“If we can use our scale to facilitate natural capital benefits being monetized, that’s a logical thing that we would look to do across our business.”
The Nuveen subsidiary is currently conducting pilot projects in various areas including remote data gathering, regenerative agriculture validation and various related technologies.
The goal is to push the needle with regards to how the previously unquantified value produced by the benefits of sustainably managing natural assets, could be given a monetary value.
“The future is looking at the values of things we never really thought about putting a value on before: natural capital value. What is the value of clean water? What is the value of biodiversity? What is the value of potential carbon sequestration between two and five tons of CO2 per hectare, per year?” Davies said.
Westchester is, of course, not alone in pursuing this avenue. HSBC and Pollination made a splash last year when they announced plans to launch the first ‘natural capital asset manager’ on the market, while Mirova’s Althelia climate, ocean and land degradation neutrality funds have sought to create returns through natural asset stewardship for several years.
What makes Westchester’s early moves in the space different is that its pilot projects – as well as looking at carbon offsets – also include data capturing systems that could be used to supply water quality and biodiversity offset markets.
Although Davies declined to discuss the details of what has been learned from early testing and the potential shape these new markets could take, assuming they’ll at least loosely resemble Indigo Ag’s agricultural carbon offset marketplace seems like a sensible bet.
Another thing is, given the myriad teething problems fledgling agricultural carbon offset markets are suffering from, proponents behind water quality and biodiversity offset markets may choose to bide their time before they launch as well.
What is encouraging, however, is that another financial markets heavyweight – Westchester manages 2.2 million acres of farmland across seven countries – is pushing for a new mindset where nature’s ‘free’ benefits will be valued accordingly.
With the world set to be gripped by the need to uncouple economic growth from natural resource use for decades to come, that has to be viewed as a step in the right direction.