By David Craig, Former CEO Refinitiv, co-chair TNFD (Task Force on nature-related Financial Disclosures) and the IUKFP (India UK Financial Partnership), Executive Fellow London Business School

On April 25th Elon Musk struck a deal to take the “de-facto town square” of Twitter private for $44bn, one of the biggest buyouts in history. His goals are not economic: he wants to create a public platform that is maximally trusted, which he states is “extremely important for the future of civilisation”. If he can achieve this goal, using innovation and new technology along the lines of what he has successfully deployed at Tesla and SpaceX, that would be an achievement. But if securing a thriving, prosperous future civilisation is the ultimate goal, what would be truly world saving is applying this type of innovative spirit and ambitious investments to agriculture, land use and regeneration and enhancement of natural resources.

When ground breaking reports come out, like the 6th report from the Intergovernmental Panel on Climate Change (IPCC) published this April, I like to set aside a couple of hours from my busy schedule and get really into the detail.  The gems and most useful insights are often not revealed in the summary, or the media headlines, but in the body of the text or the detailed appendices.

I suspect many financial analysts and investors would not have heard of the term ‘AFOLU’ (Agriculture, Forestry and Other Land Use), but the details of the IPCC report makes it clear they need to. The AFOLU sector is currently a critical source of the greenhouse gas emissions causing climate change, but it has the potential to offer very practical (and cost effective) solutions in terms of both climate change mitigation and climate change adaptation. The sector also plays an essential role in tackling the escalating nature-related risks that business and finance are now appreciating. The question now is how do we get financial markets interested, excited and invested in AFOLU?

As a career long believer in financial markets and new technologies driving investment opportunities and change, I see the ‘green shoots’ of innovation and investment starting in the AFOLU space; laboratory food (“lab-meat”) production, to new agriculture production technologies and techniques, and scaling nature-based (and positive) carbon offsets. Some of these are not new, but there is a long way to go. The challenges to improving this sector include increasing competition for land, increasing demand for animal-based proteins, existing governmental subsidies and the highly complex, localised agriculture production sector. The ‘Teslafication’ of AFOLU has not happened yet, but it needs to if we are going to have any chance of arresting climate change and nature loss in our lifetimes.

So, what is AFOLU and why does it matter?

The IPCC estimates that in 2019, approximately 34% of total net anthropogenic GHG emissions came from the energy supply sector, 24% from industry and 22% from agriculture, forestry and other land use (AFOLU). A remaining 15% comes from transport and 6% from buildings and other sources.[1]

So, on its own, AFOLU is the 3rd biggest contributor to climate change. Over half of AFOLU emissions are from deforestation, due to the negative absorption impact from removing forests and the release of CO2 from wood burning or decomposition. It is estimated that we lose the equivalent of a football pitch of primary forest every 6 seconds. But this is not just about deforestation. We are increasingly using (and subsidising) food production methods that are unsustainable. We are increasing animal protein in our diets around the world, further increasing demand on land and water, and livestock released methane, a potent greenhouse gas (as well as creating more demand for land, which again drives deforestation). Lastly, climate change driven temperature rises are degrading natural systems; the peat bogs, savannas, forest areas, the melting of tundra in Northern Europe and America and wildfires in California, Australia or Europe.

The IPCC report estimates that of all the measures at our disposal to halt climate change, the largest potential contributor are changes we can effect in the AFOLU sector. Using alternative farming techniques in sequestration of carbon in agriculture, for example organic soils; reducing CH4 and N2O emissions; reducing conversion of forests and other ecosystems to farming production; reducing food waste, and changing diets to reduce animal meat consumption and other carbon intensive food chains – the list of measures we can take goes on. In fact, estimates show that the total estimated CO2 equivalent reduction of 13.5 GT per year possible in the AFOLU sector by 2030 would be more than all the actions in transport, industry, buildings and construction combined.

In addition, AFOLU practices present other benefits in terms of biodiversity and ecosystem conservation, food and water security, wood supply, livelihoods and land tenure and land-use rights of Indigenous Peoples, local communities and small land owners.

So why is it that we are not as focused on this area with more or even equal urgency as we are in say decarbonising the energy supply or electrifying transportation? Why are investment banks and funds not investing at scale in nature-protection and alternative farming methods? Why is it when I hear countless smart executives talk about transition pathways and goals for net zero, they rarely mention AFOLU or anything to do with nature or land?

Well, this lack of attention I am told is not a new issue. Many people, from natural scientists, economists and environmentalists have been and are focused on this area, and have been for many years. They have told me of the barriers to change, and the lack of capital investment opportunities. The reluctance for financial markets to step in and invest are based on a few real issues - and some perceived ones. Could we see some of these barriers changing?

1.     Unsustainable farming subsidies: Trillions of dollars from national and international development banks are funnelled to drive production and efficiency, rather than to protect natural systems like forests and soil. In a recent report by Global Canopy, even with re-direction of private finance, it recommended that at least $1 trillion of harmful subsidies were needed to be re-directed to nature positive outcomes.[2] As food security and increasing prices are major concerns globally, this might be unlikely to change, though there is increasing pressure on development banks to take climate and nature-related concerns into account in their financing decisions

2.     Fragmented Land ownership: Farming rights are owned by relatively large numbers of small producers and communities, and so achieving change at scale is complex and difficult. Their financial banking relationships are in the retail, small business divisions of the high-street banks with little incentive or ability to invest at scale. This is highly unlikely to change, however the agriculture firms, the buyers and traders of food and commodities, as well as co-operatives do provide the change to implement change at scale, as do governments with new policies and standards, and controls over subsidies

3.     Early-stage, high-risk new agriculture techniques and technologies: To date, whilst there is increased innovation in controlled natural light growing such as glasshouses, newer artificial technologies such as indoor vertical farming are not yet proven or available at scale, and have not attracted large capital investment – this might be changing as more companies, such as One Farm in the UK, are setting up indoor production farms coming on stream later this year using new lighting and other technologies and other intellectual property. One Farm, like similar companies, promises to use a small fraction of the normal water, substantially reduce carbon and grow good in the UK which is normally exported in. Eat Just have been creating plant-based eggs and meat for nearly 9 years with a valuation as a private company of over $2b;  Beyond Meat is now worth $2.3b on the Nasdaq, falling from a high almost 6 times higher in August 2019; Impossible Foods Inc is reported to be preparing for IPO; but their new CEO is probably waiting for market confidence to return. However, many banks are invested in traditional farming methods, investments in alternative farming are still seen as early and high-risk. Previously ‘over cooked’ valuations in the so-called ‘faux-meat’ market, have reduced investor appetite, but as growth in consumer demand continues, we could see growing popularity in this sector from investors now we are beyond the hype bubble.

4.   Financial Valuation models lack pricing for ecosystem services: Unlike the change we are seeing in carbon pricing, ecosystem services (the contributions from nature we use in our production systems) are not yet factored in or priced into valuation and investment models. Neither are the risks (or opportunities) associated with nature and biodiversity – this should change as efforts like the market-driven Taskforce on Nature-related Financial Disclosures (TNFD), which I co-chair with Elizabeth Mrema of the CBD, establish standard approaches and methods for assessing and factoring in both risk and opportunities from nature and nature-related risk as well as the impacts on nature. More bodies such as the Network of Central Banks and Supervisors for Greening the Financial System (NGFS),the International Sustainability Standards Board (ISSB), and other industry and standards bodies start to include nature and biodiversity risk in their global frameworks.

5.      Lack of financial incentives and goals: Incentives to protect natural habitats are not well established or that effect as yet - a high-integrity nature-positive carbon offset market using natural based Carbon Dioxide Removals (CDR) has the potential to change this at scale – we are seeing many new offerings based on nature based solutions, and companies such as Earthly form the UK are offering a network of validated natural carbon offset solutions, which they claim are reviewed for nature positive criteria. In addition to a lack of incentives, we are missing global goals and we are yet to have a global formal agreement to protect natural wildlife and habitats or to set aside portions of land and sea for preservation – We are seeing some progress here. At the climate summit COP26, 11 countries as well as the EU committed to invest $12bn of public finance in protecting forests.[3] There is (albeit slow) progress of the UN CBD (Convention on Biological Diversity) to agree a global framework for protection of natural systems this year. Meetings in Geneva last month made progress, and the final round of negotiations are scheduled for later this year (expected August/September).

6.   Finally, and close to my heart, gaps in trusted data and data standards – our recent work with the TNFD has shown there are now over 30 commercial data companies and government, NGO-backed initiatives providing satellite, measurement, environmental and other important spatial ‘input’ data relevant to the AFOLU sector. It is improving rapidly. Through our work of the TNFD we hope to help standardise how this data is generated and used by providing a standard assessment approach. Our intention is that standard disclosed and reported ‘output’ data on nature and biodiversity dependencies and impacts can be used to provide the transparency financial institutions require to make comparisons and invest with confidence across all sectors, but especially in the AFOLU sector.

I attend many conferences and public debates on the climate transition, on ensuring a ‘fair transition’, and on the offset markets, but few people seem to have a detailed understanding of the importance and potential of natural systems in supporting decarbonisation, or are aware of how they can invest in this space. People talk about carbon removal as if they can plug in a big machines waiting to suck gigatonnes of carbon out of the air at low cost. Direct Air Capture (DAC) technologies removed a mere 8,000 tonnes of greenhouse gases in 2021 according to the IEA.[4] This is a miniscule amount compared to what is absorbed every day by nature and the total anthropogenic emissions we need to reduce.


While the global financial system focuses on decarbonising our energy supply, transportation, industry and construction, achieving the 1.5 degree Celsius climate change goal is unlikely to be achieved without increasing our focus on the AFOLU sector, as the IPCC scientists’ latest report told me. The TNFD and its many partner organisations are putting nature on the investment map – not because it is a good thing to do, but because it is essential that we change how we value nature and the ecosystems we depend for so much of our economic activity. What is also required are new technologies and methods proven at scale and investible at scale. This “Teslafication” of a sector requires billions of investment dollars in the delivery infrastructure (think of the 30,000 Tesla chargers scattered across the globe), the technological innovation, and then scaled investment to ensure demand matches supply for new types of food production, alternative foods and use of land.

This type of global change is what Tesla, at $900B the most valuable car producer on the planet, has achieved for the electric vehicle industry over the last 10 years. For $44B Elon Musk could have bought all the alternative food and agriculture companies together 4 times over. Maybe someone else will, and in striving to create a prosperous future civilization, create the next trillion $ industry?


[1] 6th IPCC report B.2.1

[2] The Little Book of Investing in Nature, Global Canopy January 2021