How to finance a nature-positive future and transform industries

getting nature on companies' balance sheets. Our  guests in that episode, Paul Bodnar, is Director of Sustainable Finance, Industry, and Diplomacy  at the Bezos Earth Fund. And he said this needs to happen in order to unlock financial flows  for nature. Esther Whieldon: In this episode, we explore how to unlock those financial flows with  2 guests who spoke on this topic at the GreenFin Conference in New York last week. GreenBiz Group  hosts the event and S&P Global Sustainable1 was

the sponsor. Today, we'll hear about the current  landscape from Dr. Carter Ingram. She's Managing Director at nature and climate change investment  and advisory firm, Pollination Group. And we'll also hear how venture capital firm At One Ventures  is investing in a world where humanity becomes a net positive to nature by supporting early-stage  technology. For this, we'll talk with Tom Chi, Founder and Managing Partner at At One Ventures,  which has about $0.5 billion in assets under

management. Lindsey Hall: As we'll hear today,  many companies depend on the services nature provides. At the same time, global biodiversity  is already in rapid decline due to human activity and climate change. 85% of the world's largest  companies have a significant dependency on nature across their direct operations. That's according  to S&P Global Sustainable1 research, and we'll

include a link to that in our show notes, if you'd  like to read more. Esther Whieldon: First up, let's hear from Carter, who starts off by  describing what Pollination Group does and her role there. Jane Carter Ingram: Well, thank  you for having me. My name is Carter Ingram. I'm a Managing Director at Pollination. I lead a  lot of our work on nature, including conducting major risk assessments with our clients,  helping our clients set nature strategies,

and exploring nature finance opportunities.  I work with a lot of companies in the food, fiber and ag space as well. And Pollination  more generally is a nature, a climate change investment and advisory firm. We have a joint  venture with HSBC in which we've committed to raising $1 billion to invest in opportunities  that deliver financial returns and also deliver outcomes for biodiversity and for climate.   Then we have Pollination Capital Partners,

where I sit, which is where our advisory business  is located. We also have other investment funds, venture capital funds, in which we're investing  in nature and climate tech. We also have project development funds where we support implementation  of nature-based projects related to climate change mitigation. For example, Delta Blue Carbon, which  is one of the biggest blue carbon projects in the

world. We also have a foundation in which we work  very closely with community groups and Indigenous Peoples to support nature-based solutions and  their engagement with environmental markets, and we also have a law firm. And our unique structure  allows us to work across the ecosystem of actors and stakeholders who are important for driving  the transition to net zero and supporting outcomes that are positive for nature. And that is core  to our mission. We are focused on catalyzing the

transition to net zero and supporting a transition  to a nature-positive future. Esther Whieldon: I asked Carter to explain what a transition to a  nature positive future means for Pollination. You'll hear her mention the TNFD. That's the  Taskforce on Nature-related Financial Disclosures. Okay. Here's Carter. Jane Carter Ingram: Yes. So  there's a big focus on nature positive right now and we want to support that transition and the  efforts to generate outcomes that are positive

for nature. I think we're careful not to say that  a specific organization can be nature positive, but we can all contribute to a nature positive  future. And there are still a lot of efforts underway to define exactly what nature positive  is and what that means exactly. We are focused on delivering outcomes that will deliver uplift  for biodiversity, will help restore and conserve biodiversity through the clients we work with  and through the investments that we make.

climate finance. What is really important, and  this came up a lot at the conference as well, while there's growing financing available for  nature-based solutions, the amount of money that's going into subsidies that degrade, that result  in the degradation of nature, far outpaces the

amount of financing going into nature. So we  need to address both increasing financing for nature that will support some of those positive  outcomes for biodiversity through restoration and conservation and sustainable management,  but also direct harmful subsidies away from activities that degrade or destroying nature.   Esther Whieldon: So earlier you mentioned how the amount of money that's actually going into nature  is quite small compared to the impacts that other

financing is causing. What are some of the ways  to solve that problem? What needs to happen to get the investments scaled up for nature? Jane Carter  Ingram: Yeah, that's a great question. And there's so many different components to it. There's a  policy in regulatory dimension. We need policies that basically incentivize positive actions  for nature: activities, management activities, development projects, farming practices that  support positive outcomes for nature. And

currently, a lot of our policies don't do that. So  we need a policy and regulatory environment that supports and incentivizes practices that generate  positive outcomes for nature. In addition, we need corporate action on nature as well and some of the  recent frameworks like TNFD, science-based targets for nature, are providing practical guidance and  frameworks on how companies can better understand their impacts and dependencies on nature and  how those translate into financial risks for

the company, for the business and for society more  broadly. And despite the fact that the awareness of the importance of understanding impacts and  dependencies on nature by business has been growing, very few companies actually understand  what their impacts and dependencies on nature are. That is really important for businesses to  take actions on nature. And the TNFD provides

excellent guidance on how to do that. And that's  important because one of the things we need to do that hasn't existed historically is understand the  value that nature plays in our economies and for businesses. And so being able to understand the  degree to which changes in your dependencies or impacts on nature can have a financial impact  on your business or on the economy is really

important. There have been an increasing number  of studies to basically understand the value that nature provides to economies globally and it was  mentioned at the conference that we need more of those. Several countries have done studies like  that recently, and we need more studies like that, so that governments also understand the value  that they have at risk, if nature is lost. And

the opportunity, the economic opportunities that  come from protecting nature. There are efforts underway to create natural capital accounts that  will, at the government level and corporate level, integrate the value of nature on to government  and corporate balance sheets, which should also support that as well. And in addition, we've had  the voluntary carbon markets and the nature-based carbon markets, which have provided an incentive  to support conservation and restoration of forests

that store sequestered carbon and that is an  important source of financing for nature. There's also new opportunities that are emerging like  biodiversity credits. There are other financing mechanisms that exist that could be scaled up or  enhanced to have a bigger impact in more locations like debt-for-nature, nature swaps, and blue  bonds, for example. And then there's opportunities to integrate the value of nature into existing  products and mechanisms like insurance or loans,

for example. Even though there are some  examples of that happening globally, it still is not mainstream. So I think integrating nature  into our existing financial system and economic system is really important in addition to those  markets that are explicitly focused on nature, either the carbon market or the biodiversity  credits or our conservation easements or things

like that, that were mentioned quite a bit at the  conference. Esther Whieldon: Great. So I think you've touched on quite a few themes you heard at  GreenFin, was there anything you didn't get to or you wanted to talk about before we close out our  discussion? Jane Carter Ingram: A few things that were mentioned that I think are really important  is that we tend to invest in things that are often easy. There is a great keynote that said a lot  of times we invest in things that are easier to

invest in when it comes to climate change. For  example, it's an easier investment case when you think about like a decarbonization plant versus  he used a great example of investing in beaver dam reconstruction, where beavers are amazing at  creating these structures that can take sediments in waterways and basically bury them and store  away all of that carbon for long periods of time. But we don't know how to pay for that or invest  in that even though that can be an incredibly

effective way to address some of our climate  change problems. And so this mismatch between what is currently possible to invest in, but what  can give us the biggest impacts for nature and climate, is a challenge I think we all need to  address and bring some of our best minds around the table to try to solve. Esther Whieldon:  That keynote speech Carter just mentioned was given by our next guest, Tom Chi, Founder of VC  firm At One Ventures. In the keynote, Tom said,

"The things that are easily financed and enclosed  are things that are tradable." And he went on to say that people are sometimes investing in  expensive low-carbon projects when nature can provide that same service. For example, he  estimated that about 200 beavers could do the job of a large direct air capture project that is  being built in Texas. But as Tom and Carter noted, it's harder to figure out how to encapsulate  the financing for a budget beavers building

dams. With that, let's turn to my interview with  Tom, who starts off by describing the firm and his background. Tom Chi: I'm Tom Chi, Managing Partner  of At One Ventures and [the] purpose of the firm is to help humanity become a net positive to  nature. Esther Whieldon: And then you have a scientific background, right, in engineering? Tom  Chi: Yes. So I have both science and engineering background, so I'm trained in physics and  electrical engineering. I was a working physicist

for 6 years. I did astrophysical research on  active galactic nuclei star-forming regions, published papers, did peer reviews, all  that kind of thing and then moved into the engineering side and built lots of things in  terms of hardware, software, mechanical systems. My electro-engineering specialty is in robotics  and signal processing. I am named inventor on 77 patents, patented maybe 3% of what I built,  yeah 4%, something like that. Esther Whieldon: So

quite busy. Tom Chi: This stuff is just really  inter[esting] -- I find like solving problems and inventing things like very fun to do. Esther  Whieldon: So can you give us a sense of what At One Ventures, what's your size, kind of where do  you focus your investments in and that kind of thing? Tom Chi: Sure. Yes. At One Ventures does  early-stage investments. Our first fund was $150

million. Second one is $375 million. We also have  a follow-on fund that we're aiming to be between $100 and $150, just did first close on it.   Yeah, I guess altogether, we have a bit over $0.5 billion in terms of assets under management.  And yeah, the goal is to go use that to go and find the companies that have the kind of tech that  can rewrite how entire industries work, right? Because the name of the game is not just getting a  useful product out in the world, which is actually

fine for regular venture. Regular venture, you  get a useful product out in the world, a bunch of people use it, you make money off of it. Life  goes on. If the purpose is to help humanity become a net positive nature, well, the way that we do it  is: Nature to us, the physicality of nature can be described in 4 physical subcomponents: air, water,  soil, biodiversity. And then within each of those subcomponents, we can stack rank the industries  that are currently doing the most damage to that

subcomponent. So for example, over 90% of global  water pollution comes from just 4 industries: agriculture, textiles, paper and pulp, oil and  gas. The agriculture one is the biggest one by a lot, but those are the 4. Now if you wanted to go  deal with more than 90% of global water pollution, all you need to do is change how the unit  economics of how those 4 industries relate

to water. The way that we change it is through  something that we call The Triad. The Triad is a disruptive deep tech, which ushers in radically  better unit economics, paired with radically better environmental economics, that package of  all 3. And man, there's a lot to say about this already, like there's this mistaken belief that if  something is economically better than it must be ecologically worse and vice versa. And what we've  seen from looking at -- we have screened about

6,000 - 7,000 companies at this point to build our  portfolios between the first 2 funds. What we've seen is that about 85% of the time, that's not  true. An example of The Triad is we invested in a company where the deep tech is a new type of  textile dying machine because textile dying is

where a lot of the water pollution from textiles  come from. It has 2x to 3x better OpEx. So instead of costing $0.28 to $0.35 to go dye a standard  length of fabric, it costs us $0.09-$0.15, which actually means if you're not doing it our  way within 10 years, we'll probably be putting you out of business. But notably, instead of  generating multiple metric tons of wastewater per day, our system generates about 1 to 3 ounces  of wastewater a week. So this would take textile

dying from being one of the largest polluting  industries in the planet to basically zero. And to the point that I was just making, the reason  that the unit economics are better is the exact same reason that we have less water pollution,  which is if you look at the cost structure of textile dying, most of the cost structure goes  to heating up water. So if you use way less water

to do textile dying, it turns out that you also  make it way cheaper. It turns out that you can't actually change textile dying by changing the  labor fraction of the cost, because textile dying happens in places in the world where people are  commonly paid like $50 to $70 a month. So there's kind of nowhere else to cut. Esther Whieldon:  Can't go any lower. Tom Chi: Right. Relative to

labor cost and not to say that, that should always  be the solution. And actually, this is what's great about the way that we are approaching things  because unlike a lot of venture where it's almost kind of like what's the flavor of the month, what  are the new deals that are coming down the line, where you are not able to build a deeply accretive  base of knowledge. Then for us, like we know exactly what it is about textile dying, which  is causing the problem, which means we can get

deeper and deeper at that thing. We can analyze  the cost structure of that in a way where it makes it apparent to us, the types of technologies that  could dramatically change that cost structure in a way that would also improve our relationship to  nature. Esther Whieldon: So you become experts in

these industries. Tom Chi: Yeah. We're able to  get unusually deep on things. And it is not a commonly used term outside of the industry, but I  have some colleagues that call it "venture brain", which is almost like a variation on ADHD where  it's like, "Well, yesterday, I was looking at glow in the dark shoelaces and, tomorrow, I'm  looking at generative AI for dogs. And you don't end up getting that deep when your pace of work is  like that. For us, the industries that have been

damaging our relationship to nature are kind of  the same ones for the last 50 years. It is these industries that we make the physical world out  of. And it is time for us to go back to that and actually do the hard work again. We got to do  the industry's different foundationally. It's not just a -- well, if I put a little enterprise  SaaS layer or... Esther Whieldon: And SaaS is?

main game. I'm not against the idea of that,  of any companies being funded in that space, but they're highly out of proportion right  now, which basically shows that, yes, we're not really thinking through and investing  in a way that looks like we're trying to win the game, right? Like sometimes you see some folks  playing a sport and it's like, "Oh, no, they're not really playing to win. Look at that, look at  the behavior, like look at how they're dribbling,

look at the passing game," like whatever. It's  chaos. And we're kind of there, right? We say that we're trying to go hit the de-dimensionalized  goal of carbon, where we're fully missing it. And then we're killing a lot of things beyond that,  that because we have overly concentrated in this game. Esther Whieldon: Does your organization  -- does it focus primarily on nature? Or does it include a climate component as well? Or is that  considered to be part of the same thing? Tom Chi:

Yes, climate is part of nature. I think that like  -- I don't have any like deeply visceral negative reaction to using the word climate instead. But  the one thing I would push back on is a lot of people use climate as a synonym for carbon. And I  was like, "Oh, this is a de-dimensionalization of the work that is so intense that it is going to  impair your work, right? So sometimes you state a problem and you want to simplify it a little bit  to be able to communicate it, and that's kind of

fine. But there's levels to which you can simplify  a thing where you have simplified it so much, you're now working on the wrong problem. And I  was just, you mentioned, in my talk about like, "Hey, people apparently care about carbon.  Because of that, we're willing to go fund these multibillion-dollar direct air capture plans."  When, honestly, there's a lot of stuff in nature

that would surpass its capability and the example  I gave was beavers. But that's us like fully missing it because we've de-dimensionalized  the game into just one metric that we got to move. And then we ask ourselves, like, okay, what  are the things around that are the most obvious mechanical this than that. And once you're down  that route, you're down the wrong route, right?

So I started my talk today by saying like we're  losing the battle really badly. When I say that, a lot of times people immediately move to, "Yes,  because we're already over 1.5 degree C." And that's true. But that, to me, is an example of the  de-dimensionalization where the actual examples I gave instead of that was that WWF basically  said we've kind of cleared out 70% of the wildlife on planet earth in the last 50 years. And  recent reports on coral reef bleaching basically

shows almost half of the corals on planet earth  have died in the last 1.5 years. We're really, really failing outside of the singular metric  of carbon, and we're still failing at the carbon metric, too. And this is why I push back  a little bit on the de-dimensionalization, the denuancing of things that require nuance  to succeed. Esther Whieldon: We're at the Green Finance conference, what message do you  want financial institutions to come away from,

from what you said today and, in general, for  those listening in on this? What do they need to do differently? Tom Chi: I don't know if this  is too radical a concept, but one thought is that there actually is no such thing as an externality,  it just means that you drew your system lines wrong. And if one wants to keep the idea of an  externality, I would actually flip it around, which is the economy is an externality to nature,  right? Like nature is way, way bigger than the

economy in terms of the energy that it uses, the  productivity that it creates. The human economy is like a tiny subset of that productivity, a  tiny subset of that energy, right? Like we, as a civilization, use 0.6 exajoules of energy per year  right now. But the things that we've done to the

climate have already added 400 exajoules of energy  to the ocean. So think about 0.6 compared to 400, that's like almost 100x difference in terms of  the energy that humanity actually uses in its tiny little feeble economy versus the scale of damage  that we're doing in the ecosystem because of it and the type of energy that's in the ecosystem,  right? It's a very egoic position to be like, well, look, how important we are and the global  economy is the most important thing. And how do we

deal with this little side issue of nature. It's  like, no, no, no. Nature, number one, is going to outlast us. It's really just a question of  whether we leave a big pockmark in the history of life on earth, whether we drive the sixth mass  extinction and wipe out 90%, 95% of biodiversity in planet Earth. And then the fossil record will  eventually show that it will recover over about

10 million years of re-evolving different species  and all that kind of thing. But it would actually kind of suck because we might lose 5 million,  10 million, 20 million years of biodiversity in earth's history on a planet that doesn't have  forever to go express all the life that it's going to express before the sun swallows up the planet.   Esther Whieldon: We have like 2 minutes left here. Can you give us a couple of more examples of where  you invested? Tom Chi: One of the ones that people

like to talk about a decent amount is we backed  the first vaccine to protect honeybees. And we took it from pre-approval to now USDA approved and  rolling out. And we are seeing, it improves the health of a hive broadly even before an outbreak,  but it absolutely protects against outbreaks of some bacterial diseases for bees. Also protects  against a deformed wing virus. But that's an example of a thing you're not even going to think  about if you're focused just on the carbon metric.

Because how much does the bees change the carbon  metric? Well, not that much directly. But a thing to go know is that the majority of biomass  on planet earth is plants and the majority of plants on planet earth are angiosperms, they're  flowering plants. That's about 80% of all plant species are angiosperms. And angiosperms are  obligate mutualists, they require pollinators in order to go and exist in the world and bees and  flies and some birds and rodents and all sort of

thing like -- and bats, are the pollinators. And  when you go and wipe out that type of population, actually, you are affecting the carbon balance  of the plant earth, but it requires a little bit more nuanced understanding of what becomes  what as opposed to, well, how does this become a carbon metric? I don't understand how bees are  carbon, and it's like, "Well, you would if you just understood a little bit more about biology  on planet earth." Esther Whieldon: So any last

thoughts before we close out? Tom Chi: You know,  what I would say is that we need to prepare like given what time it will actually take, even  if we can magically snap our fingers and have everything repaired today, atmosphere back to  what it was before in the industrial revolution, all sort of thing, it would still take 70, 80  years for the icecaps to refreeze. So I think we need to think about the repair of planet  earth as a multigenerational project that

will take a couple of hundred years. The purpose  of our firm is to help humanity to become a net positive to nature. I think the most realistic  time frame that we could actually achieve that mission is between 200 to 500 years. Now that  said, it doesn't mean there isn't important stuff right now. Actually, right now, we are  basically setting the rules of the game as to whether it's going to take a couple of trillion  to solve the problem, $10 trillion, $100 trillion

to solve the problem, right? If we do the wrong  things in the next 10, 20 years, it's going to cost hundreds of trillion, and we'll get to the  point where we just don't even want to pay for it, we'll just say, well, nature will die because it's  too expensive to save nature. If we're able to do a lot of the important things that we are meant  to do in the next 20 years, then it might just be a couple of trillion [dollars]. And in fact, you  might save money on it because more than trillions

of dollars of infrastructure would be damaged if  you hadn't headed it off. And I think we're right at that cusp right now where the cost of not  doing it is actually starting to substantially exceed the cost of actually fixing these problems.  And it means that this is a really critical moment in history. We can still fix it. We can still  turn this trajectory. And right now, it would be cheaper to fix it than to allow $1 billion  or $10 billion of storm damage or fire damage or

flood damage or mud slides or heat domes. Like  everything that we're experiencing right now, every single time one of those events happen, oh,  that estimated another $5 billion of damage. Well, that's real money. So the idea that like a  $5 billion can just like disappear because we didn't adapt right and the heat dome like melted  a bunch of infrastructure. You're like, "Oh, gosh,

we are spending the money right now." And we're  spending the money to end up with a damaged world as opposed to spending the money to end up with a  repaired world, and a world that's on trajectory for humanity have a lasting relationship to  nature, where we get to be part of earth's history for a good long time. We're not on that  track right now. Esther Whieldon: Great. Well,

thank you so much for talking to me. Tom Chi: Yep.  Thank you. Esther Whieldon: Today, we heard how At One Ventures looks for early-stage technologies  that can rewrite how entire industries work. One example he gave was how they significantly  reduced how much water is needed to dye textiles, which also cuts the cost of the process. Tom also  said that the decisions we make in the next 10 to 20 years will determine whether we are spending  money to end up in a damaged world or one that

can repair itself over time. Lindsey Hall: And we  heard from Carter how companies are increasingly aware that they need to understand their impacts  and dependencies on nature. This is an area that S&P Global Sustainable1 has been working on, to  help companies understand and measure. We will include a link where you can find out more about  our data in our show notes. Esther Whieldon: And please stay tuned next week as we explore  more key themes that I heard at the GreenFin

Conference. Lindsey Hall: Thanks so much for  listening to this episode of ESG Insider. If you like what you heard today, please subscribe,  share and leave us a review wherever you get your podcast. Esther Whieldon: And a special thanks to  our agency partner, The 199. See you next time.