Photo by Geran de Klerk on Unsplash

It’s Time for Business to Aim Higher. Here’s One Way to Do It — Natural Climate Solutions

Today, society grapples with numerous and difficult crises — racial discrimination, socioeconomic inequities, COVID, climate change, and many others. People yearn for — and are now demanding — more conscientious, responsible, inclusive and long-term oriented leadership. People don’t just look to the government for such leadership. They also expect that the business community will step up, do much more, and make a real difference addressing these crises. And they want this to happen now.

Some Background — NCS Is an Essential Climate Strategy

Even under the most aggressive carbon emissions reduction scenarios, the world will need to rely on some form of carbon removal to meet its 2.0C or more ambitious climate targets. According to a Goldman Sachs report, 25% of total human-caused CO2 emissions cannot currently be abated by large-scale commercial technologies. If we’re going to achieve net zero, as the experts say we must, it’s imperative to invest in carbon offsets, and better yet, removal.

Good News — Demand for NCS Is Likely to Soar

Nature — forests, soils, wetlands and other ecosystems — is currently the only readily scalable, cost-effective carbon removal solution. More and more companies are planning to purchase nature-based offsets and invest in nature-based removal. Amazon, Shell, Microsoft, Salesforce, many oil and gas companies, airlines, and others have all explicitly committed to nature-based removal as part of their climate efforts. And as part of the We Mean Business coalition, more than 1,000 businesses have signed on to an agenda for a pro-climate COVID-19 economic recovery that includes “invest in nature-based climate solutions” as one of its pillars.

But Who Will Produce the Needed Supply?

It’s easy to see demand for natural climate solutions rising sharply. But it’s not as clear where we will get the needed supply. Organizing the ambitious projects that will produce offsets at large scale is a huge and complex undertaking. Often locations for such projects are remote (think rainforests) and upfront capital needs can be significant. If the project requires restoration of an ecosystem (say a forest or mangrove), significant time is required for natural growth and associated carbon capture to occur, which means likely delays in monetizing the carbon credit and generating cash. Offsets also need to be credible of course so that means verification by third parties is necessary. Monitoring costs to do such verification start high, and somehow — probably through the innovative use of technology — need to be brought down for the offset to be affordable.

What Should the Private Sector Do in the NCS Market?

After reducing their own emissions to the maximum extent, companies can purchase high quality NCS offsets to lower their emissions further. Each day, it seems another important company announces ambitious plans along these lines. This is a trend that all of us who care about climate progress should support. The key success factors are to be fully transparent, and to purchase only the highest quality offsets. Companies should also be humble and open to input and criticism. There are a lot of things to get right here. Actively-engaged buyers of NCS have a big role to play in shaping and improving this climate strategy over time. Already, we see big buyers pushing suppliers for more participation by smaller land and forest owners, and for greater focus on biodiversity and community outcomes.

But This Won’t Be Business As Usual

I really want to emphasize this next point: success in NCS will require much more than traditional business capabilities. Companies should not try to do all of this on their own. For NCS to be credible and to scale, the private sector should engage strategically with civil society and seek support through partnership with environmental NGOs. This can

What Your Stakeholders Want to See

More and more people — employees, customers, shareholders — envision a new way of doing business. Stakeholders are setting the bar for business very high. Younger people and activists were once the loudest in making this demand. But today, the view is much more widespread. Institutional investors around the world are embracing ESG criteria and committing more of their capital to funds that invest exclusively on this basis. Even CEOs themselves acknowledge as much. Take, for instance, the Business Roundtable commitment made in April 2019: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

This Is Urgent — Please Get to Work

Natural climate solutions provide the private sector with the opportunity to accelerate the growth of an industry critical to the well-being of people and the planet. The stakes could not be higher. Further, it’s likely to be an attractive business opportunity — the proverbial win-win. For full success to be achieved, private sector speed, capital, and technology will be essential. It will also be essential to integrate best practices and know-how by partnering with able NGOs.

Former CEO of The Nature Conservancy CEO. “Nature’s Fortune” author. Family man, yogi, ice climber, vegan.

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