Natural Capital Transactions – what risks did we manage?

Rich Stockdale and the team at Oxygen Conservation, have written a very interesting article on rewilding risk recently which is linked below.

Some may be aware that we recently announced a partnership with them for carbon credits sourced from the Leighon Estate.

Oxygen Conservation and Burges Salmon seal £1 million partnership for 8,000 UK-based premium quality carbon credits - Burges Salmon

As I was reading the article, a few points occurred to me about risk in Natural Capital.  Burges Salmon (they say lawyers are experts in managing risk so let’s see!) has had to do its own risk analysis on its carbon emissions, the stance it is taking on sustainability as part of its responsible business initiative, and on signing up to the purchase of those carbon credits derived from the Leighon Estate with Oxygen Conservation.  So, Rich’s piece made me jot down some thoughts.

• We have had to consider the risk of holding true to our commitment to drive towards carbon reduction and focus on it as a key part of our business, at a time when sentiment in the political arena has softened and some companies and professional service firms have pulled back.  Have they done that to manage the politics or is that a convenient explanation?  Time will tell, but we are convinced that our clients, people and wider communities will need us and want us, to push on.
• We have had to consider the risk around the optics of buying carbon credits.  Let’s face it, carbon trading has not been without its issues and there are still many who are concerned about these types of instruments, the validity of them, how they are really measured and how responsible some of the tree planting and nature restoration initiatives are.  The advantage we have with the Leighon Estate and Oxygen Conservation, is that we have seen this scheme and worked as lawyers for this organisation from the “get go.”  This gives us the confidence, and we have built into our contract with them a whole host of measures (which I have to say,  Oxygen Conservation has embraced with enthusiasm) to monitor, learn and evaluate ongoing site development.
• We had to consider the risk of not buying carbon credits and ignoring our residual emissions for the next few years.  That was quite an easy one to evaluate.  We know that buying these credits is a last resort, but better to take that, than do nothing.
• We have had to look at the contract risk and how it is allocated. We should be experts at this, and I would say we are, having advised on natural capital and schemes for some years
• We have had to recognise the risk that nature poses.  No matter how careful and professional we or Oxygen Conservation are, we cannot govern nature, and we will never be completely sure what the site outcomes will be.  That means that these types of arrangements and contracts have to recognise that the balance of risk between parties is more intricate than in many other contracts and day-to-day businesses.
• Paying the highest price ever for these credits – guess what?  We have had to manage the risk that our colleagues will ask why?  Actually, that was easy, but it was easy because our Firm is genuine in its belief that managing our effects on the environment is important.
• I have had to manage the risk that some might see me and the Board as being on some form of “environmental crusade” when there are plenty of other issues which are also business critical.  My answer to that is simple.  We are convinced this is great business for us as well as the right thing to do.

All that said, I was at an event with professional services leaders recently and, unsurprisingly, the topics of AI, private equity investment, resourcing of talent etc. were discussed.  When it came to ESG, I heard the comment “ESG is important but it is not an existential threat”  and we moved on.  Hhmmm….really?

(22) Betting on the Wild: How Extreme Athletes, Elite Poker Players, and Oxygen Conservation Turn Risk into Reward | LinkedIn