As ESG considerations become central to business strategies, fueled in part by the growth in both voluntary and mandatory markets, the importance of integrating nature and biodiversity is becoming undeniable.
The Importance of Nature and Biodiversity
Historically conversations around ‘sustainability’ have been dominated by carbon and related emissions, but there’s growing pressure to put a focus on nature and biodiversity as well. This is because there has been a shift in the understanding that nature underpins human well-being and economic activity, and investing in its restoration is emerging as a critical response to the climate crisis- ultimately, without nature, we have no economy.
In fact, a 2022 report by McKinsey & Company estimated that the world’s nature markets are worth $9.8 trillion. The United Nations projects that these nature markets could be worth between $202 billion and $536 billion annually by 2050.
Lack of Infrastructure
Despite the growth, these markets still face significant challenges due to the lack of infrastructure found in more established financial markets, leading to fragmentation, poor price discovery, high entry barriers, and variable product quality. As a result, market participation is perceived as risky, costly, and time-consuming. To date, innovations have largely focused on specific aspects, such as carbon credit rating agencies and brokerages, without addressing the broader market infrastructure needed to finance the £56 billion gap of private investment that is needed over the next ten years to hit the UK’s nature restoration targets.
Environmental Finance Startup: Great Yellow
A recently launched environmental finance startup, Great Yellow, aims to address these infrastructure gaps and facilitate greater investment into large landscape-scale nature restoration. Landscape-scale restoration looks at projects that have deep impact in helping to restore our planet’s natural ecosystems by taking a holistic and regenerative approach to the land, rather than creating pockets of ‘nature’ that are disconnected.
The company envisions a future where investing in nature is a core business strategy of all companies and governments, rather than an overlooked consideration. Great Yellow’s approach involves several key services designed to streamline market participation and reduce risks of engaging in the nature market:
What Does Great Yellow Offer?
- Matching credible nature projects & investments: Great Yellow sources high-quality nature restoration projects and matches them to compatible investors, identifies the right business contacts, and translates the investment pitch and business cases between landowners and investors. The matching process takes into account different drivers such as voluntary (such as TNFD commitments) and mandatory requirements (BNG within the UK), as well as risk management (of physical assets and transition risks).
- Providing credible financial frameworks: Traditional markets do not fully reflect the economic value of ecosystem services and natural capital assets. Great Yellow helps shape investment propositions by providing a business case, based on financial modelling, for investment in NatCap and nature restoration projects.
- Transaction support: As an FCA-regulated company, Great Yellow can facilitate large-scale equity investment, assuring transactions between project funders and developers. Once compatible nature projects and investors have been identified and matched, Great Yellow provides transaction support to both stakeholders for legal and commercial deal structuring. This takes into account project setup, fundraising structure, governance, legal agreements, etc.
- Bring investments to life: Great Yellow is bringing the impact of investments to life by testing various innovative solutions and building tools to facilitate investments. This will help bring on board stakeholders ranging from corporate decision-makers, regulators and planners, to end customers.
Going Forward
Great Yellow is already collaborating with farmers, landowners, consulting firms, and corporations to bridge the gap between nature and finance. These collaborations primarily focus on the UK but extend to projects worldwide.
Looking forward, Great Yellow aims to continue driving policy changes and developing new market mechanisms to support a robust, sustainable economy anchored in nature. By fostering stronger connections between nature and finance, Great Yellow is paving the way for a future where investing in the natural world is a fundamental aspect of economic strategy.
This article was contributed by Giovanna Tapia, the director of communications and development at Great Yellow. She has a background in sustainability strategy & marketing and communications at a range of organisations around the world. She’s an interdisciplinary specialist with a passion for using her experience to bridge the gap between knowledge, expectations, and commitments to drive action toward nature-positive solutions.
