When it comes to creating a sustainability strategy, organisations shouldn’t focus solely on quantitative actions, qualitative work is also essential to make systemic change. That’s the conclusion of The Global Returns Project and their innovative portfolio.
According to a recent report by non-profit Ecosystem Marketplace, the value of the voluntary carbon market (VCM) has quadrupled since 2020, reaching almost US$2bn in 2021.
While offsetting emissions is a powerful tool for businesses to account for their unavoidable emissions, offsets come with challenges, such as verifying the total reduction over time. Additionally, they’re unable to tackle climate related challenges that are not so easily quantifiable, such as the downstream impacts for sustainable litigation work.
This is where the Global Returns Project comes in, with its first of a kind regenerative finance portfolio.
We talk to Jack Chellman, Head of Strategy and Communications, to learn more about their mission to bring ‘regeneration of the biosphere into every corporate social responsibility policy.’
Note: This conversation has been lightly edited for brevity.
What’s your professional background, and what brought you to the Global Returns Project?
I’m originally from the US. I came over to the UK on a two-year Marshall scholarship in 2018, did some postgraduate study, and have been working at the Global Returns project since that finished, so about two years now.
I’ve always studied communication and journalism, as well as campaign work. Finishing those programmes, climate is the sort of issue that all other advocacy issues run through. And it’s something that we all have to be paying so much attention to right now. So, it was an obvious choice to join the Global Returns Project. And I like the feel of what we’re doing in terms of trying to do something innovative.
What does the Global Returns Project do, and what makes it stand out from similar organisations?
We’re a UK registered charity first of all, and very broadly, we’re trying to accelerate regenerative finance. We work with audiences across business and financial services, wealth managers, fund managers, corporate sustainability teams, to bring regenerative solutions into normal business.
When it comes to the corporate side, in particular, what we’re talking about is regenerative business. And we’re trying to bring direct regeneration of the biosphere into every corporate social responsibility policy. It’s a portfolio of some of the very best climate, not for profit organisations. Essentially, what we try and do to the best of our ability is curate it as if it’s an investment fund. It’s not giving a financial return, but by treating it like a fund, we’re applying a really rigorous approach to selecting and assessing it, making sure that it’s delivering solutions that are tangible, and identifiable.
What we’re asking businesses to do is contribute to this portfolio of effective climate not for profits on a regular basis as a part of normal business. There are various ways to do that; you can contribute as a portion of revenue or profits, it also has relevance to purchases of offsets.
We’re keen to understand the different stakeholders you work with. Do you work more with individual investors or business/institutional investors?
We focus our time on institutional partnerships. So on the corporate side, that’s working with sustainability teams, and all those players who are thinking about offsets. On the financial services side, it’s still focusing on institutions because we think a lot from the perspective of behavioural science. From a behavioural perspective, if we can work with wealth managers and fund managers and these trusted institutions, that’s a way to get access to individual investors in a much more effective way and at a much broader scale.
Your recent impact report highlights some innovative work. How do you measure the effectiveness of these projects?
It really comes down to that fund management approach. What that means for us, even though it’s not a fund, is applying the rigour of that fund management selection assessment. We have a technical advisory board of world-class climate scientists, they’ve helped us develop our own methodology for selecting and assessing these groups.
The basic framework is when we’re considering an organisation for the portfolio, there’s a series of governance and ‘sizing gates’ to start with. We like to say these organisations should be the ‘blue chip’ equivalents in the climate, not for profit space, meaning they need to be well established, well governed, and they need to have been around for a while.
If an organisation makes it through those initial gates, then we assess them according to four factors: impact, scalability, networks, and co-benefits.
If you have a real investment fund, you expect to hear how it’s doing over time, so we’re endeavouring to do the same. Every six months, we reapply that methodology, and reevaluate the existing portfolio to say, how are the organisations in it living up to the methodology we have. We do that again, and we report it in those six-monthly impact reports.
You can download the latest Impact Report below:
Do only a small number of projects make it through to become part of the Global Returns portfolio?
Absolutely. There are six constituent organisations now, all of them are climate, not for profits, which means they’re registered charities themselves. These are profitless projects which are very hard to reach in other aspects of sustainability, like sustainable investing, for example.
We’re not saying these six are the only best, greatest not for profits out there because there are lots of great solutions. But these are among the most effective, and we know that because we’re constantly re-evaluating, we’re constantly scanning the horizon of what is out there.
And that is sort of a good segue to say, of course, we want to add to the portfolio, and we plan to do so, that’s a process that we’ll continue doing as we continue scaling to ensure that we increase the diversity of the portfolio and keep hitting as many solutions as we can.
We’ve noticed that the focus of the portfolio seems to lean towards energy. Are you looking to diversify the portfolio to ensure it focuses on other sectors as well?
It’s probably a bit incidental at the moment. Because of what we’re trying to do, diversification is a huge benefit of this fund management approach. What you expect in a real fund is a diversified set of companies, a diversified portfolio. That’s what we’re trying to apply here.
We report, as you’ve said, on the diversity at the moment. We put that in terms of the UN SDGs (sustainable development goals) that we target and the categories we target. In addition to energy, we report on how much is going into carbon sinks on land, carbon sinks in ocean preservation, all sorts of different issues. As we add to the portfolio over the next six to 12 months, we’ll use that diversity scoring as it is today as a benchmark to ask where do we need to add to the portfolio in order to keep improving diversity, make sure that it’s covering as many solutions as possible.
Some business leaders argue that investing in environmental and social endeavours leads to unnecessary costs and ultimately cuts into their bottom line. What would you say to that? What are the key business benefits to investing into the portfolio and why should companies do it?
There are a couple of points there. The first is, when you’re talking about actual investing, the sustainable investing side, I think the thing to say is that it’s increasingly becoming mainstream, and we know that you can get good financial returns from that activity. So, that should be our baseline, when you’re actually doing real investing that gives you returns, that should be normal for everyone, right?
Then you’ve got what we’re doing, which is not giving a financial return. But what we say is giving a “global return”, which is our term for the enhancement and protection of the biosphere. When it comes to that, it’s a contribution. Legally, it’s a donation. We’re asking businesses to contribute on an annual basis. But that’s not just good for the planet, there are business benefits as well. It’s a marketing benefit to be able to say, ‘we are regenerating the planet in this direct way’.
So, there’s that benefit. But we also know that all companies rely on, either directly or indirectly, a stable and healthy biosphere. This is a rational strategy, as well as something that’s good for the climate.
We’re seeing the term ‘regenerative’ used concurrently with ‘sustainable’. Could you expand on the difference between sustainable and regenerative models?
Sustainability is increasingly becoming the mainstream. But when it comes to sustainable practices in business, or investing, the reality is often what that boils down to is minimising harm on the planet, doing everything you can as a business to avoid degeneration of the biosphere. But, we need to be doing more than just that if we’re going to deal with the climate crisis, if we’re going to respond to employee and customer needs and requests. That’s where the regenerative part comes in. That’s where you’re actively benefiting the planet, where you’re actually giving back and doing those activities that are going beyond just minimising harm. That’s how we draw the line.
What is your definition of regenerative?
When we think about being regenerative, we often think about it in terms of this conversation around carbon offsets. Purchasing offsets is extremely popular and there’s a lot of discourse around it at the moment. Carbon offsets do a really good job when they’re working well, targeting funding towards things that are easily quantifiable; things like tree planting is a very popular form of offset because people tend to think that they know how to count up the carbon sequestration of certain number of trees that have been planted.
But there are all sorts of things that are really important to do, which are very difficult to quantify. For example, one of the organisations in our portfolio sues polluters, trains environmental lawyers, does all of that sort of litigation activity. And it’s very tough to purchase an offset that encompasses that. It’s almost impossible, right? But we know that those things are extremely effective, and we need to be doing them. When we think about being regenerative, we’re really specifically talking about doing those qualitative activities that complement the quantitative work of purchase of offsets.
When we talk about businesses, we’re saying, this is a really effective complement if you’re thinking about offsetting or if you’ve already done so, this is that narrative, qualitative complement to your purchase of carbon offsets that does the extra regenerative work.
Have key climate events, like the UK’s recent heatwaves, had an even greater impact on perspectives around climate change? And has this been reflected in the number of businesses contacting the Global Returns Project?
The short answer is, yes, I think all of us feel that when we read the news, and we look outside, and we know that there are these extreme weather events and various other catastrophes that are directly related to the climate emergency. I think we all feel the urgency to do something. And of course, businesses feel the same. I do think that’s driving a sense of trying to do something more systemic.
Just for example, we have one company in the UK, which contributes to our portfolio on an annual basis, as an alternative to offsets entirely. What they’ve done is calculated their historic emissions and originally set out to look at offsets. And, they basically said ‘look, we don’t have anything against the offset market itself, but we need to do something more systemic, we want to do something that is a little bit more innovative and doing something that’s going beyond what a purchase of offsets would do’. So, they actually priced their historical emissions using the UK emissions trading scheme and said, ‘that’s a price we can work with’. And they contributed that to the Global Returns Portfolio. That’s what they said to stakeholders, that this is something more systemic.
There’s a lot of buzz going on at the moment about ESG investments, and how the regulations in these areas are a little vague. Does a donation to the Global Returns portfolio have any kind of influence on how an organisation might be seen from a financial investment perspective?
It’s a good question. I think first of all, one of the benefits of contributing to the portfolio is there’s no risk of greenwash. The issue with greenwashing is that you’re asserting that something beneficial for the planet is happening, and it’s uncertain whether that’s actually the case.
When it comes to contributing to the Global Returns Portfolio, you know that regenerative activities are happening because the contribution is going direct to the constituent members. We don’t take any deduction from contributions to the portfolio. 100% in is 100% out. What I say to start is that this is in part a way to cut through that conversation around ESG and greenwashing because it’s much more direct and clear.
Do you feel confident that we’re on a good path to achieving net zero?
I think confidence would not be the word I would use. The IPCC says we have a rapidly shrinking window in which to act, which is scary. But it needs to energise us because it exists. We do have this moment in which to do something, and to do something meaningful. Even in the past months or so, we’ve seen a little bit of progress on the global stage, with a little bit of climate progress in the US, and a little bit of climate progress in Australia, along with important discourse everywhere. But all of that doesn’t necessarily put us on the right track, there’s a lot more to be done in order to make the most of that rapidly shrinking window.
When we see a little bit of progress on the political stage, what that really means is it’s even more important for businesses to step up because that’s the gap we have to fill. Businesses have a real opportunity to support these solutions that aren’t getting funded right now, and that have the ability to do something meaningful in the next couple of years before 2030.
It’s maybe not feeling confident, but feeling really focused on making the most of this and helping businesses play the really important role that they can.
What can we expect to see from the Global Returns Project in the next 12 months, and how are you planning on developing?
Our overall vision is a world where every financial strategy regenerates the biosphere. So, I think in the next 12 months, what we’re hoping is, these kinds of contributions, this shift towards regenerative business becomes a little more mainstream, a little more part of normal business for corporate sustainability teams or social responsibility programmes.
We spent a lot of time building up these partnerships with corporations. The ones who are already partnering with us are benefiting from being an early adopter because we do a lot of work to get good coverage for them, and show them as trying to innovate in this space. But, over the next 12 months, what we’re really hoping is that it leads to a snowball effect and more and more corporate teams say ‘this is what we want to do in order to respond to what our employees and customers are saying’.
How can businesses get involved with the Global Returns Project?
We want to talk with any business who is interested in the portfolio and thinks this could be a part of their CSR strategy, or a complement to a purchase of offsets.
Absolutely, reach out on our site, or reach out to me, I’m [email protected].
We think it’s as easy as we can make it for making this normal for your business.
