Nature-based solutions: crucial for our net-zero and nature-positive future
We are at a pivotal moment. The IPCC has sounded the alarm on the escalating threat of climate change, our destruction of nature has become among the biggest contributors to emissions globally, AND we risk losing ecosystems that store carbon we can’t recover in timescales that matter. In short, we are facing an escalating climate and nature crisis.
However, nature-based solutions (NBS) represent a crucial tool in both helping to limit global warming to a maximum of 1.5°C and reversing nature loss. Meanwhile, more and more businesses and investors are ready and willing to back the right solutions, alongside robust decarbonization strategies in line with the 1.5°C pathway. New and developing standards from regulatory bodies are designed to ensure the integrity of nature-based solutions and restore credibility.
Accelerate the transition to a net-zero and nature-positive future with these initiatives
The shift to net zero will result in a stronger, more resilient and more successful economy than we have today.
The economic benefit from the transition to a climate resilient, net-zero economy could amount to nearly a 25% cumulative gain in GDP over the next two decades alone compared with a scenario in which the world fails to act, according to Moody’s.
This is equivalent to adding the current Italian or Canadian economy to the global economy each year over this period and creates a $45 trillion investment opportunity for those able to take advantage of it, according to Moody’s.
The Future of Nature and Business sets out how 15 transitions across three systems can form the blueprint of action for the shift to a nature-positive economy. This could generate up to US$10.1 trillion in annual business value and create 395 million jobs by 2030.
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The necessary role of nature
To achieve a net-zero economy, the world must halve emissions by 2030 AND halt and reverse the destruction of nature, starting now. If we continue destroying our natural carbon sinks we simply won’t reach our climate goals. Changing the way land is used in value chains can turn it from producing almost a quarter of global emissions into a carbon sink.
Over 50% of the world’s total GDP ($44 trillion) is moderately or highly dependent on nature and its services, according to a report by the World Economic Forum.
The contribution of the land system to climate change is startling, representing 48% of all anthropogenic GHGs flowing in and out of the atmosphere.
The land sector is responsible for about 25% of net anthropogenic GHG emissions and 35% of gross anthropogenic GHG emissions, with approximately half from agriculture and half from land use, land-use change and forestry.
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Backing the right solutions
After years of greenwash and delay, we’re now reaching convergence on what credible nature-based solutions for climate look like, which must be made distinct from low credibility alternatives.
We need to stimulate investment in nature now to avoid the risky proposition of further dependence on carbon removal technologies that are currently nascent, expensive and still largely theoretical at scale. Whilst carbon removal technologies can respond to climate change, they do nothing towards stopping and reversing biodiversity loss.
Businesses and investors are increasingly prepared to back the right solutions, in line with new standards from regulatory bodies to ensure the highest levels of credibility.
Limiting warming to around 1.5°C (2.7°F) requires global greenhouse gas emissions to peak before 2025 at the latest, and be reduced by 43% by 2030, according to the IPCC. Accelerating action on nature was one of the few opportunities identified to narrow this emissions gap, according to the Energy Transitions Commission.
Global carbon market values grew from EUR 288bn to EUR 760bn between 2020 and 2021, RefinitivAnd the volume of carbon credits traded by private organisations or individuals acting voluntarily is growing rapidly. VCM activity surpassed US$ 1billion in 2021, more than doubling in value since 2020, according to the LSE Grantham Institute.
Capital committed to net zero now at over $130 trillion, up from $5 trillion when the UK and Italy assumed COP26 Presidency, according to GFANZ. And leaders representing over 85% of the world’s forests committed to halt and reverse deforestation and land degradation by 2030 at COP26.
Article 6 of the Paris Agreement has the potential to halve the cost of implementing national climate action plans, (Nationally Determined Contributions, or NDCs), according to the International Emission Trading Association. This could save an estimated $250 billion annually by 2030 alone, according to the UNFCCC.
Emerging initiatives, such as the Voluntary Carbon Markets Integrity Initiative (VCMI) are bringing much-needed guidance to companies to ensure their carbon credit investments are done right and with credibility. By following VCMI’s guidance companies should feel confident in their ability to make impactful, and critically needed investments in nature.
The Integrity Council for the VCM’s work to introduce a definitive global threshold standard for high quality carbon credits this year is such an important step towards increasing transparency and confidence to enable the market to scale – in turn, mobilizing billions of dollars in finance towards urgent mitigation and climate resilient development.
The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) estimates that demand for carbon offsets will increase 15-fold by 2030 and by a factor of 100 by 2050. The market for carbon credits could reach US$50bn by 2030, The Economist
A roadmap for action
A growing number of businesses now recognise they must accelerate on the path toward net zero AND go beyond, helping society get there too by investing in nature-based solutions for climate. Those wanting to take a leadership role in the transition to net zero should set twin targets for reductions and removals. Companies with a material impact on nature ought to focus on value-chain decarbonization including NBS deployment.
Companies with limited or no material nature impact ought to focus on value-chain decarbonization first and then high-integrity carbon credits. All companies ought to use their voice to support the rapid scale up of action on nature including NBS.
Over 1,000 companies are committed to reaching net-zero, in line with science-based targets, including many of the world’s largest businesses. Under the Net-Zero Standard from the Science Based Targets initiative (SBTi), these companies will have to cut at least 90-95% of their internal emissions by 2050 and also invest in NBS within their value chain to reach their net-zero targets, and beyond value chains to reach global climate ambitions.
That means combining rapid emission cuts in their business with actions that protect, manage and restore natural ecosystems on which our health, livelihoods, economies and ultimately their business depend.
To achieve 1.5°C, deforestation must end by 2030 and food, land and agriculture (FLAG) companies must deliver around 70% of that, according to SBTi.As such, all FLAG companies should commit to the SBTi’s Net-Zero Standard and tackle deforestation within their supply chain as a key priority.
The UN-backed Race to Zero Criteria 3.0, released in June 2022, highlights that for companies and financial institutions to take a leadership position in the transition to net-zero they should set twin targets for reductions and removals. The criteria states that in addition to emissions reductions, companies need to compensate for any unabated emissions year on year through investment in high quality carbon credits, disclose neutralization milestones that demonstrate the integrity of commitments to neutralize unabated emissions and state how they plan to ultimately neutralize any residual emissions by 2050 through high-quality, permanent removals.
Investments outside of supply chains should always follow the mitigation hierarchy and should never be used to replace actions and investments to reduce emissions in a company’s own supply chain.
Nature based solutions are one of several steps to align with a 1.5C pathway