247 - Tim Coates - Sell flood mitigation to institutional players to finance water cycle restoration

A conversation with Tim Coates, co-founder of Oxbury Bank, the UK’s only specialist agricultural bank, about flood risk mitigation, water quality, water cycle restoration, selling flood mitigation to institutional investors and much more.

Tim Coast, a third-generation farmer founded an agriculture focussed bank. He argues that the best place to start (at least in the UK) water cycle restoration might be selling flood mitigation to institutional investors and other institutional players suffering from bad watershed management like the drinking water companies trying to make sure we have clean drinking water, insurance companies who pay when businesses and houses flood, the reinsurance companies that pick up the final bill, the towns which get regular flooding, the railways, etc. It doesn’t make sense to sell the cooling effect of healthy water cycles and ecosystems to people who are not on board yet. According to Tim, you will lose too much time on education and convincing and... we don’t have time!

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https://investinginregenerativeagriculture.com/2023/02/21/bart-van-der-zande-2/
https://investinginregenerativeagriculture.com/2024/03/22/chris-bloomfield-daniel-reisman/

https://foodhub.nl/en/opleidingen/your-path-forward-in-regenerative-food-and-agriculture/

Transcript

Speaker 1: 0:00

A third generation farmer founded an agriculture focused bank. He argues that the best place to start, at least in the UK, water cycle restoration might be selling flood mitigation to institutional investors and other institutional players suffering from bad watershed management the drinking water companies trying to make sure we have clean drinking water. The insurance companies who pay when businesses and houses flood. The reinsurance companies that pick up the bill. The final one, basically, the towns which get regular flooding. And don't forget the railways, which in many cases have built railroads very close to rivers. Look where the immediate pain in the watershed is, in this case the Thames, it seems water quality and flood risk mitigation. It doesn't make sense to sell the cooling effect of healthy water cycles and ecosystems to people who are not on board yet. You will lose too much time in education and convincing, and we don't have that time. If it's true that water vapor accounts for 60 to 70% of the greenhouse effect, well, co2 only accounts for 25. Why do we rarely discuss it? Maybe we choose to ignore it because it means we literally need to re-vegetate the entire earth. We bring back the marshes, the mangrove, superannual pastures with trees, and re-grow real forests that can bring back rain in strategic places. In short, bring back life, lots of plants, trees, animals back to many places on this earth natural climate engineering. It is time we take our role as keystone species super seriously.

Speaker 1: 1:39

In this special water cycle series, we interview the dreamers and the doers who are using the latest technology to figure out where to intervene first. They are making, or trying to make, the investment and return calculations and plans. So what's missing? What's holding us back? Maybe we lack the imagination to back them and try regeneration at scale. We're thankful for the support of the Nest Family Office in order to make this series. The Nest is a family office dedicated to building a more resilient food system through supporting natural solutions and innovative technologies that change the way we produce food. You can find out more on the nestfocom.

Speaker 1: 2:31

Welcome to another episode Today with the co-founder of the Oxbury Bank, the UK's only specialized agriculture bank and the only bank that has a singular focus on the rural economy. Plus, he's a third generation family farmer. Welcome, tim Hi, nice to be here and your regular listeners are. You know the first question which is coming. I mean, you grew up on a farm, your third generation, but still, do you remember when it clicked? Because many, actually I would say quote unquote escape after that and it goes somewhere very far from the family, please. So do you remember when it clicked for you and say now, actually I want to be in farming and not like by my own choice and not forced because I happen to be?

Speaker 2: 3:11

born on one.

Speaker 2: 3:13

Yeah well, you're correct in the sense of I did have some time away.

Speaker 2: 3:17

Yeah, so I spent my 20s basically doing other things, hence how the idea of being part of a team founding a bank wasn't so crazy, yeah, so there was a sort of moment that clicked, and actually it was probably going back best part of a decade now and actually it was being there with my father and talking about his retirement and obviously it was a very live conversation, but actually it was the sense of place that was really landed in, just that feeling that I really had to be in that spatial context to get what I really wanted out of life.

Speaker 2: 3:54

As I thought about it then, and I always sort of come back to that feeling of this amazing ability to be a steward of a certain part of our wonderful planet, and that for me, is the kind of continuous thing, that idea of stewardship, that idea of multi-generational, that idea of passing something on. So I do sort of remember it quite clearly, but actually led into a sort of similar sort of thought, and these are kind of quite visual memories. I can think about exactly where I was having each of these and there was a big moment for me, probably about six, seven years ago now where and this was just as I was really starting to take over running things day to day and I kind of knew what I had in terms of what, at the time, was quite a conventional arable farming unit- yeah, I was going to ask you about it.

Speaker 1: 4:43

Yeah, that's what it was like. It looked like, yeah exactly at that point.

Speaker 2: 4:46

So it goes to 2017, 2018 time, and it was the sound actually that caught me because it was too quiet.

Speaker 1: 4:58

So the absence.

Speaker 2: 4:59

It was yeah, I was like actually and it didn't, it didn't sit. I'd been spending a bit more sort of time at length there by myself and I realized that it was just much quieter than my memories of it as a child and everything sort of sort of started flowing from that and thinking about and that's that's kind of when my curiosity got the better of me and thought, you know, it should be, there should be more, more life, more activity going on, and I think that was sort of the moment where I was aware that there was going to be a lot of change. And that led to some pretty big decisions pretty quickly, because I sort of been yeah, sort of been kind of spending spending some time just prior to that, involved in some management decisions, but not really practically involved in everything. Yeah, and it wasn't all yet. To me it was just being a very organized handover and I kind of started going. I think I know what's going to change first.

Speaker 2: 5:51

So, on season one, which is, you know, harvest 2018, that was different. I mean, the first, the first easy thing was right, well, that's the end of pesticides on this fall. And everything sort of started spiraling from there and my inherent curiosity from very from many things kind of got the better of me and started looking into everything to do with this, this term which was new to me then at the time of regenerative agriculture and what that all meant. But for me it started from from a sense that the place wasn't as alive as it used to be and could be.

Speaker 1: 6:22

And did you share that with with your father at that time, and if so, what was his reaction?

Speaker 2: 6:28

I didn't exactly that time, but a bit later I did and his reaction was okay.

Speaker 1: 6:33

That was the last time we used pesticides. That's quite a strong change in many places.

Speaker 2: 6:39

Yes, and interestingly for him he went. Your grandfather would have agreed with you.

Speaker 2: 6:51

And I actually led a really it's just led to actually a very honest conversation. It's actually something which has been always been I've kept very true to me, which is always listening to, to my father's generation. There are people I'm still working with who are in that generation, into their late 70s, 80s now, and actually it's the social change that happened in their lifetime alongside the changes in agricultural practices, because that sort of immediate post-war period in the UK was obviously one of rationing and one where there had been huge incentives to invest, as they would have seen it, in agriculture through mass mechanization. And then, obviously, the green revolution and this was a country trying to dig itself out of, out of the war debt that it had has, as it were, not just financial but sort of social, and there were people in absolute poverty in rural areas.

Speaker 2: 7:41

And I still, as I say, still talk to people of that generation who they were growing up in what we would now describe as poverty in what is now obviously a very advanced Western country, and that feeling of you've got to do whatever maximizes your profits along the way is very, very hard to go away from. I think my father would be quite honest in saying that he followed the economically correct path and the one that he was incentivized into by policy at many stages. So actually it was a very and that's not always, that was quite often, I suppose for him through sort of gritted teeth, and then I think things just sort of got away from him in terms of then you're in a system and change is hard, and change gets harder generally for everyone as we get a bit older. So I think to some extent the handing on to the next generation was a nice thing for him too and he's still with us and we talk very closely about it and I think he's very happy with what has changed actually in the last few years.

Speaker 1: 8:42

Do you bring him to Grantswell and things like that? Is he still interested in the farming piece? He's not quite as mobile as he used to be. Does he leave it to you?

Speaker 2: 8:51

He generally leaves me to it now, which actually is quite nice and actually that's quite important. I think as well that's fundamental.

Speaker 2: 8:58

But no, we definitely still talk about it a lot and the wider family, because he's not the only one in his generation that his brother was farming in Spain for some years and things like that. So there's always talk about what's going on and what's different and everything. So it was, and one of my cousins has recently also sort of returned to farming, having had nothing to do with it for most of his life, and then sort of decided that it's his calling as he reaches 50. And again, it's a really interesting conversation to suddenly have that, which is not something we'd previously talked about. So it's good to sort of see the family coalescing around a sort of renewed interest and passion back in London and the stewardship of it.

Speaker 1: 9:43

And has some of the sound returned.

Speaker 2: 9:45

Yes, absolutely. I mean, actually it's the great thing, which is we've been so, so, a lot, of, a lot of things. I sort of started going on. There was actually some things that you'll hear people talk about all the time, like baselining, but I sort of got sort of carried away and so that's. It's not just you know people often talk about that to do with, you know, carbon baselining. We've definitely done that. But we've also been doing a lot of biodiversity baselining and specific species monitoring, particularly bird counts, and very good indicators there. It's done a few things with the EDNA as well. It's all very and seen how things have progressed.

Speaker 2: 10:17

But actually again, those really basic indicators that actually sort of in this spring, summer, particularly as we had quite a hot June insect life, insect noise, that kind of general activity that's sort of in the background, that buzzing, literally, that's going on and that's you know. We've adopted big things now with integrated pest management. We've got large margins, we've got new hedgerows, we've got new woodlands. There's really a lot going, lots of changes in the way we're managing the soil, managing the cropped areas. There's a lot of change that's happened that really starts now to be making a difference. I mean including, you know the great test which is, you know, insect splatter on the windscreen, right? I mean you actually can get some now. So that's and that's all really good. So, yeah, there's definitely some feeling of noise, and the other bit of noise actually is human, and by that I mean we've got more people again.

Speaker 1: 11:11

Yeah, I was going to say the rural economy piece in the entire time. Yeah, it really driven. Yeah, exactly, but I'm living that on farm.

Speaker 2: 11:17

Like you know, it had again driven to this kind of like you know, must minimize the labor cost of all efforts kind of agenda. And actually I'm a great believer in. You know, every time you bring someone back in who's passionate about what they're doing on a farm, you get more than you pay for, because you get all of that enthusiasm and intelligence and search for innovation and curiosity that comes up with the next great idea you're going to have about how you're going to manage your farming enterprise. And it's really important for me to build that team because that's what's going to make it thrive and particularly when I'm when I'm off busy banking, right. So it's really important to build that team.

Speaker 1: 12:25

And just a bit of scale how many acres are you farming? How big is the team? What kind of crops?

Speaker 2: 12:32

Yeah, so we're 500 hectares, so just over a thousand acres, and that's, as I say, it's been a transition away from just purely conventional. So we're now sort of back to mixed farming. So we've got quite a large number, we've got about 700 sheep now which we use for sort of fully integrated livestock management. So they're grazing the crops and that's been a great big, nice change in the last couple of years which has allowed us to drop fungicides out of the mix, allowed to drop plant growth regulated on the mix. They're gone, so it's just the herbicides to go. We'll get there soon hopefully.

Speaker 2: 13:07

And we've got small poultry as well, which is also good in terms of we want to get that integrated again across the, across the pasture and due course. But that's also great in the meantime for for building up a nice source of farming, for the composting we're doing and all that kind of thing. So, yes, some sort of diversifications in terms of bringing more livestock back in, but we're running the pretty standard cereal crops of wheat, barley, oil seed rate. We grow linseed, peas, beans. So a reasonable variety of what you would expect is to see from the kind of transition out of the commodity cropping but getting more into interesting varieties and other use cases and looking for sort of immediate, more localized offtakes for what we're growing as well. Hopefully there'll be some culture in the future.

Speaker 2: 13:56

So slow is the answer to that last bit in terms of that lower thing. But I mean there's some initiatives we've got involved in which are good, which are not super local but a good proxy. So we're a wild farmed grower I'm sure we're familiar with them, which has been a good experience so far, and hope to be growing more varieties and more for them as time progresses. And actually the interesting thing about moving to the livestock again is that's been an easier route to shorter markets, right. And so then you start to think okay, how can I sort of start to build this all together? And a big push in our farmer cluster which I'm part of, to kind of look into how to do that in our county and catchment, really sort of get farms working collaboratively on that opportunity to do providing more food from a shorter distance, which just not really hasn't been a feature for some time in our area.

Speaker 1: 14:48

So processing and all of the I'm going to say quite a good standard things, and then you manage to find time or maybe it was slightly before that to start a bank. How come?

Speaker 2: 15:01

Well, it was all sort of at the same time, because it's great. Well, yeah, sort of it's that you know you might get a few children as well.

Speaker 1: 15:08

Yeah, exactly.

Speaker 2: 15:09

I have two children on the age of five, of course, yeah, it's just, you know it's perfect, you know do it all at once, kind of thing. No, it is.

Speaker 1: 15:14

It is because it's not transition chaos, let's just maximize the kit, maximize diversity Exactly.

Speaker 2: 15:19

So it was each maximize diversity. So it's it was. It was in that transition of looking. So the transition I was going through with coming out of the city, which is a sort of financial services career that I was in and thinking, well, I don't want to take, lose all of that skill set and there's other things to do and, plus, if I can keep earning outside of the farm, that's no bad thing at this point in time.

Speaker 1: 15:42

And then there's more impact to be made.

Speaker 2: 15:46

Well, this is actually. You have a big farm, yeah.

Speaker 1: 15:49

And at the same time, you're not going to manage the full watershed, you're not going to manage a few countries, luckily, because that means you have a concentrated wealth that is beyond this world. And so there's always that tension when I see people going back to farming, back to the farm or somewhere and like, okay, what are the skills that do you have and how can you leverage that beyond the farm game. Not saying you shouldn't, it shouldn't manage the farm differently, obviously, but there is, there's a trade off there.

Speaker 2: 16:16

Oh yeah, and absolutely it's the trade off that I wrestle with every day, which is the. Sometimes I want to be really focused on something really micro, on the farm, because I think it's the kind of, in my head, the most important thing to be focusing on. But then, at the same time, I've got this now with Oxford, this huge opportunity to affect change at scale, as you're saying. So that's and that's also incredibly exciting. It's sort of like which is worth most of my attention is my sort of daily battle, which I've set sort of some pretty hard parameters around to keep me focused on one or the other appropriate times.

Speaker 2: 16:46

But, yeah, but at the time of at the time of going back sort of to end of sort of 2017, I was fortunate that, having met some quite interesting people who so who became co-founders with me, so James and Nick, who bring a whole range of sort of related skills around technology deployment and building technology, companies, banking and agriculture as well, so sort of altogether, we had a kind of good mix of combined skills about how we could get a bank deployed in the UK for agriculture, and it's something that's missing from the UK agricultural landscape in many, many other countries around the world have had an agricultural bank, which is often a big part of the sort of institutional landscape, even if they've evolved since.

Speaker 2: 17:33

But we, the UK, sort of hasn't really had that. It has had something called the agricultural mortgage corporation, but that was originally sort of a government thing that kind of got sort of subsumed into kind of another part of a large bank, but it, along the way, the sort of incumbent banks seem to have sort of lost the ability to sort of service the sector in a kind of in a relationship led way in a meaningful way, in the way that actually mattered to the sector rather than mattered to them.

Speaker 1: 17:58

So they decided let's start our own. Yeah, it's a massive thing Like starting a bank sounds scary and and yeah, mountain to climb.

Speaker 2: 18:07

But again sort of do what you know. I mean, what I've been working on for the past five years before going back to farming was starting banks with other people, and my colleague James had been one of those people who had started another which was in a very different space, but it was. It was, it was felt that this was the sector where we can have the most impact?

Speaker 2: 18:27

Yeah, exactly Because and and you know our story to date, since we actually managed to get a, get a banking license and go live at the beginning of 21 was proven that there was really is this latent demand for a better service led banking operation for the agricultural sector that can put bespoke products and services in that suit the needs of the all of various different types of farming operations that are out there, including the ones that are emerging for the for the future right. So that's we've, we've kind of proven that with growth.

Speaker 1: 18:59

Why does farming need their own bank? Or why doesn't it fit? Why is it so special that it needs a different bank to to serve?

Speaker 2: 19:08

it. I think this is probably one which is in the sort of language that people talk in sort of VC investment terms today. It says that because it can't just pivot overnight, basically, so you know, you only get, you know, in a, in a, in a farming career, you might get 40 harvests, let's say, if you're growing, growing crops, or or fewer, fewer, fewer times to market, as it were, with with livestock, depending on what you're rearing. So actually you, you make certain decisions and and incur quite a lot of cost and take on a lot of risk before seeing any return in farming, and that requires a sort of particular type of financial provision. That sort of is almost patient, I would say.

Speaker 2: 19:49

But of course we're talking about commercial lending, which of course is the language that all business can speak. You know, everyone can get their head around it. I think it has to stay quite simplified and be something that people feel that they can use in a way that makes sense to them. So we're not trying to massively reinvent the wheel or do anything overly complex. We're just trying to make sure that there's enough flexibility, enough ability to structure a you know whether it's a working capital facility or a long-term loan in the right way that it suits the individual needs of that business.

Speaker 2: 20:19

And you know, a large bank, it's not that they couldn't do it, it's just would they do it at the kind of size of profile that you see of the average farm, which is a small business in the UK typically, quite often family run, and is it needed? You know, that kind of relationship which which you wouldn't, we'd only get out of a large institution if you were also a large institution right, and what we've been fortunate enough to be able to deploy is the sort of the leaps and bounds that have happened in financial technology or fintech over the last sort of 10, 15 years as well, and we've taken all the best learnings from that to build our own technology platform that we can innovate fast on so that we can meet the needs of a sector which struggles to innovate in quite such a quick way although there is, of course, massive and massive innovation in agriculture, it's just those business fundamentals, because of those natural cycles, are quite, quite rigid.

Speaker 1: 21:11

And so what do you typically provide to to a farm, to a small business, as most farms are? What is it where they come? Do they switch over fully, basically from their normal, from their current bank or their older bank, to be fully serviced by you, or what's the relationship like?

Speaker 2: 21:33

Yeah, we sort of see sort of this sort of two sort of distinct cohorts really. There are those who are looking for a complete switch and we do do quite a lot of that and have done that where people really are switching out of their incumbent provider and moving to us wholesale, and that's obviously really important. But then we have, particularly on the sort of the working capital facilities we provide, and some of those are sort of an embedded finance proposition whereby we offer facilities in distribution. Quite often it's the customers, therefore, of those distributors come and they get a new working facility with us and kind of run the working capital through that side, but they may still keep their kind of longer term debt if they have it with their incumbent. Although actually again now we've been going a few years and building that relationship and building that trust through that mechanism. We are seeing more of that business cross-sell into our portfolio as well, which is very deliberate, right, but we are sort of seeing both of those habits and trends taking place. So we've now sort of, you know, half a billion balance sheet around this time with a clear pipeline to get past a billion as we cross over into next year and that demand, that pipeline of business across our various long-term lending or working capital facilities is growing and we've now got asset finance provision in there as well, just another key thing that's often required. So it's sort of growing the proposition and growing the flexibility within it.

Speaker 2: 22:59

It's sort of easy to talk at high level terms but a lot of what we do is in the very precise structuring of repayments. An example I quite like is you know, orchard establishment. It's nice to structure that, to kind of you know how those orchards come on stream and productive. You're not expecting to get a crop out of that. You know three, four, five years, depending on what's going in. But actually having a nice interest-only period up the upfront but then actually it does come on production actually all of the repayments being heavily aligned to when they're actually selling rather than just casually spread over the next 20 years, makes a lot more sense than you know. So that's what we do Financing trees.

Speaker 1: 23:40

Yeah, it's different than financing solar panels.

Speaker 2: 25:04

Well, exactly, yeah, and then, and we've been evolving that now into kind of you know, we're doing some stuff now in the natural capital space, which in the case I think it's against financing trees, but not for crop, but it's kind of, you know, things that are done here in the UK under the Woodland Carbon Code. There's some really interesting work we're doing there on, you know, aligning that to how those credits come on stream in their various vintages at five to 10 year breaks, and thinking about structuring the provision of finance for those kind of projects to get those moving. So, and that's just a little bit of an evolution of that kind of product and that's the kind of thing we do.

Speaker 1: 25:38

And how does regeneration come into play there? Obviously on your daily farming side, but within the bank, was it a deliberate focus choice when, because you said, everything happened more or less at the?

Speaker 2: 25:52

same time.

Speaker 1: 25:52

So I'm wondering yes, or how does it come into your banking time?

Speaker 2: 25:57

Yes, we have a very high level principle at the bank, which is that it's, I suppose, take a huge step back. We all can recognize the requirement for the agricultural sector, as with every other sector, to transition actually really quite fast in the coming, you know, decades, two decades, three decades, maximum right, so that's sort of given. We also recognize that it needs to be a just transition and there's no point leaving people behind in this. And that's as true in UK agriculture as it is in any other sector. And one of the difficulties in the UK agriculture is that it's pretty marginal. You know, there's not a lot of people making a lot of money and so sort of coming along and being excluding in our approach and saying you have to behave like this isn't going to get you know back to your point about scale and impact isn't going to get that.

Speaker 2: 26:47

We have to work with where people are today to get them onto the best financial footing and work with them on that to help them make the transition, which will be entirely context-specific for their business and their location, and then support them in all of the costs that are incurred in making whatever transition that looks like. And actually one of the pieces of what we're doing now is working out how we can put together, you know, science-based targets I mean, I'm using that all with small letters rather than capitals but actually that kind of approach with farms to build transition plans that work for them against the timetable. That is realistic and is something we can work on how to fund. So and again, that then does bring in all these other principles, so that does bring in the requirement to baseline and does require us to have a really good sense of, you know, emissions flows and stocks of CO2 and stocks of biodiversity and all sorts of other things, and that all gets very interesting because that data we can all bring together and that gives us actually quite a really rich risk profile that helps us understand how to manage, you know, our portfolio over the next 20 to 30 years as well, because we, you know we do.

Speaker 2: 27:52

That's the interesting thing about being a bank. You know you're not an investor in that classic sense, but you have these exposures that go out 20 plus years and in the current climate lack of a word that's you know that's going to be a very unstable time. We know that. And so making decisions on decisions to lend over that timeframe today requires to be really confident in our portfolio management and the risk.

Speaker 2: 28:17

Exactly. You know, the decisions we have to make at the underwriting stage against that lens, against the range of scenarios we have for what the future could look like, taking into account the huge amounts of physical risk that will no doubt crystallize and could, you know, on one level, hopefully not be as extreme as we might project, but on another level may well be worse against the whole economy that itself has to transition. And all that transition risk is a fun tightrope walk Because at the same time we can't not act Right. We've got these businesses and let's go back to the point all these businesses need to be supported. So, you know, to use this sort of ESG terminology we kind of almost started with S like we're here to make a difference to this sector this is the rural economy, rural communities and ensure that they, I would say, continue to thrive, actually get back to being able to continue to thrive on the social level, that a rural community and a rural economy is strong and functioning, and that will be the engine that makes the environmental change necessary and that's what drives regeneration. So it's the human regeneration as much as the environmental regeneration that we're trying to push through, supporting these small, often family-run businesses that are the sort of lifeblood of the rural economy but also actually of the entire economy.

Speaker 2: 29:34

I mean, you know, in the UK agriculture by itself before you've been pushing to food, the value chain is probably only 1% of GDP. Right, but it's you take it away and we've got a bit of a problem. You know, that's the thing, so it's a bad measure anyway. But yeah, it's kind of true, but it's a perfectly, it's a plesably big market for us to play in here in the UK alone and we've got designs wider than that. But it's to say, it's sort of social lead and hopefully to get into that nice positive feedback loop where we see the regeneration happening as a result of healthy businesses and a healthy community.

Speaker 1: 30:19

And what excites you so much about the water side? We connected at Grantswell on that. He said we really have to talk.

Speaker 2: 30:27

Yeah, what do?

Speaker 1: 30:28

you because you mentioned natural capital a bit and but this was more. This is like a.

Speaker 2: 30:34

This is a bigger, deeper theme than only water holding capacity in the soil, yeah, but water holding capacity in the soil, as you know, is and as you've had so many great guests on recently talking to you about is so, so fundamental, because it is about cooling right. And you know, even if let's do our imagined world where everything has gone brilliantly on the pathways to net zero right, like 2040, 2050, whatever you know in a new net zero world and we've all somehow managed to decarbonize which is not a word I like to use in agriculture we need more carbon, exactly.

Speaker 2: 31:08

Yeah, but exactly. But you know, let's just sort of do that at the macro level. Well, we'll still be running an economy, that is, society, that's fundamentally hotter than it was 250 years ago. So we're still going to have to be cooling, and the best physical substance known to achieve cooling is water, and it's the biotic processes that are going to help us achieve that, and terrestrial biotic processes in particular, given the degradation of the oceans, right. So that's that's why water is so exciting, because you can affect so much change through farming practices on the water cycle, and that you know.

Speaker 2: 31:45

So, yeah, water capacity in the soil, but it's not just about the whole capacity, it's everything that it does. You know, this is, this is my sort of unfortunate spiral of curiosity that, you know, gets me into all this. You know, think, you know it's it's okay. Yes, I want to enrich a biodiversity on the farm because I think it's important for a whole bunch of ABCDFG reasons, but, okay, but fundamentally, everything leads me back to well, regenerate that soil, organic matter, and because, when I'm okay, and how do you do that? Well, you need more living matter in there.

Speaker 2: 32:14

And what's that doing? Well, it's, it's fundamentally energy transfer, right, and we're trying to. So therefore, we're trying to maximize both synthesis and you've got to maximize your water for that to happen. So everything starts this circle round to basically saying it's it's all about the water, but in the farming context, that's all about the soil and it's about the soil, organic matter, and it's about soil organic carbonate and that's. And those starts become really good proxies in terms of farm management for what you're doing, because sometimes you've got to keep it simple. If you, if you worry about everything constantly, you know you'll lose track. You have to sometimes go, you're not going to do anything.

Speaker 2: 32:48

Exactly, and you know people I'm sure I've been on here before and in fact I know that have because I've heard it but and around this, you know, constantly debating what does regenerative agriculture mean?

Speaker 1: 32:56

right, and we're a few sessions of those at Grantswell.

Speaker 2: 33:01

Exactly, and you know the one I have for me at the farm context, but also then at the bank context, where I kind of try to be. This is soil. Health has a seat at the table when you're making a decision. What would, if you were the soil and able to speak, what would you say about the impact that decision would have on your health? And I think that's just the, that's just the, the sort of mental picture I build for myself to do that, and that that's what starts to drive quite quick change.

Speaker 2: 33:31

And you know the micro level for me on the farm that's really, you know it's exciting to see the changes there in terms of changing soil, gas and matter and all of the other indicators that come off it, particularly around biodiversity and all the co-benefits that all come from that. But then at the bank level, it's very interesting. Then now we're starting to look at that at a portfolio level and manage that portfolio as well as financial risk. That gets quite exciting about going. Actually, this is this is building resilience as the keyword, resilience into the future and do you think so many ways to go, Like on the.

Speaker 1: 34:04

No, let's go with it. First, Stepping a bit back into your city environment. I mean, you're still part of the city, obviously, as you are a bank, or you are maybe seen as part of the city, even you're not located there. Why do you think, like, are you able to have these kinds of conversations about water also there? And if not, why? Like what's holding us back to to see that bigger picture? Is that frustrating? Is it interesting? Are you having a group of people actually with finance brains that are starting to look at water seriously and not just water rights? Like what? What have you seen there? Or what has been? Your spiral of curiosity has led you deep into the water piece. Has that been alone? Or have you found other people?

Speaker 2: 34:46

I have found other people and I think there's an increasing number of people starting to go hang on a second water water everywhere, as it were. But I think that you have to play a little bit of a kind of slightly canny I can't think of the best metaphor, but you know through the back door route to this. So slightly read your audience and think about the first bit of conversation they might want to have. So for some, you know colleagues internally who are quite focused on risk generally. Let's start with the obvious water conversation, which is flood risk, right. And then, because we're concerned about flood risk as people who have exposure to to land, right, we, we that's an obvious, immediate concern and there's reasonable data that we can point to and talk about the impact that you can model that story through. So start with something that that is both data rich and reasonably straightforward to explain and is already in someone's interest, and then start to talk about the wider context of why flooding is, you know, not in not just bad in and of itself in terms of the impact it might have on the asset that you're concerned about. But why might that flooding have occurred? Why is it more likely to occur? What resilience could be built at the immediate location and in the location around it, that could be managed and what is our role in improving that resilience to that particular risk? And then you pretty quickly can get into the conversation which is away from that and into the complete flip side. Let's talk about drought and then let's talk about sort of almost everything in between in terms of that immediate land focus, and then you can get into the interesting conversations about the role of life into managing those water cycles and what it means at a catchment level and I'm very lucky to also sit on the sort of board of our farmer cluster group which covers two catchments right, so two water sheds which are both in sort of the sub catchments in the Thames catchment, so in the top of the Thames, and we're working on in one of them, particularly on a catchment wide project to drastically change the management of the water and that's everything to do with water. So that is water holding capacity for natural flood management, that is water quality, because it is poor in that catchment and I won't use this opportunity to say too much about how underinvested the water authority is in that.

Speaker 2: 37:10

But we can do a huge amount in the farmland and it's lowland England. It's the farmed environment, but it's also, you know, not, it's not urban at all, but it's sort of. You know it's peri urban to some degree. It's not. It's not. It's not out there somewhere in some kind of far away wilderness that people can't get their hands on. We're within two hours of London right and the water that hits the soil of my farm by the time it's gone into that water course on the farm and I'm right at the top of the river where the head of the source is. Ten days later it's going through the Thames Barrier and, which is a useful thing to say when I'm in London talking to people about the interest in water and actually all the impacts.

Speaker 2: 37:50

Like ten days ago and July, but actually there's a huge amount of time for us about trying to control before it even gets into the water course, right, Let alone control in the water course. Control in the water course there are interventions we can make, positive information, that are going to be really good for natural flood management, for bar diversity, immediately in that riparian area. But and their intervention we can make in the floodplain and we can, you know, restore paleo channels and Riemia and the rivers and we are going to be doing that kind of thing and that's really exciting. But actually it's about how do we hold that water in the soil and in the ground longer and then before you know, you are talking about the entire catchment scale and then suddenly going, hey, this is, this is quite a big number to affect this change and we're going to get really big impacts. But it requires really big investment and, as you and I know, sometimes actually going and asking an institution for a large number is easy than asking for a small number.

Speaker 1: 38:40

Usually it is Interestingly, a lot of people are don't really because we're offering.

Speaker 2: 38:45

we're offering, you know, people are kind of starting to become increasingly aware of the problems, but we're offering the solution at scale and it's and it's an approach which should, in theory, be replicable. And then for us as the bank, on the flip side of that, you know and we've you know with me through banking most of your cluster colleagues, also banking does it make a?

Speaker 1: 39:06

concentration there. That makes sense, because then of course you're at risk, but you also have the opportunity.

Speaker 2: 39:12

So, in terms of banking with Oxford, some of my cluster colleagues are very, very decently banking with Oxford, which is nice of them, but some of them are not, and they're entitled to that. Try not to muddy the waters too much there, but we are, we have. We have done a sort of design projects together with with, you know, with the cluster, and to look at, look at how to build the financial mechanisms to support this and that's and that will. That will lead into something where we really should be able to deploy really quite a large amount of capital which is coming out of city institutions into the internet, into the natural environment, sort of directly, you know.

Speaker 1: 39:46

And then, what kind of return? Not not. Where does the return come from? Is that on the flooding side? And of course we don't talk about cooling at all here. But it's like it's really pick your, pick your storyline. This is before like pick your your entry point, like what kind of why would they invest in this sense and what? Where would the return come from?

Speaker 2: 40:05

So there's there's sort of multiple returns here. So there's so a lot of it is around natural flood management, because you know that water is going to go through major urban areas, the city of Oxford being a prime one, which is. So the insurance industry themselves are very interested in what the the savings can be through appropriate natural flood management, as the risk of flooding goes up over time, which is obviously projected to do so. But also large infrastructure owners we've got, you know, there's major highways that start crossing the river, there's railways that are running alongside the river, so we're in some quite detailed conversations with them about their investing in essentially, you know, saving themselves future potentially catastrophic repairables and ongoing maintenance costs. There's, of course, those who are primarily responsible for managing the quality of the water, who would quite like someone else to help them out of a sticky situation.

Speaker 1: 40:54

Being diplomatic as I can, yeah, do some Googling if you want to make water quality Exactly in the UK. Who might be responsible for?

Speaker 2: 41:02

that and obviously we're working with, so we're having we've got again positive conversations with them. But in doing this, obviously there's two. There's two things going on. There's in the UK you may be familiar with BiodiversityNet Gain as a new statutory market coming in from at the end of this year, which basically means for development there will have to be a net gain of biodiversity as a result, which have to essentially be offset.

Speaker 1: 41:24

It doesn't need to be in the same water catchment like because it's basically let's say I want to develop distribution center somewhere outside London, something like that. I have to prove that I'm having a net gain on biodiversity, which obviously I killed to put that big warehouse box down somewhere else in the UK, or is it even in a? So there's a spatial multiplier, and this is how, the further you go, the more you need to do it Exactly.

Speaker 2: 41:48

Yeah, so I'm massively oversimplifying there, but that's essentially what's going on? It's super complicated, but that's obviously so. That's a statutory market coming, but what it's doing is it's actually generating a lot of interest in how a voluntary market for biodiversity and nature will work, which, with TNFD coming fast down the tracks and again at Oxford, we're just about to actually release our first TNFD report.

Speaker 1: 42:10

What is it? Tnfd.

Speaker 2: 42:11

Oh sorry, the Task Force for Nature Related Financial Disclosures. Of course everybody could have guessed that.

Speaker 1: 42:16

Sorry, they said it's right.

Speaker 2: 42:17

So there's something called the TCFD, which is the Task Force for Climate Related Financial Disclosures, which is very much focused on carbon accounting, and that was sort of another one of these initiatives that has had Mark Carney's fingerprints all over it, but it's now been adopted as mandatory by the stock exchange.

Speaker 1: 42:33

Mark, I'm going to read a former head of the Bank of England. Bank of England, yeah, exactly, and one of the most important banks, basically State Bank.

Speaker 2: 42:41

So this is a global initiative, tcfd, which is now in force. It's now mandatory in the UK and many other traditional, generally for listed companies to disclose their emissions. But the sort of next initiative that's right behind it that is due to sort of basically be enforced and probably the end of next year, is around nature. So it's looking at what are your impacts on your activity as a corporate on nature, your dependencies on nature, describing and quantifying those and then talking about the risks and opportunities to obviously to manage that. Going into the future, and again with the UK where there's this big government targets to get 30% of nature restored by 2030.

Speaker 1: 43:21

And a lot of listed companies in the UK.

Speaker 2: 43:22

A lot of listed companies exactly who are going to have to suddenly act.

Speaker 1: 43:26

I see a lot of work for consulting companies right, I'm quite sure.

Speaker 2: 43:30

Yeah, quite sure, I mean we went and wrote our own because we're sort of like that, but it's push. But we've got the statutory market coming in the UK which is basically creating a framework for the voluntary market there for conducting and giving some price discovery, which is obviously really important, and so there's basically a huge potential future private market to invest in nature. And we've been sort of trialling that with some people who sort of put their hands up and said they want to be early adopters of impact investment and that kind of scrape from there and it's sounding very positive and very keen.

Speaker 1: 44:01

And that water piece. Do you agree that that could be especially the water catchment or the whole catchment approach feels very natural that that's the first to go, like the key to unlocking a lot of this, because it's very clear, like your runoff whatever, or the water that leaves your farm 10 days later, passes, passes a lot. Yeah, that's very concrete.

Speaker 2: 44:21

That's that kind of yeah, exactly, that's a really. And there's we've got so much data on the behaviour of the water courses, the rivers themselves, which is, which is really good. But you know, and we're over a particular type of limestone aquifer which is, I believe, which one of the hydrologists I now work with, which I never the sentence I didn't think I'd be saying five years ago, you know, sort of I think it's I don't know if this is a technical term it's very flashy. So actually it has to be managed really quite sensitively in terms of it essentially almost acts a bit like an annual cycling of water, the aquifer, whereas some of the deeper chalk aquifers are sort of, you know, kind of multi-ant and decadal kind of timeframes in terms of the water that cycles through them.

Speaker 1: 45:01

So if you get a lot at one point, you have a problem, yeah exactly we can have that exactly.

Speaker 2: 45:04

So, and then we have had, you know, in our catchment we've had some quite significant flood incidents in the last decade, which you know. This is, this is villages getting getting getting flooded out and of course it's always a very inconvenient time. So the last, you know, a few years ago, there was one village, you know, flooded on Boxing Day. Of course it did of all timings, but you know any day's bad. But we, we already know how to manage that from the farm environment now. So now it's about working as a group of farmers and being farmer led to make that change, to protect that risk and manage that risk, and we've got a very clear audience who'd be very willing to see that come to come to life. Let's just extrapolate that out from one village and think about it on a landscape level catchment level first, and then a landscape level and suddenly you realize there are so many people who are dependent on us for natural flood management, let alone all of the other co-benefits that come from that. That's what I mean.

Speaker 1: 45:52

If you start optimizing for natural flood management, it leads you back to going well, we better have really good quality soils in the farmland, oh you know, and basically using that as sort of a children horse or the first conversation, even though many people and I'm really getting this because I'm trying to look how do we make this conversation or this larger conversation, but starting with a smaller piece and much more common in places where it's not, which is, financial institutions, large corporates, etc. We're all talking carbon now and we should be also talking again. I'm not saying no carbon, but also about water and in many cases in your areas of the world, floods is the entry point.

Speaker 2: 46:29

Yeah, it's, it floods the entry point, but it's really interesting there is because people have got used to talking about carbon. Is that? Actually? It's not such a jump now as it might otherwise have been. So you can say, hey, look, you don't worry, all this stuff you've been doing, worrying about your emissions and what to do about sequestration, remember all that, but let's talk about actually what else we can go and do here and you will still get your carbon goals and that's that's quite powerful, because it's not selling, it's not saying, hey, we've walked this so far down this path, but actually we're going to get. We should have gone down that path instead, because actually, the joy of starting to view everything as an ecosystem because it is is that actually, generally, you know, unless you're going absolutely in the wrong direction, you're. If you're going in one of the right directions, you're going in all of them, and that's quite a powerful feeling and that helps bring people with you, because as long as people have made that first step, then you can help them take the second.

Speaker 1: 47:23

Take them down the rabbit hole.

Speaker 1: 47:24

And what does it mean for for investors? Now, you know, I'd like to ask the question what if we do this in an audience, let's say in a theater in the city of London, and we have this conversation and we want the main message, what would you like the main message to be? That people remember, if they remember one thing from the evening that, of course, was funny, it was interesting, was very relevant and exciting. But if the next day, the next morning, they go to work and they remember one thing from that evening, what would that be?

Speaker 2: 47:53

Well, on the assumption that they've kind of come to hear something about regenerative agriculture, right, because it clues in the name.

Speaker 1: 47:59

Or regeneration in general. Like we didn't joke. People know a bit but still would say I wouldn't assume that they, before walking in, knew that the most the crucial bit in cooling is water. Like I wouldn't assume that.

Speaker 2: 48:15

So, on the assumption that they didn't know, the crucial thing in water was cooling.

Speaker 1: 48:17

We've mentioned it. Of course, that might be the key message, the key takeaway, but it could be something else, as well.

Speaker 2: 48:22

Well, I think actually then I'll take it back and make it really sort of both really personal. And maybe this is just because I'm in the UK and we're sort of indoctrinated at birth to love the NHS, which is the National Health Service, which actually the point about this is that this is a health matter. Right, this is all about human health.

Speaker 1: 48:40

In a water cycle series, I wouldn't have expected it to be interesting. We also have nutrient density series for anybody wanting to listen to this.

Speaker 2: 48:48

But of course. So you've just said nutrient, and that's a health matter. Absolutely, that is really. I don't know if I was right. That's almost more obvious. But this is, we're talking about ensuring that people can thrive into the future. Right, this is, you know, about healthy lives and that we can offer for our children and grandchildren. Right, and that is not going to be possible in the kind of hot house, global boiling that is the UN are now calling it world and we're just not adapted to that. A health level, an individual physiological level, and I think that's as important a message as anything. People say OK, we need to, so we've got a cool. And how do we do it?

Speaker 1: 49:34

Well, that's the water cycle, the plural, you know whether they be large or small, and then being the devil's advocate, saying, yeah, but I am one of those people in that room not on stage in this case but I invested in this amazing carbon sucking machine in Iceland. What do you say?

Speaker 2: 49:53

I say, the thing about that carbon sucking machine is that it itself is creating heat. And to get into physical physics matters that I would describe poorly, or even philosophical ones, but it's all going to become heat one day, right, and let's bring that back to a bit more medium term. Those things are still. Heat is creating. You know, that's, I think, common. What year they teach that in school? But everything transfers to heat energy. Eventually.

Speaker 2: 50:23

We've got a job to make sure that we've got mechanisms in place to manage that heat, which is going to come from even the best director capture, right.

Speaker 2: 50:32

I mean I read there was a study out that I saw the headline of sort of about a month ago, something at the University of California, riverside, I think, about Google's data centers and the cooling requirement they need and it's something like 21 billion litres of water a year.

Speaker 2: 51:10

I think was the figure right, and I think Google and I may be casting aspergents here, so I don't intend to, but I think Google obviously say that you know they work very hard to ensure that their data centers are, you know, net zero from a carbon point of view.

Speaker 2: 51:22

But I'm like, but they're still generating a hell of a lot of heat and there's a hell of water that is required to manage that today, and all energy infrastructure has that problem. Whatever it is, and you know it's we need water for cooling, we need water for so many other things too, and it needs to be clean water, and we're running out of clean water. So there's a competition for water as a whole, and yet we've got to make sure there's plenty of it for cooling, and our best bet for that is is it a biotic processes? You know, the natural life, life processes that can be found through terrestrial vegetation enhancement in particular. So and that's what it gets us back into thinking about the farmland, right? Because then that's exactly that's. That's that's how it starts to come back there.

Speaker 1: 52:10

What would you? So, switching the question to to the 1 billion question, I'd like to ask what would you do and maybe I'm going to put a constraint, but taking away partly the sense of place you have with the place like would you, where would you focus and prioritize? Would it be the UK? Would it be somewhere else? And if you had a billion dollars? Actually you will have a billion pounds sterling under management by the end of the year, but of course, not fully freely of how to to put that to work. And if you had a significant amount of money with a lot of zeros, where would you start on the water cycle piece? Where would you maybe do something else as well? But how would you put that to work? And I'm also interested in terms of geographies, maybe where the cooling is more needed or there are more opportunities, etc. What would you do if, tomorrow morning, you had this billion euros or dollars or pounds to to put to work as an investor?

Speaker 2: 53:01

Well, there's a principle first, before we get into the water, and I think this is about again.

Speaker 2: 53:05

What's the context we're looking at?

Speaker 2: 53:06

We're looking at transition, and so I think you know, if you're looking to invest over a time period, you want to create value through that transition.

Speaker 2: 53:15

That's what we're trying to do. As an investor right to maximize returns, you want to see the value from the fact that the world is changing, and so then you've got to look at what the requirements are in that transition and in the concepts we've just been discussing, it's very, very apparent that water is going to be required for cooling and it's going to have both be what I would call that. There's going to be an element of hard grey infrastructure in that Absolutely there is, but there's going to be a huge requirement to get that, as I said, through biotic processes, and that is about biodiverse afforestation on land, as I understand it right, and I think obviously I'm biased to wanting to see that done in the UK and we need to do it here, although, although I don't know if you saw this, there was also a study at the beginning of last week, so mid July, that was released saying actually this could all go the other direction, because climate change could lead to the collapse of the Gulf Stream.

Speaker 2: 54:15

And actually the UK is going to be plunged into an ice age. That's supposed to be one of those completely alternative scenarios. But let's assume that that's the minority report, as it were, and that we're going to be required to be required. That doesn't mean there aren't other parts of the world where the global heating and requirement for cooling isn't going to be necessary. So I think generally I would be biased to large scale biodiverse broadleaf afforestation in the UK, but there are obviously huge parts of Europe that I think are particularly the as one of your guests is talking about the Western Mediterranean Basin, which is a desperate need of that.

Speaker 1: 55:00

So where would you start with all those places where to do it or things?

Speaker 2: 55:06

It's an interesting one because we're talking now really about mitigation of the fact that we're already in a bad situation and the constant, that kind of mitigation versus adaptation kind of tension that you sometimes see in this space. I mean, should we be trying to sort of essentially create safe havens that we know where we'll get better returns because we're less likely to see physical climate risk disrupt nature-based solutions, or are we trying to say actually we really need to make an impact where those are both likely to be acutely felt tomorrow but they could be more risky because they may not succeed but how we want them to. So it becomes a really difficult decision. On that front, because you've steered me into talking about this very sort of narrow, specific position, I say if it was easy, it wouldn't be something that you would get good returns from right. With risk comes reward, but I think that's the focus.

Speaker 2: 56:06

I think really what that's about is and there's a very interesting discussion on a well-known podcast, the Freakonomics Radio podcast about ESG and disinvestment right, which was relatively recently, and I think the reason I'm bringing that up is the thought that's in the back of my head is even with a billion, can you make a difference in a global economy worth trillions by investing in a certain direction if others are not? Probably not. Yeah, exactly. So it becomes quite a tricky thing to say. So what's the biggest lever you can pull?

Speaker 1: 56:45

with that, what's the biggest?

Speaker 2: 56:45

lever you can pull with that, and should you? Should that be your focus? Or can you cost something that means that you can get an impact? But it depends what you're investing for here. And then we get into the other fun topics around it. Is this purely investing for returns, or are we talking about financial? Or are we talking about those that are creating an impact in terms of the situation we've got? And I'm not here to fill us off-size about whether this is the end of capitalism as we know it or not. But so I think it really depends on how you're asking the question. Are we investing for the biggest impact in terms of achieving cooling? Are we investing for the biggest impact in terms of returns? And can those two meet by ensuring that everyone is moving in the same direction, or at least a sufficient amount of financial capital has been mobilized to support natural capital, which is from whence it came? All of today's wealth has been made possible by the exploitation of natural resources, so it's probably time we paid the debt back.

Speaker 1: 57:56

Which argument is that, says the banker? So if you would go into it, okay, let's go for maximum cooling with, let's say, with a return showing that there is at least it's not, a grant or it's not, let's say, it could be very long term, it could be, but you don't need double digit return tomorrow. So what would you do if you focus on maximum cooling and with a return, and I guess also with the interest or the focus on how to pool in more capital, because then a billion is obviously nothing? Where would? Where where lies, let's say, most of your excitement?

Speaker 2: 58:35

So I think there's a really interesting financial mechanism that could work here, which is sort of like a kind of some form of top-size debt approach. Actually, which is which is what you say is that there's something you want to see accomplished in terms of a natural capital outcome. This goes back to my point about it's all on ecosystem's approach, and you can target the thing you care about the most, which is, let's say, what I'm most interested in is something that's going to be doing, something that is contributing to global cooling through enhancing the small water cycle. Right, I will deploy a certain amount of equity into that let's say a billion but what I know I'm going to get is a range of ecosystem services co-benefits that I'm less interested in. They're all important, but I'm less interested in those outcomes. By less interested, I mean I'm not going to try and capture their value. So they are therefore marketable.

Speaker 2: 59:21

So, let's say, what I'm focused on is that cooling.

Speaker 2: 59:24

But actually all of these products would be eligible for the types of markets so voluntary card markets or biodiversity markets or other things that may come on board and, of course, if they're in an agricultural environment, product markets, right.

Speaker 2: 59:41

So if I just take a top slice of any return that comes from any of those things in the future and I let those markets function and grow and that project therefore itself is able to make good financial returns, because they could just flow to me financially as well.

Speaker 2: 1:00:00

Or, on the other hand, if I suddenly do decide in the future that I do care about the carbon and need them because I'm some large multinational with a large carbon footprint, then I just start taking the benefits and those as they come on stream myself. So I've kind of invested for something that's really important to me Today because and it may be because I think it's really important in and of itself or because actually I think it's imperative to my, my business. You know, I need, I need that outcome, but I I'm enabling the markets to come on stream of dealers and I'm getting the money on the ground today. So it's not a grant, but I've I've really focused, focused in on getting getting it to happen by essentially providing something that isn't an equity in or a grant investment upfront, but it behaves like it is and so it gets it to happen.

Speaker 1: 1:00:49

And then you get into the detail of how to, if you do on a catchment area, how to Make sure, yeah, you get your, your percentage, or how do you make sure something flows to you. Before it flowed, this, I'm staying in the water. See, how would you manage that and how would you? It's almost like a tax, or it was like some profit share or something.

Speaker 2: 1:01:10

It is some form of product happens, it is some form of profit share, absolutely, and I think that's that's about, and I think that's why these things have to deploy at a reasonable scale. I think it'd be quite hard to deploy this onto a very, very small area, but but at a catchment, more shared level, I think that it's totally possible and the good thing about in that direction.

Speaker 1: 1:01:27

Do you seek conversation about okay, how do we? A bit, of course, what you're doing, no matter how, do we Do it at that level and at that scale, because then suddenly a billion is not so much. But also, as we said before, it's probably easier to raise that compared to 20 million for a specific 2, 3 farm project, etc.

Speaker 2: 1:01:46

Interestingly, well, exactly, and I think the interesting thing about that is that I think and one of the things like this is sort of in the background of all of this is is the kind of Understanding and ownership of the rights, and about that I mean not just this, property rights, which, you know, there's a lot of people who think that you know to control land you have to own it, and I think that doesn't have to be true, but or at least I think you should be fighting that you know, and that's again being a huge, you know, cause of injustice throughout the entirety of human history is that debate?

Speaker 2: 1:02:16

But Because there is so much value to all of humanity coming from the kind of wider commons of natural capital, how do you ensure that those who are Delivering the services are justly rewarded? Right, that's that's what that question boils down to, and I think that we are now able to start describing how that share should be done, and do it in a just manner, both, and again I can in a UK context, that's, that's. That's easier for me to get my head around, but it's, it's something which is conceptually possible Everywhere, and I think there's increasing and again, one of the huge, huge things that gives me sort of hope and optimism in what can look like a very pessimistic world sometimes is that I do think that some of that social justice element is starting to really start to land in the thinking of of particularly those in the in the global north, in how they interact on a global scale. So it gives me some, it's some optimism. I'm really sorry they haven't told you exactly what to go out and invest in with a billion.

Speaker 1: 1:03:18

In a direction.

Speaker 2: 1:03:19

But if you have, if you have, yeah, but you know I would, I would, I would think about it. You know, almost in the, as I say, I think there's gonna be the value in the transition and, in the widest sense, if I was just a pure asset manager, what I would be looking for is the Consistency of returns as the base, and by that I mean, as you say, they don't think we're gonna see investments that are deployed to which have a Agricultural component and the reason they have an agricultural component because that's how you get the land management action to take place that are gonna give you those great double-discounts. This is not, this is not about Some form of exponential growth in the next Decacorn, right. This is about quality, resilient businesses that can thrive in the transition, and those are the businesses that I think are really interesting as a kind of core base for any sort of future portfolio and Providing a service that you know everyone is always going to need into perpetuity, which you know is food production, right?

Speaker 2: 1:04:19

So, and then I think you can get you know, if you consider that you kind of you know, you're looking at kind of building a centropic layer here, you know, like, if you consider that you're kind of base, sort of low-canopies sort of stuff, then you can move up and start to build.

Speaker 2: 1:04:32

You know, exposure to things that are, you know, then doing more interesting things in ecosystem services and and related functions and ancillary services around data, like we've talked about, and you know, I think the huge opportunity still out. There is someone to be doing something which is sort of some form of unified natural capital data Product, which I don't think yet exists. There's lots of there's lots of data and there's lots of people looking at the question, but I don't think something that is interoperable for everybody, let alone a national, if not a global, scale, is yet there, and I think we all need that. You know so. So, rather than trying to build, you know there's someone out there apparently trying to build an app for everything, but if that's part of it, that you might actually get me to partake.

Speaker 1: 1:05:16

So Because that it might be very tricky. Yeah, of course it's tricky and it's complicated and the complex complex.

Speaker 2: 1:05:24

But again it's about your point how do we get everyone talking the same language here? I mean, I don't know, I think you're made a very valid point.

Speaker 1: 1:05:32

You don't need to necessarily as long as they're moving in, as long as the thing steps, for whatever reason, into Broadly the right direction. There they're valid. Of course you can argue is it the best step, the most effective step, the most, etc. But it's a step and yeah, and that that that helps and I want to be conscious, talking about steps, about your time, and end with a final question. I would like to ask what if you had a magic wand and you could change one thing overnight? Would it be that one unit or so?

Speaker 2: 1:05:58

I think I would. You mentioned or somebody. I think it would be something like that. Yeah, it'd be like you know, if there was one, I'd address it like open source natural capital database. That was that is spatial Right, so you can. It's spatially content contextualized, because I think from that flows so many other tools that we need to affect the transition right in that natural capital accounting the risk models that will allow you know efficient allocation of resources, the transition plans that you know really, like on a farm scale, on even a few scale, what has been like.

Speaker 1: 1:06:28

When you say that, what do you mean?

Speaker 2: 1:06:29

So I'm talking about the, you know, except could go to and that's there's a resolution question there, absolutely, but I am talking about, you know, so I think there could be different resolutions for different data points, but you know, I am talking about, you know, understanding carbon stocks in, in soils of not just the farmland but sort of everywhere.

Speaker 2: 1:06:44

I am, you know, talking about, you know, biodiversity metrics.

Speaker 2: 1:06:47

That that can be, you know, that makes sense, not just in a, in an immediate geography, but a national geography or a continental geography, global geography, hopefully, you know, that kind of those kinds of both the resolution that's required and the data quality that's required and the investment, therefore, that's required to have that in one place that everyone can can build off that and that that creates those markets, having talking about those, those which which create, you know, which means that the flow of capital starts going into those ecosystem services markets and create and creates a transition which would, of course, will give us better data. So the whole thing becomes, hopefully, some kind of virtuous circle and and every, you know, tomorrow isn't going to look like today, but everyone has struggles to really, you know, guess exactly what it will look like. So we have to kind of pretend that it will look a bit like today, and I suppose this is this. This would be the way where, hopefully, data really would become the new oil, like it's been promised to be right, because we'll last few decades.

Speaker 2: 1:07:50

Yeah, well, you know exactly, yeah, but you know that's what we do kind of know we need to stop, stop that one industry and we, you know, you know, need to leverage the capabilities in the other, and I kind of think you might be able to get the alignments of capital, because everyone who wants to, you know so much money again being talked about wanting to deploy into AI. But if you know, great, so let's use it for this. You know, it's kind of my view, you know, from my sort of bias viewpoint that let's, you know, let's let's invest in understanding our natural world better so that we can support it, because we've Definitely had enough from it. So it's time to time to give something back.

Speaker 1: 1:08:29

And, and we depend on it.

Speaker 2: 1:08:30

Yeah, there's a better.

Speaker 1: 1:08:33

Way to end this conversation. I want to thank you so much for Coming on here. In the busy schedule you need to harvest as well, which the weather hasn't been helping Not so much. I'm sure. There are many, many Say things to do in rainy days like today, and getting on a podcast is one of them, but I'm happy you prioritize that over over the others and I'm looking forward to check in and to Follow the watershed work you do, yeah well, thank you so much for having me.

Speaker 2: 1:08:59

It's been absolutely fantastic.

Speaker 1: 1:09:10

Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website Investing in regender agriculture. Comm forward slash posts. If you like this episode, why not share it with a friend? Or give us a rating on Apple podcasts? That really helps. Thanks again and see you next time.