Regeneration: An approach to addressing the ‘E’ in ESG
4th May 2016, Royal Institution, London
At the beginning of May, Synchronicity Earth held a Regeneration Breakfast at the Royal Institution. These grand surroundings provided the perfect backdrop for us to introduce a new funding drive called the Regeneration Portfolio.
What is the Regeneration portfolio?
The Regeneration Portfolio is an exciting new initiative from Synchronicity Earth which, put simply, aims to encourage businesses, in particular, investment management firms, to contribute funds to a select group of our project partners who are currently engaged in vital regeneration work restoring natural habitats. The key to this new approach is the opportunity it offers for businesses to improve their environmental footprint and demonstrate their commitment to the often neglected environmental component of ESG (Environmental, Social and Governance) criteria.
This approach, whilst it may share similar ultimate aims, is not the same as impact investment. Regenerating landscapes requires an input of funding to re-establish growing conditions and nurture and monitor the regeneration, whilst impact investing is about funding sustainable economic development with specific environmental and social benefits with a financial return. Instead, what the Regeneration Portfolio offers is a meaningful way for businesses, with complex investment strategies, where analyzing the environmental impact of portfolio constituents is not straightforward, the ability to start addressing their environmental responsibilities and fulfilling their own ESG criteria. The Portfolio provides a range of curated projects which have had a proven, long-term impact in preserving and/or restoring ecosystems whilst at the same time helping to enhance the livelihoods of local communities in and around biodiversity hotspots around the world including Ecuador, the Philippines, Borneo, Uganda and the Zambezi river basin.
Is regeneration the same as carbon offsetting?
Overwhelmingly, carbon credit and offsetting schemes have been seen as the answer for many businesses looking to offset their emissions, and this focus on emissions, whilst in some ways welcome, has tended to draw attention away from the myriad other ways in which business activities can have a negative impact on ecosystems and people. Add to this the fact that carbon offsetting schemes have often been rightly criticised for, among other things: allowing companies to opt out of tackling their own carbon emissions; lengthy supply chains which leave significant room for error and fraud; schemes which grab land from communities in order to ring fence them for schemes which often fund mono-culture agroforestry with an indefinite time horizon to harvesting. In short, carbon offsetting is far from being a perfect solution, and there is space for new mechanisms which take a more proactive and holistic approach, building on rigorous research and community knowledge to develop more sustainable solutions to ecosystem degradation.
The Regeneration Portfolio offers an alternative
Through rigorous research and the cultivation of long-term relationships, Synchronicity Earth is uniquely positioned to connect businesses concerned with ESG to projects on the ground around the world which have proved themselves to be effective at regenerating degraded ecosystems, whether these are forests, mangroves, wetlands or coral reefs. The projects in the Regeneration Portfolio have a common approach: they all work closely with local partners and communities, understand that regenerating an ecosystem is a long-term commitment and that, in order to be successful, the key is to help to recreate conditions which allow nature to thrive and do what it does best.
What did the event aim to do?
The event itself was attended by an audience of around 100 people, mostly from the investment and fund management sectors. They heard thoughtful contributions from Simon Ruddick (Chairman, Albourne Partners Ltd) and Kevin Gundle (CEO, Aurum Fund Management Ltd), who both spoke of the path that had led them to become involved in regeneration, the importance of thinking about environmental impact and the need to fulfil ESG Criteria as well as the momentum gathering in the investor community for investment managers to report on their ESG commitment and impacts.
Perhaps the highlight of the event was the opportunity to hear in person from one of our project partners, Isabelle Lackman, head of Hutan, a French NGO which has been working to restore tracts of forest and wildlife habitats in Malaysian Borneo. She gave an impassioned exposition of her 20-year involvement in this project, allowing the audience to get a flavour of the positive impact this type of project can have, not just on a threatened ecosystem but also on the communities living in and around it.
The encouraging turnout for the event was testament to the interest there is in the environmental side of ESG Criteria. Ultimately, the aim was to drive funding towards our projects. Yet, with so many influential figures in the finance world in attendance, our hope is that, at the very least, some people will have been given some food for thought to go with their morning coffee. It is also probably not everyday that a fiery and passionate French conservation champion like Isabelle has a captive audience of fund managers and finance gurus… all in all, they seemed quite impressed!