cropa new way to invest in nature at scale, launches its ‘Triple Crisis Action Plan’, a new plan to tackle the worsening planetary triple crisis of global warming, biodiversity loss and water stress.
As the world processes the latest IPCC report (Sixth Assessment Report), Cultivo is intensifying its efforts to combat crises by channeling investments, particularly private capital, towards projects that address the triple planetary crisis.
The need for urgent action to deal with the triple planetary crisis:
- Climate change: The global surface temperature was 1.09°C higher in the decade between 2011 and 2020 than it was between 1850 and 1900. The past five years have been the hottest on record since 1850. The recent rate of sea level rise of the sea has almost tripled compared to 1901-1971
- Biodiversity loss: Wildlife populations have declined, on average, 60% since 1970, and there is potential for our actions to cause the loss of 1 million species.
- Water stress: 2.3 billion people live in countries with water stress, of which 733 million live in countries with high and critical water stress. Water stress is a global crisis and seriously affects many developed countries. For example, as of May 2021, 41 of California’s 58 counties were in a declared drought emergency.
By 2050, the total investment needs for nature-based solutions will total $8.4 trillion cumulatively, reaching more than $536 billion per year, four times the amount invested today.
Currently, only 14% of financing for nature-based solutions comes from private capital. Scaling investment from private equity firms is critical to cover the trillions of dollars of funding needed. Based on primary research with financial institutions, corporations, and foundations, Cultivo releases its 5-Step Action Plan to Help Unlock Private Finance in the Wild.
1. Offer nature as an attractive asset for investment
For investors, it is often very difficult to evaluate a nature-based project as an investment. Where does the money come from? How do you generate a return? Cultivation’s new plan packages nature-based solutions into investment products, showcasing financial, social and environmental returns.
2. Use technology to reduce transaction costs and create market efficiencies
i) For financial institutions, the cost of seeking out and originating high-quality nature-based projects is very high.
Cultivation’s new plan will leverage proprietary algorithms and remote sensing technologies to reduce the transaction costs involved in identifying high-quality, nature-based solutions.
- Cultivo uses an in-house sourcing and origination team to do the “heavy lifting” and identify the best assets to invest in.
ii) The cost of ongoing monitoring of projects can be high and impact a project’s margin.
- Cultivation Technology Hub uses its own tools and third-party tools to provide digital MRV (monitoring, verification and reporting) to monitor the vital signs of a project and reduce monitoring costs.
3. Take a holistic approach
• It is important not to focus only on carbon. The new Cultivation plan takes a more holistic approach.
• Cultivation assesses the ‘Natural Capital Density’ for each project, which means each layer of the services that nature provides (water, biodiversity, carbon, food, etc.)
• The Crop Technology Center has tools to analyze the impacts of water stress, loss of biodiversity and climate change.
4. Measure the right attributes and choose the right standards
- When investing in nature on a large scale to create genuine impact, finding the right standard that addresses multiple issues, not just one, is essential. CCB from you will see is a good example of the standard applied to investments supported by Cultivation.
- The new action plan will also ensure that each project has built-in environmental and social safeguards.
5. Make data transparent
- Lack of data disclosure is a major impediment in the market.
- Cultivation’s approach ensures that all nature-based project data is transparent to all stakeholders from start to finish.
Commenting on the launch of the new action plan, Dr Manuel Pinuela, co-founder and CEO of Cultivation, said: “It is critical that we take a holistic approach when it comes to investing in nature. The triple crises of climate change, biodiversity loss and water stress are interconnected and must be tackled urgently together. We can no longer afford complacency: the future of our children and grandchildren is in grave danger. High-quality nature-based solutions can address these triple crises and we need to unlock investment in nature at scale and speed.
“We hope that the forceful nature of this year’s IPCC report will help galvanize us all into action and give private financial institutions and corporations around the world the motivation to work with us and embrace the plan we are launching today.”
Francis Bignell
