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Our 'In Conversation With' series continues with Dr. Bruce Howard, Director at Ecosystems Knowledge Network. He explains the basics of biodiversity and finance and discusses research into the links between biodiversity, the economy, and the climate. He also covers the growing list of investable opportunities and projects in the biodiversity space, and how the reinsurance and finance industries are assessing their impacts on nature.
Welcome to the Sustainable Finance Guernsey podcast page.
Guernsey Finance is a joint government and industry initiative tasked with promoting and connecting Guernsey as a leading international finance centre.
Named as one of the Green Finance Guide's top 10 must-listen sustainable finance podcasts, our broadcasts feature news, insights and discussion about green and sustainable finance, and the contribution which Guernsey, as a global leader in green finance, is making in this space.
Rosie 00:05
Hello and welcome to the latest Guernsey green finance podcast rated one of the top 10 most useful sustainable finance podcasts by the green finance guide. Guernsey is one of the jurisdictions leading the way in green and sustainable finance. And as part of this podcast series we'll be speaking to and learning from some of the leading global figures in the field. My name is Rosie Allsop and Communications Director of we are Guernsey, the promotional agency for Guernsey's finance industry. And today I am delighted to be speaking with Bruce Howard, Director at Ecosystems Knowledge Network. And today, among other topics in the climate finance space, we'll be focusing on biodiversity. Welcome, Bruce.
bruce 00:51
Well, Rosie, it's a pleasure to be here.
Rosie 00:54
Thank you very much indeed. It's great to have you on the podcast now. Can we start by introducing you to our listeners? Can you tell us a little bit about yourself and your background and your career to date?
bruce 01:06
Yes, so delighted to, my career began centered on the avoiding avoidance of harm to the environment I trained originally in plant science and went on to be concerned with pollutants, particularly heavy metals in the environment. And in the third of my career, we were very focused on harm and avoiding harm to the environment and where there had been some harm, some contamination, thinking as to how that could be remediated. But now, in the second part of my career, which I have to say, is much more exciting, we're focused on I'm focused on the positives. If we restore the natural environment, what good does it do in society? What does it do for people's well being and prosperity. So it's a career of two halves. But during that career, I've worked in local governments in private consultancy for a university. And now I'm running the charitable initiative, that ecosystems Knowledge Network. So that's a little tour of me so far.
Rosie 02:19
That's great. Thank you so much. Now, natural capital, biodiversity and nature positive investments are relatively new terms that are mainstreaming quite quickly. And so for anyone who's not as familiar with biodiversity, and the risks and opportunities, could you explain for our listeners, what Biodiversity means, and why we should be protecting it and investing in nature?
bruce 02:45
Yes, so Rosie, environmental people have lots of terms to that they use to explain why they're concerned about our surroundings about land and marine habitat, and such like, some of these terms that they use are old. They've been around for a while, like nature, and biodiversity. And some are new, like, for example, the term natural capital to refer to nature and its value. But to answer your question, though, biodiversity is one of the terms and it describes the variety that's found in the natural world at every scale, from genetic code, to whole habitats like woodland and coral reef. So biodiversity is about variety. And that variety matters, not just because it's appealing to people. But because it means resilience. If you just have one of something, generally you have problems, but in diversity is found resilience. Biodiversity, though, is often taken as a tag word for everything that's out there in the natural world. So in schools and offices, it's now used as a term for the state of nature in general, not just the number of microbes that you could count on in a teaspoon of soil or water, or the number of tree species that you could count in a hectare of forest. We've got lots of words to describe food, and we might call it cuisine or fair or meals. And the same is true for the environment. And biodiversity is just one of those terms. But it's very important because we've got an international convention, the Convention on Biological Diversity. That's all about it. And in recent years, we've had the Dasgupta review of the economics of biodiversity
Rosie 05:02
So you just mentioned the Dasgupta review. Can you tell us a little more about Professor Dasgupta and his work?
bruce 05:08
Yes. So the last few decades have been punctuated by big reports on the state of nature. So we had, for example, over 20 years ago, now the Millennium Ecosystem Assessment. And then we've had the TEEB report - the economics of the environment and biodiversity report, descriptor. And this, this review that he published last February, February 2021, was another one of those big moments. But unusually, it wasn't initiated by an environmental organisation or report prompted by environmental people, but it was initiated by a finance ministry, and in particular, the Treasury for the UK Government. I was surprised that it used that term, biodiversity, it's the economics of biodiversity review, because biodiversity is a bit of a technical term. But when you read the review of Professor Partha Dasgupta, who's a economist, eminent economist at the University of Cambridge, you, when you read it, you'll see his review is all about the natural of investment environment in every dimension. It's all about making nature visible for human wellbeing. And the challenge, of course, with with all these reports that keep coming out, is keeping them alive. Economic Analysis of the environment, which we find in this report, it only gets us so far. Economists use complex methods to generate eye watering figures for what changes in the condition of a natural feature are worse, natural features like a public park or even a vast ocean. But the conversation about finance and nature, I think now is one of their most fertile and urgent Professor Dasgupta recognise this in his review, and it's great that Guernsey Green Finance are on the case with this as well.
Rosie 07:26
It's great to hear and I absolutely agree with you that conversation about finance and nature being, as you say, fertile and urgent. And I hope that thanks to your explanation, our listeners can understand what natural capital is, and the economics behind biodiversity. Can you tell me what are some of the investable opportunities for those who are interested in pursuing nature of positive investment strategies?
bruce 07:54
Yes, so it is early days in terms of those investable nature positive opportunities coming around. But whilst it might be just a drip drip of projects at the moment, it's clear to me having looked at this field for the last four or five years, that that drip drip is going to turn into an attractive project pipeline. At the moment in the UK, at least, which is the area that I focused on with the ecosystems Knowledge Network, we have a whole variety of landowners, private, public and nonprofit third sector, all now interested in new forms of revenue. So that means not just revenue relating to tourism, or food or timber, but revenue relating to carbon, and reducing nutrient loss and providing biodiversity net gain. So that's a way in which if you lose biodiversity in one place, you can make sure you get it back in another. So there is well widespread interest in these new revenue streams. And that's great to see. But what we don't yet have or what we have very few of our projects that have turned that appetite for new revenue into new business businesses. There are some and there are some very exciting schemes around these islands, which are now happening and finances is beginning to to flow. But it's it's very much early days, and that's because we've got a myriad of different landowners, all looking around for the revenue opportunities. We don't yet have the scale. But the moment that we begin to put together these these landowners and into coordinated packages, then the investable opportunities will be substantial.
Rosie 10:08
So thank you for that. It's fascinating to hear about those investable schemes within nature based finance. Can you tell us about some of the more specific projects that you're seeing? And what's the state of the environmental restoration project pipeline? In in Europe?
bruce 10:26
Yes. So I have the pleasure in my job of being able to, to look around certainly the UK and beyond to find the most exciting projects and to make those discoverable. The ones that I'm most excited about are still relatively small scale, but they are certainly pioneering. So I would refer you to the wire catchments, natural flood management project in Lancashire in England. That's why why are II and this is a partnership between the rivers trust looks at looks after this river wire and Flood Re, which is a reinsurer the local water utility, United Utilities and Co Op insurance and the Environment Agency to develop a scheme to develop a business basically that sells flood risk reduction. And it's estimated that within this catchment, the relatively small catchment in in Lancashire, the economic cost to insure us of flooding is at least in the order of 2 million pounds, and a year. And therefore, we're looking at ways of reducing that exposure. And there is now a scheme that's attracted just under a million pounds of repairable finance nine year project, which is bringing together those people who need flood risk reduction with the landowners who can provide it, and particularly the rivers trust. So that's a very exciting project, social investment tax relief, this formed part of the ability to raise the finance there. So that's the the wire. In looking to Scotland. There are some exciting schemes, particularly in relation to investment crowdfunding. So we can look at the work of Hyland rewilding. And they have been able to raise seven and a half million pounds to secure sites for rewilding. And that's been done by a whole mix of different investors. It's open to citizens, as well as philanthropists and others. And that's a very exciting project, because that's looking at not just creating a Highlands environment that's thriving for nature, but also one that offers employment opportunities as well and begins to make sure that Scottish rural communities are thriving. And they're looking at revenue opportunities through the carbon in particular. So those are just two two schemes I would identify around the world, there's all sorts of exciting work, which the Nature Conservancy is doing, including, for example, in Norfolk, England, with biodiversity net gain. And we can also look further afield to the US and environmental impact bonds are really big there. That's just a way of ensuring that finances and the projects provide are brought together and share the risk, which inevitably there is when you're trying to reduce flood risk, for example. The outcomes are sometimes uncertain. So there's lots of exciting work going on around the world. Our challenge is to make it discoverable, so people can learn, and we can begin to scale up,
Rosie 14:23
hopefully replicate what, what's been done, they said they sound really fascinating. Thank you. Now, one of the things we normally do on this podcast is ask our guests to sort of talk about the outcomes of cup 26 But you're slightly different because nature has its own cup cup 15 And this is clearly your specialism so can you let's have a chat about that. What do you think that cop 15 might achieve and why it's different from cop 26 Bruce?
bruce 14:57
Sure. I think a lot of these Conferences of the parties have these big international agreements. It's not so much about actually what's signed during the week of negotiations, but it's about the, the narrative, it's about the story and bringing the public on board with these issues. And I'm sure that will be the case. At cop 15. It's obviously it was the case that cop 26 It was as much a sort of citizens conference as it was for the political representatives from the civil servants who were there. But if at COP 15, or what remains of cop 15, we just have environmentalists and politicians banging the lectern with tales of woe and destruction of the world's nature. Or just issuing new dreams of harmony between people and nature, I think we will have failed. So the story is important here. But I think the big thing will be making on the big thing I expect will be that, just as at COP 26, we saw climate being linked to the condition of nature, I think I'd caught 15, we will see the plight of the world's nature, being connected with the plight of the world's climate. So I think that will be really important. But I really do hope that there will be an interest at COP 15. Again, in the finance side of nature, we assume that there will be a greater understanding of the supply chain dependencies that we all have citizens or organizations or governments supply chain dependencies on the state of nature, around well around the world. And I particularly hope that citizens will begin to see that their own personal finance, their pensions, they hold savings, and such like, are in intimately linked with the condition of nature around the world. And so that that connection between personal finance and nature, I think is a is a fantastic opportunity. And I really hope that will be taken at COP 15. So hopefully that gives you a flavor of what I hope it will achieve changing the narrative. Yes, but also some particular action in terms of finance.
Rosie 17:52
It'd be very interesting to see what the outcomes are. Now, you may be aware that in Guernsey financial services regulator, the Guernsey Financial Services Commission launched the world's first regulated Green Fund regime into verified green projects back in 2018, and which now channels more than 4.9 billion into verified green projects. Now, in the last week or so, we're very proud to have just launched another world firstly proposing a natural capital fund regime. The intentions are to direct capital to biodiversity and natural capital investments. And we're hoping it will also provide investors with the confidence that their investments into these funds are going to economically viable business models that are aligned to international standards on reporting and nature based targets, which will ensure transparency, good governance and mitigate the risk of greenwashing. We've seen that leaders in biodiversity finance has been calling for greater private investment and regulation to protect and restore the natural world. What do you think are the main challenges for well managed environmental markets and maybe talk around some of the opportunities and the methods to overcome those challenges?
bruce 19:11
Great. Well, thanks for asking. I'm involved in an initiative, a UK initiative called financing UK nature recovery at the moment, it's a process that's been going on for the last couple of years, over 300 organizations, public private third an academic sector have been involved in this discussion about what it would mean to have high integrity environmental markets operating serving both the land environment but but also offshore as well. And this is really important that we get this right because if the the the the transactions that there are The sales and purchases of credits, whether those are carbon credits or biodiversity credits, or whatever that might be environmental offering is we've got to make sure that it's equitable, that it's, it's transparent that people, everybody from citizens to, to the actual buyers will, we'll all kind of agree that this is working for nature, the stakes are also very high. Because the more we see, the more we think about it, public finances never going to restore nature. It's just simply impossible to imagine anywhere in the world, where public finance would be sufficient to bring nature back to a position where it's thriving, and therefore kind of doing what it should for our economies. So these environmental markets are important. What we need are the multiple things we need, we need to make sure that we have the standards and the codes that are everybody agrees on are reliable. To represent the improvements in the environment. We already have a woodland carbon code and a peatland code. But they need to keep up with advances in monitoring. So if you're looking at how much carbon is actually locked up, not just in the trees and woodland, but in the woodland as a whole the soils beneath. And that and the trees above the there's a lot of advanced, there are a lot of advances in technology there. So these, even the standards and codes that we've got, I've got to be kept up to date, but we need others as well. So salt marsh, for example, fantastic at storing carbon from the atmosphere. But we don't have a code for a salt marsh project. So we know it's reliable, and it really is doing what it says it will in terms of carbon sequestration. The same for farm soils as well. There is a code in development. But we've got to fast track these codes and make sure that they talk to one another. Because of course, if we're investing in the farmed environment, they may have bits of woodland under the woodland code that maybe carbon and farm soils that needs to be taken into account. We need all these codes to talk to one another. So the codes and standards are piece is very important as well, we need to get the monitoring and verification right. At the moment, it's very expensive to verify that the carbon really is there, or that the nutrient loss has been avoided. But we need to make sure that our national data in any any country can quickly provide both buyers and sellers with the data, they need to be reassured of the outcomes. And we also need government to set principles as well so that all this trading is equitable. And that's very important. Scotland has taken the lead with its interim principles on responsible investment in nature. But we need to see more detail on that. So that as all these financial transactions happen in environmental markets, the beneficiaries are actually the stewards of the land and the rural communities that are present. So hopefully that were these environmental markets are going to be you know, accelerating. And now is a challenge to make sure that within the different parts of the UK, in other countries as well and worldwide, that the environmental markets aren't the Wild West. But actually something that everybody would agree on are restoring nature delivering impact, and underpinning projects that are investable as well,
Rosie 24:27
which ultimately they have to be able to do now turning to the ecosystems Knowledge Network. Can you explain a little bit about the history of the organization and the work that it does?
bruce 24:39
Sure, yes. So I've had the pleasure of leading this organization ever since it was set up by government in Westminster and also Scottish government involved as well. And the challenge that was put to us back in 2011. When we we started out, it is the challenge we still work on today. A there are lots of policy papers now, which are talking about the value of nature, telling us that the environment is important not just for its own sake, but also for people's well being and prosperity. Back in 2011, there was an environment white paper for England. And that's when we were set up. And we were asked, please Would we show the white paper in action, this white paper called securing the value of nature. And along with government elsewhere in the UK, we set up as a network to put a spotlight on the the innovation that connects the environment, with well being and prosperity. And that we've continued to do over the last 10 years as an independent, impartial organization. We respect expertise wherever it lies in the in the in the nonprofits in, in businesses, water utilities, power companies, highways, agencies, whatever it might be, we're looking for clever things, things that connect environmental restoration with pressing issues like increasing flood risk, for example, or in the need to improve public health. So we're in we're in the business of sharing, understanding, we have a network of 3000 professionals across the UK and beyond people in Guernsey and many other places around the world as well. And but we were a positive organization we don't ever get involved in, in the negatives, the stories of nature's decline, we're interested in well, if we got the finance, right, and the partnerships, right, how could we actually restore nature? And actually, everybody be better off as a result? So that's, that's the network. And we've been working on this nature based finance question for the last five years, or no, it's also it's just one element of our, our work. Okay.
Rosie 27:20
So you've been working, as you said, to tackle environmental related issues for the past 14 years, what do you think has changed the most in terms of how the public views the environment? What do you think is driving the change and disinvestment into nature?
bruce 27:39
Okay, yeah, so a lot has changed. So the, I think we're seeing now the power of data, data that connects the things that people do and the things that they consume, with the condition of land, water, and nature. So we can look at a parcel of land now anywhere in the world. And it is possible to determine which financial services organizations have an interest in that parcel of land. It's also possible to work out which other types of business have an interest in land, particularly in relation to food, and fiber, and timber, you can trace virtually any consumer product around the world, and back to some bit of habitat, some place. So we've seen that we're, we're very rich in data now. And that's, that's a really big and positive change. I think another change that's happened over the years we used to, sort of when I started out my career, you know, decades ago now, there was this Polluter Pays idea that we had to identify the businesses that really were the source of, of environmental problems, and we had to do something about those businesses. They were the polluters. But now I think that there was a realization, because of the data and the media effort, that in a sense, every citizen, you and I and everybody else, we're all polluters, in one sense, we all have some impact on the natural environment. And I think we're beginning to face up to that reality. So this idea of Polluter Pays is, is being severely challenged now, I think. But what we don't have yet and I'm looking forward to I think we're on the cusp of it is the idea that every citizen Yes has impacts on the environment. But they're also a potential restorer of nature. Through the product choices they make, they could not just avoid harm and guilt, but they can drive good. And be proud of it. And you recall, I mentioned investment crowdfunding before the opportunity to involve all sorts of people in restoring nature. So, in short, the big change is access to data. We still have a lot of people who go on about reversing nature's decline. And they seem to talk about a moment when we'll get there. And somehow through their campaigns, through their their sort of advocacy. And through enough public finance, will suddenly have this blossoming moment when Hurray, we have nature back. I don't think it will be like that. I think by just focusing on the decline, we're not going to get very far, what we must think much more of coming back to Dasgupta that I mentioned at the beginning, is think about the positive economic case for restoring Nate. So that we haven't got yet, but we're on the cusp of it.
Rosie 31:17
We're very proud of our work so far with Guernsey, green finance ganseys initiative for greening the financial system. We are an integral member of the United Nations financial centers for sustainability. And we recently launched the world's first fundraising. As I mentioned before, our regulator has recently joined the TNF default, however we accept there is always more that can be done. What in your view, Bruce could Guernsey do next?
bruce 31:46
Well, I think important to say that you're already doing a lot in terms of your leadership. And we're really pleased to see that you've got your sights set on the natural capital fund, and you've embraced the nature positive agenda. But yes, there's always one, there's always more. I think, as I've mentioned, a number of points in our conversation, there was opportunity to engage citizens in nature, positive finance, we've got to think about personal finance and its relationship with nature. We can also do more to show the power of finance in securing what often people refer to as a green recovery. As we come out of the pandemic, people are looking for new economic opportunities. And I think we do when we talk about finance and nature positive, it's not just about the habitat and the species, it's about people. It's about rural economies, about local communities, and all the the economic opportunities that come when they thrive. So my suggestion would be, don't just focus on the kind of the hard nosed biodiversity think about nature and people together. And I'd also, of course, suggest being the one who's always on the lookout for projects in this emergent pipeline, to initiate some projects at home among the beautiful landscapes and the marine habitat that you have in the bailiwick. So now in particular is time to innovate in the blue economy, now's the time to invest in food products that can accrue a premium, because they are a restorative of nature. So, whenever we look at food products that we may purchase, we may we may be told that well, these have been these foods have been produced with without certain level of pesticide or, you know, the good for insect pollinators or that kind of thing. But I think there's, there's opportunity to both within Guernsey and elsewhere, to be looking at investing in food products that when people buy them that they feel they're not just buying that food product, but they're buying into a whole landscape, or environmental restoration outcome as well. So just a few suggestions from me.
Rosie 34:32
They're really, really great suggestions. Thank you so much. And yeah, I'm very much hoping that someone's going to be listening to this and be the person that takes it forward. Thank you so much for your time and your insights today. Bruce, it's been really interesting hearing about the ecosystems Knowledge Network and how you are working towards improving diet biodiversity across the UK, and equating it as a source of well being and prosperity. I'd like to offer Thank you for listening to today's podcast. We have quite a back catalogue of interviews and panel discussions on the Guernsey green finance podcast channel and you can check them out by searching for Guernsey green finance wherever you get your podcasts. And if you enjoyed today's episode please leave us a review or comment we always love to get your feedback. Now to learn more about the investable opportunities with biodiversity finance, and about guernseys sustainable finance offering you can now register and come to Guernsey for our sustainable finance week which is being held in Guernsey. between the 19th and 23rd of September. We'll be hosting market leading keynote speakers with informative panel sessions and an opportunity to network with global and Guernsey leading sustainable finance practitioners and you can also find us at Guernseygreenfinance.org and weareguernsey.com and interact with us on Twitter- @guernseygreenfinance and @weareguernsey you can hear more news relating to developments coming out of guernseys finance industry by checking the WE ARE GUERNSEY podcast on your preferred platform. We've also got links to Bruce and ecosystems knowledge networks, social media in our show notes, so check them out to hear more from them. And we'll be back soon with another edition of the Guernsey green finance podcast.
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My name is Rosie Allsop and communications director of we are Guernsey, the promotional agency for guernseys finance industry.
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