💡What Are Nature-Based Solutions?

The Paris Climate Agreement pledges to work toward limiting global warming to 1.5°C and to keep it below 2°C 🌡️.

Whether we can all work together to decrease warming sufficiently to prevent the worst effects of climate change will depend on what the international community does between now and 2030.

The risks of catastrophic weather and collapsing ecosystems increase above the 1.5 °C threshold.

According to the most recent IPCC assessment, the top five most successful methods for lowering carbon emissions by 2030 include nature-based.

Nature-based solutions use ecosystems like forests, wetlands, and agricultural land to absorb and store carbon dioxide (CO₂) from the atmosphere.

These projects—such as reforestation projects in Brazil—actively remove carbon, generating carbon credits while restoring ecosystems (e.g. Microsoft's reforestation efforts).​

These projects—such as reforestation, soil carbon sequestration, and wetland restoration—generate carbon credits by actively removing carbon from the atmosphere.

In simple terms, nature-based solutions create a market where nature itself is the solution to reducing carbon emissions.

🌍 How do carbon credits from nature work?

Here’s how nature-based solutions fit into carbon markets:

• A company or organization funds or develops a project like planting trees or restoring mangroves.

• The project absorbs CO₂ over time, earning carbon credits.

• Companies that exceed their emissions caps buy these carbon credits to offset their emissions.

For example, if a company emits more CO₂ than allowed, they can buy credits from a reforestation project to balance out their emissions.🌳 

Nature-based solutions create a win-win situation: emissions are reduced, and ecosystems are restored.

💼Why are nature-based solutions crucial for investors?

Nature-based solutions present significant investment opportunities. For companies and investors looking to align with ESG goals (environmental, social, and governance), NBS offer:

• Tangible impact: Investments in nature-based projects deliver clear environmental and social benefits, restoring ecosystems while reducing emissions (read more about it here - Morgan Stanley).

• High demand: As carbon markets expand, the demand for credits from nature-based projects is soaring, particularly in voluntary carbon markets (read more about it here - Bain).

🌱 For private investors, this means that supporting nature-based projects can offer both financial returns and a positive climate impact.

The beauty of NBS is that they don’t just neutralize emissions—they also contribute to biodiversity, sustainable agriculture, and community development.

🌐 Expanding NBS into emerging markets

Much like the geographic disparities we discussed in previous posts, nature-based solutions also offer enormous potential in emerging markets. Projects like reforestation in Africa 🌳 or sustainable land use in Southeast Asia can:

• 🌍 Reduce emissions.

• 💼Improve local economies.

• 👷Create jobs and restore ecosystems.

In regions where emissions are low but the need for climate resilience is high, NBS can generate carbon credits while improving livelihoods and ecosystems. 🌿

While the potential for nature-based solutions is enormous, they are not without challenges. Issues such as:

• ✅Verification: Ensuring the carbon credits accurately reflect real emissions reductions.

• 📉Market volatility: Prices for carbon credits can fluctuate, making long-term planning difficult for investors.

🔑 Key Takeaways

• 🌿 Nature-based solutions are essential tools for removing carbon from the atmosphere and generating carbon credits.

• 💼 Investors can tap into NBS projects for both financial returns and a positive environmental impact, aligning with ESG goals.

• 🌍 NBS projects in emerging markets offer double benefits: reducing emissions and improving local economies.

As the world looks to decarbonize, the true power of nature-based solutions lies in their ability to not only capture carbon but also restore ecosystems and uplift communities—making them an essential tool in the fight against climate change.

The next frontier?

How ESG investing is driving this transformation.

Tomorrow here on the news! 📰

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