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Investors can draw inspiration from COFCO International’s $1.6 billion sustainability-linked loan tied to soy supply traceability or green bonds such as BPCE’s €750 https://www.xcritical.com/ million issuance tied to sustainable agriculture. Crucially, the emphasis should always be on reducing negative impacts, with credits used as a last resort. As regulations evolve, frameworks like the Taskforce on Nature-related Financial Disclosures are nudging investors to consider nature across portfolios – a trend that is only going to strengthen. Additional problems emerge when practices become unsustainable, with reliance on imported feed, the use of open slurry lagoons that emit excess methane, letting animal drugs contaminate soil and waterways, or clearing forests for grazing land.
Blockchain in the Carbon Offsetting Market
The introduction of schemes like BNG aim to drive more sustainable land use by requiring an increased valuation to be given to nature during development and planning decision-making processes. Demand for credits is expected to create enhanced investment in credit generating projects and regenerative finance so we expect ReFi to play its part here. Savimbo uses blockchain in relation to source data tracking and for some payments applications.
Report: State of Voluntary Biodiversity Credits Market: A Global Review of Biodiversity Credit Schemes
There is surprisingly little discussion about the role of policy uncertainty as a potential source of idiosyncratic and systemic risk for financial markets. Many early success cases are in climate change mitigation areas including renewable energy and energy efficiency. Through GEF funding, governments put enabling environments in place such as feed-in-tariffs and power purchase agreements. With this foundation, and the significant cost savings of sustainable energy technologies, the private sector scaled-up its investment. The key challenge to be addressed is ensuring that scarce public resources are deployed in a way that catalyzes the required redirection of finance for achieving conservation outcomes.
So then, what is Regenerative Finance?
The revitalised soil structure enhances water retention and diminishes erosion while fostering superior nutrient absorption. This synergy results in heightened crop yields and an overall fortification against environmental stressors, ultimately mitigating revenue risks over time. It will explore aspects of the integration of risk reduction into development, humanitarian, and climate action, allowing the re-examination and redress of our relationship with risk. If the current risk-blind approach to macro-economic policy and development and finance persists, economic losses due to disasters will continue to increase. The lack of decisive action risks shrinking the already small window for transformative action, and may render the ‘decade of action’ a ‘lost decade’ placing sustainable development and resilient societies out of reach.
Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate. This must be supported with enhanced guidance on how to integrate disaster risk into procurement processes, accounting practices, as well as in international and national accounting standards. Similarly, guidance on alternative lending standards and collateral documentation for informal markets is critical.
The decentralization of data through blockchain also poses significant challenges in scaling and managing the vast amounts of climate data required for effective action. The traditional infrastructure for climate data is often cost-prohibitive and inaccessible for grassroots projects, which blockchain technology could potentially democratize. Yet, as ReFi ventures into storing large volumes of data such as soil moisture levels and rainfall data, the need for a re-architected, robust data infrastructure becomes evident. Without this, the promise of decentralized data may fall short of its potential to drive substantial climate action. Impact Investing is not a new phenomenon – the term refers to a type of investment that aims both to generate financial returns in the traditional sense, but also to ensure those investments are in projects that will have a positive environmental (or social) impact.
Farmers typically incur the risk of transitioning through yield reduction as they initially reduce fertilizer inputs. Sign up to the “Finance for a Regenerative World” white paper series to receive your download of the first white paper. You will receive the subsequent two white papers in your inbox two days after the previous one.
The Intergovernmental Panel on Climate Change (IPCC) calculates that when global warming hits two degrees centigrade, 10-year extreme temperature events will likely occur 5.6 times more frequently, and 50-year extreme temperature events will occur 13.9 times more frequently. Information on the latest events, insights, news and more from our team is heading your way soon. Our Better Being podcast series, hosted by Aon Chief Wellbeing Officer Rachel Fellowes, explores wellbeing strategies and resilience. This season we cover human sustainability, kindness in the workplace, how to measure wellbeing, managing grief and more.
This Plenary will convene a discussion on global financing frameworks and macro-economic governance, specifically in relation to addressing risk and building resilience. The development of industry standards and mechanisms to guard against bad actors in the ReFi space is not just a technical requirement but a foundational necessity that will determine the integrity and effectiveness of climate action initiatives. By establishing clear protocols and fostering a cooperative network among projects, ReFi can leverage the unique benefits of blockchain technology while mitigating its inherent risks. This delicate balance between innovation and regulation will be crucial for the sustainable growth of the ReFi movement and its contribution to global climate goals. It allows anyone to create and innovate without seeking prior approval, which can lead to rapid diversification and growth of the ReFi space. However, as highlighted by one participant, this freedom also makes the system vulnerable to exploitation, where projects like the tokenization of seaweed as carbon credits can emerge without adherence to traditional norms of carbon markets.
- Many small farmholders only have access to loans within their own communities at interest rates exceeding 100% per annum, due to a lack of access to finance, land being ineligible for collateral and a lack of credit records.
- These are new loan products or established ones that have been revised to support regenerative agriculture and land use.
- With Life is an approach that holds the patterns of life and living systems at its foundation.
- Each of these categories represents a facet of the struggle to establish a system that not only promises environmental regeneration but also operates sustainably within its ecosystem.
For farmers, the transition to regenerative agriculture involves a nuanced trade-off between short-term challenges and long-term benefits. Viewing the initial reduction in yield and increased costs as integral components of a transformative process toward sustainable and resilient farming practices is essential. Over time, the positive reinforcing benefits will likely outweigh the initial risks, fostering a profitable business that is more resilient to external shocks and environmentally sustainable. In today’s rapidly changing world, the intersection of technology, finance, and environmental sustainability is becoming increasingly significant. The concept of Regenerative Finance (ReFi) emerges as a revolutionary approach to addressing systemic issues like climate change and income inequality through innovative financial systems. This article delves into the comprehensive landscape of ReFi, exploring its definitions, trends, challenges, and future opportunities, as presented in “The State of ReFi” report for Q1 2024.
Despite this undoubtedly positive shift, it’s still clear that if Web3 financial systems are going to be sustainable, they’re going to have to be deliberately designed with self-renewing processes in mind and work to help mend the planet. By staying well-informed and conducting due diligence, investors can safely explore this emerging sector, advancing a sustainable future without compromising on security. Strong security measures, such as those provided by Xplorisk, establish trust and enable broader adoption and scalability in blockchain projects.
Businesses literally cannot afford to leave the management of these risks solely to their sustainability or corporate-responsibility teams. Any company that seeks to thrive in upcoming years and decades – much less be seen as a leader – will have to engage the attention and energies of its entire senior-executive team, up to and including its CEO and Board of Directors. Genuine sustainability initiatives can strengthen connections with consumers – particularly younger consumers who have begun to see climate as a defining generational issue.
Commodity traders and supply chain partners need to increase the consistency and volume of regenerative products bought from farmers. Investors need to deploy more capital to reduce the financing needs of farmers who already have the appetite to transition. Additional technical capacity building, farmer network and training are also needed to enable more farmers to join the movement — topic for the next field note. In sum, regenerative agriculture has been shown to be economically positive for the farmer, let alone all the other ecological and social benefits not accounted for in this study. Furthermore, some farmers may encounter increased working capital requirements during the initial years of the transition.
KLIMA token holders benefit from rewards from the KlimaDAO just by virtue of their token holdings when others buy into the organisation. There is then an incentive to invest and hold tokens, which in turn helps to reduce carbon dioxide in the atmosphere – a pure manifestation of ReFi in action. It also ensures accountability, both for firms to prove they’re participating honestly in ‘green’ initiatives and for individuals to check the firm’s claims, which helps to drive genuine behavioural change and eliminate ‘greenwashing’. Regenerative Economics theory recognises that rather than trying to completely overthrow the entrenched capitalist system, it is better to try and evolve it to the next stage before it’s too late.
They are also engaging with blockchain technology for purposes of registration and trading of the credits being generated. In order to get nature credits certified, their generation must meet the standards set out by credible verification agencies, at which point they become valuable and tradable on voluntary markets. Savimbo has been pursuing verification with Cercarbano, registration with Ecoregistry and listing on Senken, each of which rely on blockchain technology underpinning their nature credit-related services.
But the problem we’ve got is, if we want to, we’ve got large corporates who are making many commitments towards being nature positive, we’re going to have a million hectares that have now been transitioning into regenerative agriculture. It’s not going to be Unilever who are actually doing, it, it’s the farmers, it’s the people on the ground who need to make that change. And if they’re not, they’re already under a lot of pressure and a lot of stress, and they’re not exactly profiteering hugely and there’s a huge amount of risk. We’ve also made Net-Zero commitments, so we think that’s going to help us to be able to deliver that. They’re finding that their crops yield is significantly diminished, and they’ve had to invest how much on new types of tech or new types of farming approaches and that’s just in the UK and sort of in Europe and the US. So we’ve been having these conversations, to try and say, you know what, there’s not one actor that can actually resolve this.
The top 25 companies in the FAB sector generated $1.5 trillion in revenue in the past year, while profits for the sector increased to more than $155 billion. These systemic flaws, deeply ingrained in our collective consciousness, fosters a model of finance that is misaligned with the intricate dynamics of life itself. It perpetuates a cycle of exploitation, undermining the vitality of our communities and the natural world. It highlights a number of investors already making strides in this area, including 12Tree, Agri3, Agriculture Capital, Impact Ag Partners, and SLM Partners. Governments and supranational organisations can adopt Web3 technologies to digitise the treasures of world heritage to preserve them when under threat from warfare or environmental decay. In the event that cultural treasures are destroyed, there will always be a record of their existence.