The Earth has reached its tipping point. The warning signs are loud and clear and have been for decades. Quantifying Nature has set out to mobilise positive environmental change at scale by quantifying the financial risks of climate change & biodiversity loss.
The company’s core belief is that the current information gaps and language barriers must be bridged to generate genuine environmental change. This involves communicating risks and opportunities through a universally-understood medium: money.
As such, Quantifying Nature has embarked on a mission to inform the key stakeholders about the exact financial costs of inaction and the economic benefits of adaptation interventions. The company provides the world’s first software to identify and quantify the financial risks of the climate-biodiversity crisis to mobilise target adaptation solutions.
Company roots
Quantifying Nature was born out of Adrien Firmenich’s (CEO and founder) lifelong passion for the environment and preserving it, which had already led to his codeveloping the world’s first bankable-nature based solutions and the Oxford Offsetting Principles. However, it was only in 2021, whilst working in asset management, that Firmenich noticed that some of the assets of the fund he was working at had been suffering from decreased revenues in specific geographical areas, which were famous hotspots of climate turmoil.
Upon researching this topic in greater depth, Firmenich realised that biodiversity loss also had a material impact on companies, yet no one was talking about it at the time. “At this point, it became apparent that the climate-biodiversity crisis had become a material financial risk to corporations, financial organisations, and governments worldwide,” he said.
Yet, after market research, Firmenich noticed a gap in the market: there needed to be a market tool providing knowledge on the extent of these damages and how to reduce them. “This glaring information gap drove me to take the leap of faith of quitting my job in asset management and launching Quantifying Nature in February 2022.”
Disrupting the status quo
Despite the best efforts of many, the status quo is not working. “Since the first international earth summit held in Stockholm in 1972, we have mostly witnessed a series of continuous unfulfilled global policy initiatives, corporate pledges, and financial coalitions. The result: our planet has reached its inflexion point, and we are a moment away from the point of no return. That is when all forms of human intervention will be rendered mute by Earth’s destructive and uncontrollable positive and negative environmental feedback loops.” Firmenich said.
“Financial self-preservation is a powerful catalytic agent of change. Inaction towards addressing the climate-biodiversity crisis will cost each of us much money down the line. Fortunately, there are cost-effective financial hedging solutions with positive environmental ramifications, such as nature-based solutions. These two elements need to be connected to unleash the full potential for the good of sustainable finance globally, which is exactly what we have set out to do.”
Although some market players such as Jupiter Intelligence, Cervest and Climate X have developed AI software quantifying the financial risks of climate change on various assets, Firmenich said their analytics needs to be more scientifically correct, as they need to incorporate the biodiversity element.
“Given the intertwined nature of the climate-biodiversity crisis,” he said, “how can we have accurate climate analytics, or biodiversity analytics, for that matter, without ensuring that the synergetic effects are considered?”
For example, biodiversity offers an average of 30% of resilience toward the impacts of climate change on corporations across the world. “In other words, as biodiversity becomes increasingly degraded, the economic damages incurred on companies from the physical effects of climate change are set to increase dramatically.”
Quantifying the financial risks of biodiversity loss is critical. According to Firmenich, most people need to realise the extent to which global supply chains either moderately or heavily depend on biodiversity, given their multiple positive ecosystem services. “Biodiversity decorations are estimated to cost global GDP hundreds of billions per year, which translates to numerous financial impacts on corporates.”
Bridging the information gap
Quantifying Nature aims to bridge the information gap that hinders governments, corporates and financial institutions’ ability to make informed decisions toward practical environmental preservation.
“At Quantifying Nature, we analyse the future monetary loss that any publicly listed company is set to lose from the climate-biodiversity crisis,” Firmenich said. “This requires assessing the future losses anticipated throughout any company’s supply chain and at every one of its physical assets (factories, operations centres, and more).”
This information, Firmenich said, enables Quantifying Nature to make targeted adaptation interventions to ensure both financial hedging and conservation positive outcomes.
Copyright © 2022 FinTech Global
Copyright © 2018 RegTech Analyst
