Being in the climate and nature space for a very long time, you come across some persistent tropes that, despite rebuttal, continue to be used in debates and discussions about the polycrisis.

One that has been around since the 70s came up in a conversation I had recently. It’s a rhetorical conceit you will have all heard, one commonly used ostensibly to justify action to protect nature. It goes something like..

“Nature will be fine. It’s not nature we should be worried about. It’s what will happen to people if we don’t do something.”

I understand the impulse behind the talking point — to make the larger societal case for nature conservation geared to people who don’t seem to get it, or perhaps to those who may think of conservation as a frivolous pursuit of the wealthy.. Why protect animals and plants when there are so many other important causes to support (health, education, poverty)?

But this tired trope is problematic in several respects. First, it clearly hasn’t worked. Since 1970, we’ve lost nearly 70% of all living creatures on land [1], and one out of every four listed species are now threatened with extinction [2]. Financial support for conservation is shockingly low and has barely budged in the last 25 years. In contrast, the philanthropic category of arts and culture is the main focus of 18% of the world’s foundations, versus only 2% for the environment [3]. I’m not saying the arts aren’t important. They certainly should be funded, but if we can come up with $150–200 billion for the arts, shouldn’t we be able to do the same for the very life support system of our planet? It seems the “nature will be fine” framing is not working in our favor here.

Second, beyond it being just factually incorrect (take a look at the Great Barrier coral reefs), it sets up a philosophical framework within which every action should be judged by the degree to which it helps people, and more specifically capitalistic societies, to achieve growth and prosperity.

Yes, we are getting better at explaining and quantifying the value of ecosystem services to our economies, and that’s a good thing. Like everyone, I frequently reference the big economic stats about nature:

• 55% of global GDP (approximately $65 trillion in 2025 dollars) is dependent on functioning ecosystems. [4]
• If nature were a country it would be contributing an additional $225 trillion per year in GDP, nearly double human GDP of $118T. [5]
• Nature loss is set to costs businesses $430 billion per year and is now ranked as the #2 risk to companies in the future. [6]

While these points are all helpful in explaining to a lay audience the importance of nature at the macro scale, they sort of set an impossible bar of proof, which forces us to justify each small intervention to protect or restore a natural ecosystem based on its imputed dollar value.

At a recent event for a group of philanthropy advisors and family offices, I mentioned the accelerating extinction of species and someone stood up and asked, “But does it really matter if another species goes extinct?”

This person wasn’t being cruel. She was asking a real question on the minds of many people.. why should we care when you haven’t clearly delineated the exact cost to society of losing, say, a specific bee species in Iowa, or an orchid in Guatemala, or a rare orange-lipped primate in the Congo?

The reality is we just don’t know. It’s impossible to articulate the value of each thread of the bewilderingly complex tapestry of life that has been woven over millions of years, providing a stable climate and enough tasty flora and fauna to enable a few thousand primates in Ethiopia to explode into a population of 8 billion homo sapiens, who now occupy nearly every nook and cranny of our planet. But we do know it’s all connected.

If we pull out just one thread, will the tapestry still hold together… Who knows? Maybe that one thread has a knock-on effect, loosening other threads that gradually start to unravel a critical carbon sink, say a forest in the Amazon. And without that carbon sink, nearby ecosystems start to cook, leading to a tipping point that significantly undermines the capacity of our biosphere to absorb carbon. And that would be bad — land sinks currently absorb as much as 30% of global CO2 emissions [7]. The cautionary principle would dictate that we do absolutely everything we can to save the ecosystems upon which we all rely. Protecting 30% of the planet by 2030 is just the start of what needs to be done, and it will take a lot of capital that currently isn’t on the table.

What’s funny is that the “nature will be fine” argument is used by both lefties and climate deniers alike. I was recently in a discussion with a very conservative neighbor trying to explain carbon sinks.. I felt like I was making some progress, and then he terminated the conversation by saying, “Well nature will take care of itself.” I agreed yes, but on what time frame? 1000 years. 2000 years. Will humans still exist at that point? And what will nature look like then.. will it just be a vast sea of kudzu vine? Will the midwest become a second Sahara desert? I guess we could call that nature, but it’s not the nature we love and value.

For the estimated 200,000+ species we have lost since 1500 [8], nature certainly isn’t fine. And the recent death of Sepp Settele, a renown entomologist and co-chair of the IPBES Global Assessment report, has me thinking about the the many species we will lose in the future if we can’t figure out how to communicate effectively about the importance of funding nature at scale. His estimate was that around 1 million animal and plant species are now threatened with extinction, many within decades [9]. How many miraculous medicines (gila monster venom), nutritious superfoods (camu camu fruit), and high-tech materials (glass sponge nanostructures) will we lose to science if we don’t conserve what remains of nature?

And to be a bit selfish for a minute, try to imagine life without the tiny chocolate midge, the only natural pollinator of the cacao tree whose flowers emit an intoxicating mixture of 75 different aromas specifically designed to attract this one little bug for fertilization. Or the melipona bee, the main pollinator of the vanilla orchid whose flowers have an ingenious structure suited specifically to the native stingless bee. The global chocolate industry (worth $150 billion/yr) has these two little insects to thank for its success. Of course, both plants are now cultivated around the globe and are largely hand-pollinated, but I often marvel to think that if these peculiar relationships hadn’t been given the opportunity to evolve as they did, our lives today would be missing out on so much joy and deliciousness.

So what’s the value of the chocolate midge or the melipona bee? As an admitted chocoholic, the answer is easy.. priceless! I just don’t want to imagine life without Läderach… and don’t even get me started on the wonder of hazelnuts. This takes me to my third and final point about the weakness of the “nature will be fine” argument. It simply disregards the intrinsic value of nature existing for itself.

I was actually inspired to sit down and write this piece because I saw a great little video captured by a marine biologist of two orcas “holding hands” (Ocean Titans on Facebook), a behavior which has also been documented in dolphin populations and other marine mammals [10]. He remarked at the skill and intentionality of the two friends in the video:

“Orcas are highly emotional and tactile creatures. When they want to show deep affection, trust, or comfort to a family member, they swim perfectly side-by-side and gently rub their pectoral fins together. It is their version of holding hands in the vast, dark ocean. Even the most powerful and feared predators in the sea need the quiet, physical reassurance that they are not swimming alone. True connection does not always require words. Sometimes, it is just the quiet comfort of someone staying right beside you in the deep.”

What is the value of two orcas holding hands? I don’t know, but I can say I don’t want to live in a world without them. And before you get on me about biodiversity being a “first world” problem, I recently spoke to a Māori spiritual leader who was part of a 2024 coalition of Pacific Island nations calling for the recognition of whales as legal persons with inherent rights. She said something I will never forget: “You think whales are animals. For us, they are our ancestors. They are family.”

Maybe herein lies the key to a new narrative about our relationship with nature, which incorporates both the material and spiritual reasons that we need to invest in its protection. We’ve made a mess of this world, and now its our duty to repair it as best we can. The title of Sep Settele’s final book is No Time for Pessimism, and that’s probably the right place to be, hovering somewhere between fear and optimism, but anchored in a sense of duty and love for what is right.

Do you have thoughts or ideas on what this new narrative could be? Please share in the comments! And also share your experiences that led you to care about nature in the first place.

Back in 1776, when Adam Smith published his treatise on capitalism, The Wealth of Nations, he certainly wasn’t thinking about nature as a limiting factor to economic growth. Back then, there were only about 850 million people on Earth, and nature was seen as an endless well of resources for the taking. A wolf had no economic value in the eyes of the early capitalists.

Of course at the time, no one understood just how valuable ecosystems were and the enormous importance of the iconic species that manage them. It turns out that wolves are indeed very valuable, which we learned after their complete extirpation from the Yellowstone ecosystem in the early 20th century. Within decades, the entire ecosystem started to collapse. Without wolves, coyotes and deer ran amuck. The former decimated beaver populations, the ecosystem engineers of the river. And deers, with no serious threats, could now descend to the river banks and devour the abundant riparian vegetation, leading to major soil erosion, which then disrupted fish spawning, and so on. It wasn’t until the wolves were reintroduced in the mid-90s that the ecosystem began to heal.

We now know that without the intricate web of life and the myriad species that make the Earth’s operating system function, none of us would probably even be here today. The One Earth ‘Razor’s Edge’ Climate Model shows the enormous role nature plays in balancing our global climate system. In order to achieve the long term 1.5C goal of the Paris Agreement, certainly we need to transition our energy systems, but equally important is the annual “background” removal of carbon dioxide (CO2) by the world’s land and ocean carbon sinks (the light blue and green curves below). Without these regulating functions of nature, we’d all be cooked.

So we need to secure and properly finance these carbon sinks, and in addition, there is a large potential for additional carbon dioxide removal from natural climate solutions. Based on a series of papers supported by One Earth, we estimate that it’s possible to remove approximately 169 GtCO2 through reforestation and forest management by 2100, 45 GtCO2 from coastal restoration, and 67 GtCO2 of carbon removal from grassland restoration and silvopasture.

We are also beginning to estimate the additional climate mitigation potential of specific wildlife species. New research shows that the presence of large herbivores like bison in grassland ecosystems can actually increase carbon removal. Two recent papers show that restoring pacific and Atlantic whale populations could result in an additional 32 GtCO2 removed, and restoring African forest elephants to their original levels could remove another 11GtCO2.

If we were to attach a price tag to these nature-based climate mitigation pathways at $20/tonne, it would total about $6.5 trillion in value. These are just a few examples of the role nature plays in regulating our climate. And climate regulation itself covers just two of 45 different types of ecosystem services provided across terrestrial and aquatic domains.

The latest estimate is that the sum total of all ecosystem services is worth roughly $58 trillion, underwriting about 55% of the global economy annually. But of course, nature does not receive any compensation for this, which is due in part to how we calculate GDP — gross domestic product.

Recently, the UN put out its first big report from the ‘Beyond GDP’ high-level task force, Counting What Counts. In the report, they make a case for incorporating new metrics to track how countries are really doing beyond just a simple GDP per capita metric. The recent decoupling of health outcomes in North America despite increasing GDP is a great example of how economic productivity alone is no longer an adequate measure of a country’s prosperity. East Africa, for example, is currently showing a dramatic increase in GDP per capita, but this is at the expense of wide-scale land degradation, which could result in an increase in poverty in the future.

Clearly GDP is not a good measure of the health and wellbeing of a society. Many ideas have been proposed to either fix or supplement this metric, going back to the ‘Green GDP’ concept introduced in the early 1990s by SEEA, the UN system of environmental-economic accounting. It was eventually shelved due to country backlash, and since then many other proposals have been made:

• Doughnut Economics (DEAL)
• Global Ecosystem Product (GEP)
• Gross National Happiness (GNH)
• Nature Relationship Index (NRI)
• Human Development Index (HDI)
• Better Life Index (BLI)
• Sustainable Economic Welfare (ISEW)
• Global Peace Index (GPI)

All of these are what we might call “side-along” metrics, They don’t actually touch the core GDP metric itself. Though many of these proposals are beautiful and useful, none of them were really developed rom the perspective of a financial planner sitting in a country office or at Central Bank, who only cares about answering one question, “Is my investment going to pay off?” Countries need access to capital to grow, and how much capital they can get (and at what lending rate) is determined primarily by one equation –Debt Level. Here’s how it works:

Countries need to increase their growth rate (g) in order to lower their interest rate (r). But there’s a big problem.. Some of the most important biodiversity areas and carbon sinks are held by relatively low-income countries, some of whom have a very high r value. Protecting natural assets doesn’t help them in the all-important debt to GDP ratio calculation. In fact, it’s just the opposite. Converting or extracting natural resources quickly increases their cash flow (boosting g), which then reduces their cost of capital. In a sense, the equation at the heart of the global economy effectively incentivizes the destruction of nature, not its preservation for the long term.

It’s important to have a sense of the sheer volume of capital flows driven by the simplistic debt-to-GDP ratio. In Emerging Markets and Developing Economies (157 nations representing 90% of the global population), sovereign bond issuances hit $4 trillion in 2025, bringing the total debt stock to USD 14 trillion, or 30% of GDP, the highest level since 2007 according to the Global Debt Report (2026). This means EMDE countries will be spending close to $1 trillion per year just to service their debt.

This system is not good, but unfortunately it is how the world works. But what if there were a way to reduce the debt burden of low-income countries by putting nature on the balance sheet?

This is the question addressed by an exciting new paper introducing the concept of Regenerative GDP (or ReGDP). Led by Ralph Chami, an economist and former IMF Asst. Director, the paper has worked out the quite complicated math that can in a sense “hack” the all-important debt level equation, injecting projected revenues from ecosystem services into economic growth calculations. This could quickly reduce lending rates and thus improve the long term economic outlook of EMDEs.

Moving beyond GDP to ReGDP is not a symbolic shift. It is about aligning economic logic with ecological reality. And that alignment will define the next chapter of our economy. — Ralph Chami

The new Chami et al. paper models the ReGDP of the Bahamas, a heavily indebted nation with a 66% debt-to-GDP ratio. Recently, marine biologists studying the behavior of sharks in the Bahamas (by strapping cameras to their backs), discovered the world’s largest sea grass meadow, roughly the size of Austria. Based on this asset, the economists can now accurately project future revenues from carbon, fisheries, and tourism, which dramatically improves the Bahamas debt level calculation, and thus its overall economic outlook. The ReGDP approach allows poorer countries that are rich in natural resources, to incorporate these ecological assets into their balance sheets.

What does this mean in light of the 30x30 goal (protecting 30% of the planet by 2030)? This target was operationalized as part of the UN Biodiversity Convention in Montreal a few years ago, and in some ways you could say it has initiated a giant “World Game” (a term coined by Buckminster Fuller). In this context, the game can be imagined as something like a ”race” for nations to protect more of their natural resources, thereby gaining a larger share of the 30% global goal. Some countries will do much better than others protecting their critical natural assets, and like the Bahamas, those countries could be rewarded for healthy functioning ecosystems though reduced debt burdens, saving them hundreds of billions of dollars over time.

This sounds theoretical, but actually the global game is already underway. Earlier this year, the public sector accounting board released the first-ever guidelines (IPSAS51) for countries to list ‘tangible natural resources held for conservation’ (intact forests, grasslands, wetlands, etc). Many major asset managers, who buy sovereign EMDE debt, are now interested in assigning a risk status to countries based on the health of their ecosystems. Countries striving to preserve their ecosystems could receive preferred interest rates on their bond issuances. Playing this out in one global scenario, countries with a higher ecological status could collectively save as much as $377 billion over an average modified loan duration of 6.5 years ($58B/yr), versus countries that continue doing business as usual.

You can see that this could quickly become an enormous financial incentive for countries to strive to conserve and restore their ecosystems. And to support this theory of change, the Nature Data Lab is developing a new ‘Conservation Status Index’ powered by the Global Safety Net v3 (GSN3), which estimates the full extent of natural ecosystem areas country by country. The GSN3 process uses annual satellite imagery to model with historic land use data, intersected with areas of particular importance for biodiversity and ecosystem services (AIBES). These data are compiled and displayed on the new GSN3 web application.

Learn more on the Nature Data Lab website > https://www.naturedatalab.org/

Note: If you haven’t yet read my Dummies’ Guide to CSRD, TNFD, SBTN and the Nature Action Alphabet Soup, I’d suggest reading that first. Also note, there is a major set of revisions proposed to reduce the scope of reporting as part of the ‘Omnibus 1 Simplification’ initiative. This would gradually phase in companies over four years, starting with large companies first. A joint statement by leading investors and companies calls to preserve the core elements of the original EU sustainability framework (PDF). The piece below attempts to establish a potential market size in 2030, so I kept to the original 2024 guidelines for this piece.

Here’s the math. Per EFRAG (PDF), the administrative costs for reporting under ESRS will be approximately €740,000 on average for large listed companies in addition to €430,000 in initial investments (adjusted to 2025 euros). Spread over three years that works out to about €880,000 annually for the largest listed EU companies between 2026–2028. A big chunk of this covers auditing requirements for listed companies, which EFRAG estimates will be €4.3 billion per year. Now that’s just for large EU-based companies under the mandate. There are approximately 10,000 non-EU companies and 38,000 small and medium companies that also have reporting obligations:

• 11,700 large EU corporates = €10.3 billion in reporting costs
• 10,000 large non-EU corporates = €8.8 billion (assuming same as above)
• 38,000 small & medium EU corporates = €4.2 billion (assuming 1/8th the cost)

So referencing EFRAG numbers, this would put the total at about €23.3 billion per year in reporting costs. This seems almost comically low. Costs for the 2000 companies that currently report on greenhouse gas emissions under NFRD are estimated to be about €580,000 per year (adjusted to 2025 dollars). So EFRAG would have us believe that companies now reporting on an entirely new suite of landscape-level impacts (including material impacts to freshwater, oceans, and terrestrial ecosystems) as well as increased reporting on pollutants will only cost 35% more than current climate reporting requirements??

If you read through my Alphabet Soup article, which breaks down the numerous components of ESRS, you will find this claim as astonishing as I do. ESRS is orders of magnitude more complex than stand-alone climate reporting, and I would argue will be at least doubly more expense (excluding auditing which is a fixed cost). Also, it is a bit of a leap to believe that small and medium companies will only be spending 1/8th on reporting costs versus large listed companies. Yes, the auditing requirement is removed (reducing the cost by about 40%), but regardless of a company’s size, the systems that it needs to create in order to report across all the ESRS categories is significant. For the sake of argument, I’m going to assume that after removing the auditing burden, small and medium companies will incur about one-quarter the costs of a large company (roughly double the EFRAG estimate). So here is my reality-adjusted ballpark estimate for total reporting costs under CSRD:

• 11,700 large EU corporates = €16.7 billion in reporting (about €1.4 million per company)
• 10,000 large non-EU corporates = €14.2 billion (assuming same as above)
• 38,000 small & mediums = €8.1 billion (assuming 1/4 the cost less auditing)

Altogether that adds up to about €39.0 billion per year ($45 billion US) for ESRS accounting and reporting by my estimate — or roughly 10 basis points on business revenue (aka ‘turnover’ as they say on the Continent). How big of a professional services market will this open up? And how about software.. can new AI products, including next generation land cover models, and advanced MRV tools help reduce those costs? Or is $45 billion underestimating the complexity involved in properly complying with ESRS?

These are some of the questions I was asking myself after attending the Nature Action Dialogues in Cambridge this spring, a conference put on by the UN Environment Programme to help companies understand and utilize data on biodiversity and ecosystem services.

I will say the tenor at the conference was somewhere between overwhelm and panic. Presentation after presentation laid out the enormous challenges involved in accounting for a vast array of potential environmental impacts that companies are now expected to disclose. The Nature Positive Initiative identified 600 metrics just for the biodiversity category (one of five ESRS categories). Another top-tier consultancy has identified 1052 metrics. For the CSRD more broadly, the EU lists 84 reporting requirements and 1200 possible data points, depending upon the sector.

All of this makes the burden of climate reporting feel quite light in comparison. Climate disclosure currently costs companies globally an estimated €13.3 billion (using the above €580,000 per company estimate applied to 23,000 companies reporting through CDP), most of which is spent documenting just three relatively straightforward greenhouse gases — carbon dioxide, methane, and nitrous oxide — across Scope 1 (on-site emissions), Scope 2 (direct energy use), and Scope 3 (supply chain emissions). A huge and growing market for carbon accounting software is in place to aid corporates in their climate reporting — the market hit $17 billion in 2023 and according to Grandview Research is expected to quadruple by 2030.

For nature reporting, the metrics are significantly more complicated, and matters are worsened by an extremely underdeveloped ecosystem of public and private data providers to support system-wide transformation across company value chains. In the climate space there are literally hundreds of organizations and research institutions that provide credible data to help (and goad) companies and governments to develop their greenhouse gas inventories (e.g. CDP, Climate Action Tracker, CERES, Climate TRACE) and hundreds more that help those entities meet their net zero targets (e.g. SBTI, Climate Action 100, Climate Arc, Climate Policy Institute, Systems Change Lab, Mission Possible).

There is no ‘NDP’ — akin to a Carbon Disclosure Project for nature (CDP is the central repository for greenhouse gas inventories). There is nothing like ‘CNRM’ — an equivalent to the Corporate Climate Responsibility Monitor for nature commitments (CCRM is an involuntary transparency initiative led by NewClimate Institute holding corporates accountable for their climate targets). There isn’t really even an equivalent to an IPCC for nature. The IPCC incorporates over 100 climate models (and 23 Model Intercomparison Projects) to create a vitally important common science-based reference supporting the formal climate negotiations under UNFCCC, which also benefits the private sector. Ironically, we know more about the dynamics of our atmosphere than we do the ground we walk on…

The closest equivalent to the IPCC for nature is the IPBES initiative, which is terrific but neither funded nor mandated to provide scientific consensus or core data products. For example, there isn’t one globally agreed map of biodiversity habitats to support Target 3 of the UN Biodiversity Convention (30x30) or even, for that matter, a common taxonomy of ecosystem types by which such a map would be organized.* And there is no globally agreed map of degraded lands to guide Target 2 covering restoration potential, only an overlap analysis offered at very low resolution. There is also no central utility that tracks the progress of jurisdictions towards achieving the targets of the convention, much less the major corporate entities domiciled within those jurisdictions.

Many will point to the numerous open-source land cover maps provided by research institutes like NASA and JRC. I recently reviewed the 12 leading global land cover maps and found that none of them were able to differentiate between natural and non-natural lands consistently across all landscape types. They just weren’t built for that purpose, and this means corporates will have to purchase expensive high-resolution maps individually from commercial providers in order to create their environmental footprint analyses (Satelligence and Space Intelligence are two companies that offer really excellent maps, though coverage is limited largely to tropical forests in both cases).

Currently the centerpiece of global data infrastructure for nature is the Integrated Biodiversity Assessment Tool (IBAT), which provides access to three main data sets — the location of Protected Areas (WDPA), Key Biodiversity Areas (KBAs), and range maps for endangered and threatened species via the International Union for the Conservation of Nature (IUCN). These data are far from complete, and the platform is severely underfunded. I asked someone on the IBAT team when a full inventory of KBAs would be ready, and they said it would take about 10 years and $100 million to complete it. This incomplete data also comes with tight restrictions — a major problem given that KBAs are arguably the most important data set for corporate footprint analysis related to biodiversity.

One major new development in the space is the Science Based Targets Network (SBTN), which in some ways is the nature equivalent to SBTi (an initiative providing corporates with a commonly agreed framework to establish net zero climate pledges). I had a front row seat to the development of the SBTN framework as a technical reviewer for Steps 1 (Assess) and 2 (Prioritize). SBTN offers a framework to help companies make nature-positive commitments in line with CSRD and TNFD, and identifies 45 leading data tools to assist companies, divided in 6 main categories:

1. Biodiversity assessment software/web applications

2. Life Cycle Assessment (LCA) tools

3. Multi-Regional Input-Output (MRIO) analysis tools

4. Geographic Information Systems (GIS-based tools)

5. Calculated Indices (e.g. BII, EII)

6. Biodiversity-related data repositories (e.g. GBIF)

A new paper just out (Barth et al. 2025) assesses these tools by performing pair comparisons across thematic objectives, examining 11 relevant metrics concerning the state of biodiversity, including:

• ecosystem extent
• ecosystem structure
• ecosystem composition
• ecosystem function
• species biodiversity (e.g. population dynamics, richness, extinction risk)
• nature’s contributions to people (i.e. ecosystem services)
• soil quality (nitrogen and phosphorus)
• water quality (nitrogen and phosphorus)
• water availability
• precipitation
• temperature

Below are pair comparisons for 22 tools supporting corporate value chain assessments (1–4 green are similar, 6–9 orange-red are dissimilar):

The one thing that pops out immediately from this analysis is the extreme heterogeneity of tools that are currently available. Only about one-quarter of the tools perform comparably with each other (scoring 1–4), and many of these are actually focused on different domains. Unlike climate change reporting, which has one single domain (the atmosphere), nature reporting has four main domains — land, freshwater, oceans, and species — and each of these have a myriad of sub-components.

It’s not surprising that many companies are trying to hire PhDs and other staff to develop their own internal science teams at great cost. Megan Pilsbury, the CEO of Dunya Analytics — a SaaS platform the supports companies on their environmental reporting — has pointed out that only the largest corporates can afford to do this. “Most of the rest of the companies that fall in scope for CSRD, or that even just want to be leaders in their space, don’t have those kinds of resources. So they’re looking for the tools that can make them more efficient. They’re hiring consultants..”

Numerous firms are now starting to fill this void by delivering software and services. Some of them, for example Refinq which serves financial institutions or Clarity, are marketing AI-powered analytics. Many scientists are starting their own consulting firms, some of them focusing on specific regions or domains, for example Nature Analytics which focuses on fisheries. New companies like Kanop are offering turnkey MRV solutions, and some startups like Cecil are offering data utilities to make existing spatial data more interoperable. The NatureTech Collective is now tracking this rapidly growing market sector, but it is really early days. In the next few years, we should see an explosive growth of companies coming into the environmental reporting space to claim a piece of that $45 billion in projected ESRS expenditures.

Back to the addressable market question.. A big chunk of this market will be gobbled up by auditors (roughly $8 billion or so according to the estimates above). Perhaps another 20% will be spent by larger companies that can afford to hire FTEs and build their own nature data teams ($9 billion or so), totaling roughly $15 billion. That leaves an addressable market of $30 billion for software developers and consultants supporting ESRS compliance. A new $30x30!

Perhaps AI will help streamline some facets of ESRS reporting, and new scientific products and MRV tools will come online to greatly reduce data acquisition costs. But in the end, we’re dealing with hundreds of novel metrics, not the few dozen associated with climate disclosure. Costs could be considerably higher. Maybe the truth is somewhere between my reality-adjusted estimate of $30B and Grandview’s bullish software estimate of $70B (mid-range of $50B per year) in new spending by 2030. We shall see once the Omnibus gets sorted.

*IUCN is attempting to remedy this lack of shared definitions through their Global Ecosystem Typology initiative (GET2.0). After five years in development IUCN released a Level 3 typology (sub-biomes). It is not yet field tested and finer scale typologies still need to be developed. The goal ultimately is to define a Level 5 typology (approximately 5000 ecosystem types), derived from national ecosystem inventories (Level 6). A more simplified alternative is the Ecoregions framework, which is the most widely used taxonomy in the field of biogeography, delineating 844 discreet terrestrial units.

How much will it cost companies to comply with EU’s nature reporting standard (ESRS)? was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

As the U.S. goes retrograde with dozens of anti-ESG bills being pushed through state legislatures, Europe is moving forward despite some setbacks. The package of new EU sustainability regulations, part of the European Green Deal (EGD), went into force in 2023, but in April a ‘Stop-the-clock’ directive was approved, delaying implementation to 2028. It now faces an ‘Omnibus 1 Simplification’ initiative, which seeks to limit the number of companies under the mandate while greatly reducing reporting requirements. A large group of investors, NGOs, and corporates are pushing back against this effort to preserve the core principles of the original regulation.

As we wait to see things how things shake out in Europe, I thought it will be helpful to pull together some charts explaining how all the pieces fit together, and what the implications might be for companies in the coming years, specifically focusing on environmental reporting. I’ll start with my own summary chart that breaks out the alphabet soup into a simple four-part grid — regulations and initiatives focusing on corporate ‘Transparency’ (i.e. reporting) and those focusing on ‘Transformation’ (i.e. mitigation), further divided into mandatory vs. voluntary initiatives:

Mandatory Transparency (top left). The evolution of the Corporate Sustainability Reporting Directive (CSRD), adopted by the EU at the end of 2022, is an interesting story (see below for the history). It attempted to solve problems associated with earlier reporting directives (NFRD and SFRD) by providing a uniform set of reporting standards to accompany a unified reporting directive. The first version of the European Sustainability Reporting Standards (ESRS) was developed by the European Financial Reporting Advisory Group (EFRAG), an independent NGO commissioned by the EU government with input from the Global Reporting Initiative (GRI), Taskforce on Nature-related Financial Disclosures (TNFD), and other key stakeholders.

It has three main sections — Environmental (E), Social (S), and Governance (G) — in addition to general, cross-cutting requirements. Here I’m most concerned with the ‘Environmental’ section which has five components — climate (E1), pollution (E2), water (E3), ecosystems (E4), and circularity (E5), described in more detail below. The CSRD is the legal directive describing which entities must report (the “who”), while the ESRS lays out a uniform system to organize the reports (the “how”). CSRD incorporates the principle of double materiality, requiring a company to disclose both the material risks that its operations pose to society and the environment, as well as associated financial risks. In addition to this, there is Green Claims Directive in development (GCD), which describes how a company should make environmental claims to the public.

Mandatory Transformation (lower left). Adopted last year, the second big directive of the EGD is the Corporate Sustainability Due Diligence Directive (CSDDD aka CS3D). While CSRD is all about transparency of risk, the CSDDD asks companies to take action on those risks, requiring them to “…adopt and implement effective due diligence policies for identifying, preventing, mitigating and bringing to an end potential and actual adverse impacts on human rights and environmental matters in these companies’ own operations, the operations of their subsidiaries and certain operations of their business partners.” Notably this includes a requirement for in-scope companies to publish and implement net-zero transition plans in line with the 1.5°C goal of the Paris Climate Agreement. It also covers a company’s entire supply chain, so if a supplier is polluting a river or using illegal timber, it is the company’s responsibility not only to report it but to take measures to correct it.

This is known as a lex generalis (a general law), which acts in some way as an umbrella regulation interacting with numerous other specific EU laws or lex specialis. These include:

• EU ETS — EU Emissions Trading Scheme pricing carbon emissions (ETS II coming soon)
• CBAM — Carbon Border Adjusted Mechanism taxing imports based on carbon intensity
• AAQD — Ambient Air Quality Directive regulating air pollution in line with WHO targets
• WFD & MSFD — requiring protection of freshwater supplies and the marine environment
• EUDR — EU Deforestation Regulation banning deforestation-linked commodities
• ESPR — Ecodesign for Sustainable Products promoting durable and recyclable goods

One of the implications of the conjoined adoption of CSRD and CSDDD is that companies will need to put into place extremely robust Monitoring Reporting & Verification (MRV) methods across their value chains (even covering beyond value chain investments) in order to accurately report on the progress being made by the company to achieve its sustainability goals.

Voluntary Transparency (top right). Way back in 2001 the IFRS Foundation was established as a public interest NGO to support the financial sector by developing “high-quality, understandable, enforceable and globally accepted accounting standards” alongside a new Accounting Standards Board (IASB). Twenty years later, at the UN Climate Conference in Glasgow, they established the International Sustainability Standards Board (ISSB) with the remit of developing a global baseline for sustainability-related financial disclosures (backed by the G7/G20) informed by the Carbon Disclosure Standards Board (CDSB), the Sustainability Accounting Standards Board (SASB), and the Taskforce on Climate-Related Financial Disclosures (TCFD).

In response to the growing complexity of existing sustainability frameworks, the IFRS consolidated its standards launching IFRS S2 focused on climate-related disclosures and IFRS S1 standard covering broader sustainability risks and opportunities (thanks to EcoAct for the handy overview chart). ISSB, in conjunction with GRI, TCFD, TNFD, and other key reporting organizations, influenced the development of the CSRD. They are now working on a new Biodiversity, Ecosystems, and Ecosystem Services initiative (BEES), which will help to inform standards specifically pertaining to E4 of the ESRS with input from TNFD.

Voluntary Transformation (lower right). In the lead up to the UNFCCC Paris Climate Agreement in 2015, the Science-Based Targets initiative (SBTi) was formed. While government negotiations dragged on, companies wanted to get ahead of the game by setting their own net-zero aligned targets for decarbonizing their operations. There was no formalized method available at the time, so with a large array of stakeholders SBTi published the first set of guidelines called the Net-Zero Corporate Standard in the lead up to the Glasgow COP in 2021. One important thing the standard did was to recommend limits on offsets used by a company on its way to achieving net zero emissions by 2050, initially covering Scopes 1 and 2. Things got hairy when it came to Scope 3, and the standard is currently going through a major revision. Meanwhile over 10,000 companies now have targets or commitments in place, due in large part to SBTi’s efforts.

In 2019, the Global Commons Alliance launched a parallel initiative called the Science Based Targets Network (SBTN) to develop corporate target setting guidelines for nature in the lead up to the UN Convention on Biological Diversity (meant to be held in 2020 but delayed to 2023 due to COVID-19). Due to the many components of nature reporting, the SBTi standard is significantly more complex covering four other major categories of environmental impact beyond climate — freshwater, land, oceans, and biodiversity. The process is organized in five steps (I was a technical reviewer on Steps 1 and 2) and adds much-needed clarity for companies seeking to transform their operations in line with a nature-positive future.

Alongside SBTN, there are numerous other certifications and credentials that companies have used to align their operations towards environmentally friendly practices. As a young architect way back in 1999, I was a contributor to the first version of the Leadership in Energy and Environmental Design (LEED) standard for green buildings, and several years later a reviewer of the first B Corp standard in 2006 (right time, right place)! Fair Trade, Green Seal, Cradle to Cradle and many others focus on consumer products companies. 1% for the Planet helps companies contribute to nature beyond their value chains in the form of charitable donations to vetted organizations (currently 4800+ members who have donated close to $800 million). These efforts have really made a difference, and recently I proposed an ‘Internal Price on Nature’ to help accelerate voluntary corporate action.

Back to the substance of ESRS…

It’s important to point out that in Europe large companies (>500 employees and/or €50 million in revenue) and other Public Interest Entities (PIEs include banks and insurance companies) have already been subject to reporting requirements under the EU Non-Financial Reporting Directive (NFRD), which passed at the end of 2014. This was structured around the familiar ESG framework — Environmental, Social (including employee treatment, human rights, and diversity) and Governance. By 2018 all the member states had adopted NFRD, and a new separate standard was in development called the Sustainable Finance Disclosure Regulation (SFRD). Greenomy has a nice timeline of these events.

As the EGD was being developed, it sought to solve several shortcomings of these two reporting directives. It had become clear that (a) it didn’t make sense to have two separate directives — one covering material risk and one covering financial risk — and (b) that companies needed an official reporting standard to use, one that covered both material and financial risks. The Taskforce for Nature-Related Finance Disclosures was officially launched in 2021 backed by G20 countries, and starting in 2022 TNFD worked closely with EFRAG to ensure continuous exchange in the development of the ESRS Environmental ‘E’ standards in line with TNFD guidelines.

One of the big contributions in the TNFD Recommendations (PDF) is the LEAP framework, which stands for Locate-Evaluate-Assess-Prepare. Each of these steps have 4 parts..

The LEAP process gives us a sense of just what a daunting task nature-related reporting will be for companies. Right now, most companies are just working on ‘L’ for their owned facilities, which could require an enormous effort given some companies have hundreds, if not thousands, of sites. Then imagine doing the same for all the company’s subsidiaries and suppliers (remember the CDDD directs a company to mitigate the impacts across its entire value chain). L3 is particularly tricky because there is not currently one single publicly available data set at a decent resolution that maps the extent of natural ecosystems. So ‘L’ is going to take a while (and cost a lot of money). Then, and only then, can companies move on to ‘E’ and ‘A’. People have been a bit confused by these two terms because they are linguistic synonyms, but in my understanding ‘E’ is focused on the evaluation of nature-related dependencies and impacts on nature for each location, while ‘A’ is an assessment as to whether those, in totality, pose serious material and financial risks to the company, shareholders, and stakeholders.

Note: GRI and TNFD just published case studies of companies using the LEAP process and found that while the standard is still relatively new, many companies are proceeding onto the Evaluate ‘E’ process to map dependencies, impacts, risks and opportunities (DIROs).

This chart, a result of the TNFD-ESRS collaboration, shows how the two systems can be seen as working together, helping companies clarify the questions they need to have answered in order to prepare their reports for submission per ESRS (PDF):

There are numerous components of each of the ESRS environmental reporting categories. The London Stock Exchange research group (LSEG) created this handy chart to breakdown E1-E5 sub-topics and sub-sub-topics defined within the CSRD (not exhaustive but covers most of the main topics to report against). Under the requirements of the CSRD, any material impact, risk or opportunity within these topic areas should be reported (Note: this crops out E1 Climate Change, which has three main sub-topics — Energy, Mitigation, Adaptation):

E2 Pollution has 7 sub-topics — air, water, soil, living organisms, substance of concern, hazardous substances, and microplastics. E3 Water has two main sub-topics — Freshwater and Marine Resources — with 5 sub-sub topics. E4 Biodiversity has four main sub-topics — Drivers of Biodiversity Loss, Impacts on Species, Impacts on Ecosystems, and Impacts/Dependencies on Ecosystem Services — with many potential sub-sub topics based on the sector. E5 Circularity has 3 main sub-topics — Resource Inflows, Resource Outflows, and Waste Management.

Zooming in a bit further into E4 Biodiversity, it’s useful to think about the synergies specifically between ESRS, TNFD, and SBTN. The more recent version of CSRD requires the disclosure of a broad range of qualitative and quantitative information, which is quite demanding albeit more flexible than the original version, according to I Care. The ESRS gives some latitude regarding the choice of metrics, while TNFD is a bit more prescriptive and also more comprehensive (or systemic) stating, “…nature refers to the natural world, emphasizing the diversity of living organisms, including humans, and their interactions with each other and with their environment.” SBTN goes further with a high level of precision, notably because the framework requires extensive data collection and detailed analysis of pressures across a company’s value chain with the ultimate goal of transitioning to a nature-positive business model.

Here is I Care’s comparison of the three framework in regards to ecosystems and biodiversity (E4) across 7 major themes:

The rubber hits the road when we get to MRV. There are numerous ways a company could measure its specific impacts on ecosystems and biodiversity (and hopefully how those impacts are improving over time). One of the best references on this topic that I’ve found is Recommendations for a Standard on Corporate Biodiversity Measurement and Valuation (2022) by the Align Project, which was funded by the European Commission, and led by UNEP-WCMC, the Capitals Coalition, Arcadis, and ICF. It provides businesses and financial institutions with principles and criteria for biodiversity measurement and valuation (PDF). After a three-year consultation with leading experts on biodiversity measurement, they arrived at a framework with three main categories — Ecosystems, Species, and Genes — and 9 major metric types:

One of the key recommendations is that indicators of ecosystem extent and condition should form the core of assessments of impact and dependencies (shaded blue). Given that biodiversity is multifaceted and difficult to capture in a single metric, ecosystem condition gives insight to the capacity of ecosystems to deliver ecosystem services, while allowing changes in biodiversity to be effectively valued. Species-level metrics (shaded green) can capture risks associated with species loss, extinction risk and population size. These are much more difficult to retrieve. Measuring genetic diversity (dark green), while potentially the most valuable, is even more difficult and expensive to retrieve and process.

I’ve taken you on a tour of the alphabet soup of nature-positive acronyms, a history of CSRD, TNFD, and SBTN with a special focus on Ecosystems & Biodiversity in the new ESRS standard (E4). Now the big question remains, how much will all of this cost as CSRD goes into force? That is the question I tackle in my next post, How much will it cost companies to comply with the EU’s nature reporting standard?

A Dummies’ Guide to CSRD, TNFD, SBTN and the nature action alphabet soup was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

I stumbled upon this new phrase as I put my thoughts together for a panel at Accelerate 2050 on nature finance, which was focused on how we can accelerate investments in nature from the private sector. I thought surely there would be a guide on setting an “Internal Price on Nature” but was shocked to find zero instances of either that phrase or “Internal Nature Pricing” anywhere online. This is probably telling.. we are just at the beginning of the epic journey to align business practices globally with environmental stewardship.

With the concept of ‘nature positive’ now taking root along with new reporting frameworks like TNFD, CSRD, and SBTN, there is suddenly enormous pressure on companies to assess their impacts on ecosystems and biodiversity and then chart the transformation of nearly every aspect of their business operations — from local impacts of their owned facilities to remote impacts associated with their supply chains..

..by 2030!

In many recent discussions with corporate leaders, I’m sensing a gnawing anxiety beginning to emerge. Just as companies were starting to get their heads around achieving ‘net zero’ in alignment with the Paris Climate Agreement, the consensus has arrived that companies must now also achieve nature positivity in additional to climate neutrality.

The Kunming-Montreal Global Biodiversity Agreement (KMGBF) ratified at the end of 2022, effectively adopted the goal of “nature-positive by 2030” as its core mission. And like the Paris Agreement, there is a stated expectation that companies must do their part to achieve the goal, even though they are not official parties to the Convention. There are a few big differences between the two targets.

First is the timeline. The Paris Agreement set a “leisurely” timeline of 35 years to reach net zero. The KMGBF gave everyone just eight years. The latest science, in particular the latest Planetary Boundaries report, shows that the collapse of biodiversity and ecosystem services is posing an even graver and more urgent threat to humanity than climate change, and therefore needs to be addressed more rapidly.

The second major difference is the immense complexity involved in measuring progress toward the target. The Paris Agreement boils everything down to a single universally relevant unit — one tonne of carbon dioxide (CO2). Of course, decarbonizing the global economy is no small feat, but the goal itself is simple: get to zero. When it comes to measuring progress towards nature positivity under the KMGBF, life gets complicated fast.

The overall intent is clear — reverse the cataclysmic decline in biodiversity (more than two-thirds of all vertebrate life on the planet wiped out since 1970). But what’s the unit of change? We have a myriad of domains we’re dealing with — land, freshwater, oceans — and those are subdivided into a myriad of different sub-domains. For example, there are 844 terrestrial ecoregions, each with its own unique set of variables, including soil biology, flora, and fauna.

If a company wanted to become truly nature-positive, it would first have to understand in which of these domains the business has material impacts (all the way through its entire supply chain), and in what ways the company has impacted these environments. Was essential habitat for biodiversity converted to a plantation? Is the water table being severely depleted? Is the soil, water, or air being polluted by industrial processes? Are these pollutants having effects downstream, harming wetlands or coral reefs?

Each one of those questions has to be answered with a different method using a different set of variables. And those variables will vary greatly across subdomains. The baselines you might use to understand biodiversity loss or gain in a moist tropical forest will be different than a dry tropical forest, and so on. So instead of one universal unit like CO2, we have thousands to contend with.

Fortunately, frameworks like SBTN offer a clear approach to classifying these impacts and what can be done to mitigate or compensate for them. And more and more technology and services companies are starting to come online to help companies with the mapping of their impacts; the reengineering of business processes to reduce environmental degradation; as well as Measurement, Reporting, and Verification (MRV) systems. But it is a gargantuan set of tasks. I suspect for most companies, even the most committed environmentally friendly companies, it will take three to five years just to establish a roadmap to becoming nature positive.

Can ‘Internal Nature Pricing’ help out?

There is a lot of work to be done, but companies can get the gears moving by considering an Internal Price on Nature (IPN). Like an Internal Price on Carbon (IPC, alternatively known as Internal Carbon Pricing or ICP), this approach allows a company to price in externalities that pose long term risks to the business (and to society as a whole). According to Carbon Disclosure Project’s latest survey, the use of IPCs is growing. More than 2,800 reporting companies now have carbon pricing in place or are planning to implement an IPC in the next two years. More than half of the world’s biggest companies now have an IPC in place.

There are three broad categories of risk that an IPN could help to mitigate:

• Social/Brand risk. As public opinion galvanizes around the need for companies to “do no harm” the companies at the forefront of nature positive action will be considered more valuable and relevant both to consumers and investors.
• Regulatory/Legal risk. It’s only a matter of time before regulations kick in requiring companies to disclose their nature impacts. There will be legal expenses and potentially punitive damages paid by ill prepared companies.
• Material risk. Companies require a safe environmental operating space if they are to have successful businesses over the long term. If they over-exploit the natural resources upon which their revenues are based (timber, fish, minerals, water, etc.) or if they poison their own backyards, they may face cataclysmic supply chain disruptions in the future.

When the concept of an Internal Price on Carbon was first introduced and then popularized by early movers like Microsoft, it was a game changer for voluntary corporate action on climate change. Given the reality that a mandated carbon tax would likely not come to pass, the IPC offered a way forward for companies that wanted to take action to address their climate impacts by creating a performance-based incentive. In a sense, the IPC works as a voluntary internal “tax” — the less CO2 emissions your department produces, the less it has to “pay” thereby gradually increasing the topline earnings of the company.

It also allows a pool of capital to be developed that can be deployed to enact the transformations that the company must make to reach net zero emissions. This can be internal investments — for example, outfitting buildings with solar panels — as well as beyond value chain contributions to compensate for past emissions — for example, providing funds for forest conservation and restoration.

The Internal Price on Nature would act in a similar way, helping to build buy-in across a company’s entire operations, from the C-suite to suppliers to entry level staff. It would also make a company more attractive to new talent. Companies with strong sustainability and climate policies have been shown to be more attractive to young professionals, with two-thirds of young employees saying they would prefer a sustainable company.

Recently at One Earth, we have been in discussion with several major companies who are exploring this concept, and we encourage others to embrace it as well. There is a lot to be worked, but as Milkywire points out in their latest guide to setting up an internal carbon fee, perfect is the enemy of the good. Initially, it’s the implementation of a fee, any fee, that is more important than figuring out exactly how to price every aspect of a company’s impact on the nature world. One approach, which we’re recommending, is for companies to implement an “Earth fee”. To start, this can be something as simple as a five-basis point fee on revenue (1 cent on $20 of revenue).* Eventually this can be linked to specific units of impact, for example hectares of land degraded over a single year.

Another option is to start with an estimate based on a sector-wide average of environmental impacts. A new study, Natural Capital at Risk, put out by UNEP’s TEEB program (The Economics of Ecosystems and Biodiversity) finds that companies have a total of about $4.5 trillion in unpaid environmental externalities (not including climate impacts which account for another $2.8 trillion). It’s not a simple task, but firms like Trucost (owned by S & P Global), Quantis (owned by BCG), PlanetPrice, LandGriffon, Iceberg Datalabs, and Dunya Analytics (to name a few) offer data and services to companies looking to put a price tag on their environmental footprint.

Just this week, NatureMetrics launched a major new initiative called the NatureTech Alliance (with Salesforce and ERM) to make it easier for corporations to measure and manage their biodiversity impact. And some leading-edge companies have already started on their own internal programs. Tetrapak just released what many are considering the first-ever roadmap for a company to become completely nature-positive. Kering has been a leader in the space for a while, implementing an Environmental P & L account. Walmart has calculated it’s physical footprint on the environment, committing to protect or restore 20 million hectares of land. Two fashion powerhouses — LVMH and Inditex — have each set science-based targets to protect or restore 5 million hectares of land.

It’s becoming something of a movement, with 70 major companies now joining the Act4Nature pledge, “committing to integrating nature — environments, animals, plants, ecosystems, interactions and genetic heritage — into our strategies and business models.” An ‘Internal Price on Nature’ is just an idea for the moment, but we believe it can be a powerful catalyst for change, allowing companies to align their business units around a common goal of protecting and restoring the ecosystems and biodiversity upon which we all depend. We invite anyone to join in this new exploration!

*Note: 5 basis points is a lot less than the estimated environmental impact of companies worldwide. According to researchers at Harvard Business School, the “environmental intensity” of an average business equates to about 2% of annual revenues (or 200 basis points).

It’s time for companies to consider an ‘Internal Price on Nature’ was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

You’ve probably noticed that the word “bioregion” has been cropping up in conversations lately. I was recently at an investing conference in Boston and was surprised to hear several people referencing bioregions in the context of investment strategy!

I’ve found, however, that people are really confused about what, exactly, the term means. To bring some clarity to the situation, I just published a detailed piece on One Earth called What is a Bioregion? which delves into the myriad definitions found in both the scientific literature and in more philosophical writings.

It’s not surprising that people are confused. I count 25 different approaches to defining bioregions within the field of biogeography — the branch of biology that deals with the geographical distribution of plants and animals. It’s clear that bioregions can take many forms and operate at many scales — from very small ecosystems or ‘biotopes’ to ecoregions (which can be nested at different scales) to continent-scale distributions of plants and animals, like biomes or realms. All of them, technically, are considered bioregions.

When you look at Wikipedia, you see a different definition of bioregions presented, one that specifically refutes the tens of thousands of academic papers written using the term. The current ‘Bioregion’ page on Wikipedia states, “A key difference between an ecoregion and bioregion, is that while ecoregions are based on general biophysical and ecosystem data, human settlement and cultural patterns play a key role in how a bioregion is defined.” UPDATE: I’ve written a more neutral and accurate definition in the lead section of the Wikipedia page.

This is incorrect. While it’s true that bioregions could be defined or informed by human-influenced processes or cultural patterns, that doesn’t mean they always are. Bioregions are a broad category that encompass a myriad of approaches to delineating geographical boundaries informed by biological processes. But there is a community of practice — centered around a philosophy called bioregionalism — that refers to bioregions in a very different way from the more common uses of the term in academia.

Bioregionalism is a beautiful concept. It was popularized by Peter Berg, who influenced a generation of ecological thinkers and practitioners through the idea that human communities should live sustainably and harmoniously with nature, meeting their basic needs for a happy and healthy life — food, feed, fiber, water, shelter — all from regional sources. Bioregionalism seeks to reverse the extractive paradigm that has resulted in the polycrisis we now face, characterized by accelerating biodiversity extinctions, the rapid depletion of freshwater supplies, and the destruction of our soils.

Equally important, bioregionalism weaves in concepts of bioculturalism — the complex system of interrelationships between humans and nature in a particular place. This can include ancient relationships, like those developed over centuries by Indigenous peoples, or modern relationships, for example sustainable community design. One website reflecting this school of thought boils it down to this: “’Bio-region’ is simply short for ‘bio-cultural region’”.

This statement would surely raise some eyebrows in the academic world. To date, there have been about 65,000 scholarly journal articles or books that reference the term “bioregion”, the large majority of which focus on mapping populations of plants and animals, not on bioregionalism. The overall trend in this field, in fact, has been towards increasingly data-driven approaches that remove human sentiment from the equation altogether.

How did it all start?

A contemporary scholar of bioregionalism, Richard Evanoff, wrote a piece in the Aoyama Journal of International Politics crediting Allen Van Newkirk with the invention of the term “bioregion” in his titular essay of 1975. This is cited as fact in the Wikipedia page, and I wondered if that was actually true. So I rolled up my sleeves and dug into the Google Scholar archive to unearth the history of four related terms found in scholarly literature — “bioregion” “bioregions” “bioregional” “bioregionalism”.*

I created a Google sheet that you can peruse, and below is a summary view. On the left is the year, followed by the number of citations in that year (with an estimate for duplicates removed), a prominent paper from that year, and the author/s of the paper. There’s more info on the sheet, which I’ll be adding to over time:

The first thing you’ll notice is a rapid growth of papers and books related to bioregions, from just a handful in the 1970s to about 4400 last year alone, roughly doubling in volume since 2010. Going way back in time, I found a couple 1960s references to “bioregion” in Poland and Czechoslovakia, but I wasn’t able to confirm those.

The very first confirmed use of the term I found is in a paper on, of all things, blue crab populations of Louisiana. Interestingly, the author used the word “bioregion” to refer to the area that provides the crab with all the resources it needs throughout its entire life cycle (not too dissimilar from the bioregionalist perspective). This inference, however, didn’t stick. The term was quickly adapted to describe a much broader set of macroecological phenomena.

Several other marine biology papers picked up the term from 1972 to 1976, and it’s fascinating that right then, in 1975 — when scientists were using “bioregion” to discuss crustaceans in Australia and reef fishes in Mexico — Van Newkirk published his paper “Bioregions: towards bioregional strategy for human cultures” in the academic journal Environmental Conservation. He describes his starting point as the IUCN ‘Biotic Provinces of the World’ published in 1974, but he weaves in the role of humans on the landscape:

“Bioregions are tentatively defined as biologically significant areas of the Earth’s surface which can be mapped and discussed as distinct existing patterns of plant, animal, and habitat distributions as related to range patterns and… deformations, attributed to one or more successive occupying populations of the culture-bearing animal (aka humans).”

So basically his idea is to acknowledge that humans are animals too, and understanding the role they play within natural landscapes could “..aid in the conservation and restoration of wild ecosystems.” Peter Berg latches on to this idea and publishes an influential essay in 1977 on the “North California Bioregion” followed by an anthology in 1979 of “essays, poems, stories, prose, interviews, and oral histories (which) speak of the region’s ecological integrity and biological and cultural history”.

By 1980, we are off to the races. The term “bioregion” is used with increasing frequency, and the bioregionalists in particular were on fire. It was interesting to see how many new concepts that we now take for granted were introduced during that decade. In the early 80s, the idea of using watersheds (or hydrological basins) as a governing principle is introduced, epitomized by J.J. Parson’s influential essay “On ‘Bioregionalism’ and ‘Watershed Consciousness’” in 1985.

Anthropologists lean in to the term as well, for example, a paper about Zuni sacred theater, which defines a tribal “Zuni bioregion”. The critical theory people join the party, adding new concepts like “deep ecology” and “ecofeminism” to the mix. The urban planning people start contributing ideas around “green cities” and “sustainable development”. Probably the most important book of the decade was Dwellers in the Land: The Bioregional Vision by Kirkpatrick Sale (put out by the Sierra Club), which really brought bioregions into the mainstream.

Concurrently, even in the early 80s, you see agronomists starting to use the term in reference to building “sustainable farming systems”, taking a more pragmatic approach to defining bioregions by climate type, hydrology, and soil characteristics. In 1983 we get the landmark paper on biodiversity conservation “A Regional Landscape Approach to Maintain Diversity” by Reed Noss, who is later known as the father of “ecoregions” (and also one of the lead reviewers of the One Earth bioregions).

Something strange happens in 1990 with the publication of an essay by Donald Alexander entitled “Bioregionalism: Science or Sensibility?” which sets up a sort of ontological battleground, pitting scientists against philosophers around the definition of bioregions. An early-career philosopher, Alexander was the product of a time when post-structuralist theory was all the rage and used to critique every academic discipline under the sun.

He makes that claim that all the hard work by scientists — people studying the distribution of conifer forests, or the life cycles of amphibians, or the seasonal migrations of bison — “…mystifies the concept of region, discounting the role of subjectivity and culture in shaping regional boundaries and veers toward a simplistic view of ‘nature knows best.’”

This is such a strange thing to say. We still have so much to learn about the intricate web of life upon which we humans depend. Instead of embracing new knowledge about the ecosystems of the world, Alexander frames science as a problem. It strikes me that centering human experience above all else is precisely the reason why we’ve gotten ourselves into the mess we’re in, crossing every planetary boundary on our road to maximum fulfillment. But I digress..

In the 1990s we see a big ramp-up of publishing on the topic of bioregions — increasing 10-fold from about 100 per year to 1000 per year by Y2K. During this time, a lot of progress is made applying biogeographical frameworks to the fields of both biodiversity conservation and natural resource management.

This includes an important textbook by K.R. Miller Balancing the scales: guidelines for increasing biodiversity’s chances through bioregional management (1996), which describes an ecosystem as a type of bioregion. A couple years later we have the first application of bioregions to the development of a national-scale plan for protected areas (in Australia). And in 1999 we have the first textbook on Applied Biogeography that compares the relative strengths of global bioregional frameworks.

In the 2000s there is an increased volume of scientific publications on bioregions alongside an increased sophistication around the use of the term. In particular, we see research produced specifically to inform models for conservation policy, including everything from “A bioregional approach to tropical forest conservation” (in Costa Rica) to fire-driven ecosystems in California to the montane lakes of New England. The first bioregional map of “Global seagrass distribution and diversity” also comes out in 2007, and the same year the first complete set of marine ecoregions and provinces is created.

Throughout the decade, there is still a healthy output of material on bioregionalism like the 2003 book LifePlace: Bioregional thought and practice, which is described as a “…provocative meditation on bioregionalism and what it means to live, work, eat, and play in relation to naturally, rather than politically, defined areas.”

By 2010, there were roughly 2500 scholarly articles and books being published annually on bioregions, and it is during the 2010s that we enter the modern era of biogeography. With the advent of affordable satellite-based remote sensing products and advanced computer modeling capabilities, novel insights were generated daily about how ecosystems function and what we can do to more effectively protect them. Just a small selection of titles illustrates the depth of scientific knowledge created by leveraging bioregional frameworks:

• “Bioregion heterogeneity correlates with extensive mitochondrial DNA diversity in the Namaqua rock mouse”
• “Improving bioregional frameworks for conservation by including mammal distributions”
• “Building a bioregion through transboundary conservation in Central America”
• “Distribution, abundance, diversity and habitat associations of fishes across a bioregion..”
• “Descriptive bioregionalisation and conservation biogeography: what is the true bioregional representativeness of protected areas?”
• “Big data suggest migration and bioregion connectivity as crucial for the evolution of Neotropical biodiversity”
• “A network approach for identifying and delimiting biogeographical regions (bioregions)”

This was also the decade that brings us a big update to the terrestrial ecoregions framework (Dinerstein et al. 2017), which would later provide the foundation for One Earth’s bioregion framework. New advanced approaches to delineating bioregions are developed, for example, based on distribution patterns of particular species, such as “Infomap Bioregions” (Edler et al. 2017). A big update to the Köppen-Geiger climate classification maps comes out at an enhanced 1 km resolution, and we see governments starting to utilize bioregions, for example the U.S. Geological Survey in its 2017 guide to Bioregions of the Pacific U.S.

During this decade we also see some major works on bioregionalism, including The Biosphere and the Bioregion, a compendium of the writings of Peter Berg, and the aforementioned essay by Richard Evanoff, “Bioregionalism: A Brief Introduction and Overview”. The word’s first “bioregional bank” — One PacificCoast Bank — is formed in 2011 by Ecotrust, signifying another big trend in the decade, the application of bioregionalism to mainstream economic theory and the financial sector, as summarized in the book The Bioregional Economy by M.S. Cato.

That takes us more or less to the present day. In 2020, roughly 3500 scholarly articles were published referencing bioregions, most of them concerning issues of biogeography but expanding to other fields of research including public health, in particular disease transmission and nutrient flow models. 2020 sees the release of two major biogeographical references — a comparative analysis of quantitative approaches to “Determining marine bioregions” (Hill et al.) and the IUCN Global Ecosystem Typology (2.0) — concurrent with the release of the review version of One Earth’s own bioregions framework.

Just last year, there were roughly 4400 articles published in the field and there seems to be no sign of things slowing down in 2024 (with over 600 papers published in just the past few weeks). While the large majority of these papers are concerned with the biological sciences, particularly macroecology, there is a steady undercurrent of literature on bioregionalism (roughly 10% of the recent total), spanning fields such as agroecology, the social sciences, and environmental philosophy.

One paper that just came out is a great example of the huge breadth of meanings that can be contained within the scope of bioregionalism. “A Critical Biocultural Identity Framework” (Cavaliere & Branstrator, 2023) explores social science strategies for the conservation of biocultural identity in rural Alaska. “This research extends place identity by applying critical ecofeminist-posthumanistic epistemologies that analyze the structural power components of biocultural identities.”

I’m not exactly sure what it all means, but I do know that we should expect to see many more, and increasingly more varied, uses of the word “bioregion” in the future. It’s a perfect word for a time that invites all of us to embrace complexity fully, in all its glory. From frogs to feminists, serpents to scientists, bison to bankers — it is the bioregion that connects us all together.

*Note: This lit review was a bit tricky because the term “bio region” (with a space) is used commonly in DNA research and academic literature concerning genetics. To get a really accurate count of the papers concerning bioregions, we would need to scrape all the records from Google Scholar and run a program (or maybe an AI process) to removed redundant records. I’ve found for example, Google Scholar will count a reference even if the target word is found at the bottom of a web page showcasing related articles. This is a pretty major flaw IMO, so any AI folks who want to take this one on, please reach out!

A brief history of bioregions and bioregionalism in scholarly literature was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

Even more staggering, the ‘Top 0.1%’ (roughly 5.3 million adults) are responsible for 3x more greenhouse gas emissions than the entire bottom 50% of the world’s population (2.7 billion adults), exceeding a total annual carbon footprint of 225 tonnes CO2 per capita [3].* The bottom 50% have an average carbon footprint of just 0.6 tCO2 per capita.

The ultra-wealthy have seen their fortunes continue to rise, even during the COVID-19 pandemic. A recent Oxfam report, Survival of the Richest, found that the Top 1% saw their fortunes increase collectively by nearly $28 trillion over the first two years of the pandemic, as millions of people fell into poverty [4]. And this inequality is expected to dramatically increase by 2025, according to Wealth-X:

Why is this happening? One of the main reasons is that the ultra-wealthy, especially in countries like the U.S. have the lowest effective tax rates. According to a ProPublica investigation, the average effective tax rate for four of the richest men in America was about 1% [5]! Hundreds of loopholes and offshoring strategies allow the wealthy to shelter their assets from tax collectors. In the midst of a polycrisis, this makes a clear moral case for the implementation of a global wealth tax.

I’ll review the two leading wealth tax proposals, along with a compromise proposal developed at One Earth which that could raise $680B per year.

As I reviewed in my previous post about the Paris “Finance Pact’ summit earlier in the year, a coalition of NGOs released a letter signed by over 150 economists, calling for a global wealth tax that they estimate could raise $2.5 trillion per year to finance environmental and social programs.

The $2.5T number is eye-popping. If it were possible to raise that much revenue by taxing the rich, we would generate enough capital to cover the entire clean energy transition. According to the International Energy Agency’s new net zero scenario, we need to increase spending from $1.8T today to $4.5T by 2030 [6] — a gap of just over $2.5T.

How feasible would such a tax be? The $2.5T proposal comes from a report entitled Taxing Extreme Wealth [7], developed by Oxfam, the Institute for Policy Studies, and Patriotic Millionaires with data provided by Wealth-X and Forbes covering 66 countries. The report finds that by EOY 2021, globally there were:

• 3.6 million individuals between $5-$50 million in wealth with assets totaling $75.3 trillion
• 183,000 individuals between $50 million-$1B in wealth with assets totaling $36.4 trillion
• 2,660 global billionaires with total combined assets of $13.8 trillion

An annual tax on total assets (not an income tax) broken into three brackets — 2% tax on the first group, 3% on the second, and 5% for billionaires — would raise $2.5 trillion per year. (Note: the effective tax rates are lower than what’s listed, as the first $5M in wealth would not be taxable, only amounts above the $5M threshold).

The case for an even more aggressive version of the tax is also made, based on the work of Gabriel Zucman and Emmanuel Saez, which seeks to gradually phase out the existence of billionaires [8]. In that scenario, billionaires would be taxed at 10%, generating $3.6T in annual revenues. Needless to say, this would be extraordinarily difficult to implement..

One thing we all know is that billionaires are extremely influential in politics, and even a relatively small billionaire tax, say 2%, would be fiercely opposed. Implementing a 5%-10% tax on extreme wealth tax, while totally justified, is almost impossible to imagine. Part of the challenge is that the uber rich have most of their wealth locked up in private equities, which can be difficult to liquidate in significant quantities.

An alternative, and more modest, tax scheme is proposed by French economists Thomas Piketty and Lucas Chancel, Co-Director of the World Inequality Lab (WIL) housed at the Paris School of Economics and UC Berkeley [9]. The WIL proposes a progressive tax focusing only on wealth holders above $100 million in total assets. They find:

• 62.5k individuals between $100M-$1 billion in wealth with assets totaling $15.3 trillion
• 2.6k individuals between $1B-$10 billion in wealth with assets totaling $8.3 trillion
• 155 individuals between $10B-$100 billion in wealth with assets totaling $3.2 trillion
• 11 individuals between wealth above $100 billion with assets totaling $1.4 trillion

An annual wealth tax is applied in four brackets — 1.5% tax on the first group, 2% on the second, 2.5% for the third and 3% for the centibillionaires — raising close to $295 billion per year.

This proposal would be far easier to implement. Instead of chasing after millions of people, you’re only focused on about 65,000 individuals. To be fully effective it would require a “simultaneous policy” [10], whereby most every nation would adopt the policy in unison, removing the ability for the rich to shelter their assets in tax havens. The authors admit this would be difficult to implement, and they suggest that a bilateral agreement between the U.S. and EU would capture about half of the potential, assuming only a modest amount of flight.

Given the gravity of the climate crisis, the extinction crisis, the concurrent poverty and healthcare crises, and increasing food insecurity globally, this second approach does not seem sufficient to meet the needs of a world spiraling out of control. So at One Earth (OE), we are proposing a middle path that incorporates the best features of the two approaches.

Estimating various wealth brackets and tax rates involves some really complicated statistics, but fortunately WIL offers a cool calculator to estimate wealth data by population group along with effective tax rates. To create the OE tax model, we needed a more refined understanding of the various brackets in order to estimate revenue from a gradually increasing tax rate applied as follows:

• 1.5M individuals between $10M-$100 million in wealth with assets totaling $33 trillion
• 62.5k individuals between $100M-$1 billion in wealth with assets totaling $15.3 trillion
• 2.6k individuals between $1B-$10 billion in wealth with assets totaling $8.3 trillion
• 155 individuals between $10B-$100 billion in wealth with assets totaling $3.2 trillion

Each of these are divided into 10 sub-brackets to simulate a gradual (rather than a stepped) tax rate, rising from a 1% tax for people with $10M-$20 million in wealth all the way to a 3% tax rate on centibillionaires. The upper brackets are the same as the Piketty proposal, but this proposal incorporates an additional full bracket for individuals holding $10M-$100 million in total assets:

Because the exercise was focused on a wealth tax for the Top 0.1%, we also added a half-bracket for those with $4.5M-$10 million in wealth. Why $4.5M? This actually involved some tricky math. The 4 brackets listed above only cover the wealthiest 1.6 million people (the Top 0.03%). So we had to add an additional 3.7 million people to get to the wealthiest 5.3 million — the Top 0.1% based on a global population estimate of 5.3 billion adults in 2022 [11]. The WIL calculator does not give us that much detail, so we used the wealth distribution curve developed by Credit Suisse for the Global Wealth Report [12] in order to establish the threshold for the Top 0.1% at approximately $4.5M in total assets.

When you add it all together, annual revenue from One Earth’s proposed global wealth tax would be about $680 billion per year (rising to about $700B by 2030), more than double the Piketty proposal. The lowest bracket generates $46B; the second $206B; the third $188B; the fourth $139B; the fifth $69B; and $32B from centibillionaires. This approach would certainly be more feasible to implement globally, however one wonders if the difficulty involved in chasing after an additional 3.7 million people is worth the relatively modest gain of $46B per year.

You may think this is a fantasy pursuit, but the movement for a global wealth tax has been steadily gaining steam. Almost two-thirds of Americans now think a wealth tax is a great idea [13], and in the UK that figure rises to three-quarters [14]. At the recent climate march New York City in September, “Tax the Rich” signs appeared in abundance. While a global wealth tax generating $680 billion per year won’t entirely solve the climate crisis, it would go along way in accelerating the transition to renewable energy and preparing communities most at risk from the ravages of climate change.

*Note: The World Inequality Report report finds a steady increase in the annual carbon footprint of the Top 0.1% — growing from 155 tCO2 in 1990 to 209 tCO2 in 2010 and 217 tCO2 in 2015. We project continued growth at roughly 1 tCO2/yr, arriving at an estimated carbon footprint of 225 tCO2 for 2022.

Could a wealth tax on the top 0.1% help solve the climate crisis? was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

The ‘New Global Financing Pact’ was originally inspired by the prime minister of Barbados, Mia Motley, who called for a “green transition that leaves no one behind.” The idea was quickly backed by French president Emmanuel Macron and subsequently endorsed by many world leaders including Joe Biden.

The core topic of the summit was the Bridgetown Initiative (named after the capital of Barbados), which demands that multilateral development banks (MDBs) and the International Monetary Fund (IMF) reform their lending practices, particularly in response to natural disasters. These practices have been described as “imperial” — locking poor and vulnerable countries into toxic debt they can never repay whilst providing preferential terms for new fossil fuel infrastructure that worsens the climate crisis.

Barbados is one of 58 member countries of the Climate Vulnerable Forum, a cohort of nations pushing for major financial reforms and new funding commitments to help the world’s poorest and most at-risk countries respond to worsening impacts caused by climate change (and extractive development).

According to the newly released Climate Vulnerability Monitor (CVM3), poor countries in the Global South have borne the worst impacts of climate change, whilst contributing the least to its underlying cause. And these impacts will increase in frequency and severity in the coming decades, disproportionately affecting the developing world.

Who is responsible?

A major study estimates that loss and damage from climate change will cost developing countries between $290-$580B per year by 2030, rising to more than $1 trillion by 2050. From a moral perspective, the lion’s share of these costs should be provided by wealthy countries as ‘reparations’ to developing countries for loss and damage.

Since 1965, when scientists officially warned governments about climate change, North America and Europe have gone hog wild on fossil fuels, emitting nearly two-thirds of total greenhouse gas emissions to date (705 GtCO2 out of a total 1102 GtCO2 through 2021 to be precise). So it would stand to reason that the Global North owes the Global South.. big time.*

Until very recently, this topic has been off-limits in the UN climate negotiations. Even just a few months ago when John Kerry, the U.S. Special Envoy for Climate, was asked about finance for loss and damage he said, “There is not enough money in any country in the world to actually solve this problem.”

That is debatable… The U.S. alone managed to come up with $2.2 trillion for just the first round of COVID relief by printing money more or less out of thin air. Giving Kerry the benefit of the doubt, let’s agree there isn’t enough money in any one country to pay for loss and damage. However, if wealthy countries were to join forces there certainly is an abundance of capital to be had.

And I’m not talking about voluntary government pledges. Thirteen long years after the COP15 announcement by then Secretary of State Hillary Clinton, the commitment for $100B billion in new annual funds to assist developing countries has not yet been fulfilled. Even if donor countries do reach that goal by 2025, this wouldn’t come close to supplying the funds needed to respond to the crisis at scale.

How do we close the climate finance gap?

Several proposals have been put forward by NGOs and think tanks to meet the urgent need for climate finance. The Climate Damages Tax Coalition (CDTC) has proposed a levy on new fossil fuel extraction at $5/tonne gradually rising to $250/tonne by 2050. If applied globally, this would meet the low-end estimate of $290B per year for loss and damage funds in the Global South.

Another proposal, which seems to be gaining a bit of steam, is a levy on maritime shipping that could generate as much as $60B per year. An additional tax applied to aviation could generate $120B per year. Critics say these taxes would slow the process of decarbonizing the transport sector, but quite the contrary is true if a split-revenue approach were applied (recommended by CDTC) — giving shipping and aviation companies half of the proceeds to directly finance the decarbonization of their fleets.

No doubt these industry-specific proposals would be fought fiercely by corporate lobbyists and armies of morally bankrupt lawyers. If there’s one thing we’ve learned about late-stage neoliberal capitalism, it is that the corporation always seems to win. Twenty years of failing to implement a simple carbon tax should make that clear.

Will the carbon markets help? While both compliance and voluntary carbon markets are growing, they are still far too small currently to have much of an impact. They have also been riddled with accounting and verification problems that erode the credibility necessary for these markets to scale — some credits were even shown to have funded new fossil fuel projects! Perhaps the voluntary market will scale to $50B per year, as suggested by Mark Carney, but much of that will be directed to nature conservation and restoration, which is important but won’t help much on loss and damage.

How about taxing wealthy individuals?

In advance of the Paris summit, a coalition of NGOs released a letter addressed to government leaders in the Global North, now signed by over 150 economists, which calls for an ‘all of the above’ approach to solve the converging crises that now face our planet. The letter offers a three-pronged solution:

1. Implement a global “windfall tax” on fossil fuel profits and rapidly phase out fossil fuel subsidies.
2. Cancel unfair debts held by Global South countries and end preferential terms for fossil fuel infrastructure projects.
3. Tax the rich by levying a global wealth tax on the world’s wealthiest individuals, raising as much as $2.5 trillion per year.

When asked about a global wealth tax President Macron dismissed it, and it wasn’t on the formal agenda of the Financing Pact summit. But the stake has been planted in the ground. Going after the people that accumulated the most wealth in the midst of multiple crises might be the clearest pathway to raising the funds urgently needed — not only for loss and damage but to finance the transition to a zero carbon economy.

In the next post, Could a wealth tax on the Top 0.1% solve the climate crisis? I’ll review the various proposals put forth thus far, and how this could become a defining campaign focus for climate activists over the next five years.

*A recent study examining the “atmospheric appropriation” by Global North countries of the remaining carbon budget puts the estimate at a mind boggling $192 trillion owed to Global South countries.

It’s time for wealthy countries to open the climate finance spigot was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the six years following the adoption of the Paris Climate Agreement, the world’s 60 largest banks have provided a staggering $4.6 trillion in financing for fossil fuels. In 2021, the year that many of these banks pledged to achieve net zero ‘financed emissions’ (the amount of carbon pollution associated with assets under management), banks spent nearly three-quarters of a trillion dollars to further oil, gas, and coal development. It goes without saying that if this trend continues, consumer banks will lock in sufficient greenhouse pollution to take us well past the 1.5°C redline in global temperature rise.

The role of banks and financial institutions in driving the climate crisis has been known for a while. Rainforest Action Network, Banktrack and the Sierra Club have published annual reports tracking the banking sector’s role in financing climate change for almost a decade. Every year, the Banking on Climate Chaos report shows that the “Dirty Dozen” — the 12 most harmful banks in the world (see above) — are responsible for an average of $400B in annual fossil fuel investments. And according to the 2022 report, some banks like Wells Fargo and JP Morgan Chase, along with almost all of the major Canadian banks, have actually increased their spending!

To put this in context, the 15 worst banks are now responsible for nearly HALF of all global funding for fossil fuels (the new IEA World Energy Investment report finds roughly $900B in fossil fuel investing in 2021). Without them, the fossil fuel industry as we know it today would collapse, making way for cheaper, cleaner renewable energy projects. And where do the banks get the funds to create all this climate chaos? Well, from us consumers of course!

I’ve been tracking the topic of personal climate finance for more than a decade and have been part of a few public campaigns to get people to pull their money out of fossil banks. None have really taken off, but this year I sense a big shift in the zeitgeist. People have woken up to the sickening reality that their bank deposits, and their retirement savings, are literally killing the planet…

It doesn’t matter if you drive an electric vehicle, recycle all your plastics, or offset your air travel emissions. If you have a cash balance at one of the 60 banks listed in the Climate Chaos report, your hard-earned dollars are partially responsible for the disruption of our global climate system.

Money deposited into savings accounts is the most lethal form of climate cash. As a rule of thumb, in the U.S. 90% of these assets can be used by banks to underwrite huge investment deals in ExxonMobil, for example, which is working to develop new oil projects in countries like Guyana, one of the most densely forested places on Earth.

This realization seems to be sweeping social media. Banktrack recently launched the “Fossil Banks No Thanks” campaign targeting European banks. In the past year, we’ve seen activists shutting down traffic at the JP Morgan Chase headquarters in Manhattan, NASA scientists arrested after chaining themselves to a bank entrance, and social media influencers calling out the toxic relationship between our cash and the climate crisis (I highly recommend watching Emerson Brophy’s musical number called “Banks to Boycott”):

The pressure has been mounting on banks to heed the calls of their eco-conscious customers, and it’s starting to work. The Net Zero Banking Alliance (NZBA) representing 115 major banks and almost 40% of global banking assets, recently strengthened its ‘Race to Zero’ requirements for membership. A large coalition of NGOs have called for compliance to be mandatory, restricting their financing of fossil fuel projects. The campaign group ShareAction has called out major European banks for falling short on their climate commitments, and it’s now providing a ranking of the best and worst banks for the environment. To date only a few banks have committed themselves to environmental and social welfare, like Beneficial State Bank in the U.S. and Co-operative Bank in the UK (check out its amazing ad campaign below).

But that is changing fast. Lloyds Bank announced in October it will no longer provide direct financing to fossil fuel projects as part of its new climate policy. And not to be outdone, HSBC the world’s seventh largest bank, just announced in December that it will cease oil & gas funding. The Netherlands’ ING bank and Spain’s BBVA bank are also drawing up policies to end direct financing of new oil & gas extraction projects.

This seismic shift in banking policy may be due in part to the pressure from an array of climate-friendly fintech start-ups like Ando and Atmos in the U.S. as well as new debit card products like Aspiration and Bank of the West’s 1% for the Planet account, aimed specifically at millennial consumers who want a bank that aligns with their environmental and social values. The risk to legacy banking institutions is quite significant..

In the U.S. alone, banks are sitting on approximately $1.1 trillion in consumer savings deposits and another $4.6 trillion in corporates savings. Canadians have $300 billion in personal savings, and Europeans have amassed over $1 trillion in cash. These deposits are relatively easy to move, and with consumers around the world waking up to the power of their banking decisions to either make or break the climate, I predict we’ll see a mass migration of funds out of the Dirty Dozen, and into banks that are putting all that capital to work for the benefit of the planet.

Bank accounts are just the beginning. In OECD countries, there are another $56 trillion in retirement savings held in 401(k)s, pension funds and other accounts, $40 trillion of which are managed for U.S. retirees. Three American asset management firms control a whopping $22 trillion on behalf of consumer and institutional investors — BlackRock (with $10 trillion), Vanguard (with $8 trillion) and State Street (with $4 trillion).

Blackrock and State Street joined the Net Zero Asset Managers initiative (NZAM), which means at least in principle they are agreeing to reduce their financed emissions to zero by mid-century. But they have been known to be some of the biggest backers of oil & gas projects. For this reason they have been targeted by climate activists. Earlier in the year, faith leaders stormed Blackrock’s lobby in New York City. Note: Vanguard had also joined NZAM but just pulled out, caving into pressure from conservative politicians.

In the U.S. the pressure is on for mutual funds to clean up their act. Americans have the majority of their retirement savings in mutual funds, and individuals are starting to push their employers to offer climate-friendly 401(k) options. Our own organization just moved its retirement plan to Carbon Collective, which offers a completely fossil-free retirement plan. While such plans are still rare, they are growing rapidly. And just a few weeks ago a new rule by the Biden administration will finally ease restrictions on environmental and socially conscious investing products, encouraging asset managers like Blackrock and Vanguard to offer “green” retirement options. This will unlock the floodgates, channeling trillions to climate-friendly mutual funds.

To help individual investors, the nonprofit As You Sow offers an interactive tool called Invest Your Values, which examines the holdings of thousands of mutual funds and scores them based on their environmental and social impacts as well as their financial returns. Another research firm, Etho Capital goes deep in tracking the carbon emissions of over 10,000 publicly listed companies, including often hidden Scope 3 emissions (aka supply chain emissions). They offer an “Etho Climate Leadership Index” available as an ETF. In a recent analysis, their index has outperformed a listing of prominent fossil-dependent companies (which they call “Laggards”) by a staggering 8% per annum over a 5-year investment period.

Gitterman Asset Management, one of the leaders in the climate investing space, released a report in 2021 with ESG data provider Entelligent called the Great Repricing, which for the first time correlates physical climate risks with capital market exposure across most asset classes. The report maps out a great transition that is about to occur in capital markets — as once profitable “blue chip” companies become too risky due to their fossil fuel dependency, while new opportunities in clean energy and climate tech emerge as big winners. (Check out Jeff Gitterman’s show on FintechTV for interviews with some of the world’ smartest climate investors).

For those that have the bulk of their retirement savings in pension funds, it’s certainly much harder to influence investment policies, but a new campaign in the UK has carved out a pathway for individual pensioners to make a difference. The Make My Money Matter campaign was launched for the purpose of gathering public influence to force change in the retirement savings industry. As Campaign Director David Hayman says, “If you have a pension, you have power. So much power that greening your pension is 21x more effective at reducing your carbon footprint than giving up flying, going veggie, and switching your energy provider combined.”

The public was woken up to the powerful role we all can play in solving the climate crisis through our personal finance decisions. As I detailed in 6 reasons why we can be optimistic about solving the climate crisis, the economic tides have turned against the fossil fuel industry. Now we just have to cut off the flow of finance, preventing new polluting projects from getting funded in the first place. It turns out that decision is largely in our hands.

Climate finance gets personal: people are realizing that their banking decisions could make or… was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.

On the heels of COP27, here are my 6 top reasons why I believe we can be cautiously optimistic about solving the climate crisis, getting the world on track to achieve the 1.5°C target.

1. Renewables have reached a turning point, and emissions will peak before 2025.

After 200 years of fossil fuel expansion, we are at a turning point in the global energy system. Fossil fuels are getting less attractive and more costly everyday (even without carbon taxes), as investment opportunities in renewables and energy efficiency become more and more appealing. The International Energy Agency (IEA) in their recent World Energy Outlook has done an about-face and is now predicting that fossil fuel emissions will peak by 2025. Putin’s war in Ukraine and OPEC’s recent price hike has exposed the fragility of an energy system dependent upon fossil fuel supply chains. While there has been a temporary bump in production of oil and gas to respond to the emergency, the golden age of natural gas is over and will be replaced by cheaper, cleaner, and more reliable energy sources.

A new report by BloombergNEF finds that 87 countries have now reached clean energy tipping points with accelerated adoption of 10 critical technologies. The U.S. despite political intransigence, managed to go from 5% to 20% renewable power in just 10 years. Solar is now 33% cheaper on average than natural gas, and Xcel just set a record in Colorado — a utility solar project with storage at 4.5 cents per kWh (3 cents with subsidies), far below any form of fossil fuel generation. China single-handedly quadrupled global offshore wind capacity in a single year. And for the naysayers that continue to harp on about the environmental impacts of renewables, detailed analysis has shown that the harmful externalities associated with solar and wind energy are almost imperceptible relative to those of fossil fuels.

In fact, the University of Oxford in a new study shows that transitioning to 100% renewables would result in $12 trillion in energy savings by 2050 versus our current energy system. So effectively, solving climate change pays for itself many times over. The EU is beginning to experience the clean energy windfall first hand, with $29 billion in savings this past summer due to expanded solar power deployment. Kingsmill Bond at the Rocky Mountain Institute lays out a Theory on Rapid Transition and why it spells a decade of opportunity for some investors and a decade of pain for those wedded to their soon-to-be stranded fossil fuel assets.

2. The Climate Economy is about to explode with an influx of public funding.

I don’t think people have fully grasped the magnitude of the passing of the U.S. Inflation Reduction Act (IRA), which has at its center the single largest commitment of public dollars to address climate change to date — well over $800B in potential funding. Robinson Meyer’s excellent piece in The Atlantic entitled “ The Climate Economy is about to explode” breaks down how this will have enormous ripple effects globally, as international supply chains compete for those U.S. clean energy dollars and other governments ramp up their own stimulus packages. California, for example, just signed into law a whopping $54 billion stimulus for climate solutions, which is expected to create 4 million new jobs and cut pollution by 60% by 2030. And at the G20 summit, Indonesia signed a $20 billion deal with the U.S. to accelerate its clean energy transition.

The Climate Policy Institute, which tracks finance flows for mitigation and adaptation efforts globally, is now projecting a record $850 billion in total investments in climate change solutions in 2021, with half coming from public funding sources. This is roughly equivalent to all global fossil fuel investments (which have been steadily declining). When the numbers come in for 2022, we will have officially reached an inflection point with climate investments exceeding fossil investments. And it will rapidly accelerate from here on out as many countries eye windfall taxes to capture and redirect some of the exorbitant inflationary revenue reaped by companies like Exxon and Chevron (both of which recently posted a 280% jump in profits). Green Bonds are also taking off, now representing a total of $1.8 trillion in issuances, and they could climb to $5 trillion by 2025 (PDF).

We’re also seeing Sovereign Wealth Funds (SWFs) and Multilateral Development Banks (MDBs) get in the game. The One Planet Sovereign Wealth Funds Network, launched by President Macron just a few years ago, has now grown to 45+ of the world’s largest institutional investors with more than $37 trillion worth of assets. This is a significant milestone, as SFWs have historically been a major driver in continued fossil fuel expansion. The network includes petrostates like the UAE, which hosted an annual gathering for the network in October, focusing on the clean energy transition. Concurrently, there is a new push for MDBs to open the floodgates of capital through relatively modest shifts in lending policies. An influential G20 report lays out a pathway for the development banks to relax their overly strict risk and capitalization requirements without losing their coveted AAA credit ratings. When implemented, this would unlock trillions to facilitate the clean energy transition in the developing world.

3. Private capital is flooding in, as climate becomes a major focus for investors.

For traditional digital tech companies, we’ve seen massive layoffs and capital constriction. But the climate tech sector is absolutely booming. Overall, climate tech venture capital reached 2.5x pre-pandemic investment levels in 2021 and it shows no signs of slowing down as the traditional tech sector declines. A new analysis by CB Insights found that in Q3 of this year, 50% of the biggest VC deals were in climate tech. These companies span the gamut of solutions — from renewable power and green fuels, to “nature tech” companies that advance forest conservation, to water processing technologies and climate-friendly agricultural solutions. The recently launched Climate Finance Tracker led by Vibrant Data Labs (housed at One Earth), tracks the new influx of private capital into climate investments, and ImpactAlpha is indexing an growing collection of stories on the new universe of investible opportunities in the climate space.

You might be thinking to yourself that this is all well and good, but what about the hard-to-abate industrial sectors like steel, jet fuel, and chemicals? The recently released One Earth Climate Model, a 2-year collaboration with leading climate and energy experts commissioned by the UN’s Net Zero Asset Owners Alliance, provides for the first time pathways to decarbonize even the most challenging nooks and crannies of the global economy. Some of the most exciting opportunities from an investor’s perspective may lie specifically in these industrial sectors. A Swedish green steel firm just got the green light to build its first plant. Universal Hydrogen was just backed by major investors and aviation companies to deliver plug-and-play hydrogen fuel containers for domestic aircraft. Solugen just closed another $200 million for its highly lucrative “bioforges” that produce specialty chemicals without any carbon emissions.

The influx of money and opportunity for investors is matched by an influx of talent. There has been a mass exodus of top management and engineering talent out of the fossil fuel industry. Employees are fed up with the toxic work culture of legacy oil & gas companies (and their toxic products), and they’re heading for brighter opportunities in the clean energy sector. In parallel, there has been a mass exodus from traditional tech. Even before the big layoffs of November, top engineers were quitting in droves to join climate tech startups. Perhaps this trend is due to the sudden realization by people with high IQs that climate-friendly companies are going to fare much better over the coming decade and will likely become the dominant driver of economic growth.

4. Investors and governments are waking up to the massive risk associated with fossil fuel equities.

A stunning report by Finance Watch estimates that the world’s 60 largest banks are currently exposed to $1.35 trillion in fossil fuel assets whose value will drop dramatically in the transition to net zero emissions. Digging into annual shareholder reports, they found that the risk level associated with stranded assets is comparable to that seen just before the subprime mortgage crisis in 2008. AXA in its ninth global survey of 4500 top risk experts established, for the first time, climate change as the #1 global risk. People are finally waking up to the huge economic threats stemming from continued fossil fuel investment, and both governments and banking institutions are getting ready to crack down through incoming regulations. The European Union is now considering a ban on new fossil fuel investments, and the first major UK bank, Lloyds, just announced it will cease direct financing for new oil and gas fields.

U.S. Bank regulators are also joining in. The Federal Deposit Insurance Corporation and the Federal Reserve are moving a political mountain by organizing a joint exercise in 2023 to stress test six of the nation’s largest banks, examining the economic ramifications of climate change and energy decarbonization scenarios. According to a recent analysis by BloombergNEF the world is currently spending $838 billion per year on fossil fuel investments. This will have to get cut by half or more by 2030 (PDF) in order to solve the climate crisis, and with regulators suddenly interested in climate risk we could see an accelerated phase-down of fossil fuel investing within the next 5 years.

In a recent talk I gave at the 2022 ICE Climate & Capital conference, I laid out three distinct types of risk associated with climate change which asset owners and managers need to be thinking about. The first is physical risk, for example the increased flooding of roads, ports, or other key infrastructure assets that are essential for doing business. The second type are “stranded assets” — sunk capital in developing new fossil fuel reserves that will not be able to be sold due to shifts in government policy and markets more broadly. The third is social or brand risk, where a company is seen as a laggard (or worse) because of its association with the fossil fuel industry. Managing these risks in the coming decade will be tricky, but economists have proposed several brilliant strategies to support investors in gracefully transitioning out of fossil fuels and into climate solutions.

5. Investors are also getting very serious about their own transitions to net zero financed emissions.

It’s clear the pressure is on to reduce risk, but as investors move out of toxic legacy enterprises, where will they put all that money? How specifically, should they engineer their own financial transitions in order to support climate solutions that will deliver net zero emissions globally by 2050? These critical questions pertaining to financed emissions are being worked on by 7 distinct alliances underneath the Glasgow Financial Alliance for Net Zero (GFANZ), which includes 550+ member institutions with more than $100 trillion in assets — from asset owners and managers, to insurers and banks, to service providers and consultants. As Mahmoud Mohieldin, Egypt’s climate action champion, said at COP27, “Every company, bank, insurer and investor will have to adjust their business models, develop credible plans for the transition and implement them.” That hard work is now underway.

The Science Based Targets Initiative (SBTi), after years of haggling, was able to release fairly aggressive standards for corporate entities seeking to achieve net zero emissions. For most sectors this means a 50% reduction of actual emissions within a decade, and 95% or more reduction by 2050, with the small ‘net’ component achieved though carbon dioxide removals (aka neutralizations). Hard-to-abate sectors are given a little more leeway room, which has been criticized by some, but SBTi did succeed in creating a common baseline for the entire financial sector. A fossil fuel company, for example, can no longer claim neutrality simply by planting trees to offset gasoline emissions. Now that we know what net zero means for enterprises, institutional investors have a clear starting point. The UN-convened Net Zero Asset Owners Alliance (NZAOA), which commissioned a major update of the One Earth Climate Model mentioned above, offers a detailed transition scenario for all industrial sub-sectors, supporting asset owners and managers in advancinv internal decarbonization targets. The Net Zero Banking Alliance (NZBA) is also making progress, with more than half of members now setting 2030 targets.

This acceleration of activity is certainly due, in part, to external pressures and increasing visibility into Scope 1–3 emissions of every company and financial institution. Climate Action 100+ just put out their new stocktake and found that most companies pledging net zero do not have credible decarbonization strategies in place and are arguably guilty of greenwashing. A new UN high-level panel report entitled “Integrity Matters” lays out 10 recommendations for non-state actors to establish clear, science-based net zero claims, and warns of coming regulations. The Carbon Disclosure Project (CDP), with 18,700 companies representing half of global market cap, has now adopted a rigorous climate-related disclosure standard developed by the International Sustainability Standard Board (ISSB). It includes a new requirement to use climate-related scenarios to inform resilience analysis, a move that has been embraced by the G20, G7, and the global Financial Stability Board. This means no more wiggle room for greenwashing. In a sign of things to come, the Biden administration just announced a requirement for all U.S. government suppliers to disclose their net emissions per the new CDP standard.

6. People are realizing that their personal banking decisions could make or break our planet.

For the five reasons listed above, I believe we will soon be seeing a mass exodus of dollars out of fossil fuels and into clean, renewable energy solutions. If we cut fossil finance in half and double investments in climate solutions by 2030 we can get on track for a 1.5°C. But there is a 6th reason that makes me think we might achieve this milestone even sooner — Climate finance is getting personal.

I’m way over my word count, and this needs its own post!

6 reasons why we can be (cautiously) optimistic about solving the climate crisis was originally published in oneearth on Medium, where people are continuing the conversation by highlighting and responding to this story.