Taking the Risk out of Risk-Taking

Summer 2023

Over the last two years, Oxygen Conservation has redefined what’s possible in rural land acquisition in terms of speed and scale and, moreover, all of this land has been bought principally for conservation. For us, this means delivering a positive environmental and social impact, making a profit as a result, not as the purpose, of what we achieve.

Throughout this time, people have (very kindly) complimented us by saying that we’ve “disrupted the industry, changed the way land is evaluated and bought and, in the process, kick-started the natural capital economy.”  We’ve been told we work fast and diligently, and we’ve even been described as “relentless” (which I especially enjoyed!).

 Others have assumed that our approach brings increased risk and even playfully (or perhaps not!) suggested we must be blind to risk or are reckless in what we do and how we do it!

The truth is that we’re committed to Scaling Conservation by demonstrating that long-term capital preservation is best achieved by doing everything we can to protect at least a little of the world for people and wildlife. Moreover, we believe that natural capital will become the world’s biggest alternative asset class, and therefore, by showing that conservation can provide a positive return on capital, we can showcase a self-perpetuating loop of investment leading to environmental improvement, restoration of the natural world, and societal change.

This is an intentionally bold and hopefully aspirational ambition and, as a result, we’re very much conscious of the risks, both real and perceived, in our work and invest a huge amount of time, energy, and effort in understanding and managing those risks.

Here are some of the ways we approach risk management in our efforts to Scale Conservation.

Building a Diversified Portfolio: Our portfolio currently spans ten estates in eight counties and three countries. Each estate has unique characteristics in terms of climate, geography, land management challenges, regulatory systems, and community relationships. By deliberately diversifying our portfolio, we’re aiming to demonstrate that positive environmental and social impact can be achieved regardless of external factors. From a risk management standpoint, this diversified portfolio helps spread and manage risks across multiple geopolitical and thematic variables.

Data-Driven Decision-Making: Property of any kind is still almost always bought with the heart as opposed to the mind and in rural economy that is no different. The vast majority of people engaging with or buying rural land are positively motivated on a personal or community level to do good either through farming, development or, increasingly, environmental restoration and improvement. Whilst we need everyone to contribute what they can – from an impact perspective, this is a terrible idea!

The way we find and acquire land is different – we’re data led. We’ve developed a bespoke landscape evaluation model which allows us to instantaneously simulate thousands of individual scenarios for current and future land use change. This means we can identify assets where environment potential is unrealised or natural capital value is yet to be identified.

Over the past two years, we’ve screened thousands of individual estates, developed detailed scenarios for 157 (at the time of writing), and visited around 70 to buy just 10. We’re incredibly selective.

We have also designed an acquisition process that ensures we receive the information and data required to inform our due diligence, identifying those issues that are material to value, those in respect of which we can take a commercial view, and those which may present an opportunity or an advantage.

Often those working in the conservation sector find this a difficult concept. We’re regularly pitched a small woodland, meadow, or stream because “it’s very beautiful and would be a lovely little nature reserve” or because it has “this really special species”. Whilst a wonderful thing to do philanthropically, these are not natural capital investments and won’t help in mobilising the significant funding we need to genuinely Scale Conservation and deliver a positive environmental and social impact.

Our commitment to data isn’t limited to acquisition. We’ve developed sophisticated tools and techniques to revolutionise how existing landscape-level changes are measured and monitored. This includes assessments of existing and developing carbon stocks as well measures of biodiversity net gain and future nature credits.

Artificial intelligence and remote sensing will increasingly be a feature of how we work. You can read more about how technology is influencing our work by following this link.

Expertise and Talent: We’ve worked hard to attract the very best people to help us in our mission to Scale Conservation. This currently consists of an incredible central team of twenty people supported by brilliant Estate teams and a vast array of expert advisors and specialist partners.

Timing is so important in the success of a start-up business and the unfortunate reality is we couldn’t have picked a better time to begin the Oxygen Conservation adventure. The planet is dying. More and more people are recognising the realities of this as its impact is beginning to become very real. Fortunately, more and more people are therefore wanting to do something that matters, something that will help in the fight against climate change and biodiversity loss and we offer that opportunity.

This includes environmentalists, ecologists, data scientists, economists, data visualisation experts, financial services professionals, commercial lawyers, land managers, and, most importantly, leadership in every aspect of what we do.

We are not a normal place to work. We are committed to impact, the environment, and adventure. We expect the world from everyone who works with us because it’s the world we’re trying to save. This necessitates a high-performance culture that attracts the very best and pushes everyone further, faster, and harder to achieve more. For my part, I am increasingly spending time helping people manage energy levels and longevity as, the longer they are with us, the more they want to work. Because what we do matters.

Experience as a Risk Management Tool: We have a huge amount of experience identifying, measuring, and managing risk, especially in relation to environmental and land management.

Traditionally, risk is not well understood especially in the environment sector. In the public and charitable organisations, the culture and operating environment is often such that any form of risk is considered an immediate red flag to any type of project or investment. For example, many organisations wanting to acquire land at scale cannot do so if it includes certain ‘undesirable’ assets or features, meaning they either miss out on excellent acquisition opportunities or immediately have to dispose of potentially lucrative assets below market value.

From our perspective, the identification and management of risk have allowed us to secure some incredible assets below what we consider to be their true market value and natural capital potential. This includes taking on large-scale site clearance of potentially contaminated materials, assessing historic land use challenges including mining and mineral extraction, mitigating risks associated with access issues, legacy sporting rights, private water supplies, and every conceivable legal wrangling associated with historic land ownership and management.

We see risk as an opportunity. It provides wonderful information to make a more informed decision and our ability to manage risk has helped us redefine what was thought to be possible in conservation.

We’ve spent a lot of time learning to be comfortable with being uncomfortable and, as a result, where for others the identification of risk means stop, for us it means go if…

Building Relationships and Expansive Networks: One of our guiding principles when we began Oxygen Conservation was to be wonderfully easy to work with. This extends to professional partners, the public sector agents, and sellers themselves.

Buying and selling land can be difficult and often incredibly stressful for all involved. We’ve always tried and thankfully often succeeded in making this easier. As a result, we have developed positive relationships with everyone from whom we’ve purchased land from, including establishing a farming partnership with one family, buying multiple properties from another and remaining in regular correspondence with many others who subsequently return to visit the Estate they have sold after having moved on to new adventures.

As well as being the right thing to do, this is also hugely important in the management of historic risk, as it ensures we retain access to valuable information often only held by the families that have loved these places for many generations.

Similarly, the relationships and networks we have built with professional partners and experts not only mean we’re offered unique opportunities that others don’t have the chance to see but also that, when we encounter a unique risk or opportunity, we can quickly and easily access the information we need to quantify and manage that risk. This includes but certainly isn’t limited to, legal and tax advice, ground risk, building surveys, utilities (electricity, gas, and water), and independent assessment of property valuations.

An important way of working with these experts and advisors is our commitment to radical transparency. We’re open about our data, information, and questions such that the advice we receive is fully informed and therefore immediately applicable to our dynamic risk assessments, measurement, and mitigations.

If you’re thinking about large-scale land acquisition, especially for environmental improvement and restoration, you will need a wide network of amazing people.

We Say, “No Thank You” A Lot: People only see the yes’ and the celebrations of wonderful new acquisitions that add to our portfolio of Estates.

We say “no thank you” to so many sites at every stage of the process. We’ve declined sites before a visit, after a visit, after an offer, and, on one occasion only (fortunately!), during the due diligence processes. If its impact or economic viability falls below our measure of success, we go no further.

We invest in detailed due diligence at speed and, consequently, declining or exiting an acquisition process at any stage can come with significant cost, but we never progress an acquisition chasing sunk costs. Instead, we will always happily celebrate the abortive costs associated with successful due diligence if this means we avoid what would be a bad investment in the long run – capital preservation is a key principle of our approach and is absolutely vital to mobilising the investment needed to grow the natural capital economy.

The biggest risk…

Without a doubt, our biggest risk is inactivity. We’re very much aware of the real and perceived risk in our work and invest a huge amount of time, energy, and effort in understanding and managing that risk. We all, however, recognise that inactivity is the risk that we must manage above all others. If we continue exploiting the natural world in the way we do currently, there will be no future life on earth.

The biggest risk is not doing anything at all!

Rich Stockdale
Founder & Managing Director