The global goal of ending deforestation by 2030 is in jeopardy. To meet this ambitious but important target, we simply can’t afford to not invest in the solutions that will help us to protect and restore nature within the next six years.
Nature based solutions often fall into the category of climate tech, but investments in nature should look very different to those in technology-based solutions. The protection of our forests won’t offer the same returns as a clean tech innovation. Instead, investors should prepare themselves for an opportunity more akin to traditional infrastructure investments.
Financing the green transition, and importantly accelerating investment at the speed we need it, will require reform of the current finance systems to attract capital from outside of short-term funding routes. To do this, it’s crucial the investment industry understands the following three things:
- There’s no such thing as green unicorns.
Investors mustn’t make the mistake of viewing nature-based investments like the dotcom boom of the early 2000s. It’s not about throwing money at a young tech whizz with a great idea, a hoodie and a laptop – and rapidly ending with a startup valued at $1 billion. Such mythical creatures don’t exist when it comes to the investments needed to restore and conserve the natural world.
- We must look beyond VC investment.
Private climate tech investment is often associated with venture capital (VC). But it’s becoming increasingly recognised across the green tech sector that our technologies aren’t suited to this investment model.
VC relies on high risk, repeated investment cycles and, potentially, quick high returns. However, these planetary issues are too big to ‘app’ our way out of. They require real-world solutions, large amounts of resources and a long-term perspective.
- This is a global infrastructure upgrade.
The sheer scale of nature-based projects means they don’t offer quick, high-risk wins. To protect and regenerate our forests, soils, mangroves, peatlands, biodiversity habitats, wildlife populations, air quality and water bodies, we need large scale infrastructure projects that require high and long-term investment. Generating steady returns over quick wins, it also offers the opportunity to have a significant part in the protection of our planet.
At A Healthier Earth, we devise and implement such projects. As a case in point, our ForestFactoryTM is all about creating the huge volumes of locally relevant and hardy, climate-change-resilient tree saplings needed to drive global reforestation efforts. It will help us plant and grow entire new forests, which is not something that can happen overnight.
We are also working on a project in the UAE to transform desert into farmland by turning green waste into the soil-friendly charcoal known as biochar. When added to local sandy soils, it improves their fertility and ability to capture and store carbon dioxide. Again, it’s not a quick fix. To be done right, both its scale and timeframe are significant.
As the climate and biodiversity emergencies escalate, we need institutional private equity to close the funding gaps, so nature and climate tech companies can deliver impacts at the scale required. But finance sector leaders need to understand that the investment opportunities presented by our green tech innovations aren’t the same as a traditional tech startup. That being said, the best ones offer not just strong, long term and stable financial returns – but the ability to play an essential role in creating a viable future for everyone.