Valuing Nature – A Handbook for Impact Investing

Investing in nature and biodiversity is a growing trend that is gaining a lot of attention. Especially now in the run up to the UN Climate Change Conference (COP26) in Glasgow in November. William Ginn’s book is required reading for investors interested in environmental conservation.

“We need to align business with nature, not against it," said William Ginn, author of Valuing Nature - a handbook for impact investing. Island Press

In short

  • Ginn is a committed conservationist, but one with strong commercial instincts. He founded his own business and went on to TNC - The Nature Conservancy “tackling… climate change and unprecedented biodiversity loss.”
  • Ginn’s time at the US based non-profit organisation yields invaluable experiences he shares with readers here. The handbook is in two parts – real world case studies and an examination of impact investing tools.
  • Ginn’s core belief is that “We need the private sector, empowered by thousands of entrepreneurs, to be working on solutions to the biggest problems facing the world.”

William Ginn is more than just a ‘tree-hugger’. He makes clear the direction of his thinking by telling us: “I am energized when I see entrepreneurs working on problems in new and different ways.”

His business acumen is apparent throughout the book and it is easy to understand his success in founding Resources Conservation Inc. (his waste recycling company) in the ‘80’s.

But it is Ginn’s time at The Nature Conservancy (TNC) that is the most important guiding light to his work. The organization is mentioned over seventy times, and dominates the case studies and insights.

Ginn served as Chief Conservation Officer, then founded TNC’s NatureVest, a partnership with private investors that he tells us “has mobilized more than $600mn of private capital in its work.”

Ginn passionately believes “impact investing is rapidly becoming a third leg alongside philanthropy and government funding.” Private philanthropy “is not enough,” and in his opinion chronically underfunds environmental and animal welfare causes.

He points out that in the United States these receive a mere 3.5% of the $359bn in charitable contributions. Equally, Governments often fail to take sufficient action, and “there is no guarantee that well-meaning policy and incentives will always generate positive outcomes.”

He cites the billions of dollars spent on ethanol by the US Government. This has had the unforeseen effect of “not only driving up the cost of food products but…also contributing to further land conversion and degradation along with the release of additional carbon emissions as ethanol is burned as fuel.”

A masterful practical guide for impact investors

Faced with the shortcomings of charity and governments, “investment capital from the private sector (is) essential to fill the gap.”

He also argues there are other reasons to engage the private sector. Such as “the amazing capacity of entrepreneurs to invent new ways of solving problems.” And most importantly the fact that “the financial and political power of businesses increasingly eclipses that of government and certainly that of charities.”

Ginn marshals his TNC experiences, and his passion, to create a masterful practical guide for impact investors. There are plenty of useful tables and an enormous number of what he terms ‘deal books’. Short paragraphs describing the investment and the financing structure.

There is always a contact, normally with a website address or information on who to get in touch with. Most of these refer to projects in the United States, but not all of them. He gives information on deals in Kenya, Brazil and India for example.

Financial solutions

The first part of the book offers real-world case studies across key environmental concerns: water, farming, fishing, forestation and green infrastructure. There is a welcome emphasis on solutions. Take a handy table Ginn constructs which gives you the (five) “Best Ways to Reduce Water Use.”

This emphasis on solutions is enriched by a broad discussion of the myriad innovative financial instruments which Ginn (and other impact investors) have employed.

These include ‘The Forest Resilience Bonds’ developed by Blue Forest Conservation, and TNC’s ‘Conservation Notes’ (which have a AA- rating and a general unsecured obligation from TNC).

When discussing the many small islands swamped by debt and yet responsible for ocean conservation, Ginn tells us the solution: ‘Debt-for-Nature swaps’, where a country’s external hard currency debt is converted to a local currency debt held by a conservation trust. Ginn points out that “a debt for nature swap can be used for many potential projects.”

Lots of facts and figures

There are a plethora of interesting facts and figures. The discussion of China’s ‘sponge cities’, for instance, is fascinating: “re-imagined urban environments where almost every raindrop is captured, controlled and reused.”

And surely only specialists will be aware of American cemeteries reconfiguring their car parks as stormwater traps, or how the problem of rice waste in India is now being solved by ‘The Happy Seeder’ which picks up grinds and redeposits rice waste as mulch. Ginn even puts in a photograph for us.

Indeed, these facts and figures demonstrate the extraordinary breadth of Ginn’s experience. We are told India’s tiger population has “increased by more than 30 per cent,” while “in long line tuna fishery there are approximately 5 million baited hooks set each day on 100,000 miles of line.”

Sometimes one would like a little more detail to back up such numerical claims such as “32 per cent of the world’s energy is used directly or indirectly by buildings.”

Practical tools to measure impact

The second part of the book offers many useful tools for impact investors. It may, however, be somewhat less gripping for European readers where they are US specific. This is particularly true of the chapter dealing with the labyrinthine US legal system and its many pitfalls for investors.

But this is more than made up for by the helpful advice on raising capital, and the detailed observations on impact measurement. Because as consultant Peter Drucker says “if you can’t measure it, you can’t improve it.”

Again, there is a helpful emphasis on solutions with tables like “Impact measurement project methodology” and “Steps in Calculating the Impact Multiple of Money” along with some useful warnings on how to avoid “perverse outcomes.”

By the end of the book, the reader feels well-armed to go out and make his/her impact. Which is just as well.

As Ginn concludes, “those seeking to use market-based strategies…would do well to remember this lesser-known caution: the wealth of nature will be nurtured by how we cultivate the seeds we plant today.”