Nature-Based Solutions Are Needed to Stop Deforestation

Right now, the EU is delaying its landmark deforestation regulation that was due to come into force at the end of the year. ??

The proposed law requires companies that import goods including soy, beef, palm oil, and paper to show their supply chains did not contribute to the destruction of the world’s forests.??

The delay comes after concerns over the impact on trade and farmers, and the feasibility of tracing products through complex supply chains.

The So What? ?

“While regulatory efforts continue to evolve, it’s important to double down on efforts to improve the health of our forests. That includes both sustainable management of existing forests and planting the forests of the future,” says Lucyann Murray, a BCG partner who specializes in forestry.?

? The UN reports that:? ?

• Every year, the world loses some 10 million hectares of forests.?

• Deforestation is a major driver of biodiversity loss, with about 80% of land plants and animals living in forests.??

• Deforestation and the degradation of forests account for about 11% of carbon emissions.

More sustainable management of forests is largely driven by local regulation and forest stewardships certifications. Moving forward, voluntary target-setting and disclosures will also help drive progress. ??

When it comes to planting or restoring forests, the biggest efforts to date are being spearheaded by not-for-profit organizations such as the World Economic Forum’s Trillion Trees project, which has enlisted the support of many global companies.

But a market-based approach will also be needed to scale projects in a way that will protect our planet, Murray explains.? ?

The finance to plant and care for forests has largely come from industry which uses the raw material in supply chains. Carbon credits are emerging as a new market for forests that does not depend on cutting down trees.? ?

Organizations looking to offset their carbon emissions can buy two categories of credits, known as Nature-Based Solution (NBS) removals:??

• Improved Forest Management. This involves techniques to increase net carbon stocks in forests, such as extending the length of time between rotations in managed forests or replanting trees that produce more durable wood products. BCG expects these credits to sequester the equivalent of 13 million tonnes of mtCO2e? in 2024, rising to 41 mtCO2e by 2030.? ?

• Afforestation and Reforestation. This involves planting new forests, or restoring degraded land back to forests. BCG expects these credits to sequester the equivalent of 69 million tonnes of CO2 by 2024, rising to 255 mtCO2e by 2030.?

NBS demand is expected to outstrip supply in 2030 by >100 MTCO2epa even in “bear” BCG scenario. ?

Now What?

Double down on the quality of carbon credits. The carbon credit market for forests has had some teething problems and nature-based solutions have faced criticism for not being robust enough. Certifiying bodies have undergone some deep structural and content change, and the voluntary carbon markets for forests are now in their second life, Murray explains. An ongoing focus on rigorous standards and centralization is essential to forestry credits becoming an important part of the mix in a company’s carbon credit portfolio.??

Measure and impact relationship with nature. Companies should aim for a holistic view of their impact and dependency on nature, and work toward integrating nature-based solutions into their sustainability plans. This includes water stewardship, air quality, and biodiversity.? ?

Continue traceability efforts. Despite the increased recognition of the difficulty of accessing and reporting data from different geographies, companies should continue to double down on efforts to understand where their raw materials are coming from, and build stronger relationships with their suppliers, making sure all parties are aware that traceability is a priority throughout the value chain. Regulators, meanwhile, could consider step changes to maintain momentum. ?? ?

For further reading:?

To Understand Climate Mobility, Follow the Water ?

Get Ready for Nature-Related Disclosures?

The Staggering Value of Forests—and How to Save Them?????