Nature Based Solutions & Carbon Removal – Corporate Climate Opportunities Explained

Nature-based solutions to climate change offer 37% of the most cost-effective global mitigation needed to 2030 alongside far-reaching contributions towards UN SDGs, but currently attract only 2% of global financing aimed at addressing climate change, representing a wide gap to be filled. The carbon removal market now offers trillion-dollar upside investment opportunities. Discover the opportunities in the world of nature-based solutions, and how they fit into corporate climate, investment and ESG strategies.

Corporate use of carbon removal solutions complements absolute emissions reductions

Before understanding the possible roles of nature-based solutions, it is important for corporations to distinguish carbon removal (the active elimination of carbon from the atmosphere) from absolute emission reductions – both of which are imperative, but distinct components of corporate climate strategies. Climate science acknowledges that even after our best efforts to reduce global greenhouse gas emissions, there will be some sources which we will be unable to completely eliminate by mid-century due to technological and societal constraints. Therefore, both absolute emission reductions, year-on-year, and carbon removal solutions are required to achieve a state of net-zero by 2050 in accordance with Paris Agreement targets (see our Net-Zero vs Carbon Neutrality article). Carbon removal solutions, also known as negative-emission technologies, are essential to neutralizing these residual emissions and achieving a state of net-zero by 2050.

Carbon removal solutions are crucial to meaningful climate action

Recent research asserts that the carbon removal market now offers trillion-dollar upside opportunities for investors [1], echoing the vital importance of carbon removal solutions in climate action. Below, we define the credible roles that carbon removal solutions can play in corporate emissions strategies [2]:

 1)     To offset emissions outside or within the corporate value chain, compensating but not substituting absolute emission reduction efforts;

2)     To neutralize residual emissions within the corporate value chain to achieve a state of net-zero (see our Net-Zero vs Carbon Neutrality article for more);

3)     To achieve corporate carbon negativity after net-zero has been achieved by removing more GHG emissions from the atmosphere than are released from the value chain over a given period.

 While corporations may choose to invest in carbon removal solutions to help society decarbonize outside their own corporate value chain, in the shorter term they also need to integrate carbon removal solutions directly into their emissions strategies to neutralize residual emissions within their value chains. Nature-based solutions describe a subset of carbon removal techniques which work with natural processes and ecosystems to achieve this outcome, providing many cross-cutting benefits to society in the process.

There are a wide array of nature-based solutions available, with forest-related solutions offering highest global capacity for carbon removal

Nature-based solutions come in a variety of forms, each capturing and storing carbon in the biosphere via cycles that have existed in nature for millennia. Methods include natural forest management, coastal wetland restoration, regenerative agriculture, biochar, improved plantations, optimal intensity grazing, and legumes in pasture. The method with the largest global capacity for carbon removal is reforestation, the reversion of non-forested lands to forest in ecologically appropriate areas [3].

Nature-based vs technology-based carbon removal solutions

A diverse array of promising technology-based (i.e. manufactured) carbon removal solutions are now emerging. Though most of these tech-based solutions are still in nascent stages, a handful of companies now offer commercial carbon removal contracts backed by their technologies, which is attracting much needed corporate investment. Although tech-based solutions are set to play an important role in climate action, they currently entail higher costs per tonne of CO2 captured than nature-based alternatives, partly because they are yet to achieve their intended economies of scale. Tech-based solutions also lack some co-benefits that nature-based solutions offer.

Nature-based solutions to climate change are a set of alternatives to consider in parallel to tech-based solutions, which work with and enhance natural ecosystems and their processes as a means to capture and sequester carbon. These natural solutions offer 37% of the cost-effective climate mitigation needed up to 2030 in order to achieve Paris Agreement targets, a third of which can be implemented at or below $10 per metric tonne of CO2 removed [4]. Nature-based solutions also offer impactful co-benefits to human and planetary wellbeing in areas such as food security, water security, human health, disaster risk, biodiversity, and social and economic development and security.

Nature-based solutions are scalable

Conservation International (CI) and the Blue Carbon Initiative (BCI) are two leading organizations focussed on implementing nature-based solutions to climate change. CI aims to restore 73 million trees in the Brazilian Amazon by 2023 [5], and BCI has a number of field projects which aim to capture and sequester carbon via restoration of coastal ecosystems [6]. Countless other nature-based projects exist around the world and are contributing to various UN SDGs via factors such as education, job creation, and biodiversity and resource conservation. Many of these projects also provide private capital to developing nations, supporting their development in a socially and ecologically sustainable manner. For these reasons, they are an attractive option for corporations seeking to take simultaneous action on climate change alongside other social and environmental commitments.

 Many climate leading corporations place nature-based solutions as an immediate focus area in their strategies. Microsoft, as part of their plan to achieve carbon negativity by 2030, are initially focussing on nature-based solutions due to the readily scalable nature of these methods and their cost-effectiveness [7]. In January 2021, the Natural Capital Investment Alliance was announced at the One Planet Summit [8], which aims to target $10 billion of investment towards natural capital themes across asset classes by 2022. The Alliance aims to serve as a central hub for global corporations and financial institutions seeking to scale-up their investments into Natural Capital, in support of biodiversity restoration, including through carbon removals.

Incorporating nature-based solutions in business strategy requires stakeholder engagement, robust impact data and certification based on recognized standards

Despite the abundant potential of nature-based solutions, only 2% of global financing aimed at addressing climate change currently goes toward them [9], representing a great opportunity for corporate investment into the field.

 Nature-based solutions are suitable for any company to support now as part of a sustainability or ESG strategy, fitting into carbon offsetting, carbon neutrality and net zero targets, negative emissions goals, and commitments to supporting UN SDGs.

 Below we share three key factors that should be considered when integrating nature-based solutions as part of a sustainability or ESG strategy:

1)      Investment into nature-based solutions should align with stakeholder priorities, your wider business strategy, and can be informed by the unique climate risks and opportunities faced by your organization, which can be ascertained through materiality assessment, stakeholder engagement, and climate scenario analyses.

2)    The quantity of carbon removals fulfilled by nature-based solutions should be underpinned by robust data to demonstrate its targeted use and contributions, such as offsetting known corporate value chain emissions, or eliminating known levels of residual emissions. This can be ascertained by a comprehensive GHG emissions inventory and clear emissions targets, and clearly defined outcomes of nature-based solutions.

3)    Nature-based solutions integrated into a climate strategy should be certified by widely recognized standards, and should offer measurable social and environmental benefits alongside emissions action. These should be documentable, and reportable.

If you are interested in integrating nature-based solutions into your strategy, Agendi can help you identify the best opportunities available in the market, and purposefully mobilize capital into carefully selected initiatives with measurable climate, social, and environmental outcomes.

[1] Vivid Economics (2020)

[2] SBTi (2020)

[3] Griscom et al. (2017)

[4] Griscom et al. (2017)

[5] Conservation International (2017)

[6] Blue Carbon Initiative (2019)

[7] Microsoft (2020)

[8] ESG Investing (2021)

[9] Conservation International (2020)