Rebecca Archer
Welcome to The Remarkables, Grant Thornton's podcast that seeks to uncover stories about remarkable people doing incredible things for their community, bettering the world for future generations and inspiring others to do the same.
I'm Rebecca Archer, and today I'm joined by Frances Carter, a sustainability and finance expert, currently a Director of Asia Pacific at Conservation Capital, and Grant Thornton alumni. With a passion for protecting the planet, Conservation Capital is a market leader when it comes to preserving natural resources through implementing sustainable business processes. Welcome Frances, and thank you so much for joining us on the podcast today.
Frances Carter
Thanks for having me, Rebecca.
Rebecca Archer
I'd like to start by perhaps asking you to explain just what commercial conservation really is, and why it's so important?
Frances Carter
Well commercial conservation, or otherwise known as building resilient landscapes, is ensuring that natural capital has a financial value behind it and is supporting enterprises and communities while maintaining the biodiversity value. So, at the moment, you have various levels of protection with conservation – you have national parks, which has the highest levels of conservation protection, and it goes through gradients depending on the country. But in some countries, that's not possible because land has to pay its way. You can't exclude land, from people needing to produce food, energy, and incomes for their family, and also governments can't always afford to support those lands off the sovereign budget itself. So, what conservation capital does is it builds business models into these natural landscapes to ensure that they are driving income and return back to communities, back to business, and back to governments.
So, we do it in three ways. We do it through conservation area business planning, which is building business models over the land, that can cover various industries, it can be ecotourism, it can be payments and ecosystem services, including carbon, you can be sustainable forestry, regenerative agriculture, many, many options. So, we look at a whole suite of options and income generating activities. We also then develop financial mechanisms to bring capital to that business model. So, it could be debt, through green bonds, nature stewardship bonds, or corporate biodiversity bonds. It could also be through equity arrangements and ownership arrangements with indigenous owners of businesses that rely on that natural capital. And then we also engage corporations that rely on this natural capital for their supply chain resilience for the infrastructure resilience, so they actually are actively investing in resilient landscapes to reduce their costs, increase their climate change resilience against physical risks, and be prepared for transition risks with climate change. So basically, commercial conservation enables natural landscapes to feed into the financial services mechanism, while supporting that shared benefit model.
Rebecca Archer
And just in terms of the kind of sectors that indirectly work with nature, like finance, or healthcare, maybe retail, how can they be negatively impacted by a decline in the environment because of higher costs or regulatory and, you know, reputation, risks or health problems related to their employees or even consumers?
Frances Carter
Well, basically, every sector is impacted by natural capital, as humans are impacted by natural capital. So, when you come to the health sector, public health as COVID has shown, I know there's a lot of debate about the source of COVID. But it’s well documented that the transmission of diseases from species that we normally don't have contact with, to humans, which has created HIV AIDS, SARS, and now COVID, has shown a huge cost to the public health system, to wellness and welfare, mental health, and also the economy. Though, every industry relies on water, supply of fresh water – and every industry requires land.
From a finance point of view, the finance industry has its roots in natural resources, particularly in Australia. So, it may not have a direct impact on the financial health of those industries such as finance, but your client’s insurance, it has a huge impact from natural resources and imbalances and systems, as we're seeing with climate change, is that they're being impacted by these imbalances in this system. And we're seeing changes in these models because the risk is getting too high, particularly in finance and insurance. And then the flow on as we said, with epidemics and pandemics with public health, but also bushfires and air quality that we saw in Sydney during the black summer fires. The imbalance in the system that created that perfect storm for fire conditions that lasted months and months and months, created a public health issue. So, they’re just a few examples of how there are direct and indirect impacts from degradation of natural systems on to those secondary and tertiary industries.
Rebecca Archer
And I would love to hear your thoughts on why businesses really need to be paying attention to this and really moving on it because of the direct impact it could have to their bottom line down the track. Why is it something that they really need to start thinking about now?
Frances Carter
It's the same thing. It's that you rely on a foundation of natural resources and also your workforce welfare. So, for example, with agriculture: agriculture, and food security and food systems rely on pollination – we will not have a food security if we don't have a natural pollination system. And there's no technology at the moment, that will be able to replace that at the scale that's required to feed seven billion people and an increasing middle class. So, with agriculture, they need a healthy pollination system which not only insects, which are the obvious ones, but bats and the health system with insectivorous birds, which in Australia, we're losing because of land clearance of shrubs and grasslands.
So that is one example that our food systems agriculture really rely on that healthy system. And obviously water systems with mining, you need water for mining, you need water for agriculture, you need water for construction, and manufacturing – and in fisheries. We need mangrove systems and seagrass beds for fish nurseries, the fishery industry relies on these ecosystems to be intact for their nurseries. So, they're just a few examples, again, of how there's a direct reliance on these systems to be in balance and healthy for a profitable bottom line and reduced cost base to create efficiencies in their supply chain.
Rebecca Archer
It's such an interesting area that you're working in, I'm wondering how you arrived at this point in your career. What's the pathway that you took to get here?
Frances Carter
It was not linear, at all. It is a circle and jumping and everything. I was in finance in some sort of form for about 10, 11, 12 years. And I was in Sydney – I was doing the typical thing going to Sydney and climbing the corporate ladder, working in the banking sector. And I learned a lot in that time, professionally and personally, basically how many hours I was willing to put in each day and each week, but also technically it was a really good learning curve to understand the financial services sector. And what I came to realise is that wherever you can control or divert the money is where you will create change. So, I've always had a passion for conservation. And I wanted to see how I could have an impact on conservation. But I'm not a scientist.
So basically, observing how financial services can create change in society, but also in the natural world was really important. So, I left my job in Sydney, and I left Sydney and I decided to go and work with at the time its DFAT’s AVID Program – Australian Volunteers for International Development. And I worked in East Timor and Botswana under that program, basically, in financial inclusion and capacity building of NGOs. And it was during those times I observed really the power of industry, particularly primary industries, where they can do well in supporting communities and the environment. I know some people don't really understand and have trouble linking, for example, mining actually having a positive impact. But if it's done well, you can actually support communities and support biodiversity where a government that doesn't have the funds to do that can create scale for those countries.
But I also saw the other way, it's not done well in the devastating impacts on communities and the environment. And then also realised that in this international space, which I was entering, and I also needed a Master's, and I needed to learn another language. So, I went and did my MBA in Spain, and I learned Spanish. And I focused that MBA on social impact and emerging markets and business at the bottom of the pyramid. It's incredibly complex, I found it far more complex than working at a US Bank where you're dealing with one trillion-dollar balance sheets; I found it far more complex dealing with giving women 100 US dollar loans, because you've got the same finance but it's you've got far less resources, far more complicated cultural fabrics and systems going on, less regulation and protection of people. So, it's really interesting. And you really have to understand how these societies work to understand how then conservation is impacted as well, because poverty is one of the biggest threats to conservation.
And then I realised I didn't have a solid background in natural sciences. I went to New York and did my Master of Science at Columbia University. And that was really where everything came together – where I saw that my CA, my MBA and my over decade experience in finance and accounting, and then that practical experience being in the field solutions that are actually realistic came together. And that Master's really helped me see that and gave me the confidence that, oh, I understand this system – it is a system. It's a network. It's three dimensional of social, environmental and economic impacts. And, and that's where it really took off of understanding this concept of shared value shared benefit.
Rebecca Archer
You mentioned that you've always been passionate about conservation, but I'm curious to know how you became interested in sustainability? And what really ignited your passion for the environment, where that sort of spark was lit?
Frances Carter
It sounds cliche, but it did actually come from my parents. So, I come from an unusual background, where my mum is a conservation, well, environmental scientist, but has been involved in conservation, most of her life. My father is a geologist and in mining, so I saw both sides, but the core of it was science – was that understanding from a scientific point of view, not really an emotional point of view and understanding each other's point of view. So, they really meet in the middle, and that was my passion – I understood the impact mining could have, but I understood the need for it, and how it can actually, as I said before, support conservation and communities, but I saw there's a lot of improvement that's required in the industry. And I think there's a lot to do with culture. And that will come over time, hopefully, and with more regulation and market pressure.
But then also with the conservation, so I just I grew up in the Adelaide Hills. We were on a property, we're always out, replanting trees on the weekends, and we always had a task when we came home from school. Mum said you have to pick up 100 weeds before you come down the drive to the house, you have to pull 100 brooms or gorses. So, I'd walk home from school and me and my sisters would have to pull 100 gorses out.
Rebecca Archer
In talking about the cultural change that you just mentioned there, I'm wondering how you think that occurs, and perhaps whether there needs to be more education really, for businesses in terms of sustainability?
Frances Carter
Yeah, so this is where I have a bit of a global perspective, because I said my training was in the US and in Europe. So unfortunately, for Australia, these continents are a good decade ahead of Australia in this space. So, from an education point of view, that's one of the reasons why I had to go to US because that course was available there. At the time, I couldn't find anything in Australia that really was tailored to what the Columbia course was, but I do see them popping up now. So, this was a few years ago.
It is a cultural shift in Australia, there is a different attitude towards nature, I've noticed compared to in Africa, and Europe and the US. I think it's embedded at the roots, but you can see it in private sector as well. But you know, Australians are very innovative as well, and we've taken strides in protecting our landscapes recently. And we're now seeing a lot of leadership at the Government level in this, and private sectors coming along with it, which is which is great. But from an education point of view, that is definitely something professionally needs to step up. And I know Chartered Accountants is definitely doing a lot in this area with a sustainability playbook and looking at a sustainability module for the Chartered Accountants program.
It is a technical area, I think that is one thing that not only in Australia, but worldwide, when you've come into sustainability people have mistaken it as, oh, I'll get my legal counsel to do this, or it's a marketing area, or investor relations. It's not - it's a science area. You have to understand the basics of ecology, you have to understand the basics of social science and gender. You have to understand also the economic side, which is where accountants have a big role to play. But you need to understand how they all impact each other, not only just now, but if you make a decision now, how does it impact in five or 10 years’ time down the line, with a community or an ecosystem?
So, it's a highly technical area, and I think that needs to be understood. Obviously, the technical side of greenhouse gas accounting - that's a lot of maths and modelling. So that's another area that needs to be improved as well, but I think we're on the right path in Australia. And it's really heartening to see that people and industry are really coming on board and demanding this, it's really being market led and community driven.
Rebecca Archer
And how much growth, if any, are you seeing in conservation focused investment to really incentivise businesses in Australia to become more sustainable, compared to other countries in the world? You did say that they're, you know, perhaps 10 or so years ahead in certain parts of the planet, but is there anything that you're seeing that's quite encouraging here?
Frances Carter
Well, the Nature Repair Market Bill – that just is currently drafted for consultation is a big step. It's basically this concept of private sector investment in biodiversity – understanding that biodiversity has a role in climate. So that's the other big step that happened at COP27 is that there's an understanding that climate is not just emissions. It's not just carbon and technology. Climate is a complex system of the earth and biodiversity, and land has a huge role to play. And just because you reduce your emissions, or you have a carbon neutral, or zero carbon technology, if you've cleared land, such as solar farms, wind farms to do that, that is not green. That is just as destructive. You have to understand the system approach. So, there is this saying that there's “no net zero without nature now”, because you have to understand that approach and the Nature Repair Market Bill that the government has just released is a big step towards bringing biodiversity onto the marketplace and rewarding private conservation in that area.
There are steps that can be improved a bit more, such as regulation around infrastructure, for example, in Europe, any infrastructure investment now has to take into consideration nature. So, for example, if you are building transmission lines, they have to build and maintain green corridors along those transmission lines, instead of clearing them. In roads, it’s inbuilt in America and Canada now. And now becoming in Europe, that you have wildlife, tunnels and bridges. So, wildlife can safely cross these highways, and they're not isolated to the islands.
But Australia is at the forefront and seen as best practice in water models and water markets. And we've had to because we're the driest inhabited continent on Earth. So, we've had to develop and sustain a gold standard water market. And it is seen as, as that globally, of course – certainly improvements that always can be made, but that's definitely something we're doing well. But what I know from clients we have in Europe, and we've heard when we've talked to peers globally, is that private sector wants to invest in natural capital and nature based climate investments. But there's very few regulatory mechanisms and institutional structures to support them and incentivise them to do that. So that's definitely something that globally needs to be improved, but it is in the path at the moment where Europe is definitely leading that, and Australia is definitely improving.
Rebecca Archer
Now the fear of being penalised for greenwashing might be preventing some businesses from communicating their Environmental, Social, Governance (or ESG), and sustainability initiatives. What advice might you have for businesses who are trying to authentically integrate ESG and sustainability into their business strategies?
Frances Carter
The key with sustainability is the word you've used: be authentic. It is not to be perfect; you're never going to be perfect. And I actually saw a colleague or an industry peer post on LinkedIn that they do not want to see any companies now write, “Sustainability is in our DNA”. It's not in any business's DNA, because if it were, the world wouldn't be in the state it is. It's hard, you’re best writing “sustainability is hard”. But we’re genuinely on a journey as consulting experts and delivering on goals and metrics – and we've identified risks, we've failed at this. We're improving at this.
I understand there are issues with disclosure and confidentiality, and you don't want to disclose something that you could be sued on – sustainability experts understand that, but it does mean that you have to increase your disclosure and be held accountable for what your business does now in its impact. What I would say to businesses is, don't strive to be perfect, just be authentic in your journey. What stakeholders are expecting is to see continual improvement. When it comes to authenticity, it actually means you put your money where your mouth is – you “walk the talk”. So don't say that you, for example, have zero tolerance to abuses of human rights and then you go and sponsor an event or attend an event that has ties to human rights issues.
Again, don't call your company if it's renewable energy, such to solar or wind, and say you’re zero emissions and you're improving the climate situation and going towards the Paris 1.5 degrees when you've cleared 1000s of hectares of bushland to put up your solar farm. It's not green. There's so much degraded, cleared land in Australia that you could use. And then also support farmers with diversified income.
There are many business models that can involve integration and shared benefit that doesn't involve clearance or bushland. So, there's sort of examples of just be authentic, don't strive to be perfect, even if you're doing the bare minimum, that's fine, at least then have a roadmap and a strategy in place. And that's where you get the experts in to help you with that. So that's really what the market is looking for, it's not looking for you to be perfect straightaway. It is a journey; sustainability is a long journey. And Net Zero is very hard to achieve.
And when I say Net Zero, I actually mean Net Zero of scopes, one, two and three, not scope one and two, asterisk. And that's it. That comes back to education. Unfortunately, a lot of Australian companies, I've seen that in the sustainability reports, they say when it's zero, scopes one and two, asterisk. You cannot use that term on the international standards. If you're going to claim that you’re net zero, you use carbon neutral, or 100% offset; but you don't use a term net zero unless it’s scopes one, two, and three. And that's why it's the gold standard; it is incredibly hard to reach net zero. And for some businesses, it will actually not be possible. So, you have to understand those technical areas, and be honest about it. But it is a journey. It is a journey. And no one expects you to be perfect. And if you say you're perfect, then you're probably greenwashing.
Rebecca Archer
And if you're trying to access expert advice, if it's perhaps a business that is just starting to really commit to and look into this whole area, how easy is it to access that kind of advice?
Frances Carter
So this is split into two areas. One we've discussed already is ESG and sustainability and there are many consulting firms that are entering that space – Grant Thornton is one of them. And that's helping with ESG strategies, roadmaps, decarbonisation strategies, which is basically your core business strategy now because decarbonisation hits every part of your business.
And then there's another side with natural capital, which conservation capital what we feed into, which we can help with, and it's basically with your ESG strategy, you need to support the environmental side, and you want to create investment. Now, some companies up to date, you've got CSR, which was corporate social responsibility. That's not an integrated department, it's more on a side giving money, and what it's now showing is that ESG needs to be integrated. And instead of just giving donations to national parks, or communities, or NGOs, or whatever it may be, you actually feed that funding through your business model through investment. And also, if you can do it through a bond structure such as a green bond, it actually reduces the cost of capital. Instead of just giving a donation, it generates that return, that performance-based mechanism that allows conservation to be accountable for its outcomes and for the money that it receives.
Rebecca Archer
Frances, how we can follow your journey or perhaps further support the work that you do?
Frances Carter
So, I am on LinkedIn at Francis Carter at Conservation Capital, so you can find me there. You can also look up Conservation Capital’s website, which is https://conservation-capital.com/ and you can find a range of our case studies and information on all our suite of products and services there.
Rebecca Archer
Frances, thank you so much for your time. It's just great to see that you're continuing to do remarkable things beyond Grant Thornton.
Frances Carter
Thanks, Rebecca.
Rebecca Archer
If you liked this podcast and would like to hear more remarkable stories you can find like and subscribe to the Remarkables podcast by Grant Thornton Australia on Apple podcasts or Spotify.
Leave us a review or ideas on who you'd like to hear from next. I'm Rebecca Archer, thank you for listening.
