The 2024 World Economic Forum (WEF) in Davos centered on the theme of “Rebuilding Trust” amid escalating global risks in areas such as AI, security and nature. There was a pressing call for redirecting capital flows to support a just and nature-positive transition. In this post, Clarmondial’s Tanja Havemann and Julia Langenegger share three reflections from the week.
1. Techno-optimist visions for AI solving climate and nature crises are misaligned with the realities on the ground.
The visions for AI and a technology-led future, as described in Davos, were inspiring. The nature investment space can learn from the tech industry in applying systems thinking approaches to overcome challenges and test innovative business models. Unfortunately, there is a disconnect with the implementation readiness we observe on the ground in emerging and developing markets.
Ensuring the effectiveness of information for decision-making, including integrating new technologies such as AI, requires data to be available in a timely, relevant, reliable and cost-effective manner. Substantial upfront and on-going investment in primary data collection and management is crucial to the successful deployment of such technologies. It also requires that there is complementary capital available for capex and opex. Financiers can play a key role through supply chain and project finance by investing in data and in actioning its outputs. Several meetings in Davos corroborated our strategy for Clarmondial, the Food Securities Fund and the Biosphere Inetgrity Fund with regards to such technologies.
2. Transition to nature-positive practices requires leadership to unlock investments at scale.
Most of our clients, and global companies in general, rely on fragmented supply chains. As regulatory and disclosure pressure increase, there is a first-mover advantage in securing strategic supply chains to ensure cost-effective compliance with nature-positive practices. An additional benefit is first access to insets (i.e., within value chain mitigation) and other supply chain and landscape claims. We discussed this point with existing and potential corporate clients at Davos, and are excited to see the momentum on this topic. Integrating such claims can help attract blended finance and capital at scale, while strengthening operations and reducing reputational risk – as highlighted in our recent blog post with CDP. This theme is also trending with investors in our network.
3. Carbon credits and claims may come from suppliers or third parties: the most suitable solution is context-specific.
Fragmented supply chains face an extra challenge when traders rely on purchasing from a dynamic producer base – i.e., sourcing from different farmers each season. As a result, some corporates have been developing greenhouse gas (GHG) mitigation programs with carbon credit project developers and NGOs, instead of with suppliers. Introducing a third party to transact carbon and other claims alongside traditional supply chain operations may add additional risks, costs and inefficiencies. But, suppliers (aggregators and traders) may not have the required expertise and their value is reduced if they miss the opportunity to build farmer loyalty. This point was raised during a UN Convention to Combat Desertification (UNCCD) event where Tanja was a speaker, and during bilateral meetings. Clarmondial has worked on both approaches and we can confirm that both have merit. The most suitable solution is context specific, in view of national and sectoral trends and targets, and specific sourcing setups.
We are excited to continue working on these topics together with partners and clients, including on how our unique expertise in both nature & climate finance and value chain finance can contribute to fostering nature-positive developments in supply chains, sourcing landscapes and the deployment of new technologies.
