We are facing an unprecedented crisis: the destruction of nature and the rampant effects of climate change.

Each year, degraded coastal ecosystems release as much as 1 billion tons of CO2, the global loss of tropical forests contributes 4.8 billion tons and food systems add 18 billion tons of emissions. 

We must turn this around for the benefit of people, planet and prosperity — and we have the power to do so.

Natural climate solutions are actions that conserve, restore or improve natural and managed ecosystems to reduce greenhouse gas emissions or remove emissions from the atmosphere. They offer us up to one-third of the solutions required to meet the climate change goals by 2030. In addition, people and places also benefit from better air and water quality and the new economic opportunities natural climate solutions create for local communities.

The nature financing gap is estimated to become $4 trillion by 2050, according to recent research. credits generated by natural climate solutions can provide a critical new source of finance to stop the destruction of nature during this crucial decade of climate action.

For the first time, more than 40 civil society and business voices have come together to lay out what good investments could look like in the race to close this gap. These organizations are part of the Natural Climate Solutions (NCS) Alliance — convened jointly by the World Economic Forum and the World Business Council for Sustainable Development — which recently released guidance for businesses looking to invest in high-quality nature-based climate solutions, based on 18 months of conversations to find consensus.

Why we need guidance for business investment in nature

Net-zero commitments from the private sector doubled in just one year, and most countries now reference natural solutions as an avenue to achieving their climate targets. This has created an opportunity to rapidly grow the market for carbon credits generated from projects related to the conservation or restoration of nature.

Natural climate solutions offer the opportunity to reduce emissions from land-use sectors, such as the production of food, textiles, pulp and paper and building materials. At the same time, they can be used to address historic emissions or balance the emissions footprint of companies as they transition to zero emissions.

Yet controversy has surrounded the use of carbon credits in corporate climate strategies and the scaleup of natural climate solutions, in particular. There are two fundamental and legitimate concerns: first that companies will use offsets to delay meaningful action to decarbonize their broader operations, and second that credits generated by nature-based climate solutions have the highest environmental and social integrity and are delivering meaningful benefits for people and nature. This is why it has become critical to create guardrails.

There must also be a clear prioritization of mitigation over compensation and alignment with existing international efforts.

The NCS Alliance Corporate Guidance lays out investment principles for companies looking to make natural solutions a part of their climate strategies and outlines best practice for the use of carbon credits generated from forest, ocean or agricultural projects. It lays the groundwork for a demand campaign to scale carbon markets and raise ambition in international negotiations later in the year.

How the private sector can play a key role in financing action

According to these guidelines, to help the world meet its climate goals, the private sector must commit to high-ambition climate strategies consistent with the Paris Agreement. The guidance lays out principles for a high-integrity supply of credits from natural solutions and for supporting robust international markets.

First, companies should commit to decarbonizing at a rate that will limit warming to 2 degrees Celsius or less, and this should be achieved by avoiding emissions or minimizing those that cannot be avoided. In addition, companies should also commit to advocating for low-carbon policies, scaling renewables and investing in low-carbon technologies. 

Importantly, there must also be a clear prioritization of mitigation over compensation and alignment with existing international efforts. This is crucial to building trust and security so that investing in credits does not detract from rapid decarbonization. By following the mitigation hierarchy, credits from nature-based solutions can contribute to an overall increase in climate ambition while also enabling a flow of investment into projects and programs that deliver environmental, social and economic co-benefits. 

Second, credits must be high-quality, building on existing guidance such as the CORSIA Emission Unit Criteria, the Taskforce on Scaling Voluntary Carbon Markets Core Carbon Principles and the International Carbon Reduction & Offset Alliance Code of Best Practice.

Corporate and NGO members of the NCS Alliance have established a clear definition of what high-quality credits are when it comes to nature-based solutions and what criteria they adhere to. This is necessary to ensure executives have the knowledge they need to perform effective due diligence when sourcing credits from the market, and that the credits they are purchasing meet best-practice standards. Outlining these quality criteria will reduce the risk that credits purchases do not deliver verified climate impacts. Similarly, credit project and program developers must ensure they meet quality standards so they can deliver real carbon reductions as well as co-benefits.

Third, companies can play a greater role in international carbon markets both to inform the way corporations transact credits and the way they advocate governments. This is aimed at inspiring greater ambition both in voluntary carbon markets and the international negotiations scheduled for COP26 in Glasgow.

Only the first step

The principles represent the first time civil society and business voices have come together to lay out what good investments for nature could look like. In the race to close the nature financing gap and help scale natural climate solutions to meet their climate mitigation potential and contribute to the Paris Agreement goals, this effort is crucial for building trust.

But creating these principles is only the first step. Carbon markets will need to scale up at least fifteenfold in order to meet global climate goals. Much more is needed to create an efficient global carbon market including strong demand signals, clarity on corporate claims and better signposting of high-quality projects, better market architecture and regulatory clarity.

To continue to make progress to meeting our climate goals, we must ensure continued multistakeholder collaboration and build trust — trust in the integrity of natural solutions and trust among all parties: environmental NGOs; corporate buyers; project developers; and policymakers.