The urgency to mitigate climate change and its consequences, along with biodiversity loss, has been a growing concern for the global community. In the World Economic Forum 2023 Global Risk Report, these were perceived as the top long-term global risks to humankind, indicating a striking shift from earlier perspectives where societal concerns featured prominently.

The UNFCC COP 27 and COP 15 of the Convention of Biological Diversity highlighted the urgent need to address the interlinked global crisis of climate change and biodiversity loss. They emphasised the importance of protecting, conserving, and restoring nature and ecosystems for sustainable and effective climate action, as well as the broader context of achieving sustainable development goals.

COP15, a few weeks later, showed overwhelming support for implementing the Global Biodiversity Framework, which aims to halt and reverse nature loss and protect indigenous rights, including putting 30% of the planet and degraded ecosystems under protection by 2030.

The demand for synergy between climate change mitigation and reversing biodiversity loss, positions Nature-Based Solutions (NBS) prominently today. The International Union for the Conservation of Nature (IUCN) defines NBS as the answer to address societal challenges through the protection, sustainable management, and restoration of both natural and modified ecosystems, benefiting both biodiversity and human well-being.

Although NBS could address a multitude of societal challenges, Natural Climate Solutions, considered a subset of NBS, are often designed keeping climate action in mind while simultaneously benefiting both biodiversity and human well-being.

The question is if policymakers and corporations affect NBS to help unlock its potential to monetize carbon sequestration.

Untapped potential of mangroves

The Government of India’s Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) is an excellent example of NBS, demonstrating the benefits of mangrove protection, such as flood protection and the provision of additional nutrients for local communities.

Mangrove forests in eastern India protect villages and crops from flooding during cyclones and storm surges. The mangroves have been protected from deforestation and overexploitation since 1985.

A comparison of inundation and damage between villages found that those further away from mangroves suffered more extensive damage than those in the mangrove shadow. The same study showed that the majority of local people perceived benefits from the mangroves. Those living in the immediate vicinity of the coastal forests valued the additional nutrients they provided, while those living further away saw flood protection as the main benefit.

While all the essential criteria for an appropriate NBS potentially exist within such a government programme, there has been little discussion of the carbon sequestration potential from mangrove protection and conservation. Given their extensive root systems, mangroves are thought to store five times more carbon than tropical forests and can act as valuable sinks for greenhouse gas emissions.

Monetising this could potentially generate voluntary carbon credits available for entities seeking to offset their emissions. Such monetisation could have several benefits. It could improve both public and private finance for mangrove restoration and conservation, providing a valuable and economic pathway for carbon capture, biodiversity conservation, and socio-economic advancement.

In a mega-biodiverse country like India, mangroves are just one example of a large plethora of options for Nature-Based Solutions. Such options are embedded in the traditional agriculture, forestry, and other land uses (AFOLUs) category of projects that earlier generated carbon credits under the Clean Development Mechanism implemented by the UNFCC.

Need for clarity in policies

There is enormous potential for monetising NBS, specifically through the generation and trading of voluntary carbon credits, which would result in economic, social, and ecological benefits.

Carbon credits can be an important tool to incentivise companies to reduce their carbon footprint, and now, there is a shift towards voluntary carbon credits (VCs) generated from natural climate solutions.

These solutions can provide a better return on investment and promote biodiversity conservation and socio-economic gains. However, there are challenges in generating VCs at scale, especially in countries like India where the largest tracts of land with significant carbon capture potential are owned by the government or communities.

Without clear policies and legislation defining how benefit-sharing of carbon credits occurs, it is difficult for entities to invest in NBS projects for offsetting their own emissions or generating credits for sale in exchanges.

The Energy Conservation (Amendment) Bill, 2022 in India intends to empower the central government to specify a carbon credit trading scheme, forbid carbon credit exports, guarantee the expansion of a local domestic market for carbon credits and increase internal trade. India is in a privileged position with great potential to produce high-quality carbon credits through such initiatives with substantial biodiversity and socio-economic shared benefits.

Corporations can lean on international disclosure platforms such as the Task Force for Climate Financial Disclosures (TFCD) and the Taskforce for Nature Financial Disclosures (TNFD), which emphasize the role of nature-positive actions in climate action and vice versa, to work towards framing its biodiversity management and performance reporting.

The adoption of scientifically designed NBS programmes could be highly effective in achieving both climate and biodiversity goals along with contributing towards the reduction of both physical and transitional risks.

To increase investment in NBS projects, policymakers need to set clear policies and legislation, to facilitate the large-scale generation and trading of voluntary carbon credits, ensuring meaningful climate, biodiversity, and societal action.

To unleash the potential of NBS, companies could commence, including NBS and Nature Positive Actions in their sustainability strategies. A good starting point is conversations with the government agencies such as the forest department in India.

There are several examples of the forest department welcoming corporate sponsorship of conservation programmes in areas of high biodiversity value, either to compensate for past impacts companies may have caused, or as a part of nature-positive climate actions to align with global trends and demands. Such programmes have the benefit of long-term policy and regulatory support, conditions often needed for achieving climate or nature conservation targets. 

The actual design and implementation of NBS projects would require the technical advice and support of NGOs, research institutions and sustainability consultants to ensure scientific credibility and materiality in design, implementation and monitoring, given emerging nature and climate disclosure platforms and the likelihood of these being integrated into financial and regulatory reporting.

Undoubtedly, NBS offers highly cost-effective and tangible options to comply with future regulatory demands, address reputational risksm and increase the potential of financial investment in a company’s operations.  

Arun Venkatraman is the Technical Director and APAC Biodiversity Lead at ERM.