07.06.21

My quest to invest in nature and make a natural buck

An angry bee hovers in front of my eyes as I read the Financial Times on my phone. The bee (above) has been co-opted by Lombard Odier, the venerable Swiss bank, to star in an advertisement about investing in nature with the catch line: “industrialist” (get it?).

This is part of a series of ads and social media posts by the bank that carry a decidedly non-banking message:

“If we are to build a sustainable future, we must see nature in a different light. One where nature is at the core of our economic and ecological systems. Now is the time to transition to a Circular, Lean, Inclusive and Clean (CLIC™) economy. We view nature as the world’s most valuable industry. Learn more about our natural capital strategy…”

Targeting

Given that I believe all they say about the precise targeting of online ads, I’m convinced that Lombard Odier feel that I am the sort of person they want to do business with.  They will devise my very own CLIC™ investment strategy to put my spare pennies to work for nature and me. I click to find out more.

It turns out that the bank has been persuaded by some clever branding agency to publish web copy that competes well with the sort of vacuous stuff one reads on the websites of branding agencies.  Its alliterative messaging leaves you hugely impressed by the writer’s semantic contortions, but no wiser about the bank’s offer.

When you look more closely at the bank’s proclamations about nature, the arguments are the same as those that environmentalists have been making for decades. 

  • Nature underpins our economy
  • We are destroying nature
  • We must cease before we destroy the economy and ourselves.

My reading of the bank’s promise is that they have a clever way – CLIC™ –  of investing my money that will avoid this risk and make me more money while also saving the world.  Bring it on!

Pollination

Lombard Odier is not alone. They, HSBC Pollination Climate Asset Management and Mirova, an affiliate of Natixis Investment Managers, are the three founding partners of the Natural Capital Investment Alliance established by Prince of Wales under his Sustainable Markets Initiative.

According to the Alliance, it “aims to accelerate the development of Natural Capital as an investment theme and to engage the USD 120 trillion investment management industry and mobilise this private capital efficiently and effectively for Natural Capital opportunities.”

It’s easy to dismiss pioneering initiatives like these because their pronouncements carry a distinct whiff of virtue signalling. But the reference to investment “opportunities” is key. What are they? Can I invest in bumble bees and make a return?  Or how about important ecosystem services, such as fresh air? 

You can’t disagree with the Alliance’s sentiment, but it’s really hard to find the substance behind the signalling.  The truth is that there are very few investment opportunities in nature. We can readily identify the risk to our economies from our plundering of the natural world.  We can point to the irony of our self-cannibalising actions as we destroy the very thing that sustains us. But greenies have been warning us about this for decades.  It’s good of the more enlightened in the investment community to confirm it, but what’s different now?  Is the Alliance going to devise a way of putting a price on nature in way that will attract investment?  I hope so.

Pricing

It’s indeed possible to put a rough price on a honeybee because it makes honey (which sells) and pollinates the commercial orchards (charged by the commercial bee owner).  But what about the chubby bumble bee which we all love but makes no honey?  Or, for that matter, the lowly warthog? Both serve a natural function, but their value is not fungible.

The only tangible (if dodgy) natural capital investment opportunity today is the use of nature to offset carbon emissions. You can put a price on planting a tree and keeping it alive for a long time because there are lots of companies out there who want to offset their carbon emissions and will pay you for living trees.  This is because governments have signed up to the Paris Agreement to cut carbon. It’s policy, stupid. 

Policy creates the need and it’s the financial brains who devise the mechanisms to make investments happen. Without suitable government policies it’s impossible for business – and that includes the investment community – to create the opportunities to make a natural buck for me.  

Fawning

Prince Charles has been brilliant at using his royal clout to knock fawning heads together to create social and environmental change. But it has taken him and an army of sustainability gurus many decades to get the investment community interested in ESG.  And that interest is primary the consequence of the Paris Agreement. 

Without broad political agreement that nature must be protected, it seems highly unlikely that the likes of Lombard Odier will create the mechanisms for me to make a buck by investing in nature.  

We’re going to need many more Paris Agreements before that Lombard bee becomes a money-spinning industrialist.

Photo: Lombard Odier

    

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Author:
Peter Knight

Chairman and co-founder

Clients:
IKEA, A Global packaging company, A leading global food company




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