Nigel Sharp is a farmer, but he’s also a businessman and a fund manager. And over the past two decades he’s been a pioneer in the ‘Business of Biodiversity’.
This is Episode 3 in our ‘Investing in Biodiversity’ podcast series, and Nigel offered some valuable insights into his pioneering work of balancing land conservation with building sustainable business models; so the ecosystems he’s been nurturing can survive and thrive long into the future.
Nigel is a pioneer in this space, the Tiverton investment vehicle has developed a whole range of agricultural projects on land holdings all over Australia, and all with the regeneration of biodiversity at their core.
Plus, he seeded the Dragonfly venture fund, to support early stage climate-tech and regen-ag startups. And, he founded the Odonata Foundation, an environmental charity working to save species from extinction.
Listen on Soundcloud
On this episode…
…Nigel explained the evolution of his projects, land-holdings and investment portfolio. He mapped out the key challenges he sees on the land, and talked us through the solutions he’s building that combine regenerative agriculture, native species rehabilitation, improvements in soil carbon, as well as supporting the new breed of climate tech startups.
This is a really practical insight into the evolution of a modern farming practice, and the potential for large-scale shifts in the way we work this big brown land.
My key takeaway this week…
“We want to deliver outcomes that give all farmers competence to farm for the future of the planet, biodiversity, and the climate.”
Series Sponsor – GreenCollar
As part of our series exploring ‘natural capital’, we have the support of a new Good Future sponsor, GreenCollar.
GreenCollar is a developer and innovator of environmental market solutions, they recognise the power of putting a financial value on nature, as an incentive to drive sustainable land management, cleaning up our waterways and avoiding further loss of biodiversity and animal species.
Since launching more than a decade ago, the company has become Australia’s largest developer of nature-based carbon credit projects, and they’re pushing the market forward with schemes like ‘Reef Credits’, which target improved water quality at The Great Barrier Reef.
And their latest innovation is NaturePlus, a new form of biodiversity credits that aim to protect and restore ecosystems around the world. They’re measuring biodiversity outcomes on the ground, with a scientifically rigorous and verifiable methodology, that puts a value on natural capital, to enable investment in the conservation of high value ecosystems.
Reach out to the team at GreenCollar.com.au to find out more.
Good Future’s Good Books
by Simon Mustoe
“This book is a really good way of having a look at biodiversity recovery work. So wildlife in the balance, it’s called, it’s a great read, it puts it in a very readable form for those of us that aren’t scientific experts in what’s the problem, but also solutions that are emerging and what we need to do to work down that pathway.”
Please note, all book recommendations are directed to Booktopia, a local, Australian online bookseller, and if you choose to buy through that link you also support the podcast as we may receive an affiliate reward. Thanks in advance!
Links
Tiverton Agricultural Impact Fund
Follow us…
Sign-up for notifications of new episodes HERE
The Good Future Instagram is pretty great, check it out over HERE
My Twitter is over HERE
And you can get me on LinkedIn HERE
Disclaimer
The information on this website, and linked podcast episodes, is for information and entertainment purposed only, it is not intended as financial advice.
If there has been mention of financial products it should not be taken as a recommendation, and it shouldn’t be relied upon. It does not take into account the investment objectives, financial situation, or the particular needs of any potential investor.
You should consider obtaining independent advice before making any financial decisions
If you’re in Australia you can visit moneysmart.gov.au for more details.
Full Transcript
Note: this was an automated production by Otter.ai so some errors may remain
John Treadgold
Nigel, we’ve had plenty of time to chat in the past I’ve been wanting to have you on for a while you’ve got a lot of experience in this space. And I’m keen to dig into lots of bits and pieces. But to wind back, you grew up on a farm, you’ve always had a very tangible and practical link to the land and to the value of biodiversity. So what drove you to shift that view towards business and finance.
Nigel Sharp
Well, family circumstances, and my father, probably the farm I grew up on was a small farm four sons and needed to look at mechanisms to be able to get back into farming. So I went down the pathway into the property industry.
John Treadgold
And so it was it was very tangible in terms of just needing to do that to help out the family business. Now it
Nigel Sharp
was modify mine pathway because I always had an interest in farming and any interest in conservation, particularly around the approach to farming.
John Treadgold
Okay, very good. And tell us about how you’ve you’ve seen this evolution of natural capital and biodiversity become an investment, thematic and almost an asset class.
Nigel Sharp
Well, it has been a long story. As I was growing up, the main interested conservation focus farmer’s head was in soil erosion and salinity and back in the 80s. And that was the start of the potter farm plan and planting trees to deal with those issues. Obviously, over time, we could that went well. It led to landcare actually, that started landcare which, you know, was was a really big change from a nature perspective. But during that time, we’ve continued to see degradation of the soil seen a lot of loss of biodiversity as land clearing has continued. So whilst is there was some barely moves to continue down that pathway, the greater impact has still been mainly in the degradation area.
So at that point it was government and, and groups like Potter foundation that were looking at it as the years went by. And it’s only been more recently that there’s been some mechanisms to help fund native vegetation work that really began in the early 2000s, with the Victorian government’s vegetation offset mechanisms. And then it’s evolved there, through voluntary interests to assist with remote vegetation work and some funding towards endangered species in it, you know, from the work we’ve been doing. But the real acceleration down this pathway has really been the last few years,
John Treadgold
When the Victorian Government brought those schemes in and it came up on your radar, was it a light bulb moment for you? Did it make sense? Or did it take a bit of convincing to say, all the work you’ve been doing hang on these cityfolk in the in the offices are trying to trying to tell us how to run our business.
Nigel Sharp
Oh, that was a great opportunity for us committed down the pathway of the focus at that point on looking at the endangered and threatened species in Victoria, without much funding. So we’re relying on other forms of income to support that passion, I guess, at that point. So the fact that we’d focused on primitive vegetation of high importance, so fairly, critically endangered habitat, it was, it was like the time that matched the focus of the government to look at protected vegetation and the clearance of that type of vegetation. That was that was about 2004. I think,
John Treadgold
From then to now, you said that the last couple of years have seen a real acceleration. Hence, this podcast series, and we have TNFD has gone live, global fund managers who you never would have thought talking about conservation, talking about natural capital. To bring us up to speed on where you’re up to how you’ve progressed, can you give us an update on the projects, the investment funds, the businesses that that you’re currently involved with?
Nigel Sharp
Yeah, sure. So we’re from Mount Rothwell, which was sort of the base where we really started looking at this natural capital, recovery work and rejuvenation, we evolved in to try and focus on a farm where we could work with the natural capital and have an operating farm. We started with the Tiverton farm, which is located down in western Victoria. And the idea there was to have a sheep farm grazing on native vegetation, grasslands, but crash grazing managed, like historically, it was managed by, you know, mobs of kangaroos. We feral-proof-fenced it, the aim was to restore the health of that and run it a strong shaped farming operation.
We did that. And then we started reintroducing the mammals that used to exist in that habitat. So bandicoots, and more recently, Eastern quails. For us, that’s sort of the ultimate type of project we’re trying to do for an impact perspective so that we can have maintained income, we can have high value produce, and we can monitor and watch the revegetation and the biodiversity thrive. On the back of that, in the partnership that I set up there was with Harry Young-Man who’s got a lot of strong farming background himself, and we started a fine-wool operation, producing excellent wool, and we’re getting a premium for that, that product. It’s not a massive premium, but it’ll helps towards having a financial model that’s fully funded as a farming, biodiversity climate operation. So that’s probably the goal that we’d like to build on for a bigger picture.
On the back of that we looked at then saying, how do we look at doing a larger farm, so Tiverton’s about 1200 hectares, so we then got investors together and bought a larger property 5000 hectares, with a view to master planning it for these types of sustainable farming outcomes, but not just grazing. In this instance, we’re entering the cropping territory, and remnant corridor connection as well.
So that led to the setting up the larger fund and focusing on the farming methodology so that we could produce food, higher nutrient density, be addressing climate change through soil carbon sequestration, and restoring biodiversity. So it got more complicated and more comprehensive in the work that we needed to do through that we worked a lot with moving from synthetic fertilisers to composting to evolving a liquid bio fertiliser ourselves so that we could look at plant health, soil carbon, soil, soil, carbon sequestration, and all of the components that go together. So that became the target is how we look at scaling that type of practice across the broader farming landscape.
John Treadgold
It really sounds like you, you built the business as as sort of need and necessity drove it, you bought the land, you created the structures. I mean, more recently, you’ve invested in and taken on control of companies like carbon neutral oil companies, this carbon measurement, how do you see that that structure of building out and buying and acquiring companies to build this system, what’s sort of the I guess, the goal?
Nigel Sharp
Well, it’s been an evolution as we as we work out what’s needed. So the investment in Carbon Neutral, we really needed that carbon expertise base with voluntary credits, international credits, we’ve the gold standard and carbon neutral. And then, obviously, the Australian Emissions Reduction Fund, processes and registration. And there’s multiple different projects here carbon neutral, specialising in the REMP, which is the tree planting piece. Tiverton had been working down the soil carbon piece, some of the larger properties, we were looking at the images for regeneration piece. So we wanted to get a more comprehensive understanding of that and create the income streams that could continue to build on farming income. Because the transition of farming is a really significant phase, it doesn’t happen overnight, it’s a two to four year phase, and we were looking for the mechanisms that could help us transition farms, because we’re probably the guinea pig, and that wanted them to help other farmers go through that process.
Similarly, we invested into Downforce Technologies, which was a satellite soil carbon measurement technology that came out of Oxford University. So the combination of having a farm to do the work, and then all of the expertise so that we can build a model that we can help share across the globe, ideally, to deliver outcomes that give all farmers competence to farm for the future of the planet, biodiversity, climate, etc.
John Treadgold
Well, that’s right. And if you’re, if your drive your ambition is to protect nature and biodiversity, is there always a business solution? Are there cases where conservation won’t necessarily always pay for itself? I guess, at least in the short term?
Nigel Sharp
Well, that’s absolutely correct. And this is the challenge. The ultimate goal for impact investing is to have returns commensurate with market returns that aren’t focused on that pathway. But some of the areas that we need, but I touched on one there before is how do we fund a farmer to transition with the risk that’s involved, because if you’re switching farming methodologies, that you want to minimise that risk for farmers.
The really hard work around biodiversity, focus recovery, such as native habitat needs, restoring and recovering some of the threatened species that we’ve got that are really important to the ecosystem, there’s not much funding around for those.
We look at projects in four different categories. Really, there’s the projects that require philanthropic government donations type support, which is really the work that Odanata started doing and has become expert in because one of the keys there was to work out how to do that type of work much more cost effectively, and then to share that with landholders and show them how they can fit into a master plan.
John Treadgold
And so Odonata sorry, Odonata that’s a not for profit, right?
Nigel Sharp
Yeah, Odanata is a not-for-profit foundation focused on saving species. We Save Species, is the catchphrase for Odonata. And working with many landholders, now around the country, focused on different recovery of different threatened species. And that’s now moved beyond animals into plants as well. And that we’ve got multiple First Nations groups that we’re working with, from their perspective as well.
So that that is the hard end and hard to fund. Our second category we look at is early learning to develop a business model. But other cases are, there may not be a business model until one day there’s a biodiversity credit of value, or that type of thing that recognises the type of work that I’ve just explained. And so now, fourth model is obviously the dividend farm model, which is where it’s a full impactful investment can ensure market returns and we can achieve the farm and biodiversity outcomes that we’re looking for.
John Treadgold
Okay, and so, talking through, you mentioned, categories two and three, they’re using what impact investors will often call concessional returns really impact first, may be willing to see financial returns shift up and down, but they really want to focus on that, that early nurturing the business model. Coming to then number four, the Tiverton model, what is it that’s driving the returns there? What is what is the business model there that gives us that strength?
Nigel Sharp
Well, that’s very much a full-farming operation, that we’ve been able to design it in the early phases so that we can get the biodiversity outcomes in the soil carbon sequestration outcomes. As part of the plan.
And a lot is in the master planning of the project to get to that point where we can be confident of the returns required. And the other thing is, we need to be confident that we’re not diminishing the capital value of the property along the way, either. Because sometimes your covenanting part of a remnant that landscape, the stock going to provide you with income going forward, which will actually decrease the potential capital value because it doesn’t have future potential for agricultural purposes.
So you’re always looking at the income and the capital, appreciation potential of a property or minimising the capital depreciation, as part of trying to deal with the climate biodiversity outcome. And that was really where our measurement model for the Seven C’s got established some years ago, so that we could be contemplating all of the issues that I’ve just described.
John Treadgold
You mentioned the Seven C’s there, I’ll come to that when we talk about impact measurement, one of my favourite topics a little bit later on. But sticking with this business model, I imagine carbon credits are there as part of it. And it’s interesting, the way the language now rolls with carbon reduction and biodiversity. And we have maturing carbon credit markets, but biodiversity is slowly coming into the language. I know you work with Sentient on their Biodiverse Carbon Fund, how is that integration happening, and what’s the balance within standalone biodiversity offsets, biodiversity offsets,
Nigel Sharp
So probably they do look at the international market from that perspective, but it’s a carbon neutral, we’ve got the gold standard accreditation, for carbon credit. And for a gold standard accreditation, you’re looking at the biodiversity outcome, as well as the carbon outcomes. So wanting to have a broad corridor planting with multispecies, back to rebuild an ecosystem.
And I think at the moment, the main market for carbon, and the way we look at carbon credits is what is the total picture that we’re delivering by establishing a Carbon Project. So we’d like to see a carbon project that’s got very strong biodiversity outcomes, we’ve got carbon projects as well with First Nations partnerships as well. And we really like those projects I can take you through also.
From a soil carbon perspective, you know, 50% of the world’s biodiversity is in the soil. So rejuvenating our soils, is going to do a lot for the broader biodiversity. Even if you’re maintaining a farming operation, they’re farming that way for soil carbon, you reduce the need for your herbicides and pesticides, the insect populations invertebrate populations do well, hence, it spreads up the of the ecosystem chain.
So all of these carbon projects can be master-planned to have a maximum effect beyond carbon drawdown.
Having said that, carbon drawdown is probably the most important thing that we see at the moment. We’ve got a continuing escalation of carbon dioxide in our atmosphere with having these incredibly intense climate events these days. And so accelerating people to transition to nature-based carbon sequestration projects, I think is critical.
John Treadgold
Well, that’s right, there are two closely interlinked challenges biodiversity loss and climate change. One being a positive feedback loop of the other. But then you mentioned social impact. And of course, any action against climate change needs to take into consideration, negative and positive impacts, right, so how to use that. And you mentioned a First Nations project you’re working on.
Nigel Sharp
We’ve got a pilot project in South-Western Western Australia at this sprint with the dollar act people, and that’s involved in regenerative farming or soil carbon sequestration project and an environmental planting project as a combination.
So in that instance, we’re looking at transference of knowledge and skills, creation of employment and self-determination outcomes that can sit as a measured outcome as well. Like I mentioned before, with any of these projects, we believe it’s all in the master planning and what we’re trying to achieve in doing so, and then doing the financial modelling to support those outcomes. So we’d like to expand that model that so far has been very successful.
John Treadgold
Very good, very good. And, of course, the challenge is always impact measurement. On the climate side, a little bit more quantitative, it’s relatively easy to record GHG emissions, you move to nature and biodiversity, more complex, a lot more thematics a lot more elements of an ecosystem that you’re measuring. But of course, then you come to the social side, really difficult. And so you’ve worked with a lot of impact investors in your time they’ve been big supporters. Tell us about some of the metrics that you use yet across this nature and biodiversity thematics to try and help them understand the positive outcomes of what’s going on.
Nigel Sharp
A lot of it we’re still trying to not out in the best, most cost effective way, provide the measurement outcomes. With Downforce Technologies, we’re starting to be able to quickly measure soil health, and also habitat changes. And so from a macro picture, that type of technology is fantastic, because it’s a cost effective way of really looking at a large scale area and saying how are we changing this area. \
When we get more into the other end of the scale, the threatened species end of the scale, it can be when we started releasing about bandicoots. In other words, less than 100 left and to doing a census, and how many different locations and how we’re recovering the genetics of those species. And we’ve rejuvenated the genetics of that species, we’ve now got probably two and a half 1000 of them in four different locations now, so we can measure those with our own trapping and modelling. And there’s a lot of things, as you mentioned, in between there. How do you measure the invertebrate populations? How do you measure individual plant health, and, and to that end, down the plot path, we’ve got partnerships, and we’re using labs in Australia and in the US to measure those are some of the species work by going deeper in how we do models and using infrared technologies.
In the last couple of years, we started working with the Cesar group, and EnviroDNA, which is basically collecting water samples in a broad number of locations to be able to track and start seeing the changes to the species that are located anywhere we did a 2000 site project to map Victoria’s biodiversity throughout waterways. And that became a really large citizen science project.
So there’s no simple answer to the measurement. But then we work with La Trobe University on the farm natural capital account system so that we can take into account the changes both in the work that’s been done with nature, but also the work that’s been happening on farms, because often, farms are only at the beginning of a transition to think down the pathway that we’re discussing.
So I think this is going to be an ongoing question to be answered, we could write very large papers around every project when you start going into all the points that I’ve just outlined. So it’s how we can demonstrate to investors and others to change in in a simple format. But I think we need to get heavily involved in the complexities of technology to be able to bring to the fore a really robust way of demonstrating the impact.
John Treadgold
Yeah, thanks for that, that’s really interesting,
because I mean, clear that it is an emerging space. As I try and get simple answers, everybody’s saying no, no, it’s very complex. That’s what we’re working through at the moment. And as you mentioned, investors would like to have some sort of simple metrics that they can watch move. But as you say, you’ve got complexity across all of these different ecosystems, soil, water, land, plants, and then all of the different combinations and then the depth of layers you can go down to.
Is there anything bubbling to the top that that investors are interested in or demanding, or where you’re, I guess where you’re approaching first.
Nigel Sharp
Well I think downforce technologies is helping us a lot with that, because we can really look at a farm and see month to month, year to year changes both in the soil and that native vegetation coverage. So soil health is a very significant indicator as to the direction of the biodiversity outcome. And also by being able to look at the satellite imaging on a very regular basis, if you’re master planning and putting corridors back into your farms, you can see those emerging as a fenced or then they’re planted, they start growing.
So that’s a great indicator, like if I was trying to do something simple with our farms, it’s a Downforce Technology Report, and then a report on the species work that we’re doing. And to me DNA tests in the local waterways around that farm to see what else is changing. And between those, we can give a, a very confident summary of change. But what I want to do is keep diving deeper into each of the details around those components.
John Treadgold
Excellent. No, so interesting. Technology will save us we’ve had a raft of climate tech startups and the Ag tech startups are on the way and now. I’m not sure what the term is biodiversity tech, nature tech, it’s all coming through and yet soil What an interesting thing. It’s not just every it is the fuel that we need. So yeah, it really interesting to hear about the progress there.
I’m keen to, I guess, pull it back a bit of a bit more of a macro view a bit more of a market view. In your mind, what are some benefits? What are some opportunities in Australia, I guess some key assets or sort of investment strategies that have really good potential. In Australia specifically, we’ve got a lot of agricultural land that’s being really badly looked after we’ve got deserts. We’ve got a Huge coastline, mangroves, what are some other asset classes investment opportunities that you think people should have on their radar?
Nigel Sharp
Beyond the landscape work, we’re doing at Tiverton, we established Dragonfly Enviro Capital to look at these types of investment opportunities beyond the farm gate or the broader landscape piece. So very much what you’re alluding to.
So businesses like Pacific biotechnologies, which is an algae based solution that they’re now building a sewerage farm, which is going to be managed with the algae solution to reduce the nutrients in the water back to zero before it gets led out into the Great Barrier Reef. So that’s going to be great for the mangroves and great for the reef. Sydney Water have been running trials now for nine months, but that technology and they’re noticing the same by being able to cost effectively extract the nutrients, water that’s released back into the streams loud have the nutrient still in the water. So Dragonfly’s invested in, in that type of technology.
Also in Aviation biofuel, you know, Jetzero, they’re really another equally important to the agricultural sector in terms of a climate perspective. water and carbon is a business that has worked with leachate landfills and now is dealing with PFS, which is a, you know, a really significant environmental and human health issue. And they’ve just signed their first contract in the US, which is the Brisbane based Australian company.
Dragonfly’s focus is everything that can come up with an environmental solution beyond what we’re doing in the landscape. So we’ve got a fantastic CEO there, Adam Tucker, who’s looking at and reviewing many, many companies that are looking to solve for this nature issue, covering those type of aspects.
So I’m really excited about that as the other piece of what we can do. We’re also looking at property, for example, in the urban sense, and how that’s done biodiversity sensitively in design and delivery. And from a climate perspective and heat mapping perspective. So the mandate behind Dragonfly Enviro Capital is to be able to look at all of those types of investments beyond what dividends is, is doing from a landscape,
John Treadgold
Of course, water, I think that’s obviously a vital component for everybody, let alone in Australia. We’ve heard all of the warnings about the summer that’s coming in Australia, we’ve had a couple of years of rain and now the dry is on the way back. I mean, this is something that we have a highly politicised and a whole bunch of market issues around what trading water rights, I’m sure it had the best incentive, but investors get in there and different incentives drive people. So are there opportunities for thinking about, I guess, water flows? Do you have any views on that?
Nigel Sharp
I think by buying back water, the government is now in a position to manage flows, I think the from a agricultural perspective, we need to get more and more efficient and water use, which circles back really to more soil health and water holding capacity within the soil. And as climate change is upon us, and these dry times, we need to return the water holding capacity of our soil. And the most interesting piece there is that, you know, the higher the carbon content, the more soil biome, it vastly increases the water holding capacity of our soil, which will increase the resilience of our plant growth for food production, and the health of our biodiversity and remnant vegetation as well. So probably water efficiency usage.
But I think again, it all comes back to the soil from a landscape perspective. The other piece is that, you know, there’s emerging examples around the world if you do your corridor plantings, right. And again, this is another reason to back in carbon credits for environmental plantings. Weather patterns will restore as well. And if we can restore weather patterns and rainfall in certain areas, that helps as well.
So then you’re talking in master planning, large corridor areas. And part of the reason with carbon neutral was that we were interested in that was because of the area or corridor that they’d worked in, in WA, which is, you know, they’ve planted 10s of millions of trees to restore that corridor, and corridor planting, which features in our Seven C’s is a really important piece, the water component beyond what’s available for farmers for irrigation is probably what we’re most interested in.
John Treadgold
So I’ve planned this series to try and help people understand this space. But I think I’ve just given people more questions because as we dig in, we appreciate the complexity and the fact that this is all quite nascent, and that groups like you are really the pioneers and building as you go. So thank you for all of that. super interesting. There’s lots of lots of elements for people to follow up. And just to reiterate the Tiverton Ag Fund is there, Odanata is the not for profit, and Dragonfly is the venture fund with the tech startups. So, super interesting.
Before I let you go, I always ask my guests for a book recommendation, I’m not sure if you’re much of a reader, is there anything you’d recommend that people could be about regen ag or, or just something that’s on your side table, that’s a page turner.
Nigel Sharp
The book I’ve been interested in of lights called Wildlife in the Balance, by Simon Muster, which I think is a really good way of having a look at biodiversity recovery work. So wildlife in the balance, it’s called, it’s a great read, it puts it in a very readable form for those of us that aren’t scientific experts in what’s the problem, but also solutions that are emerging and what we need to do to work down that pathway. So I definitely recommend that yah.
John Treadgold
I’ll look into that storytelling that we need to Yes, reframe it, and give people the imagination to think of new pathways forward because we can’t keep going the way we are. And look, thank you for all of this today. Nigel, you’ve shared so much. I think a lot of people know your name and have heard about your work. So hopefully, I’ve done it justice to reframe what you’re working on. But it sounds like you’ve got just the beginning, lot’s to go on with.
Nigel Sharp
There’s a lot to do. There’s a lot to learn. We hope to keep evolving our work and really appreciate you taking the time to talk to me, John, so that we can all explore and compare notes. And it’s a shared journey for a lot of us to come up with solutions and ways forward that give us sustainable behaviour change and sustainable prosperity, which I think is sort of the ultimate goal of the whole impact investing community.
John Treadgold
That’s it. That’s just one part of a series, this conversation today. So we’ve had a couple previously and there’s a few more to come. So yeah, just trying to put the different puzzle pieces together. So yeah, lots of content out there for people. So look, I’ll leave it there. Thank you, Nigel. Appreciate it.
