Marc Naidoo Discusses Sustainable Finance in Global Banking & Finance Review

June 29, 2021

London partner Marc Naidoo wrote a June 2021 article on sustainable finance for Global Banking & Finance Review.

The article — titled “Blue Carbon: Moving Natural Capital Towards Sustainable Finance” — discussed how to get capital to where it’s needed the most by exploring one solution “whereby the actual root of sustainability can be monetised and collateralised to ensure recyclable (and bankable) capital is brought into the system.”

The article defined and explored terms such as natural capital — naturally occurring resources — and blue carbon — the absorption of carbon dioxide by flora present in marine ecosystems — and how to quantify and monetize such resources. Naidoo suggested a system similar to a toll road: Those who traverse the road, or infringe on a blue carbon habitat, would pay a toll or blue carbon tax.

“Similar to tourism levies in certain countries, a blue carbon tax could be created which tracks the amount carbon dioxide that is produced by, let’s say a ship or plane, that would then be offset by the carbon dioxide absorbed by, let’s say a seagrass meadow,” he explained. “Given that countries with rich blue carbon habitats are usually coastal (thereby having numerous tourists and shipping lanes), the blue carbon tax essentially would serve as a pay to play cost for transport companies travelling into the region.”

This would create a way to measure blue carbon habitats against real world money, Naidoo added. “Private organisations would be able to serve as the toll operators, with cashflows derived from blue carbon tax being used to: pay a portion due to the government, re-invest into creating more blue carbon habitats or maintaining existing ones and finally to keep the balance as a profit (or a debt service reserve in a lending scenario).”