7 Attributes of a Just Investor

Nature For Justice (N4J) is a social justice organization focused on supporting frontline communities experiencing the impacts of our changing climate. As our Annual Wrap-up for 2023 described, we have made progress in creating programs in Canada with First Nations, the USA with Black farmers, and across a variety of African countries with small-holder agriculturalists. The global Nature-based-solution opportunities we have pursued since our founding in late-2020 have offered us many chances to interact with all types of investors that are interested in carbon projects, a major subset of our work.

In our experience, those carbon project investors who understand and embrace our social justice mission approach investments with the following in mind:

1. Local people are bringing their natural, human, and social capital to the agreement and without it, there would be no project.
2. The management of risk needs to be approached in a true partnership style to ensure carbon payments and co-benefits are fair, transparent, and equitable.
3. Organizations that have existing trust networks can mature over time with new carbon project management skills that make them excellent long-term partners.
4. Co-creation enables better buy-in from all partners and will result in a stronger program.
5. An intermediary, like N4J, can help create an adaptive management approach, which is a critical de-risking measure for investors, as all projects will have challenges over time.
6. Sequestering carbon must never compromise a smallholder farmer’s ability or an Indigenous community’s ability to make a living or produce food for their families from their land.
7. If an investor decides to ‘cash out’ before a project ends, they ensure that the project is well-positioned for success.

Presented below is more information on each of these attributes:

1. Locals Have the Nature, Human, and Social Capital.
   Carbon projects are often hyper-focused on the qualities of land and natural resources and the related opportunity for carbon additionality. But the success of a project is entirely dependent on the human and social capital of local communities and coordinators and the follow-through on addressing climate justice additionality. Rather than just investing in the carbon produced by an ecosystem, successful investors recognize that their investment is really an investment in the capacity of local communities to continue and expand their stewardship; to build sustainable land-based livelihoods that enhance dignity; to maintain healthy relationships and uphold the responsibilities of all who use the land; and to manage the land for decades to come. When investors realize this, communities are empowered to develop strong projects with significant and lasting benefits for all parties.
2. Manage Risk as a Partnership.
   Investors understand that the long-term viability and risk in a project is determined by how much value a carbon project offers local communities in direct benefits like carbon payments and co-benefits. Carbon payments must be fair and equitable. Transparency is essential. Projects that offer real and significant community co-benefits ensure that everybody has access to what they need to feed their families and improve their quality of life. Projects that do not offer reasonable co-benefits face the risk of being considered non-essential, leading to non-participation and ultimate failure. When investors understand that risk is dependent on whether a community’s needs are satisfied by a project, it becomes clear that risk must be managed through a partnership approach.
3. Do Not Expect Organizational Perfection from Day 1.
   Local partners, regardless of their geographic location, may not tick all the technical and managerial boxes at the start of a project. So, investors need to look for potential, not necessarily a global brand and its inferred capabilities, demonstrated success in the past, or a ‘deep bench’ of capable people. N4J’s starting assessment asks whether the local group has an extensive trust network that can lead to scaling in the future. Their past may be characterized by success and failures but most important is whether, through those inevitable cycles, they were able to maintain the trust of the local community. With this foundational trust, organizations like N4J can build the capacity local groups need.
4. Co-creation is Key.
   Many local partners have built their trust networks as they have been able to offer deep expertise across fields such as agriculture, public health, or education. But carbon projects have unique and complex processes, methodologies, and rules that are rarely familiar to community-based groups. When investors try to layer on a project design that suits their own interests, it further complicates the issue. Co-creation, mediated by trusted partners like N4J, can allow for project design that reduces the risk for all parties and structures deals that are fair to investors and locals.
5. A Collaboration: Collect Data, Modify Design, Iterate.
   Carbon projects are complex, the places are never easy to work in, and the quite often thin management and technical skills of our partners requires that N4J and our local partner constantly collect data and modify a project’s design to ensure success. Just investors recognize this need for flexibility and ensure that project systems that collect performance data and allow us to change, as needed, are in place. The investor must deploy patient capital and exhibit a desire to protect their investment by working with and trusting N4J and our partners. We have decades of field experience behind us to help us to inform our choices in extremely dynamic environments.
6. Local Needs Must Dominate.
   N4J defers to the local organization and its community partners regarding what they view as their top priority. The carbon project can never come at the risk of undermining the ability of a family to put food on the table, risk its land ownership, or alienate it from the regional political and social context. To local communities, these lands are home, quite often places of spiritual significance, and sources of livelihood. N4J and our just investment partners have a significant stake in ensuring success, but our non-local stake is not as high as those whose entire lives depend on it.
7. Depart on Good Terms.
   We recognize that few investors will be with us for the entire project journey given the typical project lifespan of 30+ years. The investors willing to structure an agreement with this recognition in place can avoid stranded or marooned projects that can sour local interest in resurrecting a project or continuing it until new investors are found.

In closing, since our founding we have learned that it is increasingly important for N4J to represent the interests of communities as they engage with investors. Our predominant role is to judge the potential investor as to how well they are in line with the attributes of investment justice as we have laid out here. We do not expect perfection, but we do require a willingness to have a conversation that leads to fairness, dignity, and long-term resilience – as this is the foundation of a successful project for investors, local communities, and the planet.