Skip to main content
Home » Make a difference » Carbon finance – a means to safeguard the planet and people
CSR & Making a Difference Q1 2022

Carbon finance – a means to safeguard the planet and people

iStock / Getty Images Plus / Nuthawut Somsuk

Teresa Hartmann

Lead, Nature & Climate, World Economic Forum

Restoring and preserving nature can help us fight the twin crises of nature loss and climate change.


A sound investment strategy

Nature-based solutions are gaining popularity among governments and businesses alike to address environmental threats and solve societal problems by protecting, restoring and sustainably managing ecosystems.

We are headed towards irreversible tipping points for climate and nature. As per the New Nature Economy Report, over a half of the world’s GDP – USD 44 trillion is potentially at risk due to nature and biodiversity loss. Designing nature-positive economic systems have the potential to create USD 10 trillion in business opportunity and 395 million jobs by 2030.

Accelerated action on the ground

Last year, the international climate conference in Glasgow (COP 26) was very successful for forests and nature – 141 countries including Ireland, joined the Leaders Declaration on Forests, the LEAF Coalition announced their first USD 1 billion investment commitments for forest countries and the 12 largest traders and processors committed to a sectoral roadmap to achieve 1.5 degrees.

By 2025, the Investment Accelerator aims to raise investment commitments for NCS credits worth reducing 1 gigaton of emissions.

Additionally, initiatives like the NCS Alliance Investment Accelerator coordinated by WBCSD and the World Economic Forum, bring together leading private sector companies to pledge investments to purchase NCS (Natural Climate Solutions) credits worth 1 million tonnes of emissions this year, roughly equivalent to conserving/ restoring 30 million trees.

By 2025, the Investment Accelerator aims to raise investment commitments for NCS credits worth reducing 1 gigaton of emissions. Participation of these companies from the private sector builds trust in the system and sends a clear demand signal, which is key to create confidence in the market.

Role of carbon finance in natural climate solutions (NCS)

The carbon credits system has remained under scrutiny for many years due to possibilities of leakages, additionalities and double counting. However, owing to the establishment of distinct monitoring, validation and verification processes, one can identify high integrity projects for offset investments. This has led to a rise in demand for NCS credits over the last decade.

While the primary incentive of engaging in NCS is carbon sequestration, these initiatives also yield the dual benefit of providing multiple socio-economic benefits such as creation of jobs, promoting education, health and hygiene in indigenous communities.

Next article