[F3Life]

This seems as good a place as any to tell HN about my business:

We provide systems to banks to help them include activities which mitigate climate risk into credit agreements, and evidence of compliance into credit scores. It provides a nudge for bank clients to adopt practices which both mitigate climate change and build resilience to climate-related weather shock.

We're a fintech biz built on the fundamental insight that environmental damage, including climate change, is hardwired into the design of the credit system, because issue of credit is blind to resource overuse/abuse, creating a systemic perverse incentive for environmental degradation.

If you're interested in finance, tech and concerned about climate change, I'd love to hear from you in the comments below.

2 further points:

1. HN was the community that gave me the confidence to launch this business.

2. Through our learning experience, we have discovered that banks are already reducing exposure to agricultural lending due to concerns about weather shock. Where farmers can't get access to credit, their production can drop 75%. Although we are only in the foothills of climate change, our financial system will amplify its impact. There may be technological fixes for high value cash crops grown in controlled environments. Not so sure about staples.

[smackay]

Do you know what the effects of this "on the ground" are? Is it getting farmers to change what they grow to better adapt to the new local conditions? What affect does it have on agri-business as opposed to family farms, where the former might simply move or have the capital sufficient for large scale change in practices that the latter does not? Also are there any effects on corporations further along the supply chain - for example reducing food waste might have a greater impact on the volume of food needed which in itself would reduce environment damage?

[thecolorblue]

> There may be technological fixes for high value cash crops grown in controlled environments.

Can you expand on this? I have felt the same way, and have a good understanding of the tech problem to be solved, but I'm having trouble selling the idea to any buyer. Would you attempt to anticipate crop price spikes and plant ahead of time?

[F3Life]

By technological fixes in agriculture, I simply mean greenhouses and fertigation systems. Control the environment in which plants grow more closely and thereby mitigate risks associated with weather shock. Works great for things like capsicum, high value lettuce etc. I don't see how this can be replicated for things like wheat and maize, although admittedly GM crops potentially offer some route to solving this problem.

[thecolorblue]

For wheat and maize it can't and it doesn't have to. Both are stable after picking and can be transported. Lettuce cannot be transported as well after being picked. Maybe shipping containers with live lettuce?

[F3Life]

Re wheat and maize, it's what happens before they're picked that is the concern. Where banks project high rates of loss, they simply withdraw from the sector - understandably.

Re lettuce, I think what we will see is 2 things: firstly highly capitalised vertical farms close to where the lettuce will be consumed. Secondly, smallscale contract farming again close to point of consumption. Imagine a small greenhouse in your back garden. You pay for the infrastructure and have Uber like aggregator linking you directly to buyers. Oh god - I can see the pitch now: it's like Uber for Romain lettuce...

[thecolorblue]

The problem with Uber for romaine is that it takes at least a month to fill the demand for romaine. Anyone with a car could, potentially, sign up and fill a ride request. In practice, this might not be a big problem if the shortage is longer than the time it takes to grow romaine. This is where my mind was going with this but it would require people to have equipment sitting idle or be growing romaine lettuce anyways and sell it when the price is high enough.

[acmiller]

I work in insurance, which I imagine faces similar challenges to banks. I’d like to know more about what you’re working on and your approach.

[F3Life]

I think you're right, insurance and banks are both looking at a similar problem. In our approach, which is agri-specific, we work with banks to include requirements for climate smart agriculture into loan agreements. Farmers must do x, y and z if they want a loan. From an insurance perspective, this is the equivalent of requiring drivers to wear a seatbelt. We use a remote-sensing system to verify that farmers are in compliance with the system, and if they are we pass a score back to the bank for inclusion in their credit scoring algorithm. Compliant farmers have an improved risk profile and should be able to access credit on improved terms to reflect the improved risk.

[acmiller]

That makes sense, and I like your level of focus.

How are banks responding to your services? In insurance, we’re having a very soft market due to all the capital sloshing around the system. I imagine it can be challenging for lenders to impose significant risk controls when there’s alternative financing so cheaply available.

My wife works on climate change advocacy on the nonprofit side. Are you working with any advocacy organizations? Presumably they’re an important part of your approach.

[F3Life]

TBH - climate silos and finance silos are difficult to merge. Different language, KPIs, incentives and concerns. We're trying though to reconcile the two! That said, banks are increasingly paying attention. The two drivers for this are: (1) Ratings agencies including climate factors in their ratings, and (2) G20 Financial Stability Board, Bloomberg Committee calling for voluntary disclosure of climate risk and mitigation steps by company boards.

[F3Life]

And sorry to answer the other question: we work with NGOs, although not necessarily advocacy NGOs.