On a recent episode of the "Investing in Regenerative Agriculture and Food" podcast, Sonja Stuchtey, co-founder of the Land Banking Group, unveiled a groundbreaking concept: Nature Equity. This new asset class aims to funnel significant investment into regenerative agriculture and the large-scale restoration and preservation of natural ecosystems.
The conversation began by addressing a critical issue: while raw material costs rise, putting pressure on producers, investment in regenerative agriculture—which is key to resilient supply chains—often lags, being treated as a short-term expense rather than a vital long-term investment 00:07 - 00:42.
To bridge this gap, the Land Banking Group, co-founded by Stuchtey, is building infrastructure to connect investors with land stewards actively implementing regenerative practices 05:05 - 05:25, 10:21 - 10:41.
The core idea of Nature Equity is to repackage the outcomes of positive nature stewardship into contracts that are understandable and attractive to capital markets 12:18 - 12:36.
This innovative approach decouples investment in natural capital from direct land ownership, focusing instead on measurable ecological improvements such as enhanced carbon storage, biodiversity, and water holding capacity 13:13 - 14:59.
These outcomes are meticulously documented in a natural capital account via a platform called Landler, which analyzes various land cover types and tracks ecological progress 16:05 - 17:54.
Data is gathered through a hybrid approach, combining remote sensing, in-situ data from partners (like bioacoustics and eDNA), public data, and information from land stewards, all analyzed using AI models 18:17 - 20:05.
Initially, the primary demand for Nature Equity comes from agri-food companies facing supply chain vulnerabilities due to climate change and resource scarcity 21:20 - 22:58. By investing in Nature Equity within their supply chains, these companies can support the transition to regenerative practices, ensuring future resource availability 22:10 - 23:18.
The Land Banking Group aims to provide the necessary infrastructure—transparent digital solutions—to overcome traditional barriers like lack of transparency and fragmented supply chains, thereby facilitating direct engagement and investment 23:40 - 24:46.
A crucial aspect of Nature Equity is its potential to be recognized as an asset on corporate balance sheets, rather than a mere Corporate Social Responsibility (CSR) cost 36:27 - 38:27. This shift, supported by discussions with major accountancy firms, could unlock far more significant financial flows towards ecological regeneration 37:46 - 38:34.
While investing in natural capital outside a company's direct value chain presents complexities under current accounting standards, policy changes like tax benefits could offer incentives 35:44 - 36:15, 41:27 - 41:47.
The long-term vision, Stuchtey explained, is to create large-scale financial instruments that allow institutional investors, such as pension funds, to build diversified portfolios of Nature Equity, generating returns based on the appreciation of natural capital 45:38 - 46:18.
Real-world examples, like a tea producer investing in its suppliers' transition to regenerative methods through forward agreements for natural capital, illustrate the model's practical application, ensuring upfront investment and ongoing payments for land stewards based on ecological improvements 46:57 - 48:26.
Stuchtey emphasized an outcome-based measurement approach, respecting land stewards' expertise and ensuring a significant portion of the investment (ideally 80%) directly benefits them 31:28 - 33:56. Success, in this context, is redefined with a long-term perspective that values the accrual of natural capital 53:32 - 54:28.
Ultimately, she believes that reforming accountancy rules to formally recognize nature as an asset is fundamental to transforming our relationship with the natural world and driving the necessary investment for its regeneration 1:12:17 - 1:12:47.
