Regenerative principles to unlock a sustainable future Global
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By providing clear, understandable information, projects can empower users to overcome the initial technological barriers. Moreover, external forces such as fluctuating market dynamics, stringent https://www.xcritical.com/ regulatory frameworks, and the overarching threat of climate change itself add layers of complexity to the ReFi agenda. Each of these categories represents a facet of the struggle to establish a system that not only promises environmental regeneration but also operates sustainably within its ecosystem. Impact DAOs are decentralised autonomous organisations that are specifically focused on ReFi initiatives. They differentiate themselves from other DAOs by their mission-driven focus on positive socio-economic and environmental causes – for example, facilitating the removal of carbon from the atmosphere is one of the main Impact DAO business models.
Ensuring Consistency and Quality in 2024 Corporate Reporting: ESMA’s European Common Enforcement Priorities
Many organisations, large and small, have started to review and realign their business models towards more sustainable practices. As finance use cases in Web3 continue to evolve, there is one relatively new concept called Regenerative Finance (ReFi) that is gaining significant traction. This combines Decentralised Finance (DeFi) with positive social-economic and environmental goals – such as removing carbon dioxide from the atmosphere. EthicHub provides a decentralised finance (DeFi) system which connects the lender (investor) and borrower (farmer) without an intermediary. Investors can lend capital to farmers or stake collateral on their regenerative finance behalf in the form of a token (Ethix) and there is a compensation system for lenders based on the tokens. EthicHub employs blockchain and smart contracts to make value transfers via the internet in a fast and transparent manner.
Long-Term Sustainability and Risks
Users can log into a chosen web app, connect a digital wallet, and deposit crypto onto the platform to use regenerative finance and can choose from a list of supported crypto to borrow against the collateral deposited when the funds are deposited. Regenerative finance is ultimately designed to create a more balanced, nondestructive economy that incentivizes social and environmental good. This report offers new analysis that highlights rapid growth in circular economy financing and… Moreover, diversified crops and livestock production adds additional revenue streams and mitigates the price volatility exposure and risk of single-crop production.
‘Smart’ sustainable urban regeneration: Institutions, quality and financial innovation
Climate change presents agriculture-sector companies with a range of potential brand risks. Depending upon their decisions, actions, and public communications, companies may come to be regarded as sustainability laggards by increasingly climate-conscious consumers in important global markets. While regulatory actions can impose limits and challenges, they also offer opportunities for legitimizing and integrating ReFi projects within established environmental and financial systems. Successful navigation of this landscape requires ReFi projects to foster deep understanding, cooperation, and strategic engagement with both governmental and traditional climate regulatory bodies. Aside from internal market dynamics, external regulatory environments also play a crucial role.
- Seed Club is a Vancouver-based incubator & accelerator DAO focussed on helping eco-conscious groups set up DAO structures to carry out their good work.
- Using Web2 infrastructure, it’s difficult to accurately measure how the carbon is offset for the money being paid.
- This decision directly impacted ReFi projects that rely on tokenizing carbon credits, altering business models and forcing projects to reassess their strategies.
- For example, the presence of robust competitors might challenge a project’s market share or reveal shortcomings in user experience or technological implementation.
- Investors can lend capital to farmers or stake collateral on their behalf in the form of a token (Ethix) and there is a compensation system for lenders based on the tokens.
And I think that’s a mindset shift that we need to be able to unlock to be able to say, do you know what? It’s okay, I’m not going to get returns in the immediate future in the immediate sort of six months to a year, it’s going to be more 10 years to 15 years. Climate Asset Management is one of them where you know that minimum ten year tenure and that’s okay, and they’ve got lots of great projects and lots of great LPs are a part of that so I think that’s really exciting. If we were to lose all pollinators, and I didn’t include myself within that, we’re looking at an average of $577 billion a year, and that’s just one small element of nature. If you’ve ever seen the bee movie, and they all go on strike and they decide they’re not going to do it anymore.
That’s a genuine thing that could happen if we don’t think about the natural habitats that these bees require, and it’s not just bees either. The tiny little midge if anyone wants a bar chocolate in the evening, and my particular favorite thing to help me relax, is that and a glass of wine. You could hand pollinate but there’s one tiny little species that our cocoa agroforestry really, really do depend on so quite, quite stark. We talked about mangroves yesterday, the annual property damage would increase if we lost all of our mangroves by 1 trillion. Yesterday was a bit of a shock to the system and when we walked to Art for Guernsey in the rain, with high heels in cobbles, I thought that was a little bit cruel. But hopefully, you’ll hear some slightly different stats and a slightly different sort of high-level perspective from me and bringing it back down for the Finance Community and I can share some more insights from some of the corporates that I’ve been working with as well.
It offers a fertile ground for the innovation of new financial products and services that align with regenerative principles. Blockchain and smart contracts form the backbone of decentralized finance (DeFi), offering more decentralized, inclusive, transparent, and secure alternatives to traditional finance, while also removing the middle man. In the fast-changing non-financial reporting landscape, now is the time for harmonisation and streamlining of reporting. Such extremes are “surpassing the resilience of some ecological and human systems, and challenging the adaptation capacities of others, including impacts with irreversible consequences”[2].
Helping people make the right climate decisions involves de-risking these practices through improved data and technology, and enabling capital to flow where it needs to, thus addressing the protection gap. At the forefront of our quest to reimagine Finance, “Introduction to Regenerative Finance” marks the beginning of an enlightening journey into re-imagining genuine financial system transformation. These are new loan products or established ones that have been revised to support regenerative agriculture and land use. Examples of regenerative operating loans include grace periods on repayment of loans, longer loan tenor (up to 10 years) and discounted upfront fees for operating loans. Opening the second core day of Sustainable Finance Week, Dr Gemma Cranston, Executive Director of Pollination, talked about a regenerative approach to farming, biodiversity credits and growing investor opportunities. In the rapidly evolving landscape of Regenerative Finance (ReFi), the push towards decentralized systems presents both remarkable opportunities and significant challenges.
Cryptocurrency is now a mainstream topic and adoption continues to grow across the globe – enabling people to operate outside of the traditional financial system. To sum up the article, while challenges in ReFi exist, there are also great opportunities in ReFi adoption which can have a beneficial ripple effect on society and the environment. Education is essential for wider adoption and understanding of ReFi principles, fostering a shift towards more sustainable and regenerative economic practices.
This means not only questioning the meaning behind terms like “regenerative”, “organic” or “nature-friendly”, but also probing whether companies are adopting tangible practices that enhance soil health, biodiversity and water management. The term “regenerative agriculture” has now become firmly cemented in the corporate lexicon, appearing prominently in the policies of global food companies like Unilever, Danone and Tyson. In addition, investors must look beyond meat alone and consider the broader global food system, including the environmental impacts of plant-based commodity crops. Our Trade Collection gives you access to the latest insights from Aon’s thought leaders on navigating the evolving risks and opportunities for international business. Reach out to our team to understand how to make better decisions around macro trends and why they matter to businesses. In a globalized and hyper-connected world, supporting and protecting farmers through the life cycle of their crops creates returns that benefit the entire FAB ecosystem.
Flowing capital to projects that seek environmental and/or nature restoration, together with social and community benefits, can be described under a category of finance called “ReFi”. Our mangrove example above is taken directly from reality and describes the focus of “blue carbon” ReFi projects being undertaken now by organisations such as Vlinder, amongst others. ReFi emphasizes projects that positively impact communities, especially in underprivileged or rural areas. This approach aligns with the broader goals of social justice and community empowerment, along with inclusivity via its decentralized nature, factoring these into financial decision-making and investment strategies. These projects can assist by helping companies invest in carbon credits, incentivizing regenerative land-use practices, or even creating platforms to help organize climate-saving initiatives.
The economic scarring caused by the pandemic is exacerbating “human vulnerability patterns shaped by past developments”[1]. Such vulnerabilities “are worsened by compounding and cascading risks and are socially differentiated”[2], leading to a sharply diverging world. The severe fiscal impacts of the crisis are triggering debt distress in a growing number of countries, severely limiting the ability of many countries to invest in recovery and resilience, and sustainable development in general. Finally, investors must be prepared for the “J-curve” often seen in regenerative agriculture transitions.
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Stakeholders point out that while technological issues are surmountable, it is the social and cultural dynamics that present the most persistent challenges. These include bridging the significant gap between crypto-savvy users and those unfamiliar with digital currencies, addressing labor demands, and navigating the complex governance structures necessary for sustainable growth. The evolution of Impact DAOs is allowing individuals to directly impact social and environmental causes close to their hearts without needing to be part of a large investment fund or organisation. This directly reflects the incredible innovation within the space, which itself is growing drastically. Regenerative Finance is a comparatively new concept when compared with cryptocurrency, Web3 and blockchain as a whole.
If you haven’t already taken the Introduction to Regenerative Economics Course, you can still take the Finance Program. You will gain access to foundational sessions on Regenerative Economic theory in the Finance Program course content. The question is no longer whether climate change and other environmental and social issues matter to the financial services sector, but how it will address them. Transformational Investing in Food Systems (TIFS) is an impact network dedicated to unlocking capital for regenerative and agroecological businesses and financial innovations.
The ReFi movement aims to deliver on two core principles – the long-term generation of value for all, and the conservation/restoration of natural resources. The traditional financial markets have long been modelled on the extraction of value and exploitation of people – empowerment for the few whilst relying on the labour of many. Key characteristics of ReFi include prioritizing systems thinking for ecological and social impact, fostering a culture of proactivity, and valuing coordination and collaboration. Understanding the challenges, opportunities and next steps, we can conclude that the significant market growth and exponential growth in emerging technologies indicates a bright future for ReFi as a key player in shaping a more sustainable and equitable world. Michael Kramer, managing partner and director of social research at Natural Investment Services, introduced the concept of “regenerative investing” in 2003.
Success in this endeavor will not only enhance the effectiveness of climate-related blockchain initiatives but also ensure they are inclusive, equitable, and aligned with the broader goals of global sustainability. ReFi’s ability to merge the innovative pace of crypto with the rigorous demands of climate action presents a promising pathway to addressing the urgent challenges of our time. Standards are not merely operational necessities; they are the bedrock of trust and functionality in any technological ecosystem. In the context of ReFi, where the goal is to support climate-positive projects, the absence of unified standards could lead to duplication of efforts—such as in the case of carbon credit reporting—and potentially undermine the core benefits of the technology.
This leads to a critical need for interoperability standards across different blockchain platforms to prevent issues such as the duplication of carbon credits, ensuring that a credit sold on one blockchain isn’t fraudulently sold on another. Savimbo works with indigenous people and local communities (IPLC) with a simple mission “to clean the world’s air”. The work that Savimbo and IPLC do in the Colombian rainforest is mainly about protection and conservation of existing ecosystems and biodiversity, alongside some reforestation work.
