futures, um, and therefore it's an un unregulated asset.
• 28:48
  SPEAKER_02: Um but you know, that that could shift quite quickly.
• 28:51
  SPEAKER_02: You know, inclusion in the ETS, ETS allowances are a regulated trading activity, but that needs to be regulated to do that.
• 28:57
  SPEAKER_02: So for me, financial regulation is coming and that's really exciting.
• 29:04
  SPEAKER_00: So we we sat on the same panel with Craig Mackenzie and um he constantly bashes me that this doesn't work until it is a fully regulated, mandated market and voluntary carbon credits are integrated into whatever system that's required.
• 29:20
  SPEAKER_00: And I keep pushing back and saying, no, no, no, there's market solutions, valid product.
• 29:25
  SPEAKER_00: He is right that that's the easiest answer though, and the most effective.
• 29:28
  SPEAKER_00: So, Craig, you you are correct.
• 29:30
  SPEAKER_00: Um if it was mandated tomorrow that everyone genuinely was had to justify their use of carbon was taxed in some mechanism, however it was delivered, that would be the best thing that could happen for the planet and for the environment and all in.
• 29:45
  SPEAKER_00: I just don't think it's gonna come that quickly.
• 29:46
  SPEAKER_00: A bit like you said about the politicization of it.
• 29:48
  SPEAKER_00: I just and the other thing as well is um almost the allowing the voluntary carbon markets, which again is badly titled, it should be private carbon markets, but allowing the private carbon, in fact, I'm never talking about voluntary again, I'm just gonna talk about private markets should just be called the carbon markets because that's what it is, whether it's an allowance or not, it's a carbon credit.
• 30:10
  SPEAKER_02: It's a ton of carbon avoided, removed, or reduced from the atmosphere.
• 30:13
  SPEAKER_00: Carbon markets.
• 30:15
  SPEAKER_00: Um if the uh it makes this point harder to explain though.
• 30:20
  SPEAKER_00: If the private carbon markets was integrated into the UK ETS, the reality is less money would be flowing into the Treasury.
• 30:28
  SPEAKER_00: And that's why they're not gonna go with it, because actually it would go to businesses instead.
• 30:33
  SPEAKER_00: Now, I would argue the net growth effect on the UK economy would be far better than another tax that just disappears into nothingness with inside the Treasury.
• 30:43
  SPEAKER_02: There's already taxes out there.
• 30:44
  SPEAKER_02: There's, you know, in London, if you build a building, there's a carbon tax, Section 106 carbon tax.
• 30:49
  SPEAKER_02: I think in Westminster, I will get corrected on this, but it's somewhere between 800 and 900 pounds a ton.
• 30:54
  SPEAKER_00: That's not hypothecated, right?
• 30:56
  SPEAKER_02: There's not an argument that that has to be used for an environmental project.
• 30:59
  SPEAKER_02: It just it just goes into the it's the and then it goes, it's meant to go into decarbonisation of those councils, as far as I'm aware.
• 31:05
  SPEAKER_00: Which is where you get this conversation where people will push back and go, oh no, no, carbon credits are just a license to pollute.
• 31:10
  SPEAKER_00: I once had this really uncomfortable realization that people say, oh, carbon credits are just a license to pollute.
• 31:15
  SPEAKER_00: And I'd be like, what are you talking about?
• 31:17
  SPEAKER_00: Of course they're not.
• 31:18
  SPEAKER_00: You have to restore a landscape, plant a tree, restore Peatland.
• 31:21
  SPEAKER_00: And then I went, oh, they mean regulated.
• 31:24
  SPEAKER_00: They don't mean voluntary.
• 31:26
  SPEAKER_00: Because we're so close to it.
• 31:27
  SPEAKER_00: I hear private carbon, not carbon markets, they they meant airlines and industrial facilities.
• 31:34
  SPEAKER_00: So I ended up going back to this person and going, I'm so sorry.
• 31:36
  SPEAKER_00: You're absolutely right.
• 31:38
  SPEAKER_00: If you are an airline and you buy an allowance, there is no guarantee the environment gets better as a result.
• 31:43
  SPEAKER_00: Let me please explain to you what we do that's different.
• 31:45
  SPEAKER_00: And they were like, I had no idea.
• 31:47
  SPEAKER_00: So because we're so close to it, I didn't recognise the distinction.
• 31:50
  SPEAKER_02: Comes back to like how many times do you try and explain to your mates in a pub?
• 31:54
  SPEAKER_02: You know, say you go to a uh a school reunion, not seen people in 10 years, you know, and you go and say hi to them, and then you try and explain what you do.
• 32:02
  SPEAKER_02: I don't know about you, but sometimes you just you end up waffling, you're like, So have you heard of a carbon credit?
• 32:07
  SPEAKER_02: They're like, I I think so.
• 32:10
  SPEAKER_02: I don't don't really understand that.
• 32:11
  SPEAKER_02: Then you kind of go, Well, you know, we kind of help people, we pay for people to plant trees and do good stuff.
• 32:17
  SPEAKER_02: And they're like, Isn't that just charity?
• 32:19
  SPEAKER_02: You're like, no.
• 32:20
  SPEAKER_02: And then you turn around and you go, Well, this is you know, I this is what I like, which is we move capital to do good things.
• 32:27
  SPEAKER_02: And that's just a very apt way of describing it.
• 32:30
  SPEAKER_02: Geographically very different.
• 32:32
  SPEAKER_00: So in the US, it's the real capital angle.
• 32:35
  SPEAKER_00: In the UK, I tend to stay more on the tech side of stuff.
• 32:40
  SPEAKER_00: People but you do get that charity angle in the UK.
• 32:42
  SPEAKER_00: So people will be like, especially with auction conservation as a title, oh you're charity.
• 32:47
  SPEAKER_00: No, why not?
• 32:48
  SPEAKER_00: What do you mean, why not?
• 32:49
  SPEAKER_00: I get we used to get that quite a lot, not so much anymore, but well, I think you should be.
• 32:53
  SPEAKER_00: Oh, okay, but but we're not, we're a business.
• 32:56
  SPEAKER_00: All right, okay.
• 32:57
  SPEAKER_00: And then whereas in Europe, actually, conservation played very well as a logical business.
• 33:02
  SPEAKER_00: So there's almost a different perception in terms of that's been one of my so we brought Elena on as director of Europe in February because we had such inflow from European pension funds and now increasingly family offices, actually.
• 33:15
  SPEAKER_00: One of my excitements was I'd exclusively worked in the UK before, a little bit in the US in previous chapters of life, but I wanted to see how our brand, our language, our approach worked in different cultures from a learning and a development perspective.
• 33:28
  SPEAKER_00: And it is fascinating.
• 33:30
  SPEAKER_00: I think certainly in um I mean, we we've had advanced reach outs from Portugal, Spain, France, and then separately the Nordics.
• 33:39
  SPEAKER_00: We had Asgard, one of the fund managers um from a Danish forestry fund on the podcast a few weeks ago.
• 33:45
  SPEAKER_00: And it's it's been such a great learning experience how they view the environment, the market's completely different.
• 33:51
  SPEAKER_00: So it's a richer tapestry to work with.
• 33:54
  SPEAKER_00: It's interesting as well.
• 33:55
  SPEAKER_02: Like there's other ways of thinking, you know.
• 33:57
  SPEAKER_02: I was on a call the other day and someone turned to me and was like, Can you just be a bit more American?
• 34:01
  SPEAKER_02: Like, what do you mean?
• 34:02
  SPEAKER_02: It's like, can you be a bit more direct?
• 34:04
  SPEAKER_02: Like that's a very apt, like, and actually a good bit of feedback, you know.
• 34:08
  SPEAKER_02: Do we need to be more direct?
• 34:09
  SPEAKER_02: You know, do we need to say what we're thinking rather than skirting around the issue?
• 34:13
  SPEAKER_02: You know, that's but then is that the right way versus other things?
• 34:16
  SPEAKER_02: You know, it's it's uh nuance, isn't it?
• 34:18
  SPEAKER_00: Very much nuance.
• 34:19
  SPEAKER_00: I I want to take you back to your groundbreaking Clyde and co-deal, which got a round of applause from like 200 people in the shard about the impact on that.
• 34:26
  SPEAKER_00: Bravo.
• 34:27
  SPEAKER_00: Um, how did that come together?
• 34:29
  SPEAKER_00: Because that's you described it beautifully and simply and the impact it had, but that's a complicated arrangement.
• 34:35
  SPEAKER_00: There's multiple parties there.
• 34:36
  SPEAKER_00: How did you bring that together?
• 34:38
  SPEAKER_02: I think it took 19 months, so it took a long while.
• 34:42
  SPEAKER_02: And all credit goes to Paddy Linnigan from Clyde ⁇ Co.
• 34:46
  SPEAKER_02: He is visionary and a really amazing folk.
• 34:49
  SPEAKER_02: Um you just frame Clyde ⁇ Co.
• 34:51
  SPEAKER_02: for people who might not be familiar with it.
• 34:52
  SPEAKER_02: So Clyde ⁇ Co.
• 34:53
  SPEAKER_02: is an international law firm predominantly working in insurance.
• 34:56
  SPEAKER_02: So that's where they started out.
• 34:58
  SPEAKER_02: Um they've got think offices in 99 countries.
• 35:02
  SPEAKER_02: I might be wrong, but they're you know they're you wouldn't want to get the hundredth, would you, if you were there?
• 35:06
  SPEAKER_02: Because really cool.
• 35:08
  SPEAKER_02: Yeah.
• 35:08
  SPEAKER_02: I mean, I that might be complete rubbish.
• 35:10
  SPEAKER_02: I I can't remember exactly, but they're a big, big organization.
• 35:13
  SPEAKER_02: I think you know, they're they're as a law firm, they you know, one of the biggest in the world, probably top 50.
• 35:18
  SPEAKER_02: Um, and professional services businesses have to care about um sustainability.
• 35:26
  SPEAKER_02: The reason they have to care about sustainability, interestingly, wasn't from a talent point of view, was because their clients cared about sustainability.
• 35:34
  SPEAKER_02: So I think regulation, in my opinion, comes in in two ways.
• 35:38
  SPEAKER_02: It's why the largest companies in the world, if they get regulated, everyone is a part of their value chain.
• 35:44
  SPEAKER_02: So whether you take the NHS as an example, the NHS has a 2045 net zero target.
• 35:49
  SPEAKER_02: So if you are part of the NHS supply chain in any way, you have a 2045 net zero target.
• 35:56
  SPEAKER_02: And they're starting to ask people to have real transition plans.
• 35:59
  SPEAKER_02: They're asking people to have um what they're doing about environment, nature, social impact, et cetera, as part of their proposals, a part of their um uh procurement operations.
• 36:11
  SPEAKER_02: So procurement is increasingly becoming a very valuable tool to getting action to happen.
• 36:17
  SPEAKER_02: And so they found out that, or Clyde and Co.
• 36:20
  SPEAKER_02: found out, that they had uh over a third, I think, of their revenue was covered by an SBTI target.
• 36:26
  SPEAKER_02: So the question wasn't a question of we should do this morally because it's the right thing because our competitors are doing it.
• 36:31
  SPEAKER_02: Went, are you willing to throw away a third of your revenue because you don't have an SBTI target?
• 36:37
  SPEAKER_02: Well, no, we're not.
• 36:38
  SPEAKER_02: Should we have an SPTI?
• 36:39
  SPEAKER_02: Probably we should go get an SBTI target.
• 36:41
  SPEAKER_02: So then you go down that journey, but that journey is driven by purely, purely by like by by financials.
• 36:48
  SPEAKER_02: Of course, they want to have impact, but this is about looking at the the reason why someone might do this.
• 36:53
  SPEAKER_02: And so we started, we went through an open tender, started chatting to them, and it just, I mean, it took a lot longer than we thought it was.
• 37:00
  SPEAKER_02: So, what was that tender call?
• 37:02
  SPEAKER_02: What was it specifically asking for?
• 37:04
  SPEAKER_02: Removal credits to be purchased for so they need 10,000 tons residual emissions from 10,000 uh from 2038 onwards.
• 37:11
  SPEAKER_02: So they're buying credits in advance of an obligation, which is their net zero obligation.
• 37:16
  SPEAKER_02: They're very advanced in their net zero journey, they're decarbonizing across the board, they're reducing carbon emissions.
• 37:22
  SPEAKER_02: So this is just for the net of net zero.
• 37:24
  SPEAKER_02: And I think that's really important again, which is everyone is gonna have residual targets.
• 37:29
  SPEAKER_02: You know, to put a scale of perspective in, the IPCC recommends, reckons that at a very basis to hit 1.5 or two degrees warming, we're gonna need to remove about 8 billion tons of carbon per year from the atmosphere.
• 37:43
  SPEAKER_02: And to put that in a scale context, we produce as a world 800 million tons of grain per year.
• 37:50
  SPEAKER_02: So we need to create a market 10 times the size of the grain market, or 14,000 times what the removal's market is now in 25 years.
• 38:00
  SPEAKER_02: That's the scale of what we've got to do.
• 38:02
  SPEAKER_02: And so when you look at it through that lens, you look at the number of companies that are gonna have to be purchasing credits.
• 38:09
  SPEAKER_02: And so um, what we then did was look at the supply and demand.
• 38:13
  SPEAKER_02: So when do we think, and what do we think the forward pricing curves are gonna be associated with net zero in 2038?
• 38:19
  SPEAKER_02: So if you're gonna buy removals at that point, um, by looking at the forward pricing curves, what do you have for 2038?
• 38:26
  SPEAKER_02: It depends on what asset you're looking at.
• 38:28
  SPEAKER_02: Our general view is that tech-based assets are overpriced at the moment, nature-based are underpriced, therefore it's better to look into nature versus tech at the moment.
• 38:35
  SPEAKER_00: So just on that point, um, I think people will be surprised to hear me say this as um, to the best of our knowledge, the owner of the biggest portfolio of nature-based credits in the UK, to the best of our knowledge, and although Foresight are coming fast, shout out to the guys there.
• 38:50
  SPEAKER_00: Um, we can't solve this with nature-based credits.
• 38:53
  SPEAKER_00: So the the global carrying capacity of what you just articulated, nature, high-quality nature-based credits will be an absolute scarcity.
• 39:04
  SPEAKER_00: They'll be rarer than diamonds, they'll be so rare because again, I'm not a zealot for no farmers, no food.
• 39:11
  SPEAKER_00: I think that's an over-correction and an unhelpful thing.
• 39:14
  SPEAKER_00: And actually, I think the president of the NFU sat on our podcast and said it was unhelpful as a narrative.
• 39:20
  SPEAKER_00: But we do need to feed people.
• 39:21
  SPEAKER_00: That's why we don't buy grade one or two farmland.
• 39:23
  SPEAKER_00: We're not going to start planting trees there.
• 39:24
  SPEAKER_00: We buy grouse moors and dilapidated sheep farms and things like that.
• 39:28
  SPEAKER_00: We are going to need the climb works of this world.
• 39:31
  SPEAKER_00: We are going to need successful mechanical, technological capture and scrubbing of carbon from the atmosphere as well.
• 39:37
  SPEAKER_00: Like you, I think at the moment, that's overpriced.
• 39:40
  SPEAKER_00: But hopefully, in the same way that compute's absolutely slashed price per unit, I hope we get the same solution there.
• 39:46
  SPEAKER_00: What I think nature-based credits do give us is a world we might want to live in when we are scrubbing carbon out of the atmosphere, because in the absence of it, we're just surrounded by a carbon capture factory everywhere.
• 39:58
  SPEAKER_00: So I yes, despite being a proponent of nature-based carbon, we need the technological solutions as well.
• 40:03
  SPEAKER_02: Absolutely.
• 40:04
  SPEAKER_02: But I think if you are you're building a portfolio and you're looking at it through a financial angle, you say, well, okay, if I'm building this portfolio, then I want to be able to look at it through the lens of when's the best time for me to invest in tech-based removals?
• 40:16
  SPEAKER_02: Gonna, we're gonna need to do it.
• 40:18
  SPEAKER_02: But it's not, it's not now.
• 40:20
  SPEAKER_02: Tech-based is one, it's risky.
• 40:22
  SPEAKER_02: You know, if I plant a tree, the risk profile of a tree is basically the first five years.
• 40:26
  SPEAKER_02: Um, whereas if you're looking at tech-based, actually it's it's financial risk.
• 40:30
  SPEAKER_02: Ultimately, can you take your 4,000 ton plant that's you know taking carbon out of the atmosphere?
• 40:35
  SPEAKER_02: And can you get the capital to be able to scale that up?
• 40:38
  SPEAKER_02: And when we're talking about capital, we're talking about big institutional capital, because this is infrastructure projects, like building a bridge, you know, building a bridge across hundreds of millions, billions, you know, it's big ones, and that's what we're gonna need.
• 40:50
  SPEAKER_02: So unless we can cap catch that capital from the point of view of developing tech-based solutions, it's just not gonna grow.
• 40:57
  SPEAKER_02: So your risk profile is different.
• 40:59
  SPEAKER_02: So for Clyde, they're looking in 2038, which lends itself to a nature-based to start off with, lends itself to a nature-based kind of portfolio, because ultimately you can buy trees past the risk point, i.e., past five years.
• 41:12
  SPEAKER_02: You can then, by and large, once they're bigger than deers, can eat, and as long as there's not pests, and if you have a diversified broadleaf forest, by and large, it's unlikely that you'll end up with big losses, then you start to see that like they become less risky projects.
• 41:26
  SPEAKER_02: So when you're looking long-term out, and again, if you look at Microsoft's procurements, by and large, they've been, or they were predominantly nature-based to start off with, rather than being tech-based.
• 41:35
  SPEAKER_02: So that's that's the first point.
• 41:37
  SPEAKER_02: So they needed 10,000 tons.
• 41:39
  SPEAKER_02: They want a diversified portfolio, they wanted to be low risk, and they wanted to generate, they wanted cost certainty.
• 41:45
  SPEAKER_02: And so we uh designed a diversified portfolio, um, underpinned by um essentially our due diligence.
• 41:52
  SPEAKER_02: So we have a science team whose job it is to go and look at each project, uh, analyze the quality of the project, but the risks associated.
• 41:59
  SPEAKER_02: I come from an insurance background.
• 42:00
  SPEAKER_02: Risk is ultimately two things.
• 42:02
  SPEAKER_02: Risk is am I going to end up on the front page of the Guardian?
• 42:05
  SPEAKER_02: That's risk number one, and actually probably the biggest risk to a corporate's mind.
• 42:09
  SPEAKER_02: And risk number two is am I gonna get the delivery of it?
• 42:12
  SPEAKER_02: So if you can mitigate those two things, then suddenly you've got something again.
• 42:17
  SPEAKER_02: It's really valuable.
• 42:18
  SPEAKER_02: So we developed a uh five-year strategy um to purchase and procure um up to 50,000 tons.
• 42:25
  SPEAKER_02: Um, it's advancing each year.
• 42:28
  SPEAKER_02: So we're into year two now.
• 42:29
  SPEAKER_02: Year one was very much uh around that.
• 42:31
  SPEAKER_02: It was very much around how do we calculate what the forward pricing might be.
• 42:36
  SPEAKER_02: Um, and you can lots it out there.
• 42:38
  SPEAKER_02: But the Bloomberg NEF Long-Term Carbon Removal 2024, 25 uh carbon output, um, it's quite a useful benchmark because they look at all the different pathways, how they scale.
• 42:50
  SPEAKER_02: Um, but that's a blended model.
• 42:51
  SPEAKER_02: That's across the world, so it's not quite there, which is why we want to develop our own, like using academia to go and develop forward pricing curves for long-term forward pricing curves split between different types of pathways and nature.
• 43:03
  SPEAKER_00: Do you intend to publish that or is that going to be internal IP you use?
• 43:07
  SPEAKER_02: That should be published, um, but will be like unknown yet.
• 43:11
  SPEAKER_02: Because if you take global nature-based average price per tons it's between 16 and$25, roughly speaking, depending on whether it's a you know an old style project or whether it's a VM47 project as an example.
• 43:23
  SPEAKER_02: But actually in the UK, your average price, I think from memory at the last PIU 2025 was 28 quid, went up from 26.
• 43:31
  SPEAKER_02: Obviously, you've done deals at 120.
• 43:34
  SPEAKER_02: How is that like ultimately the question is what is the price gonna do when you take in geographic location, the particular risks associated with geographic location?
• 43:44
  SPEAKER_02: So forward pricing, looking at then building a savings like plan.
• 43:48
  SPEAKER_02: So if you start today and the average price per ton is X, what's it gonna be when it's 2038, which was Y?
• 43:54
  SPEAKER_02: And then what's it gonna cost over a five year period?
• 43:56
  SPEAKER_02: And therefore, what's the savings?
• 43:57
  SPEAKER_02: So we developed that model.
• 44:00
  SPEAKER_02: We then went and worked with insurers on developing an insurance product that sat over the diversification of the portfolio.
• 44:05
  SPEAKER_02: That insurance then allowed the risks to be mitigated.
• 44:08
  SPEAKER_02: Ultimately, again, coming back to our earlier conversation or later conversation, depending on guys in the podcast.
• 44:15
  SPEAKER_02: Anyway, so magic.
• 44:16
  SPEAKER_02: Yeah, exactly.
• 44:17
  SPEAKER_02: Um is around that, okay.
• 44:20
  SPEAKER_02: Well, we've built diversified portfolio.
• 44:22
  SPEAKER_02: We're saving money ultimately, uh, and we're building risk.
• 44:26
  SPEAKER_02: But I think the key thing was they're buying out to 2038.
• 44:29
  SPEAKER_02: That's a long way away.
• 44:30
  SPEAKER_02: But because they're capitalizing it as an asset, it creates value for their organization.
• 44:36
  SPEAKER_02: And we worked with an amazing company called Rethinking Capital.
• 44:38
  SPEAKER_02: Um, they're a think cat think tank focused on um uh unblocking the you know, accounting uh for reality, um, which is you know, there's a huge amount of intellectual property IP that is held up in in people's brains that is unaccounted for at the moment, um, and only gets accounted for is something called free will.
• 44:56
  SPEAKER_02: Um free will, I remember.
• 44:59
  SPEAKER_02: Which is when you sell a company and the value of the assets is greatly improved by the brand.
• 45:04
  SPEAKER_02: It's things like brand house.
• 45:05
  SPEAKER_02: Um and then we were looking at it through the lens of well, in normal parlance, if you've made a claim in the past that is going to lead to capital outlay in the future.
• 45:15
  SPEAKER_02: So a good example will be mining.
• 45:17
  SPEAKER_02: Um, so if you have a mine, by and large, you'll have a policy that says once we're done with this mine, we're gonna rejuvenate it.
• 45:24
  SPEAKER_02: And that's, I mean, mining companies have huge liabilities associated with tailing ponds and all that sort of stuff.
• 45:30
  SPEAKER_02: So how can we take that?
• 45:32
  SPEAKER_02: Because that gets capitalized, that goes onto your balance sheet as a liability.
• 45:35
  SPEAKER_02: It's gonna take me 10 years for the the the use of the carbon, um, sorry, the use of the mine, you create a liability, which is the liability to rejuvenate, and then you squirrel away each year assets on your balance sheet to be able to pay that off so that when the time comes that you balance it, you can then balance it effectively.
• 45:55
  SPEAKER_02: Now, the view of Andrew Watson, who's rethinking capital, was why can we not apply that to net zero?
• 46:03
  SPEAKER_02: Why can we not say you've made a claim in the past, it's gonna cost you money in the future?
• 46:07
  SPEAKER_02: So actually, shouldn't you be capitalizing your net zero journey as a liability on your balance sheet?
• 46:13
  SPEAKER_02: Now, that comes with challenges because you turn around and you go to a BP as an example or a manufacturer, and that could bankrupt them because they've got a huge net zero liability that is currently unaccounted for.
• 46:29
  SPEAKER_02: Now, there's probably an argument that that is an unrecognized liability to a business and should be accounted for in that way, but that's that's there.
• 46:38
  SPEAKER_02: So we took that idea and then we said, well, actually, do carbon credits have value?
• 46:43
  SPEAKER_02: Like literally, do they have value?
• 46:45
  SPEAKER_02: And the answer is, well, yes.
• 46:46
  SPEAKER_02: You know, you can sell them on, um, depending on which code you're using.
• 46:50
  SPEAKER_00: So are you So in this in this model that you're building, I'm assuming there's a small or not an inclusion of woodland and peatland code in that?
• 46:58
  SPEAKER_02: Yes, so there was.
• 46:59
  SPEAKER_02: So there's primarily UK uh credits to start off with.
• 47:01
  SPEAKER_02: So UK, I think we did three UK projects, UK Woodland projects.
• 47:06
  SPEAKER_02: Um and can those be sold on on the basis?
• 47:09
  SPEAKER_02: So we're exploring whether they can.
• 47:12
  SPEAKER_02: At the moment, no.
• 47:14
  SPEAKER_02: Um, but I believe uh the SP have just lowers their tone around whether people can open trading accounts.
• 47:22
  SPEAKER_00: Um and all this is developing, right?
• 47:26
  SPEAKER_00: It's um it's almost like a slow version of the AI world.
• 47:28
  SPEAKER_00: Tomorrow things will change and the next day and the next day.
• 47:31
  SPEAKER_00: So things have to be taken in the context.
• 47:32
  SPEAKER_00: And today is the 8th of May.
• 47:34
  SPEAKER_00: There you go.
• 47:34
  SPEAKER_00: So recording on the 8th of May, so right as of the morning of the 8th of May.
• 47:38
  SPEAKER_02: I think I think, and you know, that will change.
• 47:41
  SPEAKER_02: Well, we know that there are conversations that are happening around changing that.
• 47:47
  SPEAKER_02: But to my knowledge, you know, you will be able to do that.
• 47:51
  SPEAKER_02: And therefore, this if something has severability, i.e., you can depose of that asset.
• 47:57
  SPEAKER_02: If it has value, i.e.
• 47:59
  SPEAKER_02: you can actually value it, whether that's at cost depends on what you're using it for.
• 48:03
  SPEAKER_02: And if it's uh some gray out language around legal title or title, is it something?
• 48:10
  SPEAKER_02: You can't just buy a sofa unless you own that sofa.
• 48:14
  SPEAKER_02: So if you have those three things, it's an intangible asset.
• 48:17
  SPEAKER_02: And if it's an intangible asset, depending on your use, you can either take the credit and you can say, I'm going to just use like put it on my balance sheet now for future use.
• 48:26
  SPEAKER_02: Can't do it if you're using it in year.
• 48:28
  SPEAKER_02: Good example is a bottle of water.
• 48:30
  SPEAKER_02: You have that bottle of water on a shelf, that will essentially, over time, that will that will retain its value because it's still got water and you can use that.
• 48:37
  SPEAKER_02: You drink the water bottle, obviously it's not going to be that use.
• 48:40
  SPEAKER_02: So this applies to credits bought in advance of an obligation in the future.
• 48:45
  SPEAKER_02: So buying or hedging against that.
• 48:47
  SPEAKER_02: And so by doing that, and then at that point you expense it to your PL.
• 48:52
  SPEAKER_02: So when you use it, you drink the bottle of water, you then expense it to your PL.
• 48:56
  SPEAKER_02: But it's at that point, it's today's prices, not tomorrow's prices.
• 49:01
  SPEAKER_02: And coming back to the forward pricing curves we're looking at, we're saying that ultimately prices are going to go up.
• 49:07
  SPEAKER_02: You know, every forward pricing curve says that there is that price is going up.
• 49:11
  SPEAKER_00: I um did a guest lecture to 100 MBA students in Gothenburg in December.
• 49:17
  SPEAKER_00: Cool.
• 49:17
  SPEAKER_00: So these were um mostly mature students, MBA level.
• 49:22
  SPEAKER_00: My opening question, I love a bit of audience participation.
• 49:24
  SPEAKER_00: So my opening question was hands up if you believe the price of carbon will go up significantly in the future.
• 49:30
  SPEAKER_00: 99 of a hundred hands went up.
• 49:32
  SPEAKER_00: I was like, I've got to ask, you know, give me the alternative perspective.
• 49:36
  SPEAKER_00: And the guy went, oh no, I think it will.
• 49:37
  SPEAKER_00: I just like being a contrarian.
• 49:39
  SPEAKER_00: And I was like, love it.
• 49:40
  SPEAKER_00: So that was like a complete cross-section of industries and businesses.
• 49:43
  SPEAKER_00: Without doubt, everyone thought it would.
• 49:45
  SPEAKER_00: Yeah.
• 49:45
  SPEAKER_02: So, you know, as long as like the price does, which we think it will, irrespective of which pathway, you know, nature base might go up a lot.
• 49:52
  SPEAKER_02: Tech base at the moment is expected to come down quite significantly.
• 49:56
  SPEAKER_02: Fine, there's that's kind of balancing to be had.
• 49:58
  SPEAKER_02: But overall, what would an indicative tonnage price range be for tech at the moment in terms of carbon?
• 50:03
  SPEAKER_02: I mean, it goes anywhere from you know, maybe 200 quid a ton to to a thousand five hundred, you know, it's a significant.
• 50:09
  SPEAKER_00: I definitely heard the slightly north of a thousand, I just wasn't sure where it was a lot of people.
• 50:12
  SPEAKER_02: It depends on which pathway you're looking at.
• 50:14
  SPEAKER_02: So mineralization, where you're literally pumping it through geological formations to create calcium carbonate, that is unbelievably expensive.
• 50:24
  SPEAKER_02: And, you know, there's a school of thought that says that that's going to be really challenging to scale that up.
• 50:29
  SPEAKER_02: Um, or you're looking at CCS and you're plugging it into, you know, you're taking uh carbon um from the creation of from whiskey.
• 50:37
  SPEAKER_02: Manufacturers love some whiskey, but you know, you're taking it from whiskey.
• 50:41
  SPEAKER_02: Ultimately, you know that that um that's pure carbon and it gets pumped into the North Sea.
• 50:46
  SPEAKER_02: That is probably very, very scalable.
• 50:48
  SPEAKER_02: And so, but then the question is around risk.
• 50:51
  SPEAKER_02: And the risk is where does that plume go?
• 50:53
  SPEAKER_02: You know, we we think we can bury it, but sure there's natural fissures in the ground.
• 50:59
  SPEAKER_00: This is what I do like about the nature-based.
• 51:01
  SPEAKER_00: I mean, I like the side of it, obviously, Ed.
• 51:04
  SPEAKER_00: But your counterparty future risk is so different.
• 51:08
  SPEAKER_00: No, no one is trying to buy a carbon credit going, I'm happy to take some risk of that carbon scandal in the future.
• 51:15
  SPEAKER_00: They're not, are they?
• 51:16
  SPEAKER_00: If you're buying now and investing in a quality product, you are doing so because you want to do that positive step forward.
• 51:22
  SPEAKER_00: You don't want to absorb a, you don't want to be the next Volkswagen scandal.
• 51:25
  SPEAKER_01: Yeah.
• 51:25
  SPEAKER_00: 2023.
• 51:27
  SPEAKER_00: So I mean, I've waffled here, but nevertheless.
• 51:31
  SPEAKER_00: No, you were given a masterclass in the nuance and complexity that's involved there.
• 51:34
  SPEAKER_00: So please keep going.
• 51:36
  SPEAKER_00: But it has to be made really simple.
• 51:38
  SPEAKER_02: Like, I'm sure you you will have gone through procurement with Burgess Salmon.
• 51:42
  SPEAKER_02: They're a law firm, right?
• 51:43
  SPEAKER_02: They really care about who they work with.
• 51:45
  SPEAKER_00: It's why we wanted a law firm.
• 51:46
  SPEAKER_00: So we we turned down a few, we we didn't intend to sell carbon away from the portfolio.
• 51:51
  SPEAKER_00: So our model is it was lovely how you said the you know the risk around nature-based projects of the first five years.
• 51:57
  SPEAKER_00: We never intended to sell anything in the first five years.
• 51:59
  SPEAKER_00: Our view is build an institutional quality and scale portfolio.
• 52:02
  SPEAKER_00: So we're latest valuations just shy of half a billion if you factor in 50,000 acres, two million tons of carbon credits, 4,000, in fact, it's just over 4,000 now, BNG units, two wind farms under option, over a hundred buildings, got planning permission for another hundred.
• 52:18
  SPEAKER_00: So we have got an optimized landscape-level portfolio.
• 52:21
  SPEAKER_00: Um, so we weren't going to sell.
• 52:23
  SPEAKER_00: However, the conversation with Burgess Salmon to have a law firm do the due diligence to be able to connect with someone.
• 52:29
  SPEAKER_00: And they had a quote that said, What they liked about us is you can't fake quality and authenticity for five years.
• 52:36
  SPEAKER_00: And we'd work with them for that length of time, and they were like, We trust you more than anyone else would want to do this deal.
• 52:40
  SPEAKER_00: Yeah.
• 52:41
  SPEAKER_00: So we've done that on one of our estates as a proof point.
• 52:44
  SPEAKER_00: Actually, we we did do a secondary deal with we've sold Peatland at£100 a ton to the national grid.
• 52:49
  SPEAKER_00: Oh, cool.
• 52:50
  SPEAKER_00: Part of their framework agreement.
• 52:52
  SPEAKER_00: But again, that was a unique situation, and we we weren't actively trying to sell carbon at that point because we wanted to take that long-term view.
• 52:59
  SPEAKER_00: But the fact it was a law firm, and we could say, and you've got this beauty as well, you know the due diligence is on point.
• 53:05
  SPEAKER_00: Yeah, you're selling to a law firm.
• 53:06
  SPEAKER_00: It's going to be the most rigorous analysis.
• 53:08
  SPEAKER_00: We were like, that's too good a story to pass up.
• 53:10
  SPEAKER_02: Yeah.
• 53:11
  SPEAKER_02: And I think that's that's crucial.
• 53:13
  SPEAKER_02: And so how do we make it as simple as possible?
• 53:16
  SPEAKER_02: How do we make it so that you're signing one contract with us as an example?
• 53:19
  SPEAKER_02: How do we sit as a risk intermediary that prevents you having to contract with 15 projects?
• 53:25
  SPEAKER_02: You know, you could end up with a diversified portfolio and then you have 30 projects.
• 53:29
  SPEAKER_02: Imagine having the onboarding of 30 separate projects.
• 53:32
  SPEAKER_02: This is why, you know, our opinion is we need demand side aggregators, we need supply side aggregators.
• 53:38
  SPEAKER_02: And sure, there will be deals which are kind of, I guess, like you, yours and Burgeon Salmon, that are direct and long should they continue.
• 53:44
  SPEAKER_02: But actually having a demand side aggregator, someone like ourselves, someone like Nature Broking, who can sit there and who can aggregate all the different suppliers together, so you can build a diversified portfolio, really, really important because it's about friction.
• 53:58
  SPEAKER_02: And at the moment, buying a ton of carbon is full of friction.
• 54:03
  SPEAKER_00: It's really, really hard.
• 54:04
  SPEAKER_00: Exactly.
• 54:05
  SPEAKER_00: That's where that's where I go to my direct customer model.
• 54:08
  SPEAKER_00: And the challenge is it's a different thing.
• 54:11
  SPEAKER_00: It's completely no one's going to be aggregating 30 projects in that regard because the the amount will be fra grams, let's say grams.
• 54:18
  SPEAKER_00: My challenge to them is stolen from the Tesla world.
• 54:21
  SPEAKER_00: It is if we offer this product, it needs to be three clicks of a mouse.
• 54:27
  SPEAKER_00: It needs to be the simplest like way of interacting.
• 54:30
  SPEAKER_00: So I can't remember where they borrowed it from, but apparently Elon Musk went on some that was it.
• 54:35
  SPEAKER_00: He signed up for MasterCard or something.
• 54:36
  SPEAKER_00: And it was like, how many clicks does it take to sign up for MasterCard versus how many did it take to buy a Tesla?
• 54:42
  SPEAKER_00: And the head of um sort of uh customer interaction on their website was like, Oh, we've looked at it, it's like 67 clicks to buy a Tesla.
• 54:50
  SPEAKER_00: And then he challenged it and went, No, no, no, that's wrong.
• 54:52
  SPEAKER_00: They went and said, Yeah, 40 of them are us.
• 54:55
  SPEAKER_00: Like we're we're asking for more confirmation than we need.
• 54:58
  SPEAKER_00: And they stripped it right back.
• 54:59
  SPEAKER_00: So we're gonna try and look at that model, say how seamlessly can we make it for someone?
• 55:03
  SPEAKER_00: Like I ordered some protein powder this morning and I think on Apple Pay it was like four clicks.
• 55:07
  SPEAKER_00: Yeah, we need to be doing things like that.
• 55:09
  SPEAKER_01: Exactly.
• 55:10
  SPEAKER_02: And it should be but at scale up direct to consumer for sure, but it it also needs to be done on an institutional level.
• 55:17
  SPEAKER_02: You know, you're working with NGOs, you know, the carbon markets in this latest iteration, there's a lot of new players out there.
• 55:23
  SPEAKER_02: They are risky, you know, ultimately.
• 55:24
  SPEAKER_02: An organization that has been around for two years is a risky enterprise, and therefore you don't want to be contracting, you don't want to be procuring from that organization.
• 55:33
  SPEAKER_02: You want someone to sit in the middle, to manage it for you, and then to manage the portfolio for you.
• 55:38
  SPEAKER_02: So when it comes to Clyde, it was about simplicity, it's about um, it's about how do you strip out all of the challenge, all of the difficulty to allow someone to seamlessly engage with the carbon market as effectively as possible.
• 55:52
  SPEAKER_02: And then also to, you know, to to so for example, we unapologetically don't take positions because we don't take positions because that removes our independence.
• 56:01
  SPEAKER_02: Why should when someone comes in, come into a company and go, we're gonna design you what's right for you, and then it's taken positions.
• 56:09
  SPEAKER_02: That for me is a complete, in my opinion, is a complete like um what's the word?
• 56:14
  SPEAKER_02: Um conflict of interest.
• 56:16
  SPEAKER_02: Conflict of interest.
• 56:17
  SPEAKER_02: Because you're not gonna do that.
• 56:18
  SPEAKER_02: You're gonna go, well, I'm making 90% margin on this one.
• 56:20
  SPEAKER_02: Yeah, or I can go and source for you, which is actually the right project for you, and I'm gonna make 10% margin.
• 56:25
  SPEAKER_02: What are you gonna do?
• 56:26
  SPEAKER_02: Of course you're gonna go to the 90%.
• 56:28
  SPEAKER_02: So when you're designing a product and it has to be, and then also are you gonna be transparent about the 90% that you're making on that because you're invested in it really early?
• 56:36
  SPEAKER_02: No, of course you're not.
• 56:37
  SPEAKER_02: You need to be looking at it through the lens of how do you work with your customers?
• 56:42
  SPEAKER_02: And this is again, you know, when you have people who are working on behalf of landowners selling to companies, who's their client?
• 56:49
  SPEAKER_02: And then I think it's a really important thing because is your client the landowner?
• 56:53
  SPEAKER_02: And if your client's the landowner, then you want to be maximizing the price.
• 56:57
  SPEAKER_02: If your client's the customer, you want to be making sure it's the best possible thing for them.
• 57:02
  SPEAKER_02: Direct conflict of interest.
• 57:03
  SPEAKER_02: And so we work for companies and we only work for companies.
• 57:07
  SPEAKER_02: And so, because of that, we don't take positions, we don't invest in projects.
• 57:11
  SPEAKER_02: And by doing so, we can always, we are always incentivized to create the best possible solution for our clients.
• 57:18
  SPEAKER_02: That is absolutely crucial when it comes to uh like working with companies.
• 57:23
  SPEAKER_02: Because if you're going out there, you're saying, you know, look at look at our wares.
• 57:27
  SPEAKER_02: And the carbon market's really niche.
• 57:29
  SPEAKER_02: Like not many people know about it, even in the sustainability world.
• 57:32
  SPEAKER_02: And so you want someone to come and advise you, but you want to know that you're getting the best possible advice that's right for you, your organization.
• 57:39
  SPEAKER_02: You're choosing the right credits, that you're choosing the right projects, that they're linked to you, that you have that has the most amount of impact, the most amount of like brand value for you, whilst also being correct from you from a financial point of view.
• 57:51
  SPEAKER_02: And so for us, it um with Cliding Co.
• 57:54
  SPEAKER_02: It's about going, okay, well, what is the strategy you want to set?
• 57:57
  SPEAKER_02: We work with them.
• 57:57
  SPEAKER_02: We're very consultative on what they want.
• 58:01
  SPEAKER_02: We have our six-step process, which is, you know, working out, but it's it's like a tech process.
• 58:06
  SPEAKER_02: You do discovery, build a framework, you're gonna design the solution to the framework, then you do account management.
• 58:11
  SPEAKER_02: Oh, sorry, you execute on the project, then you do account management, and then you reiterate the process.
• 58:17
  SPEAKER_02: Everyone looks at the carbon market as transactional, it's not transactional, it's about building long-term value and long-term relationships with your clients.
• 58:24
  SPEAKER_02: You know, what was different about Clidenco, it wasn't a single transaction.
• 58:27
  SPEAKER_02: It's a five-year framework agreement that is helping them to essentially access the carbon market in the most effective way.
• 58:33
  SPEAKER_02: And we are very much incentivized to give them the best possible solution that they can get.
• 58:39
  SPEAKER_02: And that's that's different as far as I'm aware.
• 58:42
  SPEAKER_00: Look, where where does insurance come into the equation?
• 58:44
  SPEAKER_00: Because increasingly we're having lots of conversations on that.
• 58:46
  SPEAKER_00: We had Natalia on the podcast last week.
• 58:48
  SPEAKER_00: Amazing.
• 58:49
  SPEAKER_00: And we did a whole focus session on insurance and the role it can play.
• 58:52
  SPEAKER_00: But I'd love to know how important it was and when it came into the deal with Clean.
• 58:56
  SPEAKER_02: I guess I'm gonna throw a question back to you because I like a bit of audience participation.
• 59:00
  SPEAKER_02: Do you own a house?
• 59:00
  SPEAKER_02: Uh yes, I do.
• 59:02
  SPEAKER_02: Actually, you own a portfolio of properties?
• 59:04
  SPEAKER_02: One or two.
• 59:05
  SPEAKER_02: Yeah.
• 59:05
  SPEAKER_02: Do you have to have an insurance on them?
• 59:07
  SPEAKER_02: Yes, we do.
• 59:08
  SPEAKER_02: Okay.
• 59:08
  SPEAKER_02: So insurance protects assets.
• 59:10
  SPEAKER_02: Insurance is the backbone of capitalism.
• 59:12
  SPEAKER_02: You literally, why are all of the stra the ships in the Strait of Hormuz waiting there?
• 59:18
  SPEAKER_02: Well, they're waiting there.
• 59:19
  SPEAKER_02: I guess this maybe will the whole thing will be over by them, which would be nice.
• 59:23
  SPEAKER_02: But by the time this is published, but why do you have um why are the ships there?
• 59:27
  SPEAKER_02: It's not because they can't go through there, it's because they can't get insurance.
• 59:30
  SPEAKER_00: So insurance is absolutely crucial when you're looking at So is that why they can't be insured to go through because of the risk to them?
• 59:37
  SPEAKER_02: Yeah, yeah.
• 59:37
  SPEAKER_02: Because you know, if you've got a big load of oil, the insurance cost, not just the insurance cost, but if you get bombed that like all insurance policies, as far as I'm aware, have a war exclusion policy uh exclusion on it.
• 59:50
  SPEAKER_02: And so you are then going, Well, I'm I've got an uninsured cargo that's trying to go through.
• 59:56
  SPEAKER_02: And if I get struck, that's not insured.
• 59:58
  SPEAKER_02: So my ship's not insured, my cargo's not insured, and so I will have to inevitably pay for the environmental clear-up that comes from having a massive oil spill in that region, et cetera, et cetera, et cetera.
• 1:00:08
  SPEAKER_02: And so that is why there's no ships are moving.
• 1:00:13
  SPEAKER_02: Of course, there's loss of life, and you know, it's way, way, way too risky to go through because the Iranians will or the Americans will target you.
• 1:00:20
  SPEAKER_02: But at the same time, that's a really big factor as to why ships are not moving through.
• 1:00:26
  SPEAKER_02: And so let's play that to the natural capital markets.
• 1:00:29
  SPEAKER_02: Again, in our case, most of our customers are buying credits for what of an obligation.
• 1:00:34
  SPEAKER_02: So, you know, they've maybe got a net zero claim or they've made a claim that they want to purchase credits against.
• 1:00:40
  SPEAKER_02: They are then going, well, I'm going to self-insure that risk if they don't insure that.
• 1:00:45
  SPEAKER_02: And if they aren't going to self-insure, if they're happy to self-insure that risk, then fine.
• 1:00:49
  SPEAKER_02: But insurance is there to de-risk that.
• 1:00:51
  SPEAKER_02: And if we think about it through two lenses, one lens is um through the lens of uh actual risk.
• 1:00:58
  SPEAKER_02: So the delivery, I need these credits by this point.
• 1:01:01
  SPEAKER_02: If we, as we've been discussing, the forward pricing curve of carbon credits goes up significantly.
• 1:01:06
  SPEAKER_02: If I'm making a claim to be net zero in 2030, I have a real reputational risk that if I've made that claim and I've bought credits beforeward of that, if they don't deliver to me, then the risk to me is, well, I can't make that claim anymore.
• 1:01:18
  SPEAKER_02: And then I've got to go onto the spot market, and the spot market might be three, five, seven, ten times greater than the price it is today.
• 1:01:24
  SPEAKER_02: So you have that challenge associated with um and so this is where insurance is really important because there's two forms of reputation risk here.
• 1:01:34
  SPEAKER_02: There's the reputation risk that you can't make the claim that you're saying you're gonna make a claim, or you're buying against that claim that you're planning on making net zero.
• 1:01:42
  SPEAKER_02: Um, or the other side is well, actually, we think about the layers of in of diligence that go into this.
• 1:01:48
  SPEAKER_02: An insurer will only take a good project onto their balance sheet because you're not gonna take a dud, are you?
• 1:01:53
  SPEAKER_02: Uh, this project is never gonna deliver credits.
• 1:01:55
  SPEAKER_02: Well, the price will be way too high, the risk will be way too high, so therefore you won't insure it.
• 1:01:59
  SPEAKER_02: So it adds another level of diligence and quality over the top of it.
• 1:02:04
  SPEAKER_02: So you go, I'm thinking about buying from this project.
• 1:02:07
  SPEAKER_02: You have the VVB do their assessment, then you have a third-party independent uh look over that.
• 1:02:14
  SPEAKER_02: You have us doing our due diligence on it, we think this project is good, and then we pass that due diligence onto the insurers who then go and check it against their own models.
• 1:02:21
  SPEAKER_02: And only then do you get the risk to be underwritten.
• 1:02:24
  SPEAKER_02: So if you think about those stages that you go through, you're reducing, not saying you're you're minimizing, but you're minimizing the reputational risk because if something is going awry, we'll have been caught through those stages.
• 1:02:37
  SPEAKER_02: And you, you know, if you you look back at what happened with Kariba and what was, you know, why was that not picked up?
• 1:02:44
  SPEAKER_02: You know, why were caught why was I can't remember who were the corporates involved, but why were the corporates not looking into these projects and saying, is it doing what it says?
• 1:02:51
  SPEAKER_02: Is the money going to the underlying project?
• 1:02:53
  SPEAKER_02: What's being done?
• 1:02:54
  SPEAKER_02: Is this overcrediting?
• 1:02:55
  SPEAKER_02: So the the advisors in that space were clearly not telling the people that they were doing the the organizations were not doing the right due diligence.
• 1:03:01
  SPEAKER_02: So it's about risk mitigation from the point of delivery and the point of delivery at making that claim, but also from the point of view of reputation, because it's been through all those checks and balances, and if an underwriter is willing to underwrite that risk, then they must think it's a good project.
• 1:03:16
  SPEAKER_02: And so insurance for me is is absolutely crucial.
• 1:03:20
  SPEAKER_02: You have something called mortgage e-insurance, which is I want to, well, it's life insurance for companies, essentially.
• 1:03:28
  SPEAKER_02: I want to build something, I'm going to get that insured through the construction phase, but I'm boring 250 million quid.
• 1:03:33
  SPEAKER_02: I get mortgage e insurance to balance to essentially balance that risk that it might be taken off me by a government or there might be a natural catastrophe or something during the build phase.
• 1:03:42
  SPEAKER_02: So I come from an insurance background.
• 1:03:45
  SPEAKER_02: Clearly, I'm going to say that insurance is crucial, but it is.
• 1:03:48
  SPEAKER_02: Again, I come back to like, why don't we make this look like everything else in the financial markets?
• 1:03:54
  SPEAKER_02: Because if it looks and it smells and it feels like the financial markets, then it will be the financial markets.
• 1:04:00
  SPEAKER_02: And I I know I focus on the financial markets, but this is, you know, this is about unlocking impact.
• 1:04:05
  SPEAKER_02: It's come back to it.
• 1:04:06
  SPEAKER_02: It's about moving capital from A to good stuff.
• 1:04:09
  SPEAKER_02: But in order to do that, we have to look at it through the lens of other markets.
• 1:04:15
  SPEAKER_02: And again, you said it.
• 1:04:16
  SPEAKER_02: Why are we reinventing the wheel?
• 1:04:17
  SPEAKER_02: All of this has been done before.
• 1:04:19
  SPEAKER_02: You know, people are now coming out with bonds, income, like um impact bonds that are being super, super successful because they look and feel like a bond.
• 1:04:28
  SPEAKER_00: It was a massive feature of Zurich.
• 1:04:30
  SPEAKER_02: Yeah.
• 1:04:30
  SPEAKER_00: It was the make it as accessible to existing tools, existing techniques.
• 1:04:36
  SPEAKER_00: Um Rob Gardner's been great on this.
• 1:04:39
  SPEAKER_00: Use language that allocators are comfortable with.
• 1:04:42
  SPEAKER_00: Don't tell them everyone wants to be exciting, innovative, and different, but that means high risk and expensive.
• 1:04:47
  SPEAKER_01: Yeah.
• 1:04:47
  SPEAKER_00: Doesn't mean comfortable, safe, and secure.
• 1:04:49
  SPEAKER_02: When you're talking about big money, I mean like big, big money.
• 1:04:52
  SPEAKER_02: Big money, I like to, if you draw it back to pensions, right?
• 1:04:56
  SPEAKER_02: So you and I have a pension, we all have pensions.
• 1:04:58
  SPEAKER_02: Ultimately, the benefits of putting money away now is you get compound interest.
• 1:05:02
  SPEAKER_02: And compound interest, you know, maybe 3%, 5%, depending on what risk category you're putting in throughout the time.
• 1:05:08
  SPEAKER_02: And that means that£10 I put away now will be much, much more than that.
• 1:05:13
  SPEAKER_00: I am wearing a t-shirt that says everything compounds.
• 1:05:15
  SPEAKER_02: Um, compound.
• 1:05:17
  SPEAKER_02: So you get to the point when you get to retire and that£10 has turned into£100, whatever it is.
• 1:05:23
  SPEAKER_02: Now, if you think about it through that lens, we're asking big money, and big money is essentially pension money.
• 1:05:30
  SPEAKER_02: We're asking that to go invest in an asset class that is really risky.
• 1:05:35
  SPEAKER_02: Now, big money is boring.
• 1:05:37
  SPEAKER_02: It's really boring, and it's designed to be boring.
• 1:05:39
  SPEAKER_02: You want to go do venture capital, go do venture capital.
• 1:05:41
  SPEAKER_02: Go place your bets on a whole load of startups.
• 1:05:43
  SPEAKER_02: But that money is a fraction of what the institutional capital market is.
• 1:05:47
  SPEAKER_02: So if we're looking at it through the lens of pension funds, we have to make boring standard products that lead to boring standard returns.
• 1:05:56
  SPEAKER_02: Because otherwise, you're putting yours and mine's compound interest.
• 1:06:00
  SPEAKER_02: At risk.
• 1:06:01
  SPEAKER_02: And I don't want to put£10 in if it's going to lead to£11 tomorrow, but it might have a£2 tomorrow.
• 1:06:06
  SPEAKER_02: Exactly.
• 1:06:07
  SPEAKER_02: It's even if it is having a massive impact.
• 1:06:10
  SPEAKER_02: So again, I come back to let's look at the structures of what's happening in the world, in the financial markets, and work out what works for them, copy it and apply it to capital that happens to be nature.
• 1:06:22
  SPEAKER_00: We we got asked this the other day.
• 1:06:24
  SPEAKER_00: We the first natural, like uh nature-based natural capital.
• 1:06:28
  SPEAKER_00: So I'm not talking about forestry or farming, but sort of pure nature-based natural capital asset manager to get from VC to PE funding because we've got to hundreds of millions in terms of valuation.
• 1:06:40
  SPEAKER_00: So just shy of about 500 million now.
• 1:06:42
  SPEAKER_00: We are at a scale which would be classified beyond VC.
• 1:06:45
  SPEAKER_00: We'd be into PE and approaching the institutional scale.
• 1:06:48
  SPEAKER_00: That was always our ambition, but you're right.
• 1:06:57
  SPEAKER_00: And it should.
• 1:06:58
  SPEAKER_00: And it and it absolutely should.
• 1:07:00
  SPEAKER_00: Um, one to pit your brains on, actually.
• 1:07:02
  SPEAKER_00: So we got approached by one insurance company who asked us whether we'd thought about never selling our carbon portfolio and actually licensing it as effectively a private uh last resort option to those insurers.
• 1:07:19
  SPEAKER_00: So rather than us selling a credit, we say we have two million tons of premium carbon credits at any point in time where you have a default on a project and you need to call upon X units, you have an option right to call ours rather than us ever selling them, and which I thought was a really interesting model.
• 1:07:35
  SPEAKER_00: What would your thoughts on that be for us?
• 1:07:38
  SPEAKER_02: Like boring.
• 1:07:39
  SPEAKER_02: As in, it's not boring, it's great.
• 1:07:41
  SPEAKER_02: It's an options contract.
• 1:07:42
  SPEAKER_02: Yeah.
• 1:07:42
  SPEAKER_02: That's it.
• 1:07:43
  SPEAKER_02: You've someone is paying, we'll pay you a premium.
• 1:07:46
  SPEAKER_02: So for you to for the option to purchase credits in the future.
• 1:07:49
  SPEAKER_02: Again, we don't need to rebrand this as exciting.
• 1:07:51
  SPEAKER_02: It's done all the time.
• 1:07:52
  SPEAKER_02: It's just a standard risk management mechanism.
• 1:07:55
  SPEAKER_00: But the beauty there is we we could have multiple of those, right?
• 1:07:58
  SPEAKER_02: For sure.
• 1:07:59
  SPEAKER_02: Yeah.
• 1:07:59
  SPEAKER_02: You can have as many options as you want on it.
• 1:08:01
  SPEAKER_02: You can create synthetic CDOs if you really, really want it.
• 1:08:04
  SPEAKER_02: And someone will at some point in the future.
• 1:08:06
  SPEAKER_02: You know, you could, you know, what could you do?
• 1:08:08
  SPEAKER_02: You could securitize all of this, put it into an SBV, list it, and then it become a traded asset.
• 1:08:14
  SPEAKER_02: You know, that's all doable.
• 1:08:15
  SPEAKER_02: And then we could all put swap shares options across the whole thing of it.
• 1:08:18
  SPEAKER_02: But I think we will in 20 years.
• 1:08:21
  SPEAKER_02: Well, exactly, because it will just be a part of a portfolio.
• 1:08:24
  SPEAKER_02: You know, you'll be investing in private credit, you'll be investing in like for me, I like I don't even come from like I come from a financial services background, but I worked in insurance.
• 1:08:34
  SPEAKER_02: And so for me, the learning, the massive learning throughout this whole thing is how do we like, how do we not like sure we want to do amazing things and all of this is new to the market, but how do we not by making it new, make it scare people away?
• 1:08:53
  SPEAKER_02: To your point there, if you turn around to that, insurance companies go, yeah, sure, we'll do an options contract, you'll pay me 5% premium year on year.
• 1:09:00
  SPEAKER_02: Um, I will keep the credits.
• 1:09:02
  SPEAKER_02: We'll have multiple associated with that.
• 1:09:04
  SPEAKER_02: We'll analyze what the risk profile is in terms of what we expect, the ultimate, you know, whether you're going to take this option on.
• 1:09:11
  SPEAKER_02: I that's you know, you can create this contracts out there that can be done.
• 1:09:15
  SPEAKER_02: There'd probably be exchange traded as well.
• 1:09:16
  SPEAKER_02: So I guess my my point being it's not boring, it's really exciting.
• 1:09:20
  SPEAKER_00: And sorry, I just didn't mean to be terrible, but it's mate.
• 1:09:23
  SPEAKER_00: I you couldn't have said a better word.
• 1:09:25
  SPEAKER_00: Like it's boring is secure and confident, and that's exactly where we need the market to be.
• 1:09:30
  SPEAKER_02: I I can bring as much excitement to a room as it needs, but the investors need boring and secure and setup because it comes back to it's yours and my money that we've put it away for a future date, and therefore there's a there's a there's an obligation, you know, there's a duty for these pension fund managers who are deploying massive amounts of capital to create a return that leads to return for you and I.
• 1:09:54
  SPEAKER_00: Um I want to take us from um the business sort of to the the leadership and you side of it.
• 1:10:01
  SPEAKER_00: Um so how how have you changed as a founder from you mentioned earlier the sort of naivety of the idea phase to what you are as a business now?
• 1:10:10
  SPEAKER_00: How have you changed in that process?
• 1:10:12
  SPEAKER_02: I'm I'm really lucky.
• 1:10:13
  SPEAKER_02: So I have a co-founder in Andrew Harris.
• 1:10:17
  SPEAKER_02: He is, we co-manage the business.
• 1:10:19
  SPEAKER_02: Like I'm very fortunate uh to be working with him.
• 1:10:22
  SPEAKER_02: He has been, he is, you know, for all intents and purposes, he's more of a my wife than my actual girlfriend and partner.
• 1:10:30
  SPEAKER_02: But you know, ultimately we work together really, really well.
• 1:10:34
  SPEAKER_02: We have competing skill sets and not competing skill set, that's completely wrong.
• 1:10:38
  SPEAKER_02: We have very similar skills, but have different views on everything.
• 1:10:42
  SPEAKER_02: And we can be very, very direct with one another.
• 1:10:45
  SPEAKER_02: And I think there's a that gives you a speed, doesn't it?
• 1:10:49
  SPEAKER_02: You can be honest and do you think to be honest, you can be you know, you can be direct, and that means that you know when you've got a fight for an idea because you have to justify that idea, ultimately that creates a balance, which means that you end up with the best possible outcome.
• 1:11:03
  SPEAKER_02: Now, we also founded with two minority shareholders, Sasha and Ian, and they provide a different view.
• 1:11:09
  SPEAKER_02: They're from they're slightly older, so they come from a different generation, and so they have differing ideas.
• 1:11:15
  SPEAKER_02: And we have created an atmosphere where everyone gets the opportunity to speak.
• 1:11:19
  SPEAKER_02: You end up with tension around creating it, but from tension, you get the best possible outcomes from disruption.
• 1:11:25
  SPEAKER_02: We know that when it comes to nature, you need diversity and you need disruption, and ultimately those two work across every facet of life.
• 1:11:34
  SPEAKER_02: But how have we had to change?
• 1:11:35
  SPEAKER_02: As an organization, you go through stages.
• 1:11:38
  SPEAKER_02: I read a really interesting article um a couple of months ago, which was talking about the difference of founders at different stages of an organization.
• 1:11:46
  SPEAKER_02: When you start a business, you start off, you have ultimate naivety.
• 1:11:50
  SPEAKER_02: You've read, you've drunk the Kool-Aid of startups, you're, you know, everyone's raising hundreds of millions of pounds, you're going to be the next, you know, billionaire.
• 1:11:57
  SPEAKER_02: It's going to be great.
• 1:11:58
  SPEAKER_02: But you then get into the startup, and then it's you've got an infinite possibility of ideas, and there's naivety associated with that.
• 1:12:05
  SPEAKER_02: And then you get a couple of customers and you start thinking, okay, maybe, hey, maybe I'm doing something right here.
• 1:12:10
  SPEAKER_02: Maybe there's and then you're kind of building those products, you're kind of working out what you're going to do.
• 1:12:15
  SPEAKER_02: And then it's kind of phase number three, which is okay, we've got customers, we've got a product, we've got a solution.
• 1:12:20
  SPEAKER_02: I come back to the dampened oscillation curve.
• 1:12:23
  SPEAKER_02: You know, we're starting to trend towards what the business is, which is kind of almost a straight line.
• 1:12:28
  SPEAKER_02: And then it's about operationalization.
• 1:12:30
  SPEAKER_02: So it's about how do you take what you've done and how do you then create something that's efficient?
• 1:12:35
  SPEAKER_02: Because when you're a startup, nothing is efficient.
• 1:12:38
  SPEAKER_02: It's because it's it is, well, it is efficient because there's six people or there's 10 people or there's 15 people, and you're all able to chat with one another.
• 1:12:46
  SPEAKER_02: And, you know, if you need someone answered, you ping them on teams and it happens immediately.
• 1:12:50
  SPEAKER_02: But actually, now it's about well, how do we take what we've done?
• 1:12:52
  SPEAKER_02: And how do we create an unbelievably bespoke product, which is what we do for every customer, we make it bespoke to them.
• 1:12:59
  SPEAKER_02: But then how do we operationalize that efficiently?
• 1:13:01
  SPEAKER_02: So, how have we had to change?
• 1:13:03
  SPEAKER_02: Well, you know, I think first thing is we've had to go through those transitions of having more people coming to work, having building a team, building a culture, building an ethos, and at the same time working out the question of if we have 100 proposals coming at the same time, how do we manage that without having um without having to increase headcount massively?
• 1:13:27
  SPEAKER_02: Because and that's, I mean, we've been really fortunate.
• 1:13:30
  SPEAKER_02: We've we've happened to found a business in the time of AI and and early AI.
• 1:13:34
  SPEAKER_02: So suddenly you can do the team with a team of 10, you can do the work of 20 with the output of it of 40.
• 1:13:40
  SPEAKER_02: And I think is a saying that a lot of people are using there.
• 1:13:42
  SPEAKER_02: And so now we've just hired a head of technology who's come in, and his job is to to push AI across the business.
• 1:13:48
  SPEAKER_02: Do you know this guy ahead of time or just uh I met him through a friend, yeah.
• 1:13:52
  SPEAKER_02: Okay.
• 1:13:52
  SPEAKER_02: So um, and he, you know, like for example, in due diligence is uh it's a very like it's a huge amount of uh natural language data.
• 1:14:04
  SPEAKER_02: LLMs are very, very efficient at analysing that data.
• 1:14:07
  SPEAKER_02: So how can we leverage AI to help us with our due diligence to make sure that we're making the right decisions or better decisions around projects that we're doing?
• 1:14:15
  SPEAKER_02: How do we then make sure that we are building on the team and the expertise that we have?
• 1:14:21
  SPEAKER_02: Um and then how do we then use that across across like how do we just leverage AI across a business?
• 1:14:27
  SPEAKER_02: And you know, you spoke about anthropic floor is an unbelievably powerful tool.
• 1:14:31
  SPEAKER_02: It's how do we then use that?
• 1:14:33
  SPEAKER_02: And we're fortunate, I think, both as founders, is to be we're in an age of AI where we've had the time to get the experience to learn about how AI can be implemented.
• 1:14:44
  SPEAKER_02: You made the point about AI needs to be niche, it needs to be doing something if you've got an agent, it needs to be niche.
• 1:14:49
  SPEAKER_02: Um, and so we have the opportunity now to to know what we need the thing to do, with having the people that can then manage that, but without the necessity to hire a huge number of people, which was what would need to happen.
• 1:15:02
  SPEAKER_02: And we can be very nimble.
• 1:15:04
  SPEAKER_02: Um so I think for me, the you know, how have we changed as individuals?
• 1:15:09
  SPEAKER_02: I think it's been a huge learning curve of how do you start off with an idea, but then how do you take that idea?
• 1:15:17
  SPEAKER_02: How do you win clients, but then how do you win clients, and then how do you create a repeatable process whilst maintaining your identity and then also creating a culture?
• 1:15:26
  SPEAKER_02: Like uh every person, we've we've been really hard on ensuring that every person we hire and we work with are the best possible people that we can do.
• 1:15:36
  SPEAKER_02: And that's not necessarily the best people in terms of the skills that they have, their attitude, their want to come and work, the ability to buy into our mission, um, and then the the desire to go and do something which we think is really, really impactful.
• 1:15:50
  SPEAKER_02: You know, our belief, I'm sure is yours, is we can unlock unlock demand at scale, then we can solve the natural capital problem, which is not enough demand.
• 1:16:00
  SPEAKER_02: And I think we come at it from slightly different angles, but ultimate ultimate is how do we move capital into doing good things?
• 1:16:06
  SPEAKER_02: Um, so yeah, I think I've been very fortunate that the people around me have been absolutely brilliant, including my partner and friends and family and all this sort of thing supported because it's difficult.
• 1:16:18
  SPEAKER_02: Um I'm sure you find this it's it's really hard like creating and running a business.
• 1:16:23
  SPEAKER_02: But it's also the most exciting thing you can possibly do.
• 1:16:26
  SPEAKER_02: What's what's been the hardest or the um I think time, time it time is time management is is I find really, really difficult.
• 1:16:38
  SPEAKER_02: I'm an ADHD boy, so I you know my brain goes off in 101 different directions, and so I need time to focus.
• 1:16:45
  SPEAKER_02: I think we have a huge number of conversations, and I think again, we've like the the things that we found difficult.
• 1:16:56
  SPEAKER_02: I think we've created a culture where people can can build and can can work things out, like can we do we have a new product?
• 1:17:06
  SPEAKER_02: Someone says, can you do this?
• 1:17:07
  SPEAKER_02: Sure, we can do this.
• 1:17:09
  SPEAKER_02: And then you're calling up the team being like, can we do this?
• 1:17:12
  SPEAKER_02: You know, and being having that ability to everyone to think to be entrepreneurial, I think is really, really important.
• 1:17:17
  SPEAKER_02: But from a hard thing, it's it's been for me personally, it's it's around time management, it's about how do I fit in everything.
• 1:17:24
  SPEAKER_02: I love speaking to people because I learn very much through audio.
• 1:17:28
  SPEAKER_02: And so by speaking to people, you can see little nuggets of information that you can bring in.
• 1:17:32
  SPEAKER_02: You build this really rich tapestry of of where the market is.
• 1:17:35
  SPEAKER_02: But by speaking to a lot of people, you end up with a lot of work that you have to do off the back of it.
• 1:17:40
  SPEAKER_00: Um and then it's just a question of how do we Presumably the granolas or the um whatever tool you use to really help with that process for you because you can go from meeting to meeting with actions that follow you and automate off the back end of it.
• 1:17:54
  SPEAKER_02: 100%.
• 1:17:55
  SPEAKER_02: Um, but I think it's you know, you have a conversation, you end up with a proposal, you know, and then it's the proposal that you have to go and design, and each thing is bespoke.
• 1:18:04
  SPEAKER_02: And there's always actions that come off, and we're only a team of 10 at the moment, so we're not a massive organization, so we still have to get involved.
• 1:18:13
  SPEAKER_02: Like I still very much have to get involved in in everything in the day-to-day.
• 1:18:17
  SPEAKER_02: And I think it's actually moving back to your question a second ago, is how do you take a bit more of a step back?
• 1:18:23
  SPEAKER_02: And how do you focus on the more important things rather than going, Oh, I can help with this, or I can help that, or I can help with this?
• 1:18:30
  SPEAKER_02: That's really like you want to, you know, I want to help with everything because I know that I can give an answer really quickly.
• 1:18:36
  SPEAKER_00: That in itself eats time for me.
• 1:18:38
  SPEAKER_00: We're in a really interesting chapter at the moment.
• 1:18:39
  SPEAKER_00: So we're about 50 people in the central team and 70 or so, if you include the estates.
• 1:18:47
  SPEAKER_00: And so I've had to go through that reinvention of my role from literally doing everything on day one.
• 1:18:53
  SPEAKER_00: Uh we were talking about this this morning.
• 1:18:55
  SPEAKER_00: The first uh photographs in our proposal document were on my iPhone.
• 1:19:00
  SPEAKER_00: So we've gone from that to I mean, the third hire was a photographer, so we went pretty quickly into the visual branding.
• 1:19:05
  SPEAKER_00: But to start with, every aspect of every proposal paper from day one was me, other than the environment sex in which Dan wrote.
• 1:19:12
  SPEAKER_00: Yeah.
• 1:19:12
  SPEAKER_00: So through to now, I just sign off a proposal paper.
• 1:19:16
  SPEAKER_00: I don't see it until it's done, everything's taken care of.
• 1:19:18
  SPEAKER_00: So I've had to sack myself 49 times from different jobs.
• 1:19:22
  SPEAKER_00: Actually, that's an exaggeration because second chapter three, you second someone else to do the job instead.
• 1:19:27
  SPEAKER_00: But um, but I'm now talking to uh like manager levels within the team, saying to them, you're gonna have to give up some stuff now to focus on other things.
• 1:19:36
  SPEAKER_00: So the the conservation part of our business, the operation side of it, is now the same size as the entirety of OC a year and a half ago.
• 1:19:44
  SPEAKER_01: Yeah.
• 1:19:45
  SPEAKER_00: So it's grown at such a rate.
• 1:19:46
  SPEAKER_00: And an anthropics quote was the business feels different every three months.
• 1:19:50
  SPEAKER_00: In a much all right, tech a lot of zeros off the head count.
• 1:19:53
  SPEAKER_00: Ours does too.
• 1:19:54
  SPEAKER_00: Yeah, every three months it feels different, and what your role is is is completely, completely separate.
• 1:20:00
  SPEAKER_00: Um, I have enjoyed every chapter more.
• 1:20:04
  SPEAKER_00: A bit like parenting.
• 1:20:05
  SPEAKER_00: I my kids are nine and seven.
• 1:20:07
  SPEAKER_00: Everyone says, Oh, what's the favorite age?
• 1:20:08
  SPEAKER_00: It's like now, yeah.
• 1:20:10
  SPEAKER_00: It changes and gets better.
• 1:20:11
  SPEAKER_00: Obviously, there's noise in everything.
• 1:20:12
  SPEAKER_00: You have good days and bad days, but overall, I get to do the things I I love the most now.
• 1:20:17
  SPEAKER_00: I get to talk to people about the business, I get to share everyone's amazing stories.
• 1:20:20
  SPEAKER_00: You know, the podcast has been an absolute joy.
• 1:20:23
  SPEAKER_00: You'll be episode 180, 80 something.
• 1:20:28
  SPEAKER_00: The best learning tool I've ever had.
• 1:20:29
  SPEAKER_00: Like getting to sit and ask you questions and everything for a couple of hours.
• 1:20:32
  SPEAKER_00: It's just incredible.
• 1:20:33
  SPEAKER_00: And I love the reprocity.
• 1:20:35
  SPEAKER_00: I usually can't say that word.
• 1:20:36
  SPEAKER_00: I I love the part of that that we get to share with you great audio, visual clips of you that you can share about your business and things.
• 1:20:42
  SPEAKER_00: So it's just been the most like wholesome, wonderful thing I get to do.
• 1:20:45
  SPEAKER_02: The podcast is since I was last on, it's grown enormously.
• 1:20:49
  SPEAKER_02: I mean, you've got you've gone from having me, which was a in a two-bit six-person team in a shitty office to I can't swear, uh, in a crappy office.
• 1:20:58
  SPEAKER_02: Okay, in a shitty office down in in Spittlefields.
• 1:21:01
  SPEAKER_02: And now we're changed.
• 1:21:03
  SPEAKER_02: Now we're, you know, you've you've now got to the point where you've got, you know, I think you've got like Microsoft leaders who had the head of off water there the other day, you know, it's quite cool.
• 1:21:12
  SPEAKER_02: Um pinch me.
• 1:21:15
  SPEAKER_00: The whole the whole sector's getting it right.
• 1:21:16
  SPEAKER_00: So you you mentioned Rob's there, Rob, Rob had the off-wat guy on the rebalance one, but we've had chief execs of banks, we've had international leaders and politicians and MPs and investors, and you know, Ian Ian Sims, one of the biggest alternative asset managers in the world.
• 1:21:32
  SPEAKER_00: Yeah.
• 1:21:33
  SPEAKER_00: Like just, yeah, it's been it's been incredible in terms of picking up those things.
• 1:21:37
  SPEAKER_00: Um, and also we we'll hit a city and we'll get a message going, Oh, are you in San Frank?
• 1:21:41
  SPEAKER_00: Can I come on the podcast?
• 1:21:42
  SPEAKER_00: Yeah, which is just amazing right now.
• 1:21:43
  SPEAKER_00: And like we've got one or two spots between now and the end of the year, but it's in incredibly tight.
• 1:21:48
  SPEAKER_00: Yeah.
• 1:21:48
  SPEAKER_00: Shout out to to um James Farrell and Knight Frank for the incredible support.
• 1:21:52
  SPEAKER_00: Thank you.
• 1:21:52
  SPEAKER_00: Helping make this a reality.
• 1:21:54
  SPEAKER_00: Um, they reckon you get good at 300 of these.
• 1:21:57
  SPEAKER_00: So you ask Rogan or Bartlett.
• 1:21:59
  SPEAKER_00: When you do 300, apparently you get decent at podcasting.
• 1:22:02
  SPEAKER_00: Oh, okay.
• 1:22:02
  SPEAKER_00: So we're just over halfway there.
• 1:22:03
  SPEAKER_00: So you're halfway there.
• 1:22:04
  SPEAKER_00: I mean, I think you're pretty good at it now.
• 1:22:05
  SPEAKER_00: So I will end with my favorite question.
• 1:22:08
  SPEAKER_00: Um, what's the one question I haven't asked you Shy had?
• 1:22:12
  SPEAKER_02: Oh, interesting.
• 1:22:14
  SPEAKER_02: I've got a I've got I'm gonna fire a question back to you because I love it when this happens.
• 1:22:18
  SPEAKER_02: Um, which is what happens if there was the Jeff Bezos or the Elon Musk of nature?
• 1:22:24
  SPEAKER_01: That'd be a good thing or a bad thing.
• 1:22:29
  SPEAKER_02: Um, give me more information about what you mean.
• 1:22:31
  SPEAKER_02: So if there was someone who is like who completely dominated a niche, so you know, the Amazon, the Amazon essentially is what happens if there was the Amazon of individuals?
• 1:22:40
  SPEAKER_02: And the reason I asked this is because I think it's quite interesting, because the environmental sector tends to come from quite a I guess a trying to think of the best way of saying this, um it comes from quite a point of view of well, we want to save nature, but we want to do it in a collegiate way, should we say.
• 1:23:00
  SPEAKER_02: And that question is is is is quite toothed, because if you go, one individual has profited enormously from the rate restoration of nature, but on the flip side, if you turn around and say, Well, they would have saved nature, because if someone's creating the Amazon of nature, then we won't have any problems anymore.
• 1:23:17
  SPEAKER_02: So I think it's just quite an interesting question.
• 1:23:20
  SPEAKER_00: Um I think it'd be awesome.
• 1:23:23
  SPEAKER_00: Bring it on.
• 1:23:24
  SPEAKER_00: Um, and I'm agnostic.
• 1:23:26
  SPEAKER_00: So um I love it when I get asked a question I've never been asked before.
• 1:23:29
  SPEAKER_00: Because it makes me go, oh.
• 1:23:31
  SPEAKER_00: And um, I remember being asked by the amazing Elena Doms, who uh we subsequently hired as our director of Europe.
• 1:23:37
  SPEAKER_00: Um so he said, What do you want your legacy to be?
• 1:23:41
  SPEAKER_00: And I was like, Oh Christ, I'm not that old, and I'd never thought about it.
• 1:23:44
  SPEAKER_00: And on the spot, I was like, Okay, let's pause and reflect.
• 1:23:47
  SPEAKER_00: And I was like, I don't want one, because if we've solved this, there's no legacy to be had.
• 1:23:52
  SPEAKER_00: Yeah, if we've scaled a business in an industry and we've all done it, fantastic, job done, not necessary anymore.
• 1:23:58
  SPEAKER_00: So whether that comes from a series of businesses, whether it comes from one, yes, great, let's solve it.
• 1:24:05
  SPEAKER_00: And actually, extending that further, I want to be that person.
• 1:24:11
  SPEAKER_00: I do because um I think every business should aspire to be the leading one in et cetera, and the best it can be.
• 1:24:18
  SPEAKER_00: And and I'm not what I'm not gonna do is do it by criticizing, holding anyone back, sabotaging anyone else, or pushing them.
• 1:24:26
  SPEAKER_00: I'm gonna try and do it by elevating everybody.
• 1:24:29
  SPEAKER_00: Um, although if I was picking a moniker of who I'd like to be, I don't want to be the Elon Musk of natural capital, but I'd really like to be the demis hasabis of natural capital and take the Google deep mind model to what we do.
• 1:24:41
  SPEAKER_00: Interesting.
• 1:24:42
  SPEAKER_00: Very good.
• 1:24:42
  SPEAKER_00: Uh Luke, absolute pleasure.
• 1:24:44
  SPEAKER_00: It's um remarkable how the business has grown and the role you've played on shaping the market in the last couple of years.
• 1:24:50
  SPEAKER_00: I think that's incredibly exciting of what the next couple are going to hold.
• 1:24:53
  SPEAKER_00: And I think we'd all agree the natural capital sector is way better for having changes.
• 1:24:58
  SPEAKER_02: Thank you very much for having me.