12 reasons why evaluating the Leadership & Team of nature-based projects are crucial (& it’s not being done enough)

Source: LSA Global

The capabilities and track record of the project team are vital considerations in nature-based project investments, and the key factor for a forest or nature-based project’s success. They influence project design, execution, risk management, and long-term success. A capable and experienced team not only maximizes the potential for positive environmental and financial outcomes but also instills confidence in investors and stakeholders, making the investment more attractive and reliable.

However, in many due diligence processes, this is the area which is given the least focus. Here are the reasons why a comprehensive assessment should cover the project team capabilities and their track record:

Expertise and Knowledge: Nature-based projects often require specialized knowledge in fields like ecology, forestry, agriculture, and environmental science. The capabilities of the project team, including their educational backgrounds and professional experience, ensure that they possess the necessary expertise to execute the project effectively and responsibly.

Risk Mitigation: Experienced project teams are better equipped to identify and mitigate risks associated with nature-based investments. Their knowledge of potential challenges and pitfalls can help minimize setbacks and unexpected issues, thereby protecting the investment's financial and environmental outcomes.

Project Design and Execution: Capable teams have the skills to design and execute projects in a manner that optimizes outcomes. This includes selecting appropriate species for reforestation, implementing sustainable agriculture practices, and ensuring that conservation efforts are ecologically sound.

Environmental Compliance: Nature-based projects often require adherence to strict environmental regulations. A capable team understands these regulations and ensures that the project operates within legal boundaries, reducing the risk of regulatory fines and legal challenges.

Stakeholder Engagement: Effective stakeholder engagement is crucial in nature-based projects, particularly when dealing with local communities and indigenous groups. Experienced teams know how to engage with stakeholders respectfully and collaboratively, building support and reducing conflicts.

Monitoring and Reporting: The team's capabilities extend to developing and implementing monitoring and reporting systems. This allows for the collection of data on project performance, which is essential for evaluating the project's success and making informed decisions.

Adaptive Management: Experienced project teams are skilled in adaptive management, which involves using real-time data and insights to make adjustments during project implementation. This approach allows for continual improvement and the ability to respond to changing circumstances effectively.

Financial Management: Financial expertise is crucial to managing project budgets, securing funding, and optimizing financial returns. A capable team ensures that resources are allocated efficiently and that financial risks are managed effectively.

Safety and Ethical Practices: The team's track record can demonstrate a commitment to safety and ethical practices. This is especially important in projects that involve land management, where responsible practices are essential to protecting ecosystems and communities.

Reputation and Credibility: A project team's track record and past successes contribute to its reputation and credibility. Investors and stakeholders are more likely to have confidence in a team with a history of delivering successful and responsible nature-based projects.

Access to Resources: Experienced teams often have established relationships with key stakeholders, access to funding sources, and networks within the industry. These resources can facilitate project development, implementation, and scaling.

Long-Term Viability: The team's capabilities are instrumental in ensuring the long-term viability of nature-based investments. This includes strategies for sustainable land management, biodiversity conservation, and carbon sequestration.

If you are interested to learn about some of the checks we do when we assess the team behind the project, contact the Xilva team and we will be happy to share them with you. 

An example of one data point: We review the manual of operations to check if the team possesses the necessary skill sets and experience to manage the operations.

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Due diligence in nature-based project investments is crucial but complex. Focusing on the positive impacts in nature-based project investments is not only ethically responsible but also strategically advantageous. These projects contribute to environmental conservation, societal well-being, regulatory compliance, and financial viability, making them a win-win for both investors and the planet.

To assess the investability and impact of a forest project, Xilva’s analysis integrates 6 key areas of appraisal: Impact, Financial Viability, Safeguards, Project Design, Leadership & Team and Growth Potential.

These 6 areas are not individual, standalone elements of interest but, under Xilva’s systemic approach, they are critical, connected elements that, if not properly addressed and balanced, will reduce the project's ability to realise each individual impact.