Sibyllina Natural Capital Transfers - our concept

Introducing Sibyllina

Sibyllina connects organisations that desire biodiversity assets on their financial balance sheets with owners of land that contain valuable, biodiverse, and functional ecosystems. 

We do this through simple land lease agreements that transfer the natural asset value onto the balance sheets of organisations in a way that is legally robust, globally transferable, and auditable in a manner consistent with best practice accounting standards.

Sibyllina exists to foster the stewardship of ecosystems and the preservation of biodiversity in support of the Global Biodiversity Framework 30by30 goal. By establishing a transparent mechanism of natural asset transfer that is legally robust and meets the threshold for audit, Sibyllina provides the necessary foundation for establishing and valuing nature as a real financial asset.

Available mechanisms for Business to invest in nature

There are several drivers for why a business may wish to bring natural capital onto its balance sheet: reputational, regulatory, as a strategic asset, or for meeting stakeholder expectations. Each business has its own unique needs, but it’s clear from the emerging regulatory, accounting, and governance standards that all businesses have an exposure to their impact on nature.  As this environment matures, shareholders are coming to assess the potential impact of these liabilities being recognised on their balance sheets. This presents a risk to valuations, share prices, and capacity to access capital.

Currently the two primary mechanisms for addressing nature for business are land-banking (buying land) or purchasing biodiversity certificates. 

Land banking provides a real transfer of the land and all its attributes onto the balance sheet of businesses. It is clear, legally robust, measurable, and valuation is straightforward. However, it is also expensive, illiquid, and comes with a wide range of attendant responsibilities that may not be desirable for business. Removing other land uses, in favour only of biodiversity stewardship, limits the scale at which biodiversity assets can be acquired and protected, and also creates potential negative economic and social knock-on effects.

Biodiversity certificates are more complex and variable from region to region. They are modular, and easily scalable, but suffer from a reputational hangover from the carbon market, where certificates carry a risk of greenwashing claims. Certificate schemes also typically require substantial up-front consulting costs to establish, and often require bespoke legal or policy frameworks for their contractual foundations. 

The Sibyllina Lease provides a third path:

• It is contractually simple, robust, and globally consistent (as it relies on property law, which is clearly understood in most jurisdictions)

• It is aligned to best practice accounting methodology and can be recognized as a right-of-use asset on business balance sheets.

• Its simplicity makes it easy and low-cost to establish.

• Provided the ecosystems on land are preserved and stewarded, it can accommodate existing land uses that are consistent with a biodiversity management plan.

The Sibyllina lease can provide governance for rewilding and ‘additionality’ as well as preservation of existing high-quality ecosystems - both are important for 30by30.

Regulation and enforcement via established legal and accounting processes

The commercial foundation of Sibyllina leases is their legal and accounting robustness. 

In law, the leasing of biodiversity assets is analogous to the leasing of office space for a tenant. The tenant does not own the land and the office building or its systems, but it is afforded an exclusive use of the services that the building provides: shelter, air-conditioning, views, etc. and the commercial benefits that come from operating a business in an office. 

In the same way, the lessee of natural capital does not own the land or the trees and animals, but is afforded exclusive use of the services they provide: regulating earth’s systems, cleaning waterways, storing carbon, or maintaining biological diversity, and the economic benefits that they provide (even if at present those benefits are only reputational).

Leases are legally robust, and form the basis of long-term income for multiple asset classes to the satisfaction of institutional investors all over the world. They are treated in the IFRS 16 as a right-of-use asset, and can be/are accommodated on the balance sheet of businesses as an asset alongside the liability of the present value of the remaining lease payments over the term. 

Bridging the trust gap

The Sibyllina lease is further underpinned by an independent distributed ledger, which records the land parcel, its biodiversity management plan and annual audit trail, as well as its allocation through a lease, to avoid double dipping and maintain rigorous transparency.

The biodiversity management plan provides the foundation for the conservation-worthiness of the lease and its contribution to 30by30, including any formal registration with authorities.

Nature for Landowners

The Sibyllina lease provides a very straightforward benefit to landowners: it unlocks additional annuity funding for the stewardship of the valuable ecosystems on their land, allowing them to continue their pre-existing activities,  without imposing significant up-front costs or long-term risk.

Many landowners have a deep connection to the natural assets that they own, and lack only a reliable funding pathway for the better stewardship of those ecosystems. We believe that this pathway of reliable funding is one of the most critical outcomes for achieving the 30by30 goals of the GBF, and perhaps even more so than formal proclamation and legislative protection. 

Summary

Sibyllina leases connect businesses with nature in a new way:

• They are simple and inexpensive to establish

• They are legally robust through property law

• They accord with global accounting standards for balance sheet recognition

• They are transparent and auditable on a distributed ledger

• They are underpinned by a Biodiversity Management Plan and audit

• They allow landowners to continue their normal operations (in accordance with the BMP)

• They provide additional annuity income to landowners specifically for ecosystem stewardship.

These attributes provide a unique proposition to businesses seeking to address their impacts on nature in tangible, yet affordable ways.