Tips for socially responsible investing

Saturday, 01 May 2021

Denise Cullen photo
Denise Cullen
Freelance Journalist

    The Reef Credit Scheme, founded by GreenCollar's James Schultz and Lewis Tyndall, improves water quality and protects the Great Barrier Reef while allowing companies to offset carbon.

    Late one afternoon in 2010, GreenCollar founders James Schultz and Lewis Tyndall got word about new regulations that could detrimentally affect GreenCollar, their two-year-old business. The company specialises in using carbon and other environmental markets to enable landholders to implement projects such as forest protection land restoration — so any changes to the calculation of carbon credits constituted an emergency.

    Tyndall, a former barrister, was in the north-west NSW town of Bourke at the time, while CEO Schultz, an economist, was in Sydney. If they wanted to be heard, they needed to drop everything. Tyndall drove through the night for seven hours to meet up with Schultz before the two boarded an early morning flight to Canberra. By 10am that day, they were in front of policymakers to successfully argue their case why the proposed change would have a catastrophic impact.

    “You’ve got to have your ear to the ground all the time, and have your focus where it needs to be, rather than letting the opportunities pass by,” says Tyndall. “Acting immediately allows us to have an influential voice in the changing sector we’re in. Waiting for change will never have this type of impact.”

    The pair had met years earlier, representing different parties in a project in West Papua. Although the project ultimately did not proceed, they recognised each other’s high energy levels and commitment to conservation. GreenCollar has since established more than 100 different projects across rural and regional areas in Australia, working alongside private landholders, research organisations, government, natural resource management (NRM) and community groups. Once projects are operational, GreenCollar facilitates the sale of the resulting credits to private and public organisations seeking to manage their environmental impact. The industry provides supplemental income and incentivises preservation of the natural landscape.

    In 2017, Schultz and Tyndall started working on the idea of a Reef Credit Scheme, a tradable unit that quantifies and values the work undertaken by landholders to improve water quality flowing onto the reef.

    Just because it’s hard, because it’s scary, doesn’t mean it can’t be addressed and solved.

    James Schultz
    co-founder GreenCollar

    How does it work?

    Similar to the carbon offset market, the Reef Credit Scheme pays landholders for improved water quality. It’s an example of the market innovation developing on the back of rapidly growing momentum for organisations to achieve net zero emissions.

    In October 2020, investment bank HSBC and the Queensland government became the first private and public sector buyers of Reef Credits. GreenCollar estimates the market could be worth more than six million Reef Credits by 2030, opening the door for more businesses to invest in the future of the reef as part of their environmental, social and governance (ESG) strategies.

    As rising temperatures, extreme weather and devastating bushfires bring home the realities of climate change, GreenCollar’s growth seems inevitable. The organisation employs around 60 people based in Australia, with a number of international consultants. At the time of writing, it was recruiting an additional 25–30 people to manage new product lines in water quality and related projects. As a certified B corporation, it must meet the highest standards of verified social and environmental performance, public transparency, and legal accountability, to balance profit and purpose.

    “We map our staff and team KPIs back to those impact targets, which is a very important part of understanding the value of our work and what impact we’re having,” says Schultz. “Almost all staff participate in some form of equity participation — either through bonuses or direct management equity, and that’s built a company that is very robust culturally, because everyone has bought into what we’re trying to do.”

    Schultz grew up on his parents’ hobby farm outside Adelaide. He is now based at a farm in the Megalong Valley, in the Blue Mountains region of NSW, while remaining connected to corporate Sydney through GreenCollar’s head office. While GreenCollar remains his primary focus, in 2016 he established Earth Space Robotics. This company’s mission statement is to invest in existing and emerging technologies, including propulsion systems, and remote connectivity and monitoring solutions.

    Tyndall worked as a barrister with the NSW Supreme Court for 24 years. He has owned, operated and advised corporations in the environment sector, including being the founder of Climate Roundtable, an alliance of Australian business, environmental, farmer, investor, union and social welfare groups.

    Schultz says that the significant challenges of today’s world should be confronted head-on. “Just because it’s hard, because it’s scary, doesn’t mean it can’t be addressed and solved,” he says. “When you get out in the paddock and start working with people on the real solutions, you realise you can do a hell of a lot in a short time span.”

    Tyndall points out that the urgency of the issue cannot be overstated. “Unless we all do something — all of us — we’re going to have a substantially deteriorating planet that we, as humans, have caused,” he says.

    Board matters

    GreenCollar’s board numbers eight people with an “interesting mix of perspectives and experience”. In addition to Schultz and Tyndall, they include Chloe Monroe, former CEO of the Clean Energy Regulator, and chair Grant King, who also chairs HSBC Bank Australia and is a former Origin Energy managing director and a director of BHP.

    “We’re carving out a trajectory where we’re growing a business along a path in a very exciting sector,” says Schultz. “The experience of having taken businesses through those different stages of growth highlights the importance of how you handle expansion and the increasing governance burden as you become a larger organisation.

    It’s been fantastic to have those guys there, so deeply engaged in the business and genuinely adding value.”

    In July 2020, after global investment firm KKR purchased a stake in GreenCollar, George Aitken and Chee-Wei Wong from KKR also joined the GreenCollar board. Although the board meets formally every two months, there are frequent informal catch-ups. Schultz points out that it’s easy for people working in the field to get bogged down in the “micro detail” of the policy instruments or pieces of legislation required to achieve a particular outcome — which can constrain sector growth while causing considerable “angst”.

    “But if you step back from that and think about the macro-economic drivers, we’re providing services that every year become scarcer,” he says. “We don’t have a problem at the moment where we have a glut of carbon abatement or biodiversity or water quality. These are vital.”

    Unless we all do something, we’re going to have a substantially deteriorating planet.

    Lewis Tyndall
    co-founder GreenCollar

    How carbon credits work

    A carbon credit is a permit allowing a company to emit a certain amount of carbon dioxide (CO2) or other greenhouse gases (GHG). Credits are usually traded in units of one tonne of CO2.

    The credits are measurable, verifiable emission reductions from certified climate action projects. These projects reduce, remove or avoid GHG emissions. By paying someone else to reduce their emissions or capture their carbon, companies can compensate for their environmental footprint.

    It’s estimated credits worth two billion tonnes of CO2 will be needed to get to the 2030 target.

    The market for carbon offsetting is made up of both compliance and voluntary demand. Compliance is where companies or other entities must offset carbon in order to comply with caps on the total amount of CO2 they are legally allowed to emit. The voluntary market is where individuals and companies purchase offsets to compensate for their own greenhouse gas emissions, without being legally obliged to do so.

    There are three basic types of carbon credit: reduced, removed and avoided emissions. These include natural projects like reforestation and agriculture; renewable energy like hydro, wind and solar power; community projects such as access to safe water; and waste-to-energy projects such as biogas from landfill and industry.

    Australian carbon credit units are a financial product regulated and issued by the government to project developers and are generated mainly from land restoration projects.


    Carbon credits are given serial numbers and issued, transferred and permanently retired in publicly accessible emission registries. In the voluntary carbon market, standard organisations such as the International Carbon Reduction and Offset Alliance verify the project is real.

    But the WEF notes there has been no standardised way to trade carbon credits and verify the compensating activity behind them. Environmental groups such as Friends of the Earth criticise the process, accusing some countries of increasing emissions just to get paid for cutting them.

    A recent report from an international task force led by UN Special Envoy for Climate Action and Finance Mark Carney has devised a draft blueprint for creating large-scale transparent carbon credit trading markets based on independent verification that the claimed reductions in CO2 are valid. Data should be held securely to avoid tampering and it proposes using blockchain technology to create an unalterable record.

    While conceding vegetation- based offsetting is better than nothing, the Climate Council’s position, as of October 2020, was that offsetting GCG emissions with vegetation projects is no substitute for not burning fossil fuels in the first place.

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