Latest / Second Nature / E181 Clifford Chance, Live: The Honest Room

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E181 Clifford Chance, Live: The Honest Room · Second Nature

• 0:07
  SPEAKER_01: Well, good morning, everyone.
• 0:08
  SPEAKER_01: Thank you very much for making it in despite the heat wave and the transport issues this morning.
• 0:15
  SPEAKER_01: Obviously, the extreme heat that we are facing at the moment is a savouring reminder of the importance of the conversation we are about to have and the role that nature-based solutions can play and should play in climate change mitigation and adaptation.
• 0:30
  SPEAKER_01: So, my name's Lily Marcel.
• 0:32
  SPEAKER_01: I'm a partner at Clifford Chance and the funds team.
• 0:35
  SPEAKER_01: I advise clients on structuring private investment funds, including sustainable infrastructure funds and increasingly over the last five to six years, natural capital funds.
• 0:46
  SPEAKER_01: We will talk about how natural capital has emerged as an asset class hopefully during the panel.
• 0:52
  SPEAKER_01: I'm also giving the introduction in another capacity.
• 0:56
  SPEAKER_01: So I'm a trustee of the Lifescape project, which is a charity that focuses on the creation, protection, and restoration of world landscapes.
• 1:05
  SPEAKER_01: Lifescape is one of Clifford Chance's long-standing pro bono clients.
• 1:10
  SPEAKER_01: I will do proper introductions in a second, but we do have Lifescape CEO on the panel today.
• 1:17
  SPEAKER_01: We also have several volunteers in the audience who provide pro bono support to Lifescape.
• 1:23
  SPEAKER_01: And I wanted to take this opportunity to thank them for the enormous contribution they make to Lifescape, but also to some of the legal discussion we'll be having today around the barriers to rewilding and the legal framework we're operating.
• 1:40
  SPEAKER_01: So I mentioned both hats for that reason, but also because I'm very pleased that we're going to have both private sector and third sector voices on the panel.
• 1:50
  SPEAKER_01: I hope it will become clear from today's discussion how important collaboration, partnerships, and information exchanges in this space, given the complexity of the legal frameworks in which nature restoration projects operate and the scale of the challenge.
• 2:08
  SPEAKER_01: So the UK alone needs tens of billions of additional investment over the next decade to meet its nature recovery targets.
• 2:17
  SPEAKER_01: And the legal, financial, and operational frameworks that are needed to unlock that capital are still in many places works in progress.
• 2:27
  SPEAKER_01: That's what really brings this panel together here during London Climate Action Week.
• 2:35
  SPEAKER_01: So just to introduce the panel, we have Rich Stockdale, who will actually be the moderator, so CEO and co-founder of Oxygen Conservation.
• 2:45
  SPEAKER_01: Rich is an expert moderator, no pressure.
• 2:48
  SPEAKER_01: But if anyone hasn't seen Rich's podcasts, there are lots of them available on the Oxygen Conservation website, which are many of many of which are very relevant to the topics we'll be discussing today as well.
• 3:01
  SPEAKER_01: We have Hannah Davies on the panel, who is a senior legal counsel at Oxygen Conservation.
• 3:07
  SPEAKER_01: Oxygen conservation started operating in 2021, right?
• 3:11
  SPEAKER_01: It's been incredible to see what progress you've made since then and what energy and enthusiasm and optimism you've brought to the conversation and the ambition you have for creating a really rigorous gold standard of carbon credit.
• 3:27
  SPEAKER_01: So I hope Hannah will be telling us a bit more about this work and what it's like operating at the sort of sharp end of negotiating the contracts that underpin those credits.
• 3:38
  SPEAKER_01: As I've mentioned, we have Adam Eagle, who is CEO of the Lifescape Project.
• 3:43
  SPEAKER_01: He started his career here at Clifford Chance, so it's very nice to have you back, Adam, in the office.
• 3:50
  SPEAKER_01: To have NGOs like Lifescape using their resources to, for example, map out legal barriers to rewelding projects, equip practitioners with the knowledge they need to conduct those projects, and to advocate for change to legal frameworks where necessary, is invaluable.
• 4:10
  SPEAKER_01: And I think we'll hear more about Lifescape's work on this shortly.
• 4:15
  SPEAKER_01: We have Martin Berg, he is CEO of Climate Asset Management, which starts as a joint venture between HSBC and Pollination.
• 4:22
  SPEAKER_01: Again, incredible progress over the last few years.
• 4:24
  SPEAKER_01: And it's been a privilege at Clifford Chance to be able to help CAM to launch some innovative natural capital funds over those years and to see the capital deployed in such impactful projects.
• 4:38
  SPEAKER_01: I hope Martin you'll be able to bring a more international perspective to the panel as well, given the geographies in which CAM operates.
• 4:45
  SPEAKER_01: And then finally, we have Adam Headley, who is a Clifford Chance partner and really one of the leading legal experts in the carbon market space.
• 4:55
  SPEAKER_01: He does some cutting-edge mandates.
• 4:57
  SPEAKER_01: And we will place a talk about whether the current legal framework is a constraint or a catalyst for nature recovery projects.
• 5:07
  SPEAKER_01: So the session is going to move through three three themes.
• 5:10
  SPEAKER_01: We're going to look at the current state of the tools available for nature recovery, the challenge of turning conservation outcomes into investable assets, and then longer-term questions of permanence, risk, and where regulation is heading.
• 5:25
  SPEAKER_01: We're going to have audience QA at the end.
• 5:28
  SPEAKER_01: So please do think of lots of good questions for the panelists as you go and save them up for the end of the session.
• 5:36
  SPEAKER_01: With that, Rich, over to you.
• 5:38
  SPEAKER_05: Thank you very much.
• 5:39
  SPEAKER_05: Can we get a round of applause for Lily for the introductions, please?
• 5:44
  SPEAKER_05: As Lily mentioned, we're pretty much known for bringing ambition, audacity, and optimism to this sector.
• 5:53
  SPEAKER_05: However, that's not where we're going to start today.
• 5:56
  SPEAKER_05: We're going to start with honesty and the reality of what it's like to operate in this space.
• 6:02
  SPEAKER_05: So the deals have got bigger and faster and more demanding in the last few years.
• 6:08
  SPEAKER_05: And this panel has seen how all those things have changed.
• 6:10
  SPEAKER_05: But my opening question is going to be, and I'm going to come to everyone on this, what's still hard and what's difficult, and what are the things that you find the most challenging?
• 6:19
  SPEAKER_05: So, Adam, if we can throw it to you first and then we'll come down the line.
• 6:23
  SPEAKER_04: Yeah, I think you know, when I look at the voluntary carbon nature markets, I make comparisons to other related markets which have grown over the last 10 years, things like green bonds.
• 6:35
  SPEAKER_04: And I think at the start of those kind of markets, it's really important that you don't have too much regulation because that can stymie growth.
• 6:45
  SPEAKER_04: And you kind of want to see how the market react and how can the market help scale up.
• 6:49
  SPEAKER_04: But I think there then becomes perhaps a tipping point where some degree of regulation needs to creep in in some way.
• 6:57
  SPEAKER_04: And I think we're starting to see that in the carbon markets, in the nature markets, but perhaps not enough.
• 7:05
  SPEAKER_04: And I know, you know, for sort of free market um proponents that you wouldn't necessarily want to have a sort of all-encompassing regime which kind of takes away that unregulated, that kind of free market aspect of the nature markets.
• 7:20
  SPEAKER_04: But I think where there's a real gap at the moment is you know, there's there's a lot of kind of stick approach to regulation around preservation of nature, around um, you know, forcing certain actions to take place.
• 7:34
  SPEAKER_04: So, you know, biodiversity net gain, for example, I think is a is is a is a positive thing, but it's a stick rather than a carrot.
• 7:41
  SPEAKER_04: And I think we don't have enough kind of regulatory carrots in in the nature space.
• 7:46
  SPEAKER_04: So, whereas, you know, I make the comparison to the renewables markets, for instance, where there's a whole you know well-established policy regime and legal regime which incentivizes through subsidies or through favorable regulatory treatment or revenue certainty to get those projects away.
• 8:05
  SPEAKER_04: And there isn't really an equivalent right now in the nature markets.
• 8:09
  SPEAKER_04: And so I think that's an area for me where you know projects are getting away because the private sector is managing to make it happen, and the economics are difficult and they will remain difficult, but I think there's just something on the demand side that that could happen to facilitate that.
• 8:26
  SPEAKER_05: I think that's been a theme I've heard in most rooms this week, probably the overarching theme of this climate week for me so far.
• 8:33
  SPEAKER_05: Martin?
• 8:34
  SPEAKER_02: Yeah.
• 8:35
  SPEAKER_02: So perhaps I explain first what we're doing, and then I can explain where where the where the challenges are.
• 8:40
  SPEAKER_02: So we are both active on the carbon side, um, where we where we run independent funds for corporates, and we're helping them to invest in underlying nature projects, and then they receive the credits in kind.
• 8:52
  SPEAKER_02: So that's one part of the business.
• 8:54
  SPEAKER_02: And the other part is we're working with institutional clients to invest in nature projects in developed markets, mostly in the in the US, in um in Europe and in New Zealand and Australia.
• 9:05
  SPEAKER_02: And there we're basically a real asset investor.
• 9:07
  SPEAKER_02: So we're actually um we are investing for a return, and and uh where we can, we would bring in some revenue streams also that are related to nature, mostly carbon.
• 9:17
  SPEAKER_02: And I think what's the biggest challenge for us, well, there are a lot of challenges, I would say.
• 9:21
  SPEAKER_02: It's still a different nascent market.
• 9:23
  SPEAKER_02: I think explaining to the different investor group why we're doing this and how we're doing this is challenging.
• 9:28
  SPEAKER_02: But I think kind of building on what you said, Adam, it's like the biggest challenge is it's like it's it's actually we don't have the feeling it's an unregulated market.
• 9:38
  SPEAKER_02: It's actually such a patchwork of different voluntary, um sometimes regulatory approaches in in different countries, then semi-regulation from unregulated organizations that are kind of governing this market and navigating this, in particular for the carbon side, is really challenging and also very costly, right?
• 9:57
  SPEAKER_02: So, for example, running our carbon fund in when you have we're mainly focused now in Africa and three projects, we are in Kenya, Uganda, Himalay, just going through that and understanding the different the different frameworks there is is very complicated in a way, and then overlaying this with the frameworks these corporates set themselves.
• 10:17
  SPEAKER_02: That's that's a it's it's a real challenge in a way.
• 10:19
  SPEAKER_02: So I'm not a person that usually says like we need more regulation, regulation.
• 10:23
  SPEAKER_02: Um but I think actually we but we need a bit more clarity how we're approaching um the projects that are relatively similar in in these jurisdictions, and I think we could achieve a lot more efficiency there.
• 10:35
  SPEAKER_05: Thank you, Martin.
• 10:36
  SPEAKER_05: Um Hannah, can we throw it in?
• 10:38
  SPEAKER_00: Yeah, absolutely.
• 10:39
  SPEAKER_00: So I'm I'm gonna look at this from an operational lens, kind of delivery on the ground, and how that looks like for us, and what the biggest barrier for us is as a developer and an asset manager.
• 10:48
  SPEAKER_00: So, one of the biggest barriers we're we're kind of facing right now is the uncertainty over when we'll receive regulatory approval decisions.
• 10:56
  SPEAKER_00: So that's a massive issue for us because we kind of have this expected date or expected you know month window when we might receive that.
• 11:03
  SPEAKER_00: If that gets significantly delayed, that's not just delay for us, but that's massive knock and effect for all of our kind of contractors, partners, everyone who's lined up that window to work on our projects with us, everyone who's kind of um all the tree nurseries to grow our trees to do seed collections on our sites.
• 11:21
  SPEAKER_00: You know, that's it's such a huge lead-in window if if that regulatory approval gets delayed by you know a couple of months and then we miss our planting window.
• 11:29
  SPEAKER_00: What are we going to do with all those trees that have been growing in the nurseries?
• 11:32
  SPEAKER_00: How are they going to resell them?
• 11:33
  SPEAKER_00: You know, it's such a big issue for us right now in terms of project managing these schemes and actually scaling conservation.
• 11:39
  SPEAKER_00: It would be awesome to see some certainty over when you actually get that decision so we can do better planning.
• 11:45
  SPEAKER_06: Thanks, Helen.
• 11:46
  SPEAKER_05: Adam?
• 11:47
  SPEAKER_06: Yeah, I think I'll I'll approach this through the NGO lens, I suppose, and just think about the outcomes that we're trying to achieve through Nature Market.
• 11:56
  SPEAKER_06: So what we're talking about is restoring ecosystems across large landscapes.
• 12:02
  SPEAKER_06: You know, think forests and wetlands and grasslands dotted across a landscape which are teeming with life.
• 12:08
  SPEAKER_06: That's what we're trying to achieve through all of this, I think, um, when we're talking about nature.
• 12:13
  SPEAKER_06: And I think there is a barrier, it might not be the biggest barrier, but around when capital is being invested, purportedly for nature outcomes, there are of course some projects which aren't achieving nature outcomes.
• 12:27
  SPEAKER_06: Um so I think you know the carbon market has historically been quite guilty of this, where you have um, you know, large-scale tree planting projects, and this is still happening today.
• 12:40
  SPEAKER_06: We've been talking about it for probably a decade, um, but which using monocultures or something close to a monoculture of a non-native species because they grow quickly and they sequester carbon very effectively.
• 12:50
  SPEAKER_06: So that that makes sense, but they're likely or often still claiming outcomes for nature, and so that is essentially a greenwashing issue.
• 12:59
  SPEAKER_06: And I think that's a barrier in the sense that it's it's directing capital and claiming benefits for nature, where actually there aren't necessarily any.
• 13:07
  SPEAKER_06: And that capital could be going to stronger projects, like the projects that you know my fellow panel members are are running.
• 13:14
  SPEAKER_05: Thank you.
• 13:15
  SPEAKER_05: Lily, you wear lots of different hats in this world.
• 13:18
  SPEAKER_05: Care to throw a challenge from one of them?
• 13:21
  SPEAKER_01: Um look, think wearing my my funds lawyer hat, actually.
• 13:26
  SPEAKER_01: Um I think that there are, we've seen a lot of innovation over the last um five or six years in terms of what we can do for channeling private capital into these projects.
• 13:40
  SPEAKER_01: I think more creative solutions are probably needed.
• 13:43
  SPEAKER_01: I don't think it's necessarily so much a question of the legal frameworks um being inadequate.
• 13:50
  SPEAKER_01: It's more a question of challenging some of the accepted norms and market practices.
• 13:54
  SPEAKER_01: So maybe, Martin, this is something that would resonate with you, but the idea of looking at the long-term nature of these projects and thinking, well, how does that work with a traditional closed-ended fund structure, for example, where it would have a 10-year term or you know, maybe 11 or 12 years, and investors expect their money back at that point?
• 14:12
  SPEAKER_01: How do we reconcile that mismatch in the long-term nature of the underlying investments and the um you know the market norm and the investor expectations around the you know the fund product that channels channels their money into these?
• 14:27
  SPEAKER_01: So I think that's probably, from my perspective, one of the next steps in terms of how can we get creative on this and think about um other ways of bringing in that capital.
• 14:36
  SPEAKER_01: Probably the other thing that we've been um looking at quite a bit in the fund space is blended capital structures.
• 14:42
  SPEAKER_01: So where you um you know we have a sort of concessional capital as well as um the more traditional institutional investor capital.
• 14:50
  SPEAKER_01: So those are the things I'm I'm sort of monitoring and think would be quite interesting to get more creative on.
• 14:57
  SPEAKER_05: Um what you heard there was blending and partnership and collaboration that need to work across multiple different functions and specialisms and sectors.
• 15:07
  SPEAKER_05: Adam, how well do, wearing both both sides of your career, how well do conservationists and lawyers communicate, and what does each perhaps get wrong about the other's perspectives?
• 15:19
  SPEAKER_06: Yeah, good question.
• 15:21
  SPEAKER_06: I I think it it depends on the lawyers, um, and it doesn't so much depend on the conservationists, um, in in the sense that in the UK context, um, I think we have a uh a conservation sector that's kind of steeped in its traditions and its ways a little bit.
• 15:39
  SPEAKER_06: Um whereas the the emerging groups, like I suppose you guys at Oxygen, maybe it does depend on the I'm evolving my answer now, because I think it does depend on the conservationists, because I'm sure you guys do it much better.
• 15:50
  SPEAKER_06: But if you're looking at you know the traditional ENGOs in the UK, um I think you need a kind of very accommodating and flexible lawyer who's also got a lot of energy in order to, I suppose, encourage them in the right direction towards the solutions they need.
• 16:06
  SPEAKER_06: But um I think on the lawyer side, what's really important is that when you're approaching a rewilding project that you anticipate that there's going to be a huge variety of legal issues that get thrown up, and that those legal issues may never have been tested before, because the rewilding project is likely trying to do something for the first time, or it's one of a handful of projects that are trying to achieve something.
• 16:30
  SPEAKER_06: Um so you need to apply innovative legal thinking, you need to throw your energy into it, and really, you know, bring your best game so that you can come up with creative solutions to the problem.
• 16:41
  SPEAKER_06: I mean, bison reintroduction, let's use an example, something that many rewilding projects are trying to do in the UK, but there's this act called the Dangerous Wild Animals Act, which maybe makes it illegal.
• 16:52
  SPEAKER_06: Maybe you need a dangerous wild animals uh license from the local authority, and to get that license, you need to keep the bison in a secure enclosure.
• 17:01
  SPEAKER_06: And if you just take that to the local authority and you advise the client, go talk to them, figure out the license, then you're going to get a requirement for a 12-foot steel fence that's electrified, that's double thickness.
• 17:12
  SPEAKER_05: I mean, literally, I'll be driving Jurassic Park at this point.
• 17:15
  SPEAKER_06: I mean, that's basically, and it's absurd, and the lawyer in that case needs to go a step further and come up with those creative interpretations of what's a secure enclosure.
• 17:24
  SPEAKER_06: I mean, it's a very niche point, but it's a good example of you need to be creative and innovative, and you likely need to engage very closely with the authorities.
• 17:33
  SPEAKER_05: I think the interesting uh word there, especially, was maybe, because often that's the challenge.
• 17:38
  SPEAKER_05: No one's cleared, no one knows.
• 17:40
  SPEAKER_05: Um, Martin, Lily mentioned the time domain and the interface between almost a natural world and processes that take generations and fun cycles that are 10 years or and and reporting lines that are quarterly.
• 17:53
  SPEAKER_05: How do you balance that challenge of making those two time domains work together?
• 17:57
  SPEAKER_02: It's it's hard.
• 17:58
  SPEAKER_02: I mean, and you raise a good point, right?
• 18:00
  SPEAKER_02: If it's like constantly you you try to put a you know a square pack in a round hall in a way, you have something that works for your investors, and but you don't have something that works for the underlying project, or you have something that works for the underlying project, but it doesn't really work for your investors.
• 18:14
  SPEAKER_02: And I think that you need a lot of creativity in order, and a lot of openness in order to make this work.
• 18:20
  SPEAKER_02: Um, I think from the time perspective that you mentioned, the easiest would be an open-ended fund.
• 18:25
  SPEAKER_02: But then nobody wants to invest in an open-ended fund um if it's for the first time, right?
• 18:29
  SPEAKER_02: You do an open-ended fund when you demonstrated that the model works, or you have actually performing assets.
• 18:35
  SPEAKER_02: If you're saying, well, we're doing something completely new, and we're uh designing a new project, and it will take five years to actually implement the project, then say somebody, and we're making it open-ended, and investors are saying, Well, this is all a bit kind of too uncertain for me.
• 18:46
  SPEAKER_02: So it's it's it's a challenge, right?
• 18:48
  SPEAKER_02: So you need to you have constantly the chicken in the egg problem, and you need to find one side has to move in order to move ahead.
• 18:57
  SPEAKER_02: That's uh and and then you can sometimes pull people with you, right?
• 19:01
  SPEAKER_02: So we found that, for example, on on some of our funds.
• 19:04
  SPEAKER_02: It's important to have one or two big players that are saying, look, I'm actually want to go that way.
• 19:09
  SPEAKER_02: Then you can pull others over.
• 19:10
  SPEAKER_02: But it's uh yeah, it's uh you you you go a lot of circles until you get there.
• 19:14
  SPEAKER_05: It echoes Hannah's point about the regulatory delays and uncertainty.
• 19:18
  SPEAKER_05: You've got a regulator who perhaps quite rightly doesn't care if a project takes an extra year, but that can be fatal for the financial return of a project, especially in a in a relatively new sector.
• 19:29
  SPEAKER_05: Um, Adam, you mentioned B and G in your opening.
• 19:33
  SPEAKER_05: Um has it been a success?
• 19:35
  SPEAKER_05: Has it done good things?
• 19:36
  SPEAKER_05: And perhaps if you do have some challenges about it, what might the positive incentivised version of that be that you kind of opened up for us?
• 19:45
  SPEAKER_04: Yeah, I I think it's probably too early to say if it has been a success, in the sense that if I was if I was asked to say that right now, I'd probably say no.
• 19:54
  SPEAKER_04: Um, because there hasn't been an enormous take-up of um, you know, kind of how that's meant to operate.
• 20:02
  SPEAKER_04: You know, it's it's very much seen as a compliance obligation, um, and and developers are kind of looking at it in a very sort of okay, this is an additional cost on top of a project, rather than necessarily as an opportunity.
• 20:16
  SPEAKER_04: So it kind of comes back to my point that it's it's an effective tool and probably will become effect more effective than it is now if you think about it as a sort of stick in a regulatory sense.
• 20:27
  SPEAKER_04: Um but it doesn't really incentivize proper innovation, proper investment in rewilding or preserving biodiversity.
• 20:37
  SPEAKER_04: So I think it it will have a role to play, but you know, perhaps not necessarily the the panacea to what it's trying to achieve.
• 20:45
  SPEAKER_05: So Hannah, OC have got I'm I'm unplugging my own business here later.
• 20:49
  SPEAKER_00: I know we have to challenge that from an off-site BNG provider.
• 20:54
  SPEAKER_00: Um, you know, we have two habitat banks registered, a third, hopefully, soon to be registered.
• 20:59
  SPEAKER_00: Um, over 3,000 BNG units ready to be sold, and we're on multiple procurement frameworks for the sale of BNG.
• 21:05
  SPEAKER_00: So for us, it's been transformative to have this mandatory regulation securing that demand, securing that revenue stream.
• 21:12
  SPEAKER_00: You know, for companies like us, where our objective is to scale conservation, this provides that it secures that demand.
• 21:19
  SPEAKER_00: So we actually can do that, so we can have investment to create these habitat banks.
• 21:23
  SPEAKER_00: And you know, in BNG, you have conservation covenants which bind successive entitle of the land to these conservation obligations for 30 years.
• 21:30
  SPEAKER_00: Like that's amazing.
• 21:32
  SPEAKER_00: You know that there's going to be biodiversity uplift in that habitat bank for 30 years.
• 21:35
  SPEAKER_00: And I think that's awesome.
• 21:37
  SPEAKER_05: Love it.
• 21:38
  SPEAKER_05: Um, do you want to comment on that?
• 21:40
  SPEAKER_06: Yeah, j just to give the the NGO perspective, I completely agree.
• 21:43
  SPEAKER_06: You know, it's compared to the baseline of pre BNG, it is driving rewilding and restoration on the ground, which is so exciting.
• 21:50
  SPEAKER_06: Um, I would say it could be improved, obviously.
• 21:53
  SPEAKER_06: It could create more demand.
• 21:55
  SPEAKER_06: Um the government's currently going, I'd say, or recently has been going in the wrong direction.
• 22:00
  SPEAKER_06: Increasing the exemptions to BNG as a policy.
• 22:03
  SPEAKER_06: Local authorities are not good at policing BNG off-site projects or and on-site projects.
• 22:10
  SPEAKER_06: So there's tweaks that can be made, and the government can go in a different direction and increase demand so that you guys have a greater revenue stream and can buy and restore more sites.
• 22:19
  SPEAKER_06: But definitely having a positive impact so far.
• 22:22
  SPEAKER_05: Martin, I'm going to come to you for a global perspective here in terms of, I mean, you've got over a billion dollars deployed globally.
• 22:32
  SPEAKER_05: How has BNG been considered and viewed by people in other jurisdictions?
• 22:37
  SPEAKER_05: And what similar tools and techniques are you seeing out there that you're excited about to stimulate these markets?
• 22:42
  SPEAKER_02: Yeah, so Fussy, so we are we are in in theory we can invest in in the UK, but we haven't so far.
• 22:49
  SPEAKER_02: And I think one of the reasons is why I agree.
• 22:52
  SPEAKER_02: It's an innovative mechanism with BNG.
• 22:54
  SPEAKER_02: It's at the moment not scalable enough.
• 22:56
  SPEAKER_02: It remains a niche, a niche activity.
• 22:59
  SPEAKER_02: And I think we are generally looking for a minimum scale and minimum investments.
• 23:03
  SPEAKER_02: And that's that's been the challenge, I think, and for for us in that.
• 23:06
  SPEAKER_02: I think we're looking um we've done a very thorough overview of all the kind of different biodiversity markets.
• 23:13
  SPEAKER_05: Just put a number on that in terms of scale so people have a view of what would the sector or an opportunity need to get to for it to be viable for you to look at?
• 23:22
  SPEAKER_02: For like a B and B and G.
• 23:23
  SPEAKER_02: Yeah.
• 23:24
  SPEAKER_02: Yeah, so we we're looking usually at investments somewhere between 30 to 50, sometimes uh between 50 and 100 million.
• 23:31
  SPEAKER_05: Yeah.
• 23:31
  SPEAKER_02: Um and we and for that, especially when we're looking, that we would do through what we call our natural capital strategies.
• 23:37
  SPEAKER_02: We would look for relatively secure revenue streams.
• 23:40
  SPEAKER_02: Um, and and um that's at the moment very challenging to achieve with the with BNG.
• 23:46
  SPEAKER_02: I think where we see um um, I mean you asked like where the where the model markets.
• 23:51
  SPEAKER_02: I think actually the the the biggest model market for us on, which is slightly different but kind of the same concept, is the wetland mitigation banking market in the US.
• 23:59
  SPEAKER_02: It's an 8 billion market, compare that to the carbon market that we're all talking about so much here.
• 24:04
  SPEAKER_02: Nobody talks about the wetland mitigation banking market.
• 24:06
  SPEAKER_02: It's actually quite a sizable market, and it's an interesting additional revenue stream that one can integrate in various projects.
• 24:14
  SPEAKER_02: And I think that's something we we definitely like when we when we look at US projects, that's something that we're trying to build in where we can.
• 24:22
  SPEAKER_02: I think the other thing that maybe the in the UK, the other model that I that could have been actually a lot easier to implement and maybe stimulated much more investment in the UK is something like the conservation easements, again from the US, where where you have local or regional authorities that actually make payments for certain activities that you can do, in particular in the forestry sector.
• 24:43
  SPEAKER_02: So I think there's some models out there that that that um that actually achieve a bit more scale.
• 24:49
  SPEAKER_02: It's obviously easier said, the US is a huge country, right, in a way, but they've done this quite well because if you compare it to Australia, where you have a similar kind of from a landmass, you have so many opportunities to invest, they actually went the other way.
• 25:01
  SPEAKER_02: When you look at their they if you go, for example, to Queensland, they have a I think they have 800 different credits for biodiversity, right?
• 25:08
  SPEAKER_02: So kind of went complete opposite way in a way.
• 25:10
  SPEAKER_02: So it doesn't, it's not only the scale of the underlying project.
• 25:13
  SPEAKER_02: You have to have someone kind of think, okay, how can we now develop some mechanisms that that actually didn't have some some some some uptake?
• 25:19
  SPEAKER_02: And I think the Australian example from from like initially I remember when we started up, we were really excited because all these different credits, but when you really look at it, they're so specific and they're so there you can see that some regulators took a lot of time to think about every single eventuality, and then you have all these different credits.
• 25:36
  SPEAKER_02: But as you know, right, it's not fungible and it's very difficult to actually put a value on that.
• 25:40
  SPEAKER_02: So while academically, this is probably much more thorough than other things, it doesn't actually help you to put some money against it, and then that's that's that's always a challenge.
• 25:51
  SPEAKER_05: I'm going to share a story about um wetland mitigation markets in the US.
• 25:55
  SPEAKER_05: They're actually the parent of BNG.
• 26:00
  SPEAKER_05: So uh David Hill, uh the inventor, the guy who came up with the concept of BNG, went to the US, looked and studied these markets, brought back the principles and adapted them to multimodal habitats to produce BNG.
• 26:14
  SPEAKER_05: Now, whenever you talk to an American audience, they say we should get BNG.
• 26:17
  SPEAKER_05: It's brilliant, you should definitely do that.
• 26:19
  SPEAKER_05: Not realizing they essentially came up with it in the first place.
• 26:22
  SPEAKER_05: Um, what you beautifully described there, Martin, is a system developing and things uh changing in real time.
• 26:28
  SPEAKER_05: Adam, you've seen the carbon markets change dramatically.
• 26:32
  SPEAKER_05: If we go back five years to now, what's different and where do you hope we're going, both in terms of voluntary and regulated?
• 26:40
  SPEAKER_04: I mean, you in a way you have to be quite specific about how far you go back in carbon markets because every year is a different year in carbon markets.
• 26:47
  SPEAKER_04: But five years ago, there was there was that that was probably the beginnings of carbon market 2.0, where a lot of mistakes were made prior to that in the way that the market was looking to develop and scale up, and the way that they were looking to do that.
• 27:03
  SPEAKER_04: And there was this slight reinvention of perhaps understanding you can't commoditize the carbon market as much as we wanted to early on to be able to scale it up, and the nature piece has sort of coming into that in that in very much that way, as among the other attributes that carbon credits have as well, but but biodiversity as a as an attribute, and I think to the point earlier about you know that that means something a a whole spectrum of possible things in addition to the carbon attributes of a of a carbon credit.
• 27:36
  SPEAKER_04: And whilst you can, to a certain extent, commoditize a ton of carbon dioxide saved or not emitted, it's really hard to commoditize those biodiversity and nature-related attributes in carbon credits.
• 27:51
  SPEAKER_04: And that's the piece where I think the market is has been developing but slightly grappling with itself.
• 27:57
  SPEAKER_04: There's definitely, in my sense, a bit of a dichotomy of thought about how you deal with that piece because it it prevents commoditization, it slightly inhibits scaling up because what you know, the people who want to scale up products and and put them together want to say, this is the same as this, even though actually this is a project in Ghana and this is one in Brazil, and it's a slightly different standard, and they've gone for a slightly different culture of trees and all that kind of stuff.
• 28:23
  SPEAKER_04: It's if you look at the attributes of that piece, it's every project is unique.
• 28:28
  SPEAKER_04: And we're we're beginning to understand that, and that's coming into the quality question now, where a credit has, you know, claims to have biodiversity or nature-related attributes to it.
• 28:41
  SPEAKER_04: I think the market's becoming increasingly shrewd about how to analyse that and how to look at it and how to understand what's good and what's bad.
• 28:50
  SPEAKER_04: But in that sense, it it does inhibit this ability to scale up and kind of lump things together.
• 28:57
  SPEAKER_05: I mean, I I would be amiss if I didn't A, declare a conflict here, but B, uh throw across to Hannah.
• 29:03
  SPEAKER_05: Um OC just got the highest ever rating for a nature-based carbon credit given by B Zero, the rating agency.
• 29:11
  SPEAKER_05: How on earth did you do that?
• 29:12
  SPEAKER_00: I mean, I hope you'll indulge me a little bit since you aren't biased anyway, talking about the projectly.
• 29:18
  SPEAKER_00: Um, just so that everyone's aware of what we're doing.
• 29:21
  SPEAKER_00: So, this is an amazing woodland creation project at Invergeldi Estate.
• 29:25
  SPEAKER_00: So it's over 2,500 acres of woodland, which comprises 1.5 million trees.
• 29:31
  SPEAKER_00: So for the football fans out there, that's 1,500 football pictures of trees being created on our estate.
• 29:37
  SPEAKER_00: It's just amazing.
• 29:38
  SPEAKER_00: And they're going to sequester 350,000 tons of carbon.
• 29:42
  SPEAKER_00: So I just think that's incredible.
• 29:44
  SPEAKER_00: And you know, um, for us, how they're so premium and why we, you know, why we are so proud of that rating is because of our kind of proprietary option intelligence software that we've built.
• 29:57
  SPEAKER_00: And this is monitoring, reporting, verification software, or we can model each of those trees and we can look at the carbon removal potential of each of those trees and the nature restoration potential.
• 30:07
  SPEAKER_00: And I just think it's incredible.
• 30:09
  SPEAKER_00: So sorry about indulgent talking about it.
• 30:13
  SPEAKER_05: I'm gonna um playfully piggyback off the word pitch there from one version to another.
• 30:18
  SPEAKER_05: Um, Lily, when people are pitching investors, um what what is the element that really moves the needle and will allow us to get the billions of investment we need into the sector?
• 30:30
  SPEAKER_01: Um I think it's I think it depends a little bit on the type of investor, whether you're speaking to a corporate that's looking to um to actually um receive carbon credits as part of their sort of net zero strategy, or whether it's an institutional investor that will be coming from you know investing in real estate or infrastructure funds.
• 30:51
  SPEAKER_01: I think bringing it back to what that investor is familiar with and essentially speaking their language is um is probably the key, you know, the key starting point.
• 31:02
  SPEAKER_01: And Martin, you should come in on this too, because you're at the you're you're having these conversations.
• 31:06
  SPEAKER_01: Um I think um bringing it back to you know the the revenue flows, right?
• 31:13
  SPEAKER_01: So you know, this is um in the in all with all of this sort of um geopolitical instability in the market, if you can bring this back to, you know, we are acquiring the most sort of stable infrastructure asset, right?
• 31:28
  SPEAKER_01: We are requiring real assets, and here is the the yield that we're expecting from say the you know the crop that um or the timber.
• 31:37
  SPEAKER_01: And then here's here's the extra revenue stream, which is you know the carbon credit, the in the biodiversity unit, um, and sort of sort of selling it in in that way, making you know, when you bring it closer to sort of, you know, it's it's like an infrastructure fund, but with this additional um um sort of bonus, right?
• 31:57
  SPEAKER_01: If you if you can get the carbon credits right, for example.
• 32:00
  SPEAKER_01: I mean that I'm I'm not at the front line of these these conversations, but I, you know, this is this is sort of what we hear when we are um talking to managers about raising these products.
• 32:10
  SPEAKER_01: And I've talked about some of the other challenges around getting the actual traditional fund structures to work for um for these strategies.
• 32:17
  SPEAKER_01: But does that resonate with you, Martin?
• 32:19
  SPEAKER_01: It does.
• 32:19
  SPEAKER_02: So I think I think um initially when we started out five, six years ago, we thought we could we could write much more on the there will be big markets for um uh for the environmental attributes, and uh you should base your most of your investments on that.
• 32:35
  SPEAKER_02: And I think that has shifted quite a bit.
• 32:36
  SPEAKER_02: I think investors are now think you you have to have a very clear storyline what um the investment does.
• 32:43
  SPEAKER_02: And I think investing in in land and then either in agriculture or forestry, I think you have to real asset and you can do something with it.
• 32:51
  SPEAKER_02: And then the environmental attributes, mainly carbon at the moment, but also the biodiversity can play an important role for signaling that there's some additional value.
• 32:59
  SPEAKER_02: So we're seeing in particular, I think, forestry funds.
• 33:02
  SPEAKER_02: I think um the or generally forestry investments have become much more interesting for institutional investors because of the additional revenue streams from carbon.
• 33:09
  SPEAKER_02: That doesn't necessarily mean that they're always um employed, but I think when you look at this now from an structuring perspective, from a sudden you have another variable that you can put in.
• 33:17
  SPEAKER_02: Before it was a very standard and I would say not very interesting investment activity.
• 33:23
  SPEAKER_02: Now with carbon, you have a lot more um options.
• 33:25
  SPEAKER_02: You can say, I have a part of my project which I actually never be able to harvest, but I can make a carbon project out of that.
• 33:30
  SPEAKER_02: So I can do that.
• 33:31
  SPEAKER_02: Or I can take a decision not to harvest trees, but to get payments from the sale of carbon credits.
• 33:37
  SPEAKER_02: And I can work with Microsoft or another big company in order to provide me that payment.
• 33:41
  SPEAKER_02: And then when investors look at that, oh, this is actually a triple-A company like Microsoft providing you actually a revenue stream here against that.
• 33:48
  SPEAKER_02: From a sudden, it's a it's a completely different um type of investment.
• 33:52
  SPEAKER_02: So on the forestry side, we see this in particular, and also the optionality for investors to receive credits.
• 33:57
  SPEAKER_02: That's something we underestimated.
• 33:59
  SPEAKER_02: For example, in the beginning, we said it doesn't make any sense that an institution investor gets a carbon credit.
• 34:05
  SPEAKER_02: Um, we should sell it for them and then and then put it in uh in in the revenue start, but actually what we realize, you know, just the optionality for the investors saying I could, if I wanted to receive it, most never do, but I could, if I wanted, helps them to actually see this investment differently.
• 34:21
  SPEAKER_02: I think where it's more challenging still, it's on the biodiversity side.
• 34:24
  SPEAKER_05: I think just on that, you you pick up a really interesting psychological point.
• 34:28
  SPEAKER_05: So um we at auction always want to run and create the new thing, but psychologically, of course, it's easier for an investor to view a new market as the cherry on top, as an addition to be it regenerative agriculture or be it forestry, because they know that asset class already.
• 34:45
  SPEAKER_05: This is something else I'm getting.
• 34:47
  SPEAKER_05: I'm not losing anything, I'm not even absorbing more risk.
• 34:49
  SPEAKER_05: I'm just getting something else.
• 34:51
  SPEAKER_05: So it would make sense that that's a vehicle into this asset class, and of course, we'd grow that base first before you get the more challenging, more sort of adventurous capital.
• 35:00
  SPEAKER_02: Correct.
• 35:01
  SPEAKER_02: In in financial terms, you're saying you're giving them a free environmental call option, right?
• 35:05
  SPEAKER_02: And and everybody likes a free option.
• 35:07
  SPEAKER_02: So that's it.
• 35:07
  SPEAKER_02: So there is some value to it.
• 35:09
  SPEAKER_02: But I think I think Lily, you were right.
• 35:11
  SPEAKER_02: I think what has shifted now, in particular, with the also with the criticism on the ESG market, I think the the scrutiny on the say the business as usual um business model, that has to be there, right?
• 35:23
  SPEAKER_02: It has to be very clear what you're actually doing, how can you generate returns?
• 35:26
  SPEAKER_02: So I said if you then as you said have something more on top, I could I could generate even these biodiversity credits.
• 35:33
  SPEAKER_02: And then you know we look at what you're doing, it's like they could be worth a lot, right?
• 35:36
  SPEAKER_02: Look at there's some there's some data points in the market out there that that that carries them some weight, I think, but it's it's not sufficiently um it's it's it's it's uh it's not a conditional loan that allows investors to put money into something.
• 35:50
  SPEAKER_02: And that's that's a challenge, I think.
• 35:52
  SPEAKER_02: We're still there.
• 35:53
  SPEAKER_02: We need more proof points in order to get there that we can then say, well, you should actually put a much higher financial value also on these on these instruments that we have that we're generating.
• 36:02
  SPEAKER_05: So the open call is that we need billions and billions of more pounds.
• 36:06
  SPEAKER_05: The government is saying we need more private funding into this.
• 36:09
  SPEAKER_05: Are the government making it easy for people to do the right thing for the environment, Adam?
• 36:13
  SPEAKER_05: What's your experience?
• 36:16
  SPEAKER_06: Um Well, I would say, you know, things like BNG are are steps forward.
• 36:22
  SPEAKER_06: Um, other income streams like um the subsidy move after Brexit, you know, they step in the right direction.
• 36:30
  SPEAKER_06: But I think what I'm hearing from others is that you know a lot more needs to be done.
• 36:35
  SPEAKER_06: And you know, going backwards in the wrong direction on things like BNG is really unhelpful.
• 36:41
  SPEAKER_06: And I can only imagine that it's not great for your pitching to investors that if they you know do their research, they can see actually the government's been edging backwards over the last year or so.
• 36:52
  SPEAKER_06: Um, but maybe that will change with the leadership content uh contest that's coming up and potential updates to policies or going back to the manifesto, which of course had had good credible um statements about what they would do with regard to nature and nature markets.
• 37:08
  SPEAKER_05: And you sometimes have felt the need to step in and use legal action to really hold government to those commitments?
• 37:14
  SPEAKER_06: Yeah, I mean, not just those commitments, but you know, across the board we at Livescape use strategic litigation to achieve outcomes for nature.
• 37:23
  SPEAKER_06: Um so, you know, and I think I think the sector has um, particularly the the NGO part of the sector, has always been very reluctant to do that.
• 37:34
  SPEAKER_06: They've always focused on the policy advocacy, the engagement, the discussions, and and being quite risk-averse.
• 37:42
  SPEAKER_06: But we see it differently, we see it, and I see it personally as a as a litigator by background, there's a balance between what's the chance that you're going to achieve your outcome through that advocacy, what's the chance that you might achieve it, or a bigger systemic impact through bringing strategic litigation, what are the costs, what are the risks, but that's just not a balance that the sector's traditionally been capable of achieving and assessing.
• 38:07
  SPEAKER_06: So, yeah, we we're working on cases across you know issues like um peat um harvesting um that you use sustainable finance taxonomy at the systemic level.
• 38:18
  SPEAKER_06: Um, and you know, we had a judicial review in Scotland on on beavers in 2021.
• 38:24
  SPEAKER_06: So I think across the boards there are issues where the government or governments are not doing enough, and you know, a slightly more forceful approach can be productive.
• 38:35
  SPEAKER_06: Um, but of course the dialogue and the advocacy is important too.
• 38:38
  SPEAKER_05: So let's go magic one questions for a moment and I'll throw it open to the panel.
• 38:42
  SPEAKER_05: If you could add or remove one law or rule or regulation that would make things better for nature and carbon markets, what would it be?
• 38:51
  SPEAKER_05: As Martin steps back away from the table of lawyers.
• 38:55
  SPEAKER_05: I have so many good lawyers here they probably know much more than I do.
• 38:58
  SPEAKER_04: Adam, do you want to kick us up?
• 39:00
  SPEAKER_04: I I think I would give a much clearer regulatory signal that companies can can receive a reward for in investing in carbon projects in nature-based projects, where there is a little bit of that now about the so for in a carbon space, you know, you can if you invest in in woodland carbon code projects, then you can account for that through your emissions reporting.
• 39:25
  SPEAKER_04: There isn't the same kind of sort of thing for recognition for for nature markets.
• 39:32
  SPEAKER_04: I think there needs to be some element of a kind of regulatory reward for doing that beyond uh forcing them to do it.
• 39:39
  SPEAKER_05: Full disclosure, I spent that many months hearing about regulation literally being a no, you can't do something.
• 39:46
  SPEAKER_05: I'd forgotten the concept that actually it could offer an incentive instead.
• 39:49
  SPEAKER_05: So it's only my um Adam describing it this morning.
• 39:52
  SPEAKER_05: I was like, oh yeah, why wouldn't we incentivize that more for the thing we want as opposed to just penalising the thing we don't?
• 39:58
  SPEAKER_05: Hannah?
• 39:59
  SPEAKER_00: I think for me it's about securing demand.
• 40:02
  SPEAKER_00: So if tomorrow we enacted a law which said that all large corporates had to offset their emissions, you know, immediately, think about the revenue streams that will come into conservation projects.
• 40:11
  SPEAKER_00: And so for me, if if we really want to scale conservation, we have to have guaranteed revenue.
• 40:16
  SPEAKER_00: That's how you really get investment.
• 40:17
  SPEAKER_00: So that's what I would do.
• 40:21
  SPEAKER_01: I probably wouldn't remove anything, but there is um in the fund space, there is a regulation that requires you to um fund managers to categorize, essentially categorise their products on the sort of sustainability scale.
• 40:34
  SPEAKER_01: Um so this is SFDR.
• 40:35
  SPEAKER_01: We are expecting SFDR to at some point, um, probably in 2028.
• 40:43
  SPEAKER_01: From my perspective, ensuring that the changes to this regulatory framework really do recognise some of the challenges in sustainable funds, including natural capital funds, um and enabling those funds to categorize themselves fairly and accurately under the framework.
• 41:01
  SPEAKER_01: Again, this is where regulation could be an incentive.
• 41:04
  SPEAKER_01: If you have the highest label of um sort of sustainable fund available with clear criteria such that natural capital funds can feel, you know, feel comfortable adopting it, feel they can kind of meet those criteria without greenwash, any risk of greenwashing for investors, um and disclose, you know, fully disclose what they're doing.
• 41:24
  SPEAKER_01: I mean, that that's the aim, and that would be um that would be a good outcome of the of the ongoing SFGR review.
• 41:31
  SPEAKER_01: So I wouldn't strip out a law, but I'd I'd make some changes.
• 41:34
  SPEAKER_06: Would you like one?
• 41:35
  SPEAKER_06: Yeah, um, I guess building on what Hannah said, um so so if we have enough demand, it's then important to direct it in a really strategic way.
• 41:46
  SPEAKER_06: So I would, if waving the wand and I could have one thing, I would create a strategic map of where all of that restoration happens across the country so that we can end up in in decades to come with a connected network of protected areas of thriving ecosystems where that funding can be channelled for those investments and for-profit projects.
• 42:10
  SPEAKER_05: Um so um the tech geek part of my brain is loving what's going on in the US at the moment in terms of the government thinking about taking significant stakes in open AI and anthropic.
• 42:26
  SPEAKER_05: If we do want a government that wants to stimulate private capital flow and wants to help grow this market, would you be for or against the government taking stakes in funds like Martin's and ours and other people?
• 42:38
  SPEAKER_05: So actually, we had a sovereign wealth fund based on natural capital as well.
• 42:43
  SPEAKER_05: What do we think from the panel?
• 42:47
  SPEAKER_05: For or against?
• 42:49
  SPEAKER_06: I'm happy to jump in further on.
• 42:51
  SPEAKER_06: I mean, I I'm gonna go with four, with a much less sophisticated view than all of you from a from a deals and finances perspective.
• 42:58
  SPEAKER_06: But you know, I think government taking some level of ownership of this issue is positive.
• 43:03
  SPEAKER_06: I imagine it would increase investor confidence.
• 43:06
  SPEAKER_06: And I also think it probably plays a helpful governance role from my perspective, and from the you know, the need for litigation, the actually producing outcomes for biodiversity.
• 43:17
  SPEAKER_06: Um I think that if the government's got a heavy stake in it, then they have a greater ability to steer it to have the outcomes and deliver impact.
• 43:25
  SPEAKER_02: Martin, for or against?
• 43:27
  SPEAKER_02: I think I think there's a di well, first of all, I think there's a difference between a government taking a stake in a in a in a private fund or company and having a sovereign wealth fund that does that.
• 43:36
  SPEAKER_02: So I think I would be quite skeptical that governments as such, especially through governmental departments, will be good investors.
• 43:43
  SPEAKER_02: I think it's too politically said, but Chris hated the idea when I told him about it.
• 43:48
  SPEAKER_02: Yeah, and and uh it's difficult enough to to to deal with uh with the even private sector investors that have different views, but they may mean the government.
• 43:55
  SPEAKER_02: But I think having a sovereign wealth fund that has a certain mandate.
• 44:00
  SPEAKER_02: And it's of course governmental funded or uses some governmental revenues in order to have its funding with a very clear investment guideline but does it independently.
• 44:09
  SPEAKER_02: I think there are enough good examples around, right?
• 44:12
  SPEAKER_02: So that you could do really some good.
• 44:14
  SPEAKER_02: And I think we have too few that have a clear nature mandate, right?
• 44:18
  SPEAKER_02: When you look around at the sovereign wealth funds around the world that we're having at the moment, um I'm actually having tomorrow we have a big meeting with one of the uh one of the big groups uh that is trying to combine all the sovereign wealth funds, and we're really at the beginning of explaining what nature investment is, right?
• 44:34
  SPEAKER_02: So you you see like the the the I think having an uh sophisticated sovereign wealth funds that has these types of issues and is really focusing on it, I think could be quite successful actually.
• 44:45
  SPEAKER_02: But it has to be independent of so quite skeptical that governments are good direct investors.
• 44:52
  SPEAKER_05: I think that gives us a beautiful segue into um a comment from each of you before we go to the floor on um if we're sat here in five years' time, and I choose that timeline because five years is pretty relevant to all of us in this space and our respective businesses.
• 45:06
  SPEAKER_05: What do you hope and what do you think will have changed?
• 45:11
  SPEAKER_05: Oh, my God.
• 45:12
  SPEAKER_05: Yeah, I'm happy.
• 45:12
  SPEAKER_02: So I I hope you have more proof points.
• 45:14
  SPEAKER_02: I think the biggest challenge at the moment now is that in five years' time, I hope that there are so so I think we made all the observation we all might have started around 2020-21.
• 45:23
  SPEAKER_02: So in in five years' time, we will be 10 years in business.
• 45:27
  SPEAKER_02: And I hope after 10 years you actually have some tangible results that you can show.
• 45:31
  SPEAKER_02: And I think that's and and perhaps also going back to your initial point with the structures, perhaps at that point we could actually have open-ended funds, continuation vehicles, all these things that real markets need.
• 45:41
  SPEAKER_02: So we would have more um hopefully success stories that we can then also structure in a different way.
• 45:47
  SPEAKER_02: So we're entering into a phase where this is becoming a much more quote-unquote normal market, right?
• 45:52
  SPEAKER_02: Like what we know, for example, on the infrastructure side.
• 45:55
  SPEAKER_02: And I think the biggest challenge at the moment is investors in particular have still to imagine what could be possible, and they have to be sort of the guinea pigs, and nobody, anybody that knows investors, no investor likes to be that.
• 46:06
  SPEAKER_02: They always like to wait until they have the proof point.
• 46:09
  SPEAKER_02: So I hope that in 10 years' time you have some proof points, and um that will then actually create some momentum and allows us to do completely different things and also tackle some of the things that are now, let's say, perceived to be impossible, right?
• 46:21
  SPEAKER_02: Because then I think people are uh investors or or other players are willing to take some risks and saying, okay, I can take a leap here now.
• 46:27
  SPEAKER_02: I've seen this works, I have I've seen this in real estate, I've seen this in infrastructure.
• 46:31
  SPEAKER_02: I can now actually really vision how this how this works.
• 46:33
  SPEAKER_02: And I think we're still a bit, for some of these discussions, we're a bit too far away.
• 46:37
  SPEAKER_05: Love it.
• 46:38
  SPEAKER_04: Adam?
• 46:39
  SPEAKER_04: I think there's probably two things.
• 46:41
  SPEAKER_04: Um, I think the first is that the the kind of trust gap will have been resolved.
• 46:46
  SPEAKER_04: So, yeah, that there's still a strong element of uncertainty in the market around what's good and what's bad, and the science evolves so quickly.
• 46:55
  SPEAKER_04: I think what we need is a a much more kind of industry-wide approach or global-wide approach towards what good means, and that to be adopted by governments and and to be fully backed by governments and to be um encouraged by governments, and and that's starting to happen, but it's not there yet.
• 47:13
  SPEAKER_04: And then I think there's also the legal risk gap, and and I I think again, we're starting to get to a position now where we're understanding the toolbox that's needed to get these long-term nature-based projects away, and it's it's not just contract law because contract law is not well equipped to deal with 10, 20, 30, 100-year-long obligations.
• 47:34
  SPEAKER_04: So you need things like conservation covenants, other types of legal instruments, or um, you know, strong indicators that that risk gap has been addressed.
• 47:47
  SPEAKER_04: I mean, insurance is another really important piece of that, which is still very nascent, but that will come in.
• 47:52
  SPEAKER_04: And with things like carbon ratings as well, look, there are all these tools emerging, but it's not quite clear how they should all interact right now.
• 48:00
  SPEAKER_04: But once that becomes a you know, an established way of getting projects away, and that's the the the market understands that, then I think we'll start to see that scaling up.
• 48:10
  SPEAKER_04: Hannah?
• 48:12
  SPEAKER_00: To kind of lead on from Adam with all those amazing tools that we're going to have in place in five years' time.
• 48:16
  SPEAKER_00: You know, I really hope that we've surpassed our 1 billion assets under management target um by 2030.
• 48:22
  SPEAKER_00: And you know, we've really shown that nature is an institutional asset class just as worthy of investment as all traditional asset classes.
• 48:28
  SPEAKER_00: And that'd be amazing in five years' time.
• 48:30
  SPEAKER_06: Perfect.
• 48:31
  SPEAKER_06: And the outcome of all of that is that at that point we've already got substantial sites that are being restored for nature in the UK and globally, um, where you know rewilding processes are being enacted, where bison have been returned to one of Oxygen's estates in the future, or Eurasian elk, um, or perhaps we've got a network that's big enough for Eurasian links to be back.
• 48:54
  SPEAKER_06: So, yeah, all of that will result in a great amount of data restoration.
• 48:58
  SPEAKER_06: Lovely.
• 48:59
  SPEAKER_06: And Lily?
• 49:00
  SPEAKER_01: Well, maybe following on from that, Adam, um, one of the things that I've um I've loved seeing evolve on the lifescape side is the work you um you've been doing on um rewelding law, um the rewelding law hub.
• 49:12
  SPEAKER_01: So creating briefings for practitioners in different countries, mapping out all of these legal barriers to rewelding projects.
• 49:20
  SPEAKER_01: You mentioned the bison point, you know, that's a classic one in terms of just this very complex landscape that these projects are being undertaken in.
• 49:28
  SPEAKER_01: I'd love to see um over the next few years that project being expanded to many more jurisdictions to see um practitioners aware that this these resources are out there.
• 49:39
  SPEAKER_01: And so to just continue this exchange of knowledge that we're seeing amongst practitioners more you know in the space more generally.
• 49:49
  SPEAKER_01: And then on the fun side, absolutely what you said, Martin.
• 49:52
  SPEAKER_01: A big you know, seeing it, seeing natural capital really established as a an asset class with all of the exciting different models that we see, for example, in the infrastructure space of the open-ended funds, the continuation funds, and investors understanding where natural capital fits within their different pots of capital that they can allocate.
• 50:10
  SPEAKER_05: Um, I picked five years for a reason.
• 50:13
  SPEAKER_05: Five years ago, this sector barely existed.
• 50:16
  SPEAKER_05: These organizations didn't exist.
• 50:19
  SPEAKER_05: A carbon credit was largely a joke and was a dollar.
• 50:23
  SPEAKER_05: Now it's hundreds of pounds a ton for a premium product that you could be rated against, you can sell on an exchange, you can um insure against.
• 50:32
  SPEAKER_05: Um, Martin mentioned about the impossible things that need to be done.
• 50:35
  SPEAKER_05: These people have done impossible things for five years to bring this asset class and this industry into being.
• 50:40
  SPEAKER_05: Um I thought the panel were astonishing.
• 50:42
  SPEAKER_05: Can you give them a round of applause, please?