COP26 priority #5: Harnessing nature – our net-zero ally

Bees don’t send invoices. Perhaps they should. Nature represents the world’s most valuable industry, with natural processes underpinning more than 50% of global GDP, from agriculture and heavy industry to healthcare and tourism, according to the World Economic Forum. Yet the exhaustion of nature is currently free, and the role of nature in capturing carbon emissions is far less recognised than the moves being made to reduce them. COP26 could make important progress on both fronts.

Climate change is just one of nine “planetary boundaries” that scientists use to define humanity’s “safe operating environment” or the thresholds our species can tolerate. Climate is the area where we have the most comprehensive data to analyse. The others – including forest degradation, freshwater overuse and ocean acidification – are equally important, yet we lack ‘Paris Agreement’ type targets to address them. The lack of carbon capture due to deforestation alone amounts to 11% of global emissions, similar to the proportion generated by all passenger vehicles on the planet[1]. COP26 is a unique opportunity to define clearer roadmaps and investment pathways to address the other eight. Discussions should build on progress made at the COP15 meeting, which took place with less fanfare from 11-15 October, where the focus was on biodiversity. The benefits of putting a fair price on natural resources far outweigh the costs. Protecting mangrove forests alone could bring an estimated USD1 trillion in net benefits globally – providing flood defences, carbon sequestration and habitats for fish – 10 times the cost, notes the World Wildlife Fund. Advancing the WWF’s goal to grow global mangrove habitat by 20% by 2030 would be a start.

As support for eco-friendly policies builds, and technology costs fall, investment opportunities are rising. Investors should focus on identifying companies that harness the power of nature, e.g. by using bio- and nature-based materials, and through regenerative farming and forestry, as well as those helping to preserve it, through a more circular, less wasteful economy. The EU’s Green Deal is taking important steps to address environmental degradation, as well as climate change. COP26 is an excellent forum for investors and climate scientists to learn from each other and for companies to highlight recent advances at side events.

COP26 could also take important steps to advance the role of nature in the net zero transition. Nature-based solutions are currently the most impactful way of capturing CO2: a vital part of the transition, since even the most optimistic climate models do not forecast emissions being cut to zero by 2050. Natural Climate Solutions are about investing and monetising ways for nature to absorb CO2. They will be vital if we are to meet the steep decarbonisation objectives of the Paris Agreement. Today, large, scalable solutions are a work in progress, and COP26 brings together the necessary players – including governments, conservation organisations and the finance industry – to make this happen. Promising smaller-scale projects involve rebuilding coral reefs, preserving forests and peatbogs, farming kelp and improving soil-based carbon capture in farming by planting perennial crops, or ‘cover’ crops like clover, beans and peas after the main harvest. As well as largescale carbon removal, natural climate solutions can also avoid emissions linked to land use changes, and safeguard biodiversity.

As companies increasingly pay to offset their emissions in voluntary carbon markets, these markets can deploy capital towards natural climate solutions. As they grow and deepen, oversight will be needed, to ensure they remain science-based, and subject to credible and transparent standards and regulation. COP26 could build momentum in this area, including via organisations such as the Taskforce on Scaling Voluntary Carbon Markets. Managing natural resources sustainably could contribute more than 30% of the global climate mitigation effort, estimates the Center for International Forestry Research. Nature is our most productive asset; in a net zero future, it can also be our strongest ally.?

[1] Source: Conaservation.org