Why there is a growing business case in India for natural climate solutions

A new study conducted by the World Economic Forum, in partnership with the Confederation of Indian Industry and IORA Ecological Solutions, finds that 89% of the largest Indian companies have a sustainability strategy and nearly half have a net-zero strategy. When asked about the business case, companies expressed particular interest in the role of NCS in carbon sequestration to contribute to corporate net-zero goals, elevate brand image and increase business resilience.

Moreover, over 90% of survey respondents plan to either significantly or moderately increase their NCS investments over the next five years. And 54% of respondents mention they plan to start or increase their purchase of forest carbon credits in the next five years – compared to 7% currently purchasing such credits.

This rising level of corporate interest holds promise at a time when $44 trillion of the global economy is at high or moderate risk from nature loss. NCS represent a key strategy to address the dual crises of climate change and biodiversity loss and strengthen the resilience of the world’s socio-economic systems. NCS encompass a range of actions aimed at safeguarding, conserving, restoring, and sustainably managing terrestrial, freshwater, coastal, and marine ecosystems while providing livelihood benefits. NCS could deliver up to one-third of net emission reductions required by 2030.

The stakes are high in a country where climate-related risks could cost the nation 3% of its GDP annually, and an estimated 30% of the land is degraded with significant consequences for agri-rural livelihoods. Commitments made under India’s NDC to the Paris Agreement as well as the UNCCD include creating an additional sink of 2.5 to 3 billion tonnes of CO2e through additional forest and tree cover and restoring 26 million hectares of degraded land by 2030.

Private sector investment is acutely needed. Today, as is the case globally, current investments in NCS in India are largely public-sector driven and fall short of what is required. The total funding gap is substantial, with an estimated $161.9 billion required by 2030 in the forestry sector alone.

Yet the survey showed that significant barriers need to be overcome to unlock the full potential of corporate investment in NCS. Most companies (62%) reported that their investments currently come from Corporate Social Responsibility (CSR) budgets and the majority are quite small (under $1 million). A further 35% of corporates surveyed indicated that they invest in NCS to meet national or global mandatory regulatory requirements. This suggests that while companies recognize the potential business case linked to their core sustainability strategies and business resilience, this has yet to translate into investment decisions.

Four areas emerged that represent barriers to investment, but that respondents cited as factors that would influence their decisions to scale their NCS investments:

India is developing new instruments, such as the regulatory carbon market and the Green Credits Initiative to contribute to net-zero goals. However, to seize the opportunities presented by NCS and attract private sector investment requires clear frameworks, guidelines and incentives.

This white paper is part of the work of 1t.org in India to foster public-private partnerships and corporate investment for forest landscape conservation and restoration. The findings intend to offer a better understanding of the current regulatory and investment landscape in India, highlight key opportunities and barriers for NCS investments, and put forward recommendations from the survey and the public-private dialogue. 1t.org is the World Economic Forum’s Trillion Trees Initiative launched in support of the UN Decade on Ecosystem Restoration to serve the global restoration movement to conserve, restore and grow a trillion trees by 2030.

The Core is your go-to multi-media destination for business and strategic insights. The Core provides fresh perspectives on the world of business, primarily traditional business and the listed universe, through insights, on-ground reports, immersive shop floor walk-throughs, and visits to R&D laboratories.

Govindraj Ethiraj is a television and print journalist who has reported and written on Indian business for over 25 years. He is the founder and Editor of BOOM and IndiaSpend and an entrepreneur whose public interest journalism ventures use data to tell stories in areas like health, education and climate as well as safeguard the transparency, accuracy, and integrity of news.