Reaching net zero carbon emissions by 2050 is this century’s global imperative. Failing to achieve this will result in degrees of global heating too severe for eco- and agricultural systems to adapt to and withstand – disrupting human civilisations to an unimaginable degree. Net-zero emissions has to become, and is quickly becoming, a north star for strategic commitments by governments, businesses and other stakeholders across the world, covering by some estimates 90% of economic activity.
To date, however, concrete action and policies have two major shortcomings:
- They are tepid and nowhere near the level of ambition that’s required, with the latest UNEP Emissions Gap Report finding that “policies currently in place point to a 2.8°C temperature rise by the end of the century”; and
- They insufficiently consider, and incorporate, the role that nature and ecosystems have to play in stabilising atmospheric concentrations of greenhouse gases
Today – Biodiversity Day at COP27 – UNEP FI’s Climate lead Remco Fisher and Nature lead Jessica Smith, together highlight the importance of considering nature in all efforts to mitigate and adapt to climate change.
While many organisations and businesses are focusing on reducing emissions across transport, energy, infrastructure, real estate and other sectors, overlooking nature may ultimately undermine all other efforts. The value of nature is not getting due recognition in the race to implement net zero. Research is starting to highlight the role of the oceans as a climate solution, pointing to whales, fish, and seagrass beds as much bigger climate allies than previously given credit for. As an illustration, each great whale sequesters 33 tons of CO2 on average, valued by the IMF as worth $2 million each. If the “no-tech” carbon capture strategy of restoring global whale populations is not sufficiently delivered – that is, if we don’t invest in this nature-based solution and/or we move from air to shipping freight without considering how this traffic can avoid whale migration – a simple, cost-effective and proven opportunity to sequester carbon will be destroyed. Humanity has already missed the enormous potential of whales – now at a fraction of their earlier populations – as our allies in the climate challenge. Let’s not double-down on this mistake.
As we take action to transition to net zero across the entire economy, including our financial system, we must ensure climate action is aligned with action on nature. Influential and powerful actors in accelerating action on net zero, banks, insurers, investors and other financial institutions must broaden their definition of net zero, and reflect the value of nature within their targets and commitments.
Financial institutions must also measure and integrate nature-related risks and consider them alongside climate risks across their entire business operations and investment portfolios. This will deliver multiple long-term benefits, including ensuring they are compliant with incoming regulation and legislation. For example, by ensuring deforestation is not taking place across their portfolios, they can be certain they will comply with the incoming EU Deforestation Law. This law will scrutinise supply chains in greater detail to ensure major raw products (e.g. beef, soya, leather) are not sourced from deforested areas. Furthermore, the Taskforce on Nature-related Financial Disclosures (TNFD) is working to bring consistency in assessment and disclosure expectations, which may soon become compliance requirements as regulations in this space rapidly evolve.
Organisations must also stop financial flows to activities that destroy and damage nature, undermining efforts to meet carbon commitments as they harm ecosystems we rely on. For example, the production and manufacturing of food, including seafood, is directly reliant on a healthy natural ecosystem in order to maintain high yields of crops both today and for future generations. Financial institutions must therefore look to direct financial flows away from destructive farming practices, and support nature-friendly farming and food production systems, such as organic farming, no-tilling and animal welfare farming practices.
By embedding nature and considering nature alongside their climate action, institutions will also position themselves to fully realise the opportunities nature presents to achieve climate commitments. Members of the High Ambition Group of the Good Food Finance Network illustrated this in their announcement of integrated targets for their portfolios, which simultaneously tackle environmental and social goals. It has been evidenced that there are more benefits than trade-offs in addressing climate change and nature loss together within land and marine environments.
The tropics and global south currently hold some of the most biodiverse areas of the world and should be prioritised for financing. These areas also offer a great variety of nature-based solutions and opportunities to deliver on both nature and climate objectives, while meeting development needs. For example, over 1.6 billion people co-manage and rely on forests and 1 billion people on coral reefs. Indigenous Peoples and Local Communities (IPLCs) are important global stewards of at least 32% of land and inland waters, yet receive today just over 1% of all climate or nature finance. The opportunity for nature-based solutions to positively impact justice, human health and wellbeing alongside fulfilling environmental needs provides a win-win opportunity to use financial flows to bring positive benefit to people and planet.
With support and guidance from UNEP FI and partners, financial institutions must take action now to integrate nature into their current action on climate. Nature-related risks are material to financial institutions, and failure to fully integrate this dimension into net-zero strategies will hinder the sector’s meaningful contribution to a low-carbon economy. Nature-based solutions also offer a wide-range of financial, environmental and social benefits when allocated in the right place, and to the right people.
UNEP FI is harmonising guidance in this area, unpacking nature-based solutions and sharing insights for specific ecosystems, including marine, coastal, farmland and urban landscapes. In the year ahead, updates on the latest science will be provided for each ecosystem, with further guidance also published on how to translate this work into the setting of scientifically rigorous, science-based targets for climate and nature.
Financial institutions must fully integrate nature into their decarbonisation strategies, and advance action to identify ecosystems that can deliver the highest return on investment for people and planet, alongside profit. Action on nature and action on carbon: one agenda for our one planet.
- Race to Zero. Tackling deforestation and scaling nature-based solutions (NbS)
- Good Food Finance Network – Bringing food to the heart of the finance agenda.
- UNEP and GFI Financing Nature: COP27 Special Podcast (unep.org)
- Fischer, R (2022). COP26 – The moment private finance promised to lead
- Costa Jr et al (2002). Roadmap for achieving net-zero emissions in global food systems by 2050
- Pendril et al (2022). Disentangling the numbers behind agriculture-driven tropical deforestation
- Race to Zero. Financial sector commitment letter on eliminating commodity-driven deforestation (2021)
- Roe et al (2019). Contribution of the land sector to a 1.5 °C world
- IPBES-IPCC co-sponsored workshop. Report on Biodiversity and Climate Change
- UNEP Emissions Gap Report 2022