A climate for nature: how are nature-related issues being factored into Board decision-making?

Q&A with Brontie:

Can you tell us exactly what a guardianship model is and how this works in practice?

Being a guardian involves suspending what is best for you in any given situation, and focussing on what is in the best interests of the person or thing you have been given a fiduciary duty to speak for. I think what's really useful is that this model is tried and tested in other areas, for example Children's Rights law. Lawyers have fought tooth and nail for children's rights for decades and, of course, we have the UN convention on the rights of the child. We understand, for example, the importance of children having the right to be present in court, and the right to have a voice in medical decisions and so forth. But also, it's worth noting that there are other models out there - we're not presenting this as the be all or end all, or the answer to everything.

So, we already have this understanding that we can speak on behalf of another sentient being; and, of course, when we move into non-sentient beings, we have had the idea of a company and the concept of director (as guardian of the company's best interests) model for centuries. So, we do fully understand speaking on behalf of both sentient beings and non-sentient beings; and every time a director makes a decision, they are not making it for themselves, but rather for the purpose of enhancing shareholder value. And, of course, some directors - certainly those directors and trustees of not-for-profit organisations and charities - are making decisions with a much wider remit of stakeholders in mind and are speaking on behalf of those stakeholders. Furthermore, when we think about company law, we know full well that certain directors will be given portfolios, with a specific remit to speak on behalf of their team, their special interest or their area of the business - take, for example, a HR Director.

So, these things are well established in society, and I am really grateful for all of the work that has gone on and, in particular, the last few decades on children's rights, human rights and disability rights. We have all these wonderful systems and structures, and so the guardianship model for nature's best interests really does follow that structure - it is saying that within nature there are both sentient beings and non-sentient beings, rivers, mountains, forests etc. If we take a river as an example, which is a vessel for so much life and sentience and interconnectedness of beings, it is possible to discern what might be in its best interests in a given situation. The same is true in discerning what might be in the best interests of a particular species. So, in some ways the guardianship model is probably the least controversial bit of this, because it is totally understandable and totally acceptable that somebody else can speak on behalf of X, Y or Z; sentient or non-sentient.

Probably the most difficult philosophical element is how does a guardian decide what is in the best interests of Nature. The 'best interests of the child' test is tried and tested and we mostly know the extremes of it, the limits of it, and who has power to input into the test. So, is that something that we could wholesale import into this kind of area of work or does it require more philosophical deliberation? Do we already need to be dealing with those potential clashes of rights before we come up with a test? All of these things are really up for grabs, and I am not sure I am best placed to fully answer all of that, so I often plead with philosophers to jump in and take the reins on this stuff please!

How did you get engaged in the area of rights of nature? Could you please explain your involvement there?

Rights of nature is a movement, or specifically a genre of law, which says that either nature as a whole, or aspects of nature should have certain rights; and that is not to say that nature should have all citizenship rights that we believe all humans should have. But there are some things, some types of citizenship-based rights that are really important to help nature thrive and survive alongside human interests. Participation rights are a good example. I started Lawyers for Nature in 2019 with my business partner, the barrister Paul Powlesland. We agreed from the outset that our entire business model would be in service to nature and obtaining rights for nature.

We at Lawyers for Nature had had some dealings with a not-for-profit organisation in the US and we had both been contacted by Faith in Nature. They asked us the challenging question "can we make Nature our CEO?" and, although we were fully enmeshed in this new kind of legal genre, our first response was 'no'! Under the guardianship model you would end up being guided by the guardian's interest of course but, ultimately, because they have got to make so many decisions on a day-to-day basis, it would make the whole thing non-sensical. So we set up a nine-month project of research (and what we like to call, sending the company to therapy!), asking them to dig deep and explain why they want to do that, what's behind that. Ultimately, what flowed out of this research was a non-executive directorship position named as Nature. We appointed a corporate guardian in the end to try and remove the human aspect of it, so that humans can come and go and change without any change of appointment.

The corporate guardian is known in all board meetings as "Nature". We used a non-executive because we were determined to keep the guardian at arm's length from everyday parts of the business. There is also a Sustainability Director there who has a full-time role. The intention is to minimise privilege or the entrenched views of particular groups of humans. We set up quite a significant framework to allow them to call on different aspects of the governance model.

Projects like this provide an exciting opportunity to design governance systems in the UK from the ground up, whereas some of the European systems, as in France and Germany, are a lot more prescriptive. In the UK, if you have got your shareholders, creditors and staff on board, then you can really use your company to be right out in front, to be a thought leader. For us, that now means embodying the rights of nature and making that practice a reality.

That concept has now been on the Board for two years and Nature attends every single board meeting. The organisation has just completed a huge re-product design and included the tag line that these are the first products in the world where Nature was involved in every stage of the decision process - the products, their packaging, their supply chain, the ingredients and so on. Nature has voted on every single one of those issues from start to finish and we believe it's the first time in the world that that has happened. If you can momentarily suspend risk, and your concerns about risk, it is actually a really exciting time; any time of transition is an exciting time, but you do have to be ready to embrace change and to suspend risk adverse attitudes, to some extent.

Does Nature always say yes? Or does Nature say no and challenge the Board?

The structure we set up was a kind of a tiered structure, whereby we have something called Nature Reserved Matters and these are defined in the company's articles and voted on at board meetings. Nature can say to the Board that they think there is a Nature Reserved Matter to address, or a member of staff can bring it to the Board's attention, or the Sustainability Director can declare it as a Nature Reserved Matter. When this happens, a Nature Reserved Matters meeting is called where we bring together Nature, the Sustainability Director and other relevant company representatives to the matter being discussed. Nature gives its view at that meeting to put forward what might be in the best interests of Nature - covering what might have the most positive impact, considering governance systems and philosophical questions. The experts will come and give their view, finance directors may then also propose budgets, if there is research and development needed for example, and then a kind of conjoined position is proposed to the board.

Usually, the Sustainability Director and Nature will present on such matters together and then either the Board votes or, if a substantial matter, it is left with the shareholders, who have a representative at the Board, to approve. This approach means that by the time the proposal reaches the Board, the Finance Director and Operations Director are clear on the plan, the budget has been agreed and the whole project mapped out. Generally, we've found that the position of Nature and the Sustainability Director is nearly always aligned and so the short answer is that so far, in this example, Nature has never ever had to say no. But we recognise that may not always be the case.

Do you think this kind of thought leadership is more common among, or more suited to, smaller companies and SMEs?

In terms of whether this is suited to smaller companies, I think there is no one-size-fits-all approach here. We already know that there are a variety of different models that have been trialled, although from my research no one had ever appointed Nature to a Board officially by changing their articles of association via Companies House. Notably, Faith in Nature also changed their objects clause to have a more nature-centric purpose. This is really difficult for some bigger companies controlled by pension funds.

Some might take the approach of a full constitutional restructure where they change their objects clause and add new definitions - for example, Nature comes to every board meeting, Nature has a voice, a vote, maybe even enhanced voting (say three votes to everyone else's one - we haven't even got onto the technicalities of whether you could actually give Nature more power than every other director by enhancing voting capabilities!). I think it's important to consider that if you had all of this power and were sat in a decision-making role in a large corporation, what would you do? And taking forward ideas like putting Nature on the Board, or bringing nature into a senior leadership role, are some of the different ways we are seeing organisations move nature-related issues higher up the agenda.

What might be some of the other options to this idea of putting Nature on the Board? Could having a manager with full, or partial, responsibility for nature be one consideration, or even having nature as a standing agenda item?

We are now, as humans, really feeling hard the day-to-day effects of nature breakdown, lack of biodiversity and climate change. We can all feel the climate changing and have the data to illustrate it and predict what will happen if the biodiversity loss continues at this pace. So, I think I would say that the concept of nature-related matters is not ESG. ESG is something that is valuable and important, but this cannot be confined to one person's portfolio. Sustainability for companies often means sustainability for that company or for some humans, rather than for all life on earth, which is the reality of what sustainability means more generally. I have a huge respect for sustainability directors and the role they play in helping business plans adapt amid a rapidly changing environment.

Overall, I think the voice of nature, or nature-related matters, absolutely has to be a standing agenda item for organisations, and the extent of discussion focussed on that will vary according to the type of business and the products/services provided. There is a balance to be had and many different approaches to take, but doing nothing isn't really an option now.

In another example, an organisation settled on two board positions, both as observers rather than voting board members: one is Mother Nature and the other is the Voice of Future Generations. I think that's quite interesting and really recognises the need for longer term views around these issues in a business context. It follows the idea that you need to be looking at the 25-year to 100-year position and to be able to reflect on what you were able achieve in terms of nature positivity by a defined date. So, there is a widening of ethical responsibility there for them. There is an understanding that, just like when we brought children into the legal system, there is this widening of ethical and moral responsibilities, and we are now doing that with nature and with future generations.

We have spoken a lot about directors and nature helping to guide decision-making, but what about the idea of nature as a shareholder?

As long as you can get the requisite number of votes, you can appoint Nature to your Board, make Nature an advisor, or place Nature in a senior leadership position. But in looking at it from a shareholder perspective, I think the key question is what does it mean for Nature to be a shareholder and is it possible in any jurisdiction in the world? And the short answer is probably no; not within our current structures. In discussing the idea of nature as a shareholder, what we are really talking about is owning the capital profits of a business and there are challenges around that when nature is a non-human shareholder, not currently able to hold legal personality of its own.

One area of thought I am engaging in is whether a decentralised autonomous organisation, a DAO, might be used - so that Nature can have ownership rights within the blockchain. However, it's early days on this thinking and we are keen to see how this might evolve, and how any learnings might be brought back into the mainstream.

Another area of thought is that if the idea of nature as a shareholder is about the management and ownership of capital, then you might take the true cost accounting approach and give nature reparation or management fees; essentially, capital in order to restore itself and to protect itself in recognition of its contribution to the business. The easiest way I can explain this is to say, imagine you are a wallpaper company and you send a photographer out into nature to photograph a hollyhock. You then put that image on a wallpaper and sell the wallpaper for £500 a roll. While the photographer went along with a human made camera to take the picture, the image available to the camera was entirely created by nature. So in terms of cost accounting, you might start to think about what it took to create that hollyhock in nature, how it got there and what kind of value we should place on it. Then you can ask yourself whether that money should come off before tax and go into a fund, so that you are extracting capital from the business outside the shareholding system for, and on behalf of, Nature. But again, that sits outside the mainstream and there are many practical and financial considerations around how that might work in practice, not least how it would be viewed by HMRC.

So, is there an intellectual property right there that is owned by Nature?

Yes, so you would say that the photographer is either: an employee, in which case they get their salary, which also comes out of company profits; or they are a consultant, in which case they get a consultancy fee, which includes paying them a fee licence for use of their intellectual property i.e. the photograph. And that might be an irrevocable global licence, for example, but you still paid them for it initially. Yet, it is nature who owns the colour palette of that hollyhock, which nature created. We value colour palettes. We value trademarks. We value graphic design. But we don't pay nature for it. So, if you are talking about Nature as a shareholder, then you might widen the concept within the current economic system. In doing so you might say what that means is extracting capital from the business for nature before tax and before we pay it to other contributors who made contributions to the value being traded.

However, accepting that this route may not be possible, another concept in this example is to consider whether after paying tax and before paying dividends, money might be transferred into a fund for Nature. The idea here is that it is an amount that shows you value nature, and your donation is made on true cost accounting principles.

Yes, it's a case of starting something but, often, many organisations will face challenges around time and resource to achieving desired changes. So, should the emphasis be on taking small steps?

If you are realistic, you know that these conversations do not always lead exactly to that action, but they might lead to something else, a different type of action. The reality is that we don't have the luxury of doing absolutely nothing, and so it really is about opening up the conversation and doing something together, working collaboratively.

I absolutely do think the value of Nature on the Board is that it is a 'glass half full' approach. It is a step forward into a direction where business is done differently and it is done in a much more inter-dependent, inter-relational way, with many more stakeholders in the room. Working in nature destruction and climate change can be really challenging - a new report may make you question how are we ever going to mitigate all this! So, I think in some ways, the reason why I love nature on the Board, and why I have enjoyed the last two years of work, is because it absolutely is that tiny crack - that ray of hope coming through, among all the destruction. This whole movement around the rights of nature feels quite sensible and hopeful, actually.