Mr Simone Quatrini, ETH Zurich, Switzerland. Global Symposium on Soil Erosion (GSER19), 15 - 17 May 2019 at FAO HQ.

1. Challenges and opportunities to scale up
the application of sustainability
guidelines and voluntary standards
Dr. Simone Quatrini
ETH Zurich & ÆDIS.Earth
simone.quatrini(at)usys.ethz.ch
sq(at)aedis.earth
1

2. Enabling
Policies
Investment
Vehicles
Sustainable
Projects
De-Risking
Tools
Certification
& Standards
Building Capacity for Sustainability
FACILITATION INTERMEDIATION EXPERTISE HEDGING ASSURANCE
- policy mapping - fund structuring - pipeline development - risk assessment - guidelines
- impact analyses - blended finance - deal/partner sourcing - PPP partnerships - safeguards
- policy evaluations - impact profiling - due diligence - first-loss capital - performance
- incentives/trade-offs - risk-adjusted return - design & prototyping - scenario analysis - benchmarking
- capacity building - market positioning - project evaluation - portfolio simulations - monitoring
- strategic advice - investor relations - technical assistance - diversification - auditing
- gap analysis - wealth management - disclosure/reporting - governance - rating
www.aedis.earth

3. S. Quatrini, Mobilizing blended finance for sustainable development: experience and lessons from the investment fund for land degradation neutrality
(LDN). Doctoral Dissertation. ETH Zurich Research Collection, Dec. 2018
Sustainable Development
Theory of change
RESEARCH ENGAGEMENT APPLICATION
CHANGE AGENTS
Enabling
Policies
Investment
Vehicles
Sustainable
Projects
De-Risking
Tools
Certification
& Standards
Enabling Environment
www.aedis.earth

4. www.aedis.earthEnabling policies

5. green bondsimpact funds
www.aedis.earthInvestment vehicles

6. Organic and shaded coffee plantation, Costa
Rica
Sustainable grassland management, Switzerland
Source: De Groot et al. (2013): Benefits of investing in ecosystem restoration
www.aedis.earthSustainable projects

7. Source: Quatrini et al. (2015): Land Degradation Neutrality (LDN) Fund: Scoping Paper
www.aedis.earthSustainable projects financially viable

8. ecosystem service losses (1997-2011): $4.3–20.2 tr/year
Source: Costanza et al. (2014): Changes in the global value of ecosystem services
$2-4 trillion/year
Source: The New Climate Economy, 2015
www.aedis.earthInvestment gap

9. Source: Quatrini, Crossman (2018). Most finance to halt desertification also benefits multiple ecosystem services:
A key to unlock investments in Land Degradation Neutrality? J Ecosystem Services. 31, B
www.aedis.earthWhy ?
(1) de-risking tools are under-used
synergistic value blended finance
P2P blockchain
landscape approaches

10. Adapted from: R. Costanza, S. Quatrini (2017)
Blended finance instruments serve to lower investment-specific risks and
incentivize additional private sector finance across key development sectors“
”Source: AAAA, 2015
Green Bonds
Impact funds
Philanthropy
www.aedis.earth

11. (2) proliferation of voluntary/industry standards
Source: ITC (sustainabilitymap.org)
www.aedis.earthWhy ?
there are
hundreds of standards and
certification schemes on the
market – but some are more
credible than others

12. Source: ifc.org
www.aedis.earthIFC performance standards (2012)
DOING GOOD
incentives
NO - HARM
safeguards

13. Source: ITC, FiBL, IISD (2018): The State of Sustainable Markets 2018
www.aedis.earthProliferation of sustainability claims

14. Source: ejatlas.org
2700+ cases
of which, 750+
cases due to
land acquisitions
www.aedis.earthLand-use conflicts

15. • central component of SD (biosphere)
• finite resource, vulnerable to degradation, both natural and human-induced
• fundamental to the provision of a large number of ecosystem services
• market value (endowment, commodity, collateral)
• non-market value (e.g. historical, cultural, strategic, geo-political connotations)
• competition leading to increasing pressure, degradation, desertification
• land-based investment tend to aggravate, amplify and accelerate land degradation
• strong nexus between land degradation and food, water, land, energy security
• conflicts and mass migration flows destabilize economies, societies, and nations
• land degradation neutrality (LDN) included in the SGD agenda (target 15.3)
Source: United Nations Framework Convention on Climate Change (2017): Online Guide on Loss and Damage
www.aedis.earthClimate change loss & damage

16. 16
Source: NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2018). https://www.ncdc.noaa.gov/billions/
www.aedis.earthCost of disaster events in USA (1980-2018)

17. Source: SustainAbility (2019) Rate the Raters
• Static ‘point-in-time’ ratings
• Lack of transparency on scoring
methodologies
• Weak assessment of environmental
sustainability and ecosystem disturbance
• No or limited inclusion of interdependencies
and socio-ecological trade-offs
• Based on poor ESG reports and limited
disclosure
• Mostly established for listed companies,
without sufficient granularity
• Mostly concerned by financial performance
and internal governance
• Often mono-sectoral, commodity-focused,
using a narrow definition of sustainability
• Companies are free to ‘pick-and-choose’,
with no independent verification
Sources: 3Keel & ISEAL 2018, UNFSS 2018, Komives 2014, Boiral 2015-2018, Galafassi 2017
CREDIBILITY DEFICIT
Source: SustainAbility (2019) Rate the Raters
www.aedis.earthMistrust in conventional rating models
they measure credit worthiness:
• point-in-time opinions about credit risks
• assessments of an entity’s ability to pay its financial obligations
• predictive of the likelihood that the evaluated part will go bankrupt
they don’t measure impacts:
• socio-economic, material effects on ecosystems and communities
• on-site and off-site cascading effects (eg climate, biodiversity, etc.)
• long-term consequences, systemic risks (e.g. conflicts, migrations)

18. a new generation of sustainability ratings
“impact investing does not
have in place a set of
independent rating
agencies to attest to the
quality and practices of
impact reporting at the
firm level”
(ImpactAssets, 2016)
“the ultimate challenge is
to develop solutions that
consider a uniform,
integrated approach to
impact measurement that
enables a widespread
adoption”
(St. Gallen University, 2017)
“what is needed most of all
is a movement, and a
community, of transparent
commitment to the
principles of real impact,
providing necessary checks
and balances on corporates”
(Real Impact Tracker, 2018)
“label shopping by companies
must stop. It leads to
a race to the bottom. If there is
to be a role for certification in
the transition to a sustainable
economy, it must undergo
some serious reforms”
(Changing Markets Foundation, 2018)
Elian Hofer
Business Analyst
Evalueserve
Chile
www.aedis.earthWhat do we need?

19. www.aedis.earthIntegrated Ecosystem Assessment
and Rating System (IERS)

20. 1.Harness innovative guidelines and tools for environmental protection,
sustainable land use/management and ecological restoration as a foundation
for an integrated landscape approach
2.Integrated rating methodology that takes into consideration biodiversity,
ecosystem dynamics, connections, interdependencies, trade-offs between
multiple competing resource use interests, including non-commodity aspects
3.Certification procedures and support measures for facilitating adoption and
application at different scales (e.g. site, landscape, watershed, supply chain,
etc.), jurisdictions, biomes, and geographies
www.aedis.earthIERS objectives
Dec 2017 Mar 2018 Dec 2018 Mar 2019
Inception Consultations Proof of Concept ISO Liaison
Concept Note with Sponsors Presented at GLF Forum Application

21. 1. Integration (Performance + Impact, Ecosystem Services Trade-Offs, Externalities)
2. Technology (Blockchain, Artificial Intelligence, Machine Learning)
3. Quality (Best-in-Class Standards, Field evidence, Granularity)
1. Focus on underlying assets, liabilities, dependencies
2. Suite of proxy indicators of key impact fundamentals
3. All sustainability dimensions (economy, environment, society)
Unique Output: Impact Worthiness
Key Distinctive Features
www.aedis.earthImpact ÆSSURANCE ratings: innovations
Network BlockChain Model Software Back-End Symbols Front-End

22. Project RATINGS Landscape
RATINGS
Corporate
RATINGS
Sovereign
RATINGS
www.aedis.earthImpact ÆSSURANCE ratings: products

23. sq@aedis.it
www.aedis.earth
Q&A