In conversation with Spencer Powell
Paul, Luisa, and Just Climate’s Spencer Powell in conversation…
Luisa Cubillos DelgadoCollective Action IP
Spencer Powell is Managing Director of Climate Finance at Just Climate. He previously spent three years at the Impact Management Project leading work on corporate sustainability disclosure, including a secondment to the IFRS Foundation where he led the ISSB’s technical work on climate-related disclosures through its inaugural exposure draft.
CA IP recently spoke with Spencer about the firm’s Natural Climate Solutions (NCS) Fund — its second global strategy, following the USD 1.5 billion Industrial Climate Solutions Fund. We covered the strategy’s impact ambition, the development of a rigorous nature impact framework, portfolio implementation, and Just Climate’s aspirations for the sector.
Strategy and impact ambition
Just Climate NCS strategy is targeting two areas of positive impact. The first targets the highest-emitting, most off-track sectors of the land transition and food systems, looking at the largest sources of GHG emissions, where they are most stuck, and how to invest in solutions that can best accelerate decarbonisation. The second targets solutions that can halt and reverse nature loss. Both operate within a constraint of generating attractive risk-adjusted returns, prioritising the highest positive climate and nature impact within that.
Originally, the team expected trade-offs – that some solutions would deliver significant climate impact but lower nature impact – or vice versa. What has emerged so far is different. As Spencer put it:
“The link between climate and nature outcomes is well established in literature. What’s been exciting is seeing it show up in our pipeline, more than we’d expected. Where we’re seeing the highest climate impact, in terms of avoided or removed emissions, we’re often seeing strong nature co-benefits, and vice versa.”
Mission and rationale for NCS
Just Climate’s broader mission is to institutionalise climate- and nature-led investing for the world’s largest asset owners and allocators. Just Climate’s clients treat climate change and nature loss as material systemic risks over long-term investment horizons, aiming, for example, to ensure pensions can reliably provide capital over a 75-year period. On that basis, investing now in solutions that can mitigate those systemic risks is regarded as a fiduciary requirement. All investments have impact, whether intended or not. For Just Climate, going after the highest positive climate and nature impact links directly to that risk mitigation.
The progression from the USD 1.5 billion Industrial Climate Solutions Fund – focused on, amongst others, the steel, cement, aviation, and heavy-duty transport industries – to the NCS Fund reflects the scale of the food systems opportunity. Food systems sit at roughly a third of total global greenhouse gas emissions [1], compared with 5–7% [2] each for steel or cement. The space is also further behind than industrial decarbonisation in terms of capital deployment. For Just Climate as a business, it was an obvious next step to prove how to deploy capital in a replicable way in a sector where high emissions and under-investment converge.
Building a nature impact quality framework
Climate and nature are interconnected systems that depend on each other. There is broad recognition of nature loss as an issue, but Just Climate notes that some clients still see it as an early theme, which makes trailblazing and developing a rigorous framework and methodology to put capital to work important.
There is a lot of science on measuring nature, but very little that shows how to bring that science into an investment process early enough to compare opportunities based on nature impact. Just Climate spent time at the beginning of the strategy’s development building a nature impact quality framework and methodology that draws on scientific research – e.g. the IPBES report on drivers of nature loss [3] – and combines it with modern geospatial tools. This allows the team to access data maps and information layers with sufficient precision to make investment decisions, and where material post-investment, to move to primary data through portfolio companies such as NatureMetrics for eDNA-based nature monitoring.
By contrast, Just Climate’s climate impact quality framework is anchored on the underwriting of GHG emissions abatement, which is highly quantified, counterfactual-based, and comparable across opportunities in metric tonnes of CO₂ equivalent. Nature does not yet have that single metric. Some approaches attempt to summarise nature into one score, but Just Climate has found this is not decision-useful at the investment stage. Instead, the team is comfortable working with multiple variables: e.g. hectares sustainably managed, water use and quality, abatement of pollution pressures, invasive species, and other ecosystem condition measures. The methodology defines the key impact metrics that recur across their investment processes and creates ways to assess them in a comparable way.
Portfolio implementation: Greenlight Biosciences
Greenlight Biosciences illustrates how Just Climate’s impact frameworks play out at the deal level. The company uses RNA interference to address agricultural pests such as the Colorado potato beetle. The pest ingests the material, which intercepts and shreds its genetic code, eliminating the pest without affecting non-target species. Once sprayed on the field, the product vanishes within days. It is replacing particularly harmful neonicotinoids and similar chemicals, which stay on the farm, leach into waterways, and have broad non-target effects, creating both on-field negative nature impacts and downstream ecosystem damage.
For Just Climate, Greenlight Biosciences combines several other climate impact pathways. Displaced chemical production delivers process-level avoided emissions. Yields are protected or improved by replacing incumbent chemistries that pests are becoming increasingly resistant to (and more and more chemicals are being applied). Yield protection or gains also translate into avoided land use change (e.g. avoiding deforestation). Spencer noted that “from a global level, which can differ depending on commodity and region, roughly half of what you save from a yield perspective can actually translate into that land use change story.” Just Climate has spent significant time quantifying and linking yield claims to avoided deforestation and land use change values. There is also the benefit of avoiding the farm-level inputs that would otherwise be needed to grow the same crop elsewhere.
A climate adaptation angle sits alongside the mitigation story, and resonates strongly with farmers. Pests are migrating further north of the equator as temperatures rise, and their prevalence is increasing. Greenlight’s solution helps farmers continue to grow crops under increasingly challenging pest pressures, which in practice is what farmers care most about. Finally, soil carbon is flagged as upside. Just Climate knows there is a soil carbon benefit from displacing traditional chemistry, but rigorous quantification remains a work in progress, so it has not been captured in the base case.
Final close and collaboration
Just Climate’s NCS strategy is approaching its final close in October. Spencer emphasised the hope that the successful deployment of the mandate would prove to be catalytic for others to follow.
Just Climate does not want to compete on methodology. The team is looking at how to publish its nature impact quality methodology and put it into the wider market, an invitation for others to build on it. The ambition, in Spencer’s words, is to:
“get to a world where managers can be competing on climate and nature impact performance, not on methodologies that aren’t comparable”.