Sibyllina - leasing biologically diverse natural assets

Sibyllina seeks to unlock funding for the conservation of valuable biological diversity (“biodiversity”) at scale.

Biodiversity conservation has struggled to source funding from commercial channels and has largely been dependent on state and philanthropic donations supplemented by ecotourism and revenue generated by ecosystem services. 

What is biological diversity?

South Africa’s National Environmental Management :Biodiversity Act defines biodiversity as follows:

the variability among living organisms from all sources including terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part: it includes diversity within species, between species and of ecosystems.”.

There are important principles that can be derived from this definition that are foundational to our solution. 

• Biodiversity is a system made up of different species that interact with each other

• An individual tree, plant, insect, fish or animal participates in an ecosystem but does not constitute the ecosystem

• Being made up of living organisms, means that ecosystems are separate from the land. They can be killed, removed or conserved. A piece of land with valuable biodiversity can equally become a parking lot or mine. 

• Different pieces of land have differing amounts of biological diversity

Our mechanism for funding biodiversity conservation is a lease. 

Parties that wish to claim the reputational or other benefits of a biologically diverse area can rent the biodiversity of that area from the owner of the land on which it lives. 

Defining biodiverse assets

We think we can solve one of the big challenges of the field of sustainability which is how to directly connect sustainability impacts to financial statements.

In our model, when you enter into a biodiversity lease, you are leasing a biodiversity asset. That asset is defined as: 

A set of biologically diverse terrestrial and/or marine ecosystems existing on a demarcated area of land, recognised by an independent ecological auditor. 

The lease allows the lessee to attach rights to the biodiversity and create obligations for the landowner in protecting and conserving the ecosystem via contract, in return for payment. The landowner is allowed to continue with all other land use activities so long as the biodiversity is protected. This is not a lease of land, but a lease of the biodiversity that resides on the land.

Leases are robust in law, auditable and flexible. Lease values are determined by willing lessor and willing lessee market dynamics, and we expect the cost of conservation for the landowner to act as a pricing floor.

Long term property leases are the basis of property as an asset class. Pension funds have some of the longest investment time horizons and property makes up an important part of their portfolios. 

We believe that given the flexibility of leases, the lessee will be able to demonstrate that they have sufficient control over the biodiversity and can claim all its economic benefits in order for it to qualify as a right of use asset under IFRS 16.