Payments for Ecosystem Services Benefits to Drive the Regenerative Transition— Investing in Epoch

Our investment case for backing the Epoch team to tackle payments for land use change associated emissions

From its origins in the 1990s, the voluntary carbon market (VCM) has faced a bumpy road toward adoption and impact, hindered by mostly unintentional fraud (“greenwashing”), double-counting, lack of transparency, and accountability to local communities. This has led to lawsuits, low trust, and most importantly inadequate finance, returns, and impact. 

The time has now arrived for originating and verifying environmental assets in addition to the VCM for the next billion dollar companies formed around the climate opportunity, as corporations with trillions in budget turn to insetting to address their direct carbon footprints, as regulatory regimes bring rigor and compliance to carbon neutral claims, and as governments hold corporations to account for their environmental impacts globally, especially for Scope 3 emissions (those carbon-intensive activities from assets not owned or controlled by the reporting organization).

We believe the next 10 years of returns in climate will be led by the world’s largest businesses turning an analytical eye inward to their own value chains and making changes, because that is both where the biggest financial opportunities are, as well as the biggest impact. The VCM has shown us what offsetting alone can achieve. Now Nestlé, Unilever, Mars Wrigley, and more have committed near-term to making changes in their own supply chains because they’re attracted to the savings, profitability of owning environmental assets originated on their commodities, and ultimately the impact that guarantees their businesses are healthy for the long term.

Due to regulations worldwide, companies in industries with >90% of their emissions in Scope 3 will only have the lever of influencing their supply chain partners to reduce and meet emissions targets, by definition. Any US Government contractor with contract value higher than $50m is required to set a net-zero target, for instance. With the lawsuits crowding out carbon neutral claims (Delta), and the heat turned on the voluntary carbon market, corporations and brands have earmarked billions (Nestle’s 1B CHF Sustainable Coffee Fund, Unilever’s 1B EUR Sustainability Fund, Mars Wrigley’s $500M Cocoa for Generations Fund) to drive these changes. If a corporate can create and be credited for a provably climate-positive environmental asset, they can move their carbon footprint from the liability column to the asset column. By becoming producers of climate-positive outcomes (decarbonization, afforestation, etc), corporations can evolve their business model to make net-zero a break even or better value proposition.

However, these companies need tools to manage and deploy these programs at global scale with the ability to both quantify emissions through clear, objective, verifiable, scientific, and publicly accessible datasets and methodologies, as well as make the payments for ecosystem services. Corporations with net-zero targets do not currently possess the ability to reduce their Scope 3 emissions (monitoring and incentivizing action) and report on those reductions in a globally scalable way. 

Enter Epoch.

Epoch provides corporations with the tools to monitor emissions from select supplier activities, incentivize reductions in emissions, and report the emissions reductions in a globally scalable way. It specifically provides supplier emission monitoring in line with SBTi and GHG protocols using remote sensing data and farm data management systems, verification and reporting of measurement data and emissions calculations in publicly available storage and distributed computing infrastructure to meet public disclosure requirements, and inset purchasing based on verified carbon impact enabling multi-party collaboration via predefined rules.