Investing in nature tech is a win-win for the planet and the economy. Image: Pexels/zhang kaiyv
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- There is a growing demand for sustainable products and services.
- This is creating new opportunities for businesses that are developing nature-based solutions.
- “A wave of VC (venture capital) cash has washed over the industry in the last 18 months,” one business leader said.
Over 3,000 low-level satellites are constantly orbiting the Earth, sending back high-resolution images and data that shows the destruction of nature, and how it is responding.
An army of companies are using this information to help investors and corporations create projects that will slow deforestation and start to re-build ecosystem services. By analysing the data, explains Murray Collins, co-founder of Space Intelligence, we can help “quantify the historical changes to create a baseline for what's happening”.
Space Intelligence provides nature data and digital monitoring systems for nature-based solutions, as well as working with corporates and asset managers to offer due diligence and digital monitoring, reporting and verification (MRV).
The company has recently become the main data partner for Everland Marketing, a U.S. business representing a portfolio of high-impact forest conservation (REDD+) projects in south-east Asia, Africa and Latin America. Everland is using the data to build a comprehensive view of changes in land cover across the sites.
Apple is also using Space Intelligence’s remote sensing technologies as part of the expansion of its Restore Fund, which champions nature-based carbon removal projects. Space Intelligence is creating habitat and forest carbon maps to help to quantify the projects’ carbon removal impact.
“A wave of VC (venture capital) cash has washed over the industry in the last 18 months,” says Collins, and there is a growing focus on nature and climate tech solutions.
Pratibha Vuppuluri, head of investment at the Unreasonable Group, is partly responsible for this wave. The business, whose name is a nod to the dogged determination needed to take on massive global challenges, also runs the Unreasonable Collective, a club for investors, largely made up of high-net-worth individuals and representatives of family trusts.
The collective is trying to pull down barriers, such as pressure to become part of an investment syndicate, and improve access to sustainable investment opportunities, she says, recognising that “individuals want to put a portion of their own money into something good”.
Around a thousand ventures are screened every year, with the best offered fellowships in Unreasonable Impact, before being introduced to potential capital partners.
At the moment, says Vuppuluri, the key focus areas are ecosystems restoration technologies; oceans conservation; reducing land use through efforts around cellular agriculture, including lab-grown cotton and cocoa; and work on higher agricultural yields and carbon sequestration.
The collapse of the Silicon Valley Bank (SVB) has dented confidence in climate tech, she says. “VC funding is down and there is fear in the market”, with high interest rates also making investors more risk-adverse.
The SVB was designed for the startup ecosystem, and its penetration in the sector was significant, she explains, with over $3 billion of a tabled $5 billion deployed before it collapsed.
Historically, she says, climate tech has been a hard market to invest in, with many startups over-valuing themselves. Now, she says, things are more realistic. “We are seeing a stronger focus on evaluating the fundamentals of the startup. We are seeing reduced equity pricing, which is helpful, because two or three years ago ... you were fighting to get on to the cap (capital) table.
“Venture-backed technology companies now need to show … hard metrics to say that their company is the one that will make it,” she says. “So if there's any time to invest, then it's the next two years.”
Although now well-established, Novihum Technologies is one of the businesses that has worked with the Unreasonable Collective. The company uses lignite, a type of coal, to help boost soil health. “By modifying the chemical character of lignite it becomes indistinguishable chemically from some of the best components you find in healthy soils,” explains chief executive, Andre Moreira.
The lignite is crushed, and the granules blended with fertilisers or applied on their own, stimulating microbial activity in the soil, and encouraging root development, which helps the soil to sequester carbon.
The pay-off for having to mine the material in the first place is that it offers farmers an alternative to artificial fertilisers, which when overused degrades the soil.
The company is now working on ways to use lignin, a close cousin of lignite, and a byproduct from the paper and pulp and bioenergy sector, as a soil enhancer. “I don’t see any solution out there that can address climate change without having soil at its core,” Moreira says.
Scaling up has been a challenge, he continues, “because we don't have an IT-based solution... (which) means you have to invest in steel, and iron and people and production.”
The business has benefited from several rounds of VC investment, but the long cycles involved in the agricultural sectors can put people off, Moreira says: “Investors realise that they can get money faster in other areas.”
The science of environmental DNA (eDNA), the nuclear or mitochondrial DNA that is released by organisms into the environment, is central to the biodiversity data gathered by NatureMetrics, another tech company that has ridden the wave of VC investment.
NatureMetrics analyses soil and water samples to test for the presence of a vast range of species, from the smallest bacteria to blue whales. It’s also a standardised method that can be applied across a range of different habitats.
According to Stefanie Kaiser, the company’s head of nature-based solutions and carbon markets, in the past “the big barrier to quantifying biodiversity was the lack of consistent data on nature.” Now that is changing, and nature data is set to become the “next carbon” for data disclosure, she says.
By measuring and distilling the complexities of biodiversity into something that makes sense in the boardroom, she says, we are helping businesses track their impacts on biodiversity, a particular boon for those business moving towards the framework set by the Taskforce on Nature-related Financial Disclosures (TNFD.)
The science is playing a major role in regenerative agriculture, with more investors looking at the issue of soil resilience, says Kaiser, whose tests can show nutrient levels in the soil, alongside the presence of earthworms, fungi and bacteria.
For agriculture and forest restoration, she says, the idea is to “find a correlation between what we do above the ground and what’s happening below”.
For instance, NatureMetrics is already working with Forestry Research in the UK to see how soil fungi relates to different tree species, which then drives planting programmes.
It is also partnering with Nestle to explore the potential of seaweed as a bio-stimulant on cereal crops, supporting the project with soil carbon analysis and eDNA soil biodiversity testing. Using seaweed as an alternative to artificial fertilisers brings the additional benefit of absorbing some of the carbon and excess nutrients that would otherwise flow into the ocean, causing acidification.
Last year, NatureMetrics announced a further $15 million in VC funding, with participation from the likes of the BNP Paribas Solar Impulse Venture Fund, and Systemiq Capital. But Kaiser believes that nature tech companies as a whole are attracting interest from two sides: investors and businesses who want to use their services to monitor their own land-based assets, and those that want to invest in the businesses and make them part of their portfolio.
Edinburgh-based UNDO is also focused on the soil, the first company to bring a process called enhanced rock weathering out of the laboratory, says UNDO's co-founder Jim Mann.
The process involves spreading finely crushed basalt rock, a byproduct from quarrying and mining industries, across agricultural land. Chemical reactions then help to rapidly accelerate the way CO2 is absorbed from the atmosphere, and permanently lock it away in the ground. The technology has earned the company a nomination for this year’s Fix Our Climate Earthshot Prize.
The company buys the basalt from extractive industries – several of which have also invested in the business – before processing it and giving it away to farmers for free. They then sell the carbon credits to companies that are prepared to pay a premium to “know that their carbon footprint has been wiped out forever”. In April, UNDO signed a contract to provide Microsoft with its first enhanced rock weathering carbon removal credits.
Basalt has a long history of being used as a fertiliser, and can have a dramatic effect on crops. As a mineral-rich volcanic rock, it releases nutrients such as magnesium, calcium and potassium into the soil, boosting yields without the need for artificial fertilisers. In heavily degraded soils, says Mann, yields have been doubled after an application of fine basalt sand.
UNDO is already operating in UK, U.S. and Australia, and further expansion is planned. In terms of investment, Mann says UNDO has been fortunate enough to be able to pick and choose who they work with.
He believes natural carbon removal technologies like his are a better investment than energy-intensive solutions such as direct air capture. “This is a solution that is just sitting there waiting to be used,” he says. "When we think about climate solutions, particularly in terms of removal, it's (about) what can you deploy that isn't capex intensive and that can get to scale rapidly.”
With the Intergovernmental Panel on Climate Change (IPCC) stressing that a billion tonnes of C02 needs to be removed by 2030, Mann believes that’s a market worth $200 billion, which is perhaps why he’s not unduly bothered by the number of companies springing up that are also championing basalt.
“The more the merrier,” he says. “We're all in it together and the faster we can push the science forward, the better.”
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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