Then, now and next on nature-based solutions: Reflecting on COP26 and the road ahead
William Baldwin-Cantello, Director of Nature Based Solutions at WWF UK is joined by a host of other biodiversity experts to look ahead to how the market for nature-based solutions changes.
COP26 was much delayed, much anticipated, much maligned, and much celebrated.
In the Presidency for the summit, the UK government had prioritised nature, and nature-based solutions (NbS), as an area of action. By doing so, it aimed to address both the interdependent climate and biodiversity crises.
Significant attention was paid to nature during COP26 within the formal negotiations and beyond. The world’s businesses and governments appear to be waking up to nature as the most fundamental form of capital.
But among the flurry of government, business and funding announcements made at COP26, what does this emphasis on nature mean for businesses going forward?
Policy Shifts Toward Nature
The Glasgow Climate Pact – the main COP decision – clearly recognises the role of protecting, conserving, and restoring nature in delivering on the Paris Agreement commitments. Earlier drafts referred to NbS specifically, but its absence in the final version is an illustration that political support is not yet unanimous.
The Pact also sets a continued increase in ambition for Nationally Determined Contributions (NDCs) next year, offering further opportunity for national plans to expand and improve their inclusion of NbS. There is momentum in this direction already: a WWF report launched at COP, found an increase from 82% to 92% in the proportion of NDCs that include nature.
One entry point is through deforestation commitments; 137 countries and counting signed on to the Glasgow Leaders Declaration on Forests and Land Use, pledging to “collectively halt and reverse forest loss and land degradation by 2030”. A WRI analysis shows that achieving the leader’s pledge would save an area of forest the size of Malaysia and avoid the equivalent to a quarter of global transportation greenhouse gas emissions from 2009-2018.
Focus on Finance
Achieving these commitments will take a significant shift in financial capital and a wave of funding announcements were made during the World Leaders Summit, from $12 billion committed by a group of countries over next 5 years for forests to the Bezos Earth Fund pledging $2 billion to restore forest landscapes in Africa and transform food systems. The LEAF Coalition (Lowering Emissions by Accelerating Forest Finance) successfully met their goal of pooling $1 billion for countries and states who reduce deforestation. The Global EverGreening Alliance and Climate Asset Management (CAM) announced a $150m nature-based carbon programme in Africa.
Two things are encouraging about this. Firstly, the scale. It shows a growing share of climate finance going towards NbS, the long-called-for reflection of their larger share in mitigation potential. Secondly, it showed a greater role for private donations and the promise of a more coordinated package of initiatives.
These announcements were welcome, but this is not job done. A recent UN report showed that a tripling of finance levels for NbS is necessary to ensure their full potential. Public sector finance will never meet this amount alone, private donations are vital, but we will still need to access greater volumes of commercial finance. Private sector finance is only 10-30% of total finance for biodiversity, which is typically hindered by lack of knowledge, but also lack of cash flows induced by adverse subsidies, lack of data usability, complex and costly verification schemes or challenges with early-stage business models and their scaling. The Blended Finance Playbook demonstrates how bridging Public and Private finance is already helping move nature investments into the mainstream.
A primary focus of NbS Accelerator under the HSBC-WRI-WWF Climate Solutions Partnership is how to mobilise private finance for NbS. The aforementioned systemic barriers are compounded with the fact that investors remain relatively uninformed on NbS, and project developers remain unsure on how to secure and use commercial investment. Our Accelerator will be supporting projects on their journey to investment and contribute to the resolution of underlying barriers to more and bigger deals.
Systemic and Sector level Changes
While we scale up finance for forests and other ecosystems, we need to simultaneously open up the space for NbS by addressing the pressures on natural ecosystems, notably from the food sector and backed by the finance sector.
Adjusting how we use land requires complex and difficult conversations amongst many actors. The UK and Indonesia co-chair the FACT (Forest, Agriculture and Commodity Trade) dialogue, a notable indication that producers and consumer country governments are moving toward coherent responses that protect forests while supporting sustainable development. If the roadmap launched in Glasgow lacked specific actions, businesses took some welcome steps to address the pressures on nature. Five of Britain’s major supermarkets pledged to halve the nature and climate impacts of the food they sell by 2030. And over 30 financial institutions with over $8.7trn in assets under management committed to tackle agricultural commodity-driven deforestation.
Integrity and Impact are Key
We know businesses who commit to reducing emissions through science-based targets can enhance their impact by investing in NbS. Delivering for climate, people and nature is not always straightforward and NbS have been challenged by some organisations due to their limitations and potential risks if due diligence is not carried out. It is important that those of us involved in championing, funding or delivering NbS are all clear that these solutions be scaled and deployed only where and how they have the support and involvement of Indigenous Peoples and local communities.
This focus on integrity and quality in NbS – both from a demand and supply point of view – is critical and space in the business strategy must be devoted to a careful selection of investments.
Progress is being made toward consistent, consensus-based methods to validate, compare and clarify data to monitor the benefits of NbS interventions. The IUCN’s global standard is a helpful guide and there is an increasing number of tools available, including the WRI’s Land and Carbon Lab, that will aid project design, selection and monitoring and allow investors to “see the change” on the ground.
Looking ahead, the climate COP has set a high ambition on addressing nature loss, we must see that at least maintained in the biodiversity COP in Kunming and G20, recognizing net-zero goes hand in hand with halting and reversing nature loss. Business voices from all around the world have a big role to play in creating the space to meet that ambition.
Authored by William Baldwin-Cantello, Director of Nature Based Solutions, WWF-UK, Laura Vary, Ph.D., Senior Manager Forest Program, WRI and Marine de Bazelaire, Group Advisor on Natural Capital, HSBC - NbS leads for the Climate Solutions Partnership, a five-year collaboration that aims to unlock barriers to finance for companies and projects that tackle climate change to bring them to scale.WWF