Pierre Rousseau, the Senior Advisor of BNP Paribas’ Sustainable Business, joins us to talk about the role of banks in regenerative transition. He also talks about how monetising externalities can revolutionise the way you do business.
LISTEN TO THE CONVERSATION ON:
What role could one of the biggest banks in the world play in the regenerative transition? Why should we take into account the externalities? How do changes in value chains impact the regenerative transition? How important is science in this transition? Find out more in the podcast with Pierre Rousseau.
This episode is part of a series supported by the Earthworm Foundation about the role of corporations in the transition to regenerative agriculture.
How Banks Choose Who to Finance
Banks are the ones responsible for financing or doing the trade finance for clients who wish to transition to a regenerative way to operate. As banks, their moral obligation towards civil society is to make sure that they finance those people or companies that have the “right purpose”. BNP Paribas partnered with Misha, a natural rubber plantation in Indonesia, for its vision to operate with zero deforestation while protecting the wild animals and providing thousands of job opportunities.
“It can be the way we help them to do the operation and the trade finance, so we will have to make sure that we are helping them to do this traceability. We’re helping them to make sure it’s not coming from another forest and is coming from a non-deforestation zone.” – Pierre Rousseau
How to Turn Wastes Into Revenue
Transitioning to regenerative agriculture practices, while may require investments, can greatly increase the business’ productivity in the long run according to Pierre. One of the two things we can change is putting value to wastes (biomass, biochar, etc.) and making them a source of revenue as well. The other is to rethink about the farmers’ “indebtment” of lands, as this gives space for soil transformation that leads to additional revenues and, ultimately, to a stronger financial power.
“The carbon capture being valued, part of it will come back to the farmer because he’s maintaining. It’s thanks to his work that we will capture more.” – Pierre Rousseau
Why Revisiting Your Business Model Matters
We’re now able to measure carbon capture through satellites, allowing monetising of externalities. This helps farmers reassess their operations, including how they measure profitability, something that Pierre considers as a game changer and a big driver in our regenerative transition. How farmers or businesses revisit their supply chain is important for banks because as investors, they now see agriculture as a “disruptive model,” and no longer the way agriculture used to look like, which was linear.
“This is what we are because we are creating much more value than the economical value that we do have today. And today, the biggest mistake we have made is that we value carbon at zero.” – Pierre Rousseau
The Importance of All Game Players
Pierre emphasised the importance of science in our regenerative transition, as scientists are the ones that truly know the rules and the do’s and don’ts. It needs a collaborative effort among the finance people, scientists, players, off takers, and other different actors with a role to play in the transition. At the moment, bankers are trying to come up with a new model that can best finance the transition, which can later be adopted by banks.
“It’s not just a decision or an economical model where we still go blind; we need to be backed up by scientists. This is extremely important, because in the end, the transparency of what you will deliver in front of the investor will be there.” – Pierre Rousseau
Other Important Points Discussed:
Koen and Pierre also talked about:
- the power of collaborative solutions;
- how scaling can accelerate the transition;
- why we should pay for what we destroy;
- why we should avoid “greenwashing”; and
- how we should start rewarding the positive and taxing the negative.
To know more about Pierre Rousseau and BNP Paribas, download and listen to this episode.
Links:
- Michelin Project
- Earthworm Foundation
- Interview with Bastien Sachet
- Allan Williams
- Living Soils project in Northern France
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.