How companies can make credible investments in nature as part of their climate plansWe Mean Business Coalition
Following COP27, it’s clear that business’ investment in nature will be a key focus area in the drive to limit global temperature rise to 1.5°C. A key takeaway from the 2022 summit was the impact that business can have on protecting and restoring nature, ensuring that it is front of mind for businesses of all sizes, from multinational organisations to SMEs.
Companies must cut at least 90% of the greenhouse gas emissions their business activities produce throughout their entire value chain. These emissions cuts need to be rooted in science, in line with credible science-based targets that require accredited measurement and reporting to demonstrate impact. Actions such as switching to clean energy and transport and eliminating deforestation from supply chains are crucial.
As one of the most cost-effective methods of fighting climate change, nature-based climate solutions (NBS) have the capability to provide one third of the solutions to reach the 1.5°C pathway according to McKinsey and the World Economic Forum, and business has a vital role to play.
How can companies demonstrate credible investment in nature that resonates with their stakeholders, both internally and externally? We Mean Business Coalition, in partnership with Exponential Roadmap Initiative and the Potsdam Institute for Climate Impact Research (PIK), has released five guiding principles that can be used by companies as an integral part of their climate transition action plans. By using these principles to drive investment in high quality nature-based solutions for climate, your company can help build climate resilience, contribute to protecting and enhancing nature and establish itself as a climate leader.
The principles focus on the immediate actions that businesses should take to accelerate leadership on NBS. Drawing on best practice from existing guidance documents and multi-stakeholder initiatives such as the Race to Zero, Voluntary Carbon Markets Integrity Initiative (VCMI), Together With Nature and the Science Based Targets initiative (SBTi), they also build on the 1.5°C Business Playbook and are aligned with the net zero recommendations from the UN’s High-Level Expert Group launched at COP27.
REDUCE EMISSIONS IN YOUR OWN BUSINESS AS QUICKLY AS POSSIBLE
The basic foundation for credible corporate climate leadership is for a company to set short and long-term 1.5°C-aligned science-based emissions reduction targets and develop a climate transition action plan. The plan must detail the actions that your company will take to achieve emissions reductions, while compensating year-on-year for any emissions that cannot yet be cut, through investment in NBS. At the point when you have cut 90% of your company’s value chain emissions, you can invest in NBS to neutralize the emissions that remain. But that doesn’t mean you shouldn’t start investing in nature in various other ways now, as detailed below.
CUT LAND-BASED EMISSIONS IN YOUR VALUE CHAIN
Companies must develop specific targets, strategies, and actions to cut their emissions through better protecting, managing and restoring nature within their value chains as part of an overall emissions reduction strategy. Deforestation and industrial farming approaches are key causes of land-based emissions therefore, actions should include:
- Conducting an inventory of agriculture, forestry, and other land-use emissions with the aim of eliminating deforestation from company supply chains as quickly as possible.
- Sourcing forest and food commodities produced using regenerative agriculture and sustainable forestry practices which deliver positive outcomes for climate, people, nature and biodiversity.
- Ensuring the entire product lifecycle is considered and adapted to be more nature-positive – from product development to manufacturing, marketing, advertising and ultimately the repair, reuse and disposal of products.
INVEST IN NATURE-BASED SOLUTIONS BEYOND YOUR VALUE CHAIN
In addition to cutting greenhouse gas emissions in company operations and across value chains all companies need to invest in protecting, managing and restoring nature beyond their value, chains now, for example by buying high-quality carbon credits aligned with the Natural Climate Solutions (NCS) hierarchy.
Companies should do this every year at a level equivalent to at least 10% of the emissions they cannot yet cut. And they can do it through the purchase of high-quality carbon credits. Crucially, these investments should not be considered to offset those emissions your company has committed to cut in line with science-based targets. These are investments which go beyond your business’ own greenhouse gas reductions. There are important factors to consider on carbon credits:
- Because the land sector is significantly underfunded, it is critical to prioritise purchasing carbon credits that support high-quality nature-based solutions – such as jurisdictional REDD+ (Reducing Emissions from Deforestation and Forest Degradation).
- Investments in carbon credits for NBS must be of high quality, providing socio-economic benefits such as contributing to local communities, conserving nature and enhancing biodiversity.
- Investing now in projects that deliver credits at a future date matters. This ensures adequate up-front capital is available to give NBS projects the time to grow and reach their potential.
- Over time, your business will need to shift from buying credits that avoid emissions – for example reducing tropical deforestation – to buying credits that remove carbon from the atmosphere – for example through reforestation or ecological restoration.
ENSURE RESPONSIBLE POLICY ENGAGEMENT ON CLIMATE AND NATURE
Companies must align their advocacy and lobbying activities in support of global climate and nature goals.
Advocating for nature-positive policies is particularly important because the root causes of nature loss are often embedded in perverse policy incentives, subsidies and weak governance. Nature loss increases emissions and reduces nature’s ability to absorb carbon and respond to climate-related impacts like storms and floods. And so, your business should integrate nature-positive policy advocacy as a key component of its climate policy engagement efforts.
REPORT AND COMMUNICATE TRANSPARENTLY
Businesses must report transparently on any beyond-value-chain mitigation investments and volumes aligned with best available reporting practices through platforms such as CDP.
You should clearly state the quantity of nature-based climate solution credits purchased as a percentage of annual unabated value chain emissions and describe any other investments in nature protection or restoration. However, it’s important to remember that carbon credit purchases should not be considered as a traditional ‘offset’ and should only be used in addition to, not as a substitute for, urgent and deep decarbonisation.
Nature’s contribution to the global economy is worth more than $125 trillion annually. Building conservation and nature-based solutions into your business represents a massive opportunity: from lowering operational costs, to unlocking new revenue streams, increasing customer engagement and delivering impactful climate action.
By following these principles when assessing investment in nature-based climate solutions, your business can play a vital role in maintaining the 1.5°C pathway, while increasing business value and corporate reputation.