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NbS & Net Zero Investment

Investment in nature-based solutions (NbS) is new for many institutional allocators. But it’s clear that without substantial investment in this sector we cannot achieve net zero by 2050, or for that matter in any time frame at all.

  • NbS Are Mission Critical
  • The NbS Investment Landscape

NbS are investable today, and will become a key component of any climate-related portfolio in the near future.

Investors are already making market returns in nature-based solutions within agriculture and forestry. This is just the beginning. There are several factors that will drive even wider NbS adoption:

Dollar for dollar, NbS are the most efficient climate solution for reducing greenhouse gas emissions. According to the Food and Land Use Coalition, investment in NbS would generate a societal return of around $5.7 trillion annually, more than 15 times the related investment cost of $300–350 billion per year (less than 0.5 percent of global GDP), and would create new business opportunities worth up to $4.5 trillion a year by 2030.

NbS have the potential to create massive economic value. It has been estimated that the value of global ecosystem services is approximately $145 trillion/year. Transitioning to a nature-positive economy could generate up to $10 trillion in additional annual business revenue and cost savings and create 395 million new jobs by 2030.

The Inevitable Policy Response. As highlighted in the Inevitable Policy Response (IPR), without investment in NbS achieving net zero will be impossible. NbS have the potential to reduce emissions by more than one third of what is needed by 2030. Policy makers are becoming increasingly aware of this dynamic, and also know that private financing will be an essential part of any solution. They are currently working on making the NbS investment yet more attractive.

Only by decarbonizing the food economy, and using nature-based sources and sinks, can net zero be achieved.

NbS investment brings reputational benefits and the experience can inform and de-risk climate solution investment in other domains. NbS are inextricably linked to social justice and biodiversity. To be effective these solutions must engage diverse populations who in turn care for their biome. (The nature/human connection cannot be overstated: for instance, 32% of the world’s food is grown by small holders, on farms less than 2ha.)

Image courtesy of Project Drawdown

Successful NbS projects deliver climate mitigation, safeguard biological diversity, ensure healthier diets for all, improve food security and create more inclusive and resilient rural economies. Investing in GHG reduction will no longer be enough on its own: company and projects’ “right to operate” will increasingly be based on their ability to account for the outcomes they produce holistically.

For investors, NbS investments model how sustainable climate solutions in all domains can and must take into account these factors. This learning will help investors avoid climate investments that create negative externalities and invest in those that provide synergistic benefits.

In the final analysis, we believe that investing in NbS will determine the winning franchises of the future and be the key to long term and sustainable wealth creation.

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