Why we need an 'everything, everywhere, all at once' approach for financing nature

Limiting global warming to 1.5ºC will not be possible without immediate and large-scale emissions reductions, warns the Intergovernmental Panel on Climate Change (IPCC) in its latest update, the AR6 Synthesis Report: Climate Change 2023.

Labelled a ‘final warning’ and ‘survival guide for humanity’, the IPCC’s report underlines the risk of inaction across all areas of the economy, while also laying out a roadmap for avoiding catastrophic temperature rises.

Alongside a broad range of actions for decarbonization, it reiterates the critical role of nature. Indeed, natural climate solutions (NCS) are still able to provide a third of the climate crisis mitigation needed by 2030, but only if we act now.

Natural climate solutions consist of a broad range of actions to protect, sustainably manage and restore natural ecosystems to address social, economic and environmental challenges – and provide human and biodiversity benefits.

The most recent research indicates that natural climate solutions can provide 8-14 billion tonnes of emission reductions by the decade’s end.

The IPCC report makes the same point: conservation of 30-50% of the earth’s land, freshwater and ocean areas would not only protect biodiversity and carbon sinks such as forests and wetlands, it would also ensure ecosystem services related to food and health.

But these ecosystems are at growing risk given the speed at which the climate crisis is already changing our planet. Without protecting and restoring nature, the risks are immense – to our economy as well as planet. An estimated $44 trillion of economic value generation, over half the world’s total GDP, is moderately or highly dependent on nature.

The United Nations Environment Programme's State of Finance for Nature 2022 report found that current finance flows to nature must double by 2025 and triple by 2030.

While the climate benefits alone would warrant the billions of dollars of investment needed, investing in nature provides other valuable benefits, such as increased resilience to climate impacts, provision of clean air and water, restoration of degraded lands and support for sustainable livelihoods.

Despite all these mutually beneficial outcomes, natural climate solutions have come under intense scrutiny recently, with several recent reports and investigations specifically examining their role in the voluntary carbon market, where carbon emitters can voluntarily offset emissions by buying carbon credits from initiatives that remove carbon from the atmosphere.

Yet, natural climate solutions are much more than just carbon mitigation tools, and carbon markets are just one way of funding them. Many of the required actions are simply about changing the way we manage our landscapes and doing things smarter.

There are a broad range of things that can be done across the economy to transform our food and land use systems – and move towards a nature-positive economy.

This means reforming agricultural subsidies. Developing green financial products. Exploring the potential of biodiversity credits and other innovative mechanisms. Increasing efforts to reduce commodity-driven deforestation and build sustainable supply chains. Rethinking public policies and programmes for overseas development assistance (ODA). Adjustments to taxation policies. Factoring CO2 emissions into project financing decisions.

These are all efforts that we must urgently act on. But, at the same time, we can’t turn our backs on one of the most viable, scalable and ready-to-deploy solutions to deliver both climate action and much-needed finance for the developing world.

Simply put, the voluntary carbon market has the potential to mobilize, at speed and scale, billions of dollars a year in additional climate finance for developing countries that removes carbon or cuts emissions that helps the world stay within the warming limits of the Paris Agreement, and that benefits communities and ecosystems more broadly.

The value of the global voluntary carbon market reached $2 billion in 2021 and could be worth between $10-40 billion per year by 2030, with perhaps two thirds of this channelled into natural climate solutions. Carbon markets could deliver up to 32% of the global cumulative potential of NCS and 10-12% of the overall mitigation needed by 2030.

However, in the last three years, only 1.2% of the annual cost-effective potential of natural climate solutions has been unlocked by the voluntary carbon market. We are leaving viable solutions, and billions of dollars of climate finance, on the table. The risk of letting perfect be the enemy of good is growing more and more serious.

While it is crucial to reduce the number of low-quality NCS credits on market, the real threat is creating an environment where we think it is less risky to ignore a viable climate solution. This logic simply doesn’t hold up.

Instead, we need to push forward with support for high-integrity credits – in concert with the broad sweep of other actions listed above – to help scale to the 99% of climate action from natural climate solutions that the world needs.

This includes championing efforts to introduce more consistency and transparency in the market, as well as to develop more robust and meaningful partnerships with Indigenous peoples and local communities.

Hopefully this latest IPCC report gives us a valuable perspective on where the greatest risks lie, which is through inaction.

In his speech that announced the UN’s Acceleration Agenda at the launch of the IPPC report, UN Secretary General António Guterres warned, with reference to the recent Oscar-winning movie: “In short, our world needs climate action on all fronts – everything, everywhere, all at once.”

This should include a critical role for natural climate solutions – to be funded by all means necessary, including the voluntary carbon market.