Science, scale, and impact: Inside Dr Liz Heagney’s approach to biodiversity investment

When it comes to turning nature into numbers, few know the terrain better than Skjander co-founder Dr Liz Heagney. With a PhD in ecology and over a decade shaping biodiversity policy, research, and investment - from billion-dollar funding programs to the world’s largest natural capital study - Liz now leads analytics and portfolio at Skjander. We sat down with her to talk about what it takes to bring scientific rigour to nature markets.

Tell us a bit about your background and how you came to launch Skjander? 

I trained as an ecologist at University, went on to do my PhD in ecology and then started working in the field. But I very quickly discovered that economics, as well as being an obvious part of the problem when it comes to the environment, was also the field that, for me, seemed to contain so many of the solutions that we need. I felt that if we could just reconfigure the economic systems we created in simple small ways, we could achieve much more positive outcomes for the environment. From that very early point in my career, environmental economics became my specialty, and I have worked for government and inter-governmental agencies around the Pacific in that area for the last 20 years.

I met our CEO Dr Karel Nolles while working on reforms for the NSW Biodiversity Offset Scheme. We both thought that scaling the biodiversity credits market was key to ensuring that the state’s biodiversity was well-protected, and we both believed that this was something that would have to happen outside of government to be successful. We recognised that the problems and opportunities present in NSW were typical of biodiversity markets around the globe, so we saw a much bigger role for an investment fund to complete the ‘landscape of players’ required for effective conservation markets - and that is where Skjander was born. 

What is your role at Skjander and what do you spend your days on?

My role is in data and analytics and portfolio management. I spend my days pulling together intel from various sources (government registers, brokers, industry) to identify investment opportunities that will deliver for both investors and the environment.

Why is biodiversity and the environment important to you personally?

From the time I was about 12 years old I knew I wanted to work in wildlife conservation. From a personal perspective I find the diversity of species and landscapes to be astounding and precious. Even just today, using a bird-listening app, I can see there are 30 different bird species active in a 30m radius of my house in Lismore - each with its own ecological niche, but working together as part of a complex ecosystem. I feel very lucky to live in NSW, which is recognised as one of the world’s biodiversity hotspots.

From a scientific perspective I think biodiversity is under-valued in terms of its ‘systems’ performance. We are all now well versed in the importance of climate systems for sustaining the planet, but biodiversity is a critical system too – species work together in complex and mysterious ways to provide vital ecosystem services like water filtration, pollination, nutrient cycling and climate regulation. Scientists are concerned with the question of how much ‘redundancy’ is in the system, for example, how many species we can lose before we lose important ecosystem functions we rely on? But nobody really knows the answer. I find that fascinating, but also really worrying when we consider the current rate of species loss.

What do you think nature markets are  controversial amongst sustainability professionals?

‘Nature positive’ is the new goal post for biodiversity. It is the idea that we can’t just stop impacting nature and maintain what we have now – we need to try to restore and improve ecosystems as well. 

I think biodiversity markets are a critical part of the pathway to nature positive. Because they rely on ‘credits’, which represent quantifiable, verifiable biodiversity improvements, they move us from thinking about funding conservation activities, to funding conservation outcomes. They allow us to measure how much biodiversity we are restoring or protecting (compared to how much we are impacting) so we can identify whether or not we are ‘nature positive’.

Biodiversity markets aren’t new - they have been around since the 1990s (in the USA) and early 2000s (in Australia). But they are new in a lot of settings, with around 40 countries now implementing biodiversity offset markets, and so they are unfamiliar to a lot of people, and there are a lot of questions about whether and how they will work to protect biodiversity and help us achieve nature positive.

Obviously biodiversity credit markets and other policies or funding mechanisms will only get us to nature positive if they are well-designed, and there will be questions around metrics, monitoring and other important elements of the system that will be an ongoing challenge, but I think we are in an exciting period for conservation: we have this new ‘nature positive’ objective which exceeds our previous ambition (no net loss) and a suite of new tools that try to get us there.

One of my favourite ecological studies was undertaken by the University of Queensland - it shows that when decision-makers are more risk-tolerant with respect to the conservation projects they implement, they are more likely to prevent a larger number of  endangered and vulnerable species from going extinct. Not everything we do will work, but I think we need to embrace new approaches if we are to change the current biodiversity trajectory and halt species loss.

What do you wish more people understood about biodiversity? 

I would love it if people took a more global view of biodiversity. I think global biodiversity hotspots should be at the fore as the number one biodiversity investment priority – even for companies or investors with no specific link to these places.

Some of the new corporate biodiversity reporting frameworks – like the TNFD and SBTN ask people to look at their own impact on the biodiversity in their immediate surroundings, or to identify places where biodiversity is directly impacted by their own activities or supply chains. I don’t want to diminish the importance of looking at our own impacts on biodiversity, especially when it is done as a first step towards reducing impacts, but I think it is also really important to consider some potential unintended consequences of an investment approach that has a narrow focus, rather than a global one.  

For example, if a company negatively impacts an area in a relatively built up location with low biodiversity value, should it be constrained to investing to improve biodiversity at that specific location? Especially noting that this may not even be possible if there is a relatively low biodiversity baseline, inappropriate surrounding land use, lack of source populations required for key species to recolonise the area and so on. Could this company instead compensate for harm by investing in conservation and restoration of highly biodiverse areas of global significance, like the rainforests of Borneo? The way we choose to answer this question has important implications for the future of the world’s biodiversity.

Global biodiversity hotpots like Borneo and the Amazon are the ‘lungs of the planet’. They provide invaluable air, climate and water regulation. In addition, they provide irreplaceable habitat to more than three million unique species. These hotspots typically occur in more remote and lesser developed places (in many cases these have persisted because they have escaped the pressures of industry and population) which often have lower public conservation budgets. I think we all have a duty of responsibility to these incredibly valuable areas, but they are likely to miss out on much needed private conservation funding if we constrain companies to investing only in local or directly-impacted biodiversity.

How does Skjander’s work directly contribute to biodiversity outcomes?

Skjander is a fund that invests into environmental instruments, focusing specifically on biodiversity. This means we invest into biodiversity credit (or certificate) markets. There is good economic evidence to show that just by participating, secondary traders like Skjander can bring benefits to environmental markets: by increasing turnover and improving price transparency, they can help to increase participation - in this case that means more environmental projects being initiated.

There are also other beneficial outcomes for biodiversity, depending on the specific fund or product. For example, we invest into the credit market associated with the NSW Biodiversity Offsets Scheme. In this market, the biodiversity conservation works that are proposed for an offset site don’t start until a significant proportion of the credits available from the site are sold. In some cases this may take years - even up to 7 years and beyond. By purchasing credits ahead of market demand, Skjander is bringing restoration and conservation projects forward in time, which is important for closing the ‘offsetting gap’ where land clearing would otherwise occur before the compensatory offset - leaving a significant gap in habitat provision. For other of our products, we aim to deliver biodiversity credits to the voluntary biodiversity market - for example through ‘nature positive events’ - which enables companies to start along the pathway to nature positive. 

The bigger picture is that Skjander is trying to align environmental outcomes and economic outcomes - so investors can get a positive return by investing in projects that are good for biodiversity. If we can design investment options that deliver for both the investor and biodiversity, we can help to close the global ‘biodiversity funding gap’ estimated by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services to be in the order of $0.3 trillion to $1 trillion per year. 

What do you hope the long-term impact of Skjander will be 5, 10, 20 years from now?

I hope we make a significant contribution to closing the global biodiversity funding gap. I hope we can measure our impact in terms of ‘number of species saved’. And I hope we will continue to be part of the conversation about re-designing economic systems so that they are part of the solution rather than part of the problem.