Solutions: the business perspective - WBCSD

Solutions: the business perspective - WBCSD
Natural climate
the business
Solutions: the business perspective - WBCSD

1   Preface | 3

2   Natural climate solutions: the opportunity for business | 4
    Executive summary        5

3   The climate challenge, the role of the land sector and
    negative emissions technologies | 7
    Natural climate solutions can help bring the Paris Agreement into reach            8
    The role of business in delivering and scaling natural climate solutions           10
    Key drivers for scaling investment in natural climate solutions            12
    Principles for investing in natural climate solutions     15
    Unlocking impact at scale: how can your business play its part?            16

    WBCSD would like to acknowledge and thank PwC for their support in producing this document.
    This paper is the product of a collaboration between members of the World Business Council for
    Sustainable Development (WBCSD) and Nature4Climate (N4C), a global civil society organization.

                                                       Natural climate solutions: the business perspective 2
Solutions: the business perspective - WBCSD
1       Preface
The world is on track to surpass      with clean power, maximizing            Stopping deforestation, improving
a 1.5°C global temperature rise       circular opportunities to reduce        soil health, protecting natural
as soon as 2040.                      resource consumption and waste,         carbon sinks, restoring damaged
                                      de-carbonizing transport of             habitats, and implementing
The UN Secretary General is           goods and services, and investing       climate-smart agriculture
holding a Climate Action Summit       in nature to increase the carbon        practices are solutions that
(CAS) during the UN General           sequestration of forests, land          can and must be scaled today.
Assembly to build focus and           and oceans.                             However, despite their massive
highlight the need for more                                                   potential, most estimates
ambitious and urgent progress.        While limiting global warming to        suggest Natural Climate Solutions
We must set a bolder ambition to      1.5°C is possible, economies            only attract 2 to 3 % of public
get on track towards achieving the    and societies worldwide must            climate finance globally. Natural
Paris Commitments, and business       undergo rapid and far reaching          Climate Solutions are not just
can once again demonstrate            transformation at unprecedented         for land sector companies.
leadership and action to address      speed and scale.                        They can offset hard-to-abate
the climate emergency.                                                        and unavoidable emissions,
                                      Natural climate solutions
                                                                              supporting the transition to
Ahead of the UN Climate Action        are an established means of
                                                                              sustainable land use at the same
Summit in New York City, WBCSD        reducing, capturing and storing
                                                                              time as accelerating near-term
calls on companies to to set a        carbon emissions. Using them
                                                                              progress towards net-zero
climate target a climate target       provides opportunities for both
                                                                              emissions across all business
aligned with what science says        climate change mitigation and
                                                                              sectors. At the same time, they
is needed to limit global warming     increased resilience.
                                                                              create the opportunity to invest
to 1.5°C. According to the IPCC
                                      Investing in nature offers a            also in biodiversity, just livelihoods
special report Global Warming
                                      significant opportunity to              and rural transitions, and food
of 1.5 ºC, limiting global warming
                                      sequester atmospheric carbon            security.
to 1.5°C requires reaching net-
zero CO2 emissions by around          at a global scale while delivering
                                                                              Delivering these solutions at
2050.                                 solutions for biodiversity and
                                                                              scale will require unprecedented
                                      ecosystems. GHG emissions
                                                                              funding and coordination.
Reaching net-zero emissions           agriculture, forestry, and other land
                                                                              Close collaboration between
for a company means reducing          uses (AFOLU) contribute a quarter
                                                                              governments, businesses,
greenhouse gas (GHG) emissions        of total global GHG emissions.
                                                                              investors and civil society will be
where possible and balancing the      Investments in nature could
impact of remaining emissions         potentially deliver one third of the
with carbon removals. This will       emissions reductions needed to          The private sector can play
result in no net impact on climate.   align with the Paris Agreement          a critical role in accelerating
It will require unprecedented         between now and 2030.                   and financing these solutions.
level of action in several areas,                                             Together, we are stepping up to
including electrifying energy use                                             the challenge.

                    Diane B. Holdorf                                          María Mendiluce
                    Managing Director,                                        Managing Director, Climate &
                    Food & Nature                                             Energy, Cities & Mobility and
                                                                              Circular Economy

                                                            Natural climate
                                                                    climate solutions:
                                                                            solutions: the
                                                                                       the business
                                                                                           business perspective
                                                                                                    perspective 33
Solutions: the business perspective - WBCSD
2   Natural climate solutions:
    the opportunity for business

                 Natural climate
                         climate solutions:
                                 solutions: the
                                            the business
                                                business perspective
                                                         perspective 44
Solutions: the business perspective - WBCSD
Executive summary

Natural climate solutions            As part of this, WBCSD will focus      NCS can help.
(NCS) help nature do what            on raising corporate, civil society
it’s been doing for millions         and consumer awareness and             NCS are an important
of years: sequester and              accelerating voluntary action,         complement to long-term
store carbon.                        while working in partnership           corporate decarbonization
                                     with other key organizations to        strategies. This is especially true
                                     promote and scale carbon pricing       across land sector companies,
Research shows that these
                                     policies that steer private capital    where reductions in GHG
solutions could deliver up to one
                                     to NCS.                                emissions from agriculture,
third of the emissions reductions
                                                                            forestry and other land uses
between now and 2030 needed
                                     Collectively, global targets are not   (AFOLU) – which contribute
to limit global warming to 2°C.1 A
                                     on track to meet the goals of the      a quarter of total global
third of these have a price of USD
                                     Paris Agreement. In fact, current      anthropogenic GHG emissions
$10 per tCO2e – or less.2 NCS
                                     targets point to 3 °C of warming       – could make a significant
can also protect ecosystems,
                                     by 2100. The impacts of such           impact on achieving climate
contribute to climate resilience,
                                     warming would cause significant        goals. For companies working
restore land and transform
                                     and material risk to business and      in sectors like agriculture and
agricultural, wetland and forestry
                                     society.                               forestry, investing in nature offers
                                                                            a significant opportunity to
                                     As such, the Intergovernmental         sequester atmospheric carbon at
However, despite their massive
                                     Panel on Climate Change (IPCC)         a global scale – helping develop
potential, most estimates
                                     is calling for urgent action.          sustainable practices in addition
suggest NCS only attracts 2 to
                                     The speed at which we can              to existing efforts to avoid and
3 % of public climate finance
                                     avoid further greenhouse gas           reduce emissions.
                                     emissions, transition to renewable
WBCSD has formed a partnership       energy and push for energy             However, NCS are not just
with a coalition of NGOs,            efficiency will still not be enough    for land sector companies.
Nature4Climate,3 to help unlock      to meet our targets.                   NCS can offset hard-to-abate
private capital for investments in                                          and unavoidable emissions,
NCS.                                                                        supporting the transition to
                                                                            sustainable land use at the same
                                                                            time as accelerating near-term
                                                                            progress towards net-zero
                                                                            emissions across all business

                                                           Natural climate solutions: the business perspective 5
Solutions: the business perspective - WBCSD
There are two important drivers       Regulatory compliance: Carbon
for investment in NCS, namely         pricing instruments like carbon         WBCSD and Nature4Climate
purchasing carbon credits for         taxes and trading schemes               members recommend that
voluntary action and regulatory       provide incentives to reduce            any NCS investment adheres
compliance:                           emissions.                              to the following four guiding
Voluntary action: Many                Since 2012, the number of
companies are voluntarily             implemented or scheduled                1.   NCS investments can and
responding to the obvious             carbon pricing policies has nearly           should raise ambition
business case for addressing          doubled and a growing minority               with respect to climate
climate change. In 2016,              already encourage NCS carbon                 action, enhancing rather
voluntary buyers paid USD             credits. The combined value                  than diluting a company’s
$191.3 million to offset 63.4         of the world’s carbon pricing                contribution to the Paris
million metric tons of CO2            initiatives, including both taxes            goals. Carbon credits
(MtCO2e)4 - this is equivalent to     and emissions trading schemes                should therefore be used
a year’s worth of GHG emissions       (ETS), totaled USD $82 billion in            in conjunction with the
from 13.4 million cars,5 roughly      2018.8 While the voluntary use               GHG emissions mitigation
the number of cars on the road        of natural climate solutions is              hierarchy.
in Belgium and the Netherlands        growing and desirable, it is not
                                                                              2.   NCS credits can provide
combined.6                            currently sufficient to deliver the
                                                                                   an interim solution for
                                      Paris Agreement’s goals. Given
Forestry and land-use carbon                                                       hard-to-abate emissions,
                                      the scale of the climate challenge,
credits made up 13.1 million                                                       but not a permanent one.
                                      regulatory carbon pricing
metric tons (MtCO2e) at USD                                                        For unavoidable emissions,
                                      instruments – which are typically
$67 million.7 Given the size of the                                                carbon sinks - potentially
                                      measured in billions of dollars
challenge to achieve the Paris                                                     including natural sinks
                                      rather than millions – would likely
Agreement, voluntary action is                                                     - will always be needed
                                      have a much greater impact than
critical for demonstrating and                                                     to achieve net zero.
                                      voluntary action.
scaling NCS markets.                                                               NCS credits should be
                                      Whether companies are driven                 considered an enabling
                                      by regulation or taking voluntary            solution that will support
                                      action, they must make sure                  long-term sustainable land
                                      that their approach to the use of            use.
                                      carbon credits and the credits
                                                                              3.   NCS investments should
                                      themselves are robust and
                                                                                   deliver environmental
                                      scientifically sound.
                                                                                   and social safeguards
                                                                                   and benefits in addition to
                                                                                   GHG emissions reductions.

                                                                              4.   Sound and verified
                                                                                   carbon measurement
                                                                                   and accounting
                                                                                   methodologies should
                                                                                   be applied to ensure high
                                                                                   environmental integrity
                                                                                   of NCS credits.

                                                                            The remainder of this paper dives
                                                                            into several of the key elements
                                                                            of the NCS landscape today,
                                                                            as well as into each of the four
                                                                            principles. This paper is designed
                                                                            to provide reference and support
                                                                            to companies interested in
                                                                            integrating NCS into their GHG
                                                                            emissions mitigation strategies.

                                                           Natural climate solutions: the business perspective 6
Solutions: the business perspective - WBCSD
3   The climate challenge, the role
    of the land sector and negative
    emissions technologies

                  Natural climate
                          climate solutions:
                                  solutions: the
                                             the business
                                                 business perspective
                                                          perspective 77
Solutions: the business perspective - WBCSD
3       The climate challenge and
          the role of the land sector
          and negative emissions
At COP 21 in Paris, nearly            Carbon Capture and Storage              of avoiding catastrophic climate
200 countries adopted the             (BECCS). Although these                 change at a later stage.
landmark Paris Agreement              solutions are important, they
to combat climate change.             have not in general been proven         Nature is a proven, scalable
The Agreement aims to keep            commercially or widely deployed         carbon removal technology
the global temperature rise           at scale and therefore these            that’s been refined endlessly
to well-below 2°C above pre-          technologies need more time.            over millennia. Businesses,
industrial levels, pursuing           In contrast, NCS are available          governments and other actors
efforts to limit warming to           for deployment at scale today.          can implement NCS across the
1.5°C.                                                                        globe at massive scale to reduce
                                      Use of NCS is not only about
                                                                              atmospheric CO2 emissions.
                                      negative emissions technologies,
While the Paris Agreement
                                      however. Reductions in GHG
charted a new, more ambitious                                                 NCS store carbon and other
                                      emissions from agriculture,
course in the global effort to stop                                           greenhouse gases by enhancing,
                                      forestry, and other land uses
climate change, three years on,                                               restoring or protecting natural
                                      (AFOLU) - which contribute
the world is not on track to meet                                             sinks – like wetlands and
                                      a quarter of total global GHG
the original goals, in particular                                             peatlands - or by reducing
                                      emissions10 - are also needed.
to limit warming to 1.5°C, which                                              emissions from land-use
                                      Using NCS to avoid emissions
the IPCC describes as the upper                                               change. NCS are usually pursued
                                      from the land sector in addition to
limit of a safe operating space for                                           through three main activities:
                                      creating carbon sinks can make
humanity.9                                                                    conservation, restoration and
                                      a significant impact on achieving
                                      climate goals.                          improved land management
An IPCC report published in                                                   across forests, grasslands,
October 2018, highlights that                                                 agricultural lands and wetlands
                                      In this light, investing in nature
worldwide, on average, we’ve                                                  (see Figure 1 for examples).
                                      as a proven solution offers a
already reached 1°C warming and
                                      compelling option for society and
today’s rates of decarbonization
                                      business.                               Recent research shows that NCS
are less than half of what’s
needed to limit warming to safer                                              can provide up to one third (11.3
                                      NATURAL CLIMATE                         billion tons CO2e at less than
levels. In fact, global warming       SOLUTIONS CAN HELP
is expected to exceed 1.5°C as                                                USD $100 per tCO2e) of the GHG
                                      BRING THE PARIS                         emissions reductions needed by
early as 2040.
                                      AGREEMENT INTO REACH                    2030.12 The same study showed
Given this challenge, the IPCC                                                that a high proportion of this is
                                      Pursuing a pathway for rapid            available at relatively low cost;
describes the use of “carbon
                                      GHG emissions reductions is             around 3 GtCO2e can be delivered
removal” technologies to capture
                                      essential over the next decade,11       annually for less than USD $10 per
greenhouse gases from the
                                      which is critical – and NCS can         tCO2e (see Figure 2).
atmosphere and securely store
                                      be a key part of this. If sufficient
                                      action is not pursued today using
The IPCC lays out potential           all the available cost effective
options for carbon removal            technologies we have at our
technology such as Direct Air         disposal, then we will likely be left
Carbon Capture and storage            turning to solutions that are more
(DACCS) or Bio Energy with            expensive, and in some cases
                                      unproven, to give us any chance

                                                             Natural climate solutions: the business perspective 8
Solutions: the business perspective - WBCSD
Figure 1: Examples of NCS

            CONSERVATION                      RESTORING COASTAL                 SMART AGRICULTURE AND
                                                  WETLANDS                        LAND MANAGEMENT
    Rising demand for food and            Coastal wetlands such as            Tropical and temperate forests
    natural resources is causing          saltmarshes, seagrass meadows       are highly effective carbon sinks.
    large-scale land conversion           and mangrove forests store and      Improved agricultural practices
    around the world for commercial       sequester carbon.                   can deliver improved carbon
    agriculture and urban                                                     storage in healthier soils.
    development.                          These “blue carbon” ecosystems
                                          can store up to four times          Climate smart agricultural
    This land conversion releases         more carbon per hectare than        practices and proper
    carbon that had previously been       terrestrial forests.                management of working
    stored.                                                                   plantations and forests can aid
                                          However, destruction of coastal     carbon storage while improving
    By protecting habitats from           ecosystems is releasing massive     yields and productivity of the
    unnecessary or irresponsible          amounts of carbon.                  land.
    conversion, the loss of carbon
    stored in plants and soils into the   Restoring these environments        Improving soil health and forest
    atmosphere is avoided.                can prevent carbon from             management improves the
                                          escaping while enhancing            resilience of farming and forest
    This maintains the land area as       community resilience against        communities to climate change
    an active carbon sink.                the localized impacts of climate    risks of both drought and
                                          change through storm and            flooding, for example.
                                          flooding protection, for example.

                                                              Natural climate solutions: the business perspective 9
Solutions: the business perspective - WBCSD
THE ROLE OF BUSINESS                                                                   All companies can make use of
IN DELIVERING AND                                                                      insetting13 or offsetting using                 For this to work, investment
SCALING NATURAL                                                                        NCS credits to compensate                       in NCS for offsetting
CLIMATE SOLUTIONS                                                                      for emissions that cannot be                    must occur in tandem
                                                                                       avoided through their mitigation                with strong emissions
Deploying NCS at scale will                                                            strategies, helping draw down or                reductions efforts in the
require everyone to play their                                                         avoid carbon emissions in order                 companies’ own operations,
part. Governments can provide                                                          to achieve net-zero emissions in                whether companies are
enabling conditions through                                                            the second half of the century.                 operating in the agrifood,
policy change while civil society                                                                                                      chemicals, energy, materials,
can promote new ideas and hold                                                         NCS carbon credits should be                    transportation or any other
organizations accountable for                                                          used as a tool to help companies                sectors.
their actions. Business will also be                                                   to demonstrate leadership, and
critical in unlocking the massive                                                      to make additional, near-term
                                                                                                                                  In the second half of the century,
potential of NCS.                                                                      contributions towards their
                                                                                                                                  absolute emissions reductions
                                                                                       climate goals.
                                                                                                                                  globally must be significant
                                                                                                                                  enough to maintain steady
                                                                                                                                  atmospheric CO2 levels and we
                                                                                                                                  should not need to over-rely on
                                                                                                                                  offsetting. In other words, for
                                                                                                                                  most companies, investment
                                                                                                                                  in NCS should only be used to
                                                                                                                                  complement wider climate action
                                                                                                                                  that delivers net zero global GHG

Figure 2: Chart showing the potential contribution of NCS to limit climate change up to 2030
and beyond
Reproduced from Griscom, B.W. et al., 2017, NCS


                                                                                                                                       le mis
                                                 60                                                                               usua
         Global carbon emissions (Pg CO2 yr-1)


                                                                                                                                  Fossil fuel mitigation

                                                 30                          sion
                                                                  oric                                                 NC
                                                              Hist                                                         SA
                                                                                                                       NC      vo
                                                 20                                                                       SS          dE
                                                                                                                              eq          mi
Companies operating in the             term sustainable agricultural          For example, farmers and food
land-use sector are a bit different    and forestry practices that avoid      producers increasingly invest
as they have a particularly            deforestation while engaging in        in improving soil health as part
important long-term role to            restoration efforts. Companies         of climate-smart agriculture
play: managing land sustainably        in this sector, due to their           initiatives, recognizing the
in order to provide necessary          management and/or ownership            significant climate and business
commodities to the global              of land, also have the opportunity     benefits of doing so. Improving
markets while also working             either to sequester CO2 within         soil health increases land
to enable and support local            their own supply chains - in the       productivity, while healthy soils
communities and indigenous             form of insetting - or to produce      are also more effective at storing
peoples. While companies               carbon credits for use outside         and sequestering carbon.
operating in this space are critical   their supply chains.
for a healthy and thriving human                                              Leading companies in the forest
society, they’re also responsible      Nearly 450 consumer goods              sector are also working with
for approximately 25 % of global       companies have now set zero-           customers and policy makers to
anthropogenic emissions.10             deforestation commitments              develop business opportunities
                                       for the products they source,          for sustainably managed forests,
Because of this, land-sector           responding to customer                 delivering positive ecological and
companies have two key roles.          demand and because of long-            social outcomes by maximizing
Firstly, they can implement long-      term productivity benefits.15          carbon storage and providing
                                                                              livelihoods for local people.

Figure 3: Different private sector actors can play different and complementary roles in supporting NCS

                        D   USE SECTO                             HE        R SECTOR
                     AN              R                         OT                   S
                                                                            NCS support via
                                                                            carbon finance
                                                                            as a near-term
              NCS as a central part                                         transitionary tool
              of long-term absolute
              strategy                       TARGET                         Supporting and accelerating
                                                                            transition of land use sector
                                              Net zero                      to meet own near-term
              Transitioning                 emissions by                    climate goals
              to a long-term
              sustainable land
                                                                            Absolute emissions
              use sector                                                    reductions must
                                                                            continue in parallel
                                                                            and dominate from
                                                                            mid century

                                                          Natural climate solutions: the business perspective 11
KEY DRIVERS FOR                            Targets exist for addressing               Voluntary use of NCS
SCALING INVESTMENT                         climate change that increasingly           demonstrates to policymakers
IN NCS                                     cover full value chains, going             that businesses are taking action
                                           beyond a company’s own                     and are comfortable using NCS
There are two important drivers            operations, and aim for “carbon            carbon credits. In doing so,
behind business investment in              neutrality.”                               voluntary uptake is likely to give
NCS – both are likely to increase                                                     governments the confidence
in the coming years.                       Many companies face                        they need to deploy enabling
                                           challenges in meeting their                policy frameworks and structures
VOLUNTARY ACTION                           climate action commitments,                for scaling up NCS investment.
                                           particularly in the near-term.             It’s worth noting that some
Risks associated with climate              This is because silver-                    sectors may never fall under
change are becoming clearer                bullet solutions do not yet                direct carbon price regulation
and more tangible – as are the             exist, especially in hard-to-              and therefore scaling voluntary
commercial opportunities for               decarbonize industries such                action for these sectors will
addressing them.                           as steel, aluminum, shipping               remain critical.
                                           and aviation. At the same
In addition, companies face                time, implementation of new
pressure from customers,                   technologies often happens
investors and employees to                 over long time-horizons, as
act on climate change using                is evident in the slower-than-
methods that are anchored in               desired uptake of electric light
science and aligned to the Paris           passenger vehicles.

Figure 4: The ambition loop
Both voluntary action and regulation will be necessary in driving corporate NCS investment to the scale required, with
each playing a distinct (but interacting) role

Technical innovation             Demonstrate             Engage non-             Create working             Quick to deploy
  to enhance the                  businesses           regulated sectors       models for regulation
   robustness of                  leadership

                                                        Voluntary action


                 Deliver scale             Match businesses          Correct market           Send expectation
                                             incentives to              failures                signal to non-
                                          government’s goals                                  regulated sectors

                                                                 Natural climate solutions: the business perspective 12
Key benefits for companies using         emissions reductions              •   Another issue is the
NCS voluntarily include:                 targets or disclose their             uncertainty around how
                                         performance on tackling               carbon units will be
•   Low-carbon product                   climate change offer                  embedded within the
    offerings: Customers -               limited or no recognition             accounting and governance
    including other businesses           of NCS offsetting. This is            structure of a country’s
    - are looking to achieve             because there’s still a lack          Nationally Determined
    carbon neutrality, and often         of consensus on, or support           Contribution (NDC) under
    are concerned about their            for, the role of offsetting as        the Paris Agreement. At the
    carbon footprint. NCS can            a decarbonization tool by             core of this is a lack of clarity
    help companies meet this             NGOs. At the same time,               as to whether countries
    demand. For example, an              many consumers or investors           will export carbon units to
    airline may use NCS to help          may not recognize the                 private investors without
    customers offset their travel        commercial and social value           simultaneously making
    emissions.                           derived from investing in             corresponding adjustments
                                         NCS, which can limit demand.          to their own NDC goals –
•   Ensuring stability of                                                      which could lead to “double
    supply: NCS bring several        •   Concern about the                     counting” or overestimating
    co-benefits in addition to           robustness of NCS and                 the amount of carbon abated
    offsetting carbon emissions.         land sector carbon credits            for every transaction.
    These benefits could include         emerged in the early 1990s
    increased resilience of              when the idea and economic            The rules governing and
    agriculture, company assets          thinking around this work             monitoring these interactions
    and supply chains, securing          was still nascent. Calculating        must ensure that no two
    supply of products in the face       emissions reductions from             entities claim the same
    of growing climate-related           the land sector was not well          carbon unit. These rules are
    risks through for example            understood – as it was for            still being negotiated. There
    enhanced flood defenses or           other offset project types            is a need for these issues to
    improved soil health. When           such as those with renewable          be resolved by the time NDCs
    designed appropriately they          energy. Concerns from a               start to take effect in 2020.
    can also improve biodiversity        broad set of stakeholders
    and ecosystems while                 revolved around whether a         •   For voluntary NCS to work
    helping farmers and rural            land sector offset project            in business, there’s also a
    communities accelerate               would merely displace, rather         need to build the capacity
    improved practices and               than reduce, emissions.               to implement NCS solutions
    strengthen resilience.               However, there is now                 at scale.
                                         substantial evidence that
There are, however, several              addresses previous technical      Addressing these challenges
challenges to accelerating the           challenges using globally         must be a priority, if we are
voluntary deployment of NCS              agreed guidance17 in, for         to unlock the full potential of
including:                               example, large-scale forestry     voluntary corporate action.
                                         projects. There’s also a series
                                         of more robust tools and
•   Many reporting frameworks
                                         methodologies available for
    and standards designed
                                         ensuring the robustness
    to help companies set
                                         and integrity of NCS offset

                                                        Natural climate solutions: the business perspective 13
COMPLIANCE MARKETS                     Since 2012, the number of           Zealand now all include NCS in
                                       countries who have implemented      regulatory frameworks and are
Given the size of the Paris            or scheduled carbon pricing         demonstrating that they work.
Agreement challenge, all               instruments has nearly doubled.
investment in NCS is needed            As of 2018, 25 emission trading
and voluntary action is critical                                           CORSIA (the Carbon Offset
                                       schemes and 26 carbon taxes         and Reduction Scheme for
for demonstrating and scaling          exist worldwide. The value of
NCS markets. However, while                                                International Aviation), is
                                       these carbon pricing initiatives,   projected to require around
the voluntary use of natural           including emissions trading
climate solutions is growing                                               2.5 billion tons of carbon credits
                                       schemes, carbon taxes, permits      from 2020-2035.19 Under the
and desirable, it is not currently     and allowances reached USD $82
anywhere near enough to deliver                                            plan, international aviation’s
                                       billion in 2018.8                   emissions above 2020 levels
the Paris Agreement goals.
                                                                           must be offset with allowable
                                       Carbon pricing policies that        carbon credits. Specifically, airline
Government policies that raise         create price disincentives for      operators will have to purchase
the ambition of national climate       carbon emissions rarely include     offsets for a portion of their flight
goals (including NDCs), while          complementary price incentives      routes between countries that are
also integrating nature-based          for sustainable land-use; this      covered. From 2021-2026 only
carbon credits into compliance         must be addressed to achieve        countries that have volunteered
pathways could unlock a scale          the full potential of NCS.          are covered which includes nearly
of investment that exceeds                                                 all of the major aviation states.
what could be achieved through                                             From 2027-2035 coverage
voluntary markets alone.               In some cases, governments
                                       leave NCS out of compliance         expands to include every country
                                       regimes because of outdated         except LDCs and SIDS who can
Compare, for example, the likely       concerns around whether a           still volunteer to be included in the
size of voluntary markets for          land sector offset project would    plan. The types of offset credits
NCS carbon credits, typically          merely displace, rather than        that will be admissible have yet
measured in millions of dollars,       reduce, emissions – as mentioned    to be decided, so it is unclear
versus compliance markets,             above. These perceptions are        whether NCS will be allowed to
normally worth billions of dollars.8   changing: Australia, California,    play a major role in helping the
                                       China, Colombia and New             aviation sector lower its climate

                                                         Natural climate solutions: the business perspective 14
PRINCIPLES FOR NCS                     WBCSD and Nature4Climate                          including natural sinks - will
INVESTMENTS                            strongly recommend that any                       always be needed to achieve
                                       NCS investment adhere                             net zero. NCS credits should
Whether it is voluntary action         to the following four principles:                 be considered an enabling
by companies or regulatory                                                               solution that will support
compliance, there must be              1.   NCS investments can and                      long-term sustainable land
assurance that the approach                 should raise ambition                        use.
taken to offsetting is credible and         with respect to climate
rooted in science and that the              action, enhancing rather                3.   NCS investments must
NCS carbon credits are produced             than diluting a nation’s or                  deliver environmental and
sustainably and deliver real                a company’s contribution                     social safeguards and
carbon emissions reductions.                to the Paris goals. Carbon                   benefits in addition to GHG
                                            credits should therefore be                  emissions reductions. For
All actors – companies,                     used in conjunction with the                 example, the preservation of
governments and civil society -             GHG emissions mitigation                     a given forest could enhance
will therefore need to adopt a set          hierarchy (See Figure 5).                    a wide variety of ecosystem
of principles that can deliver this                                                      services to the benefit of local
environmental and social integrity.         Avoiding, minimizing, and                    and indigenous communities’
                                            reducing emissions should                    livelihoods.
                                            be prioritized. These efforts
                                            should continue in parallel             4. Sound and verified
                                            with and in addition to the use            carbon measurement and
                                            of NCS credits.                            accounting methodologies
                                                                                       should be applied to ensure
                                       2.   NCS investments must                       high environmental integrity
                                            deliver an interim solution                of NCS credits. Emissions
                                            for hard to abate emissions,               reductions and removals
                                            but not a permanent one.                   must be real, quantifiable and
                                            For unavoidable emissions,                 verifiable, and tracked to avoid
                                            carbon sinks - potentially                 double counting.

Figure 5: The mitigation hierarchy
Companies should use NCS offsets in conjunction with the mitigation hierarchy as one component of a decarbonization
                                                                       2019-2030   2030-2050   2050-2100


                                                       taken ​
                                                       to avoid
                                                       generating ​
                                                       GHG emissions


                                                       taken ​
                                                       to minimise ​
                                                       GHG emissions

               HIERARCHY                               Compensation

                                                       for GHG
               Companies                               emissions​
                                                       in one place
               should prioritize                       by making ​
               avoiding and                            equivalent
               minimizing their                        elsewhere

                                                                Natural climate solutions: the business perspective 15
UNLOCKING IMPACT AT                   Accelerate private sector              Advocate for policy:
SCALE: HOW CAN YOUR                   investment:
BUSINESS PLAY ITS                                                            •   Governments and regulators
PART?                                 •   We’ll continue to generate             should ensure that policy
                                          awareness of NCS as a                  supports the use of
NCS needs to become a major               climate solution in order              sustainable NCS. In particular,
pillar of the global climate change       to encourage demand                    the incorporation of NCS
mitigation strategy as soon as            and promote investment                 carbon credits in compliance
possible. Businesses can help             in NCS supply. The launch              markets will help drive
unlock the potential of NCS by            and sharing of this narrative          these solutions to the scale
investing in high quality programs        during key events such as              needed. To achieve a policy
today.                                    the UN Secretary-General’s             environment that releases
                                          Climate Summit, UNFCCC                 the potential of NCS, the
By sending a strong demand                COP25 and beyond will                  unified voice of business
signal, your company and sector           take a central role in our             should be articulated and
can help show governments                 communications strategy.               heard at the highest levels.
that the private sector is ready                                                 WBCSD, in collaboration with
and willing to contribute, giving     •   By recognizing the role that           key partners, aims to provide
governments the confidence to             NCS can play in driving down           a platform for this discussion
enact clear policy incentives to          emissions, globally accepted           at key UN events and through
which the market can respond.             frameworks for GHG                     continued engagement with
                                          accounting and target-setting          governments in partnership
WBCSD and Nature4Climate3                 frameworks such as the GHG             with organizations such as
have formed a partnership                 Protocol and Science Based             N4C and the World Economic
to help unlock private capital            Targets can act as strong              Forum (WEF). Central to
for investments in NCS. As                enablers that encourage                these efforts will be the
part of this, through its NCS             business to integrate NCS              NCS Alliance which will be
project, WBCSD will focus on              into their climate strategies.         launched at the 2019 New
raising corporate, civil society          To achieve this, we will               York Climate Week.
and consumer awareness,                   engage with and on behalf of
accelerating voluntary action,            our members to ensure their        •   WBCSD and partner
as well as working in partnership         voice is heard in the debate           organizations will continue
with other key organizations to           and to find solutions that can         to advocate for the
promote and scale carbon pricing          work within and/or alongside           development of credible
policies that steer private capital       such frameworks.                       accounting and governance
into NCS.                                                                        structures that allow the
                                      •   The credibility concerns               international transfer of
Our goal is to encourage                  around the quality and                 mitigation outcomes
responsible investment in nature          robustness of NCS carbon               between countries. This is
by helping companies overcome             credits still need to be               best achieved through Article
challenges to unlocking large             addressed to achieve                   6 of the Paris Agreement.
scale investment in NCS.                  greater acceptance by
                                          business and society. The          WBCSD and N4C aim to stimulate
                                          science behind carbon              private sector ambition and
                                          sequestration by nature is         investment in NCS to protect
                                          well established. Equally,         nature and improve food security
                                          standards agencies can and         while sequestering carbon from
                                          do provide independent             the atmosphere on a scale
                                          verification of NCS projects.      sufficient to combat climate
                                          Collating and communicating        change. The NCS team at
                                          the latest information on NCS      WBCSD welcomes participation
                                          offsetting can help to alleviate   and partnerships – so please
                                          credibility concerns.              reach out to WBCSD and help us
                                                                             shape these exciting - but as yet
                                                                             underdeveloped - natural climate

                                                          Natural climate solutions: the business perspective 16
    Griscom et al., Natural           8
                                        State and Trends of                     17
                                                                                     Donofrio, B., Rothrock,
    climate solutions, PNAS             Carbon Pricing 2018,                         P. & Leonard, J. Supply-
    2017 114 (44) 11645-                https://openknowledge.                       change: Tracking Corporate
    11650,                     Commitments to Deforestation-
    content/114/44/11645                                                             free Supply Chains (Forest
                                                                                     Trends, 2017).
    For reference, at the beginning
    of 2019, carbon traded on the
                                           Agriculture, Forestry and Other      18
                                                                                     Examples include: https://verra.
    European Union Emissions               Land Use (AFOLU). In: Climate
                                           Change 2014: Mitigation of                org/, https://www.goldstandard.
    Trading System (EU ETS) at                                                       org/
                                           Climate Change. Contribution
    around $10 per tCO2e. https://
                                           of Working Group III to the Fifth                                                 19
                                           Assessment Report of the
    environmental-markets/spot-            Intergovernmental Panel on                environment/Pages/corsia.aspx
    market/european-emission-              Climate Change
                                           The IPCC highlights that the              next twelve years are critical
    statistics/412794/euro-to-             to achieving the emissions
    u-s-dollar-annual-average-             reductions needed to avoid
    exchange-rate/                         catastrophic climate change
    Including UNDP, CBD,
    The Nature Conservancy,           12
                                           The Natural Climate Solutions
    Conservation International,            (NCS) referred to in this paper
    World Resources Institute,             are land- and coastal-based and
    Wildlife Conservation Society,         do not include the potential role
    Woods Hole Research Centre             of oceans.
    and WWF.
    State of Forest Carbon                com/index.php, https://www.icroa.
    Finance 2017 https://www.             org/Insetting
    uploads/2018/01/doc_5715.         14
                                           A 2016 study found that
    pdf                                    companies that offset
                                           overwhelmingly do so in the
5                   context of an overarching
    energy/greenhouse-gas-                 emissions reduction strategy,
    equivalencies-calculator               investing approximately 10
                                           times the amount in direct
    ACEA Report Vehicles in use            emissions reductions compared
    Europe 2017, https://www.              to companies that don’t offset.   
    documents/ACEA_Report_                 publications/buying-in/
    Negative Emissions                    deforestation-pledges-need-
    Technologies and Reliable             help-support-to-meet-targets-
    Sequestration: A Research             new-study-finds/
    Agenda (2019). National
    Academies of Sciences,            16
    Engineering and Medicine,

                                                            Natural climate solutions: the business perspective 17
ABOUT WBCSD                           ABOUT                                DISCLAIMER
WBCSD is a global, CEO-led                                                 This publication is released in
organization of over 200 leading      Nature4Climate (N4C) is an           the name of WBCSD. The paper
businesses working together           initiative of the United Nations     is the result of a collaboration
to accelerate the transition to       Development Programme                among WBCSD NCS group
a sustainable world. We help          (UNDP), UN-REDD, the                 members and Nature4Climate
make our member companies             Convention on Biological             and is intended to represent
more successful and sustainable       Diversity (CBD), the International   the wide range of discussion
by focusing on the maximum            Union for Conservation of            and perspectives among
positive impact for shareholders,     Nature (IUCN), Conservation          these stakeholders. Not every
the environment and societies.        International (CI), The Nature       contributor may agree with every
Our member companies come             Conservancy (TNC), Wildlife          word in the document but the
from all business sectors and all     Conservation Society (WCS),          members are largely aligned on
major economies, representing         Woods Hole Research Center,          the guiding principles described
a combined revenue of more            World Business Council for           in this paper.
than USD $8.5 trillion and 19         Sustainable Development
million employees. Our Global         (WBCSD), World Resources             This publication has been
Network of almost 70 national         Institute (WRI), We Mean             prepared for general guidance
business councils gives our           Business (WMB) and WWF that          on matters of interest only and
members unparalleled reach            aims to increase investment          does not constitute professional
across the globe. WBCSD is            and action on natural climate        advice. You should not act upon
uniquely positioned to work with      solutions in support of the 2015     the information contained in this
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across value chains to deliver        N4C partners work together to        specific professional advice.
impactful business solutions          catalyze partnerships between        No representation or warranty
to the most challenging               governments, civil society,          (express or implied) is given as to
sustainability issues. Together,      business and investors that          the accuracy or completeness
we are the leading voice of           use nature-based solutions to        of the information contained
business for sustainability: united   climate change.                      in this publication, and, to the
by our vision of a world where                                             extent permitted by law, WBCSD,
more than nine billion people                                              its members, employees and
are all living well and within the                                         agents do not accept or assume
boundaries of our planet,                                                  any liability, responsibility or duty
by 2050.                                                                   of care for any consequences
                                                                           of you or anyone else acting, or
Follow us on LinkedIn and Twitter                                          refraining to act, in reliance on
                                                                           the information contained in this                                                              publication or for any decision
                                                                           based on it.

                                                                           Contact: Christopher Conifer,
                                                                           María Mendiluce,
                                                                           Peter Beare,
                                                                  and see
                                                                           our natural climate solutions


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