The clock is ticking on the global imperative to address climate change. As the calendar rolls over one year closer to 2030, marking the deadline for many sustainability commitments made in the last decade, it’s more important than ever for governments and corporations alike to go beyond commitments and take action.
Positive change is afoot and it’s expected to continue in 2023 but for Palladium’s Nature Based Solutions team, those changes are already well underway and this year may bring a tipping point in the right direction for those working in addressing climate change.
Nature Based Solutions and Creative Carbon Sequestration
“Nature based solutions and the importance of restoring and protecting our natural capital is still and will continue to be on the agenda,” says Emma Davies, Palladium Senior Manager of Nature Based Solutions. “ I think it’s already getting more and more recognised as a broadly adopted approach to climate mitigation and decarbonisation (or carbon capture) that can be rolled out at scale, and 2023 will bring more focus on it as corporates look at how they will meet their net zero commitments.”
Palladium’s Nature Based Solutions Technical Lead, Tom Gegg, takes it one step further and envisions that 2023 will be the year that nature based solutions go from being projects that have always been funded by public grants or donations to becoming tangible investment opportunities for ethical investors. “This is what we are doing with Revere and the UK National Parks – creating projects from beginning to end in which the private sector can invest,” he explains.
“But the way forward is to start thinking about nature restoration projects in really the same way we would think about managing and investing in an infrastructure project,” Gegg adds. “Just like building a motorway or wind farm, the same project finance principles and techniques can be applied to organising a large-scale nature restoration project.”
Why think about it this way? He explains that beyond the fact that the projects are generally structured in the same way – from development, to securing offtakers, designing government subsidies in the right way, and finally attracting investment – it’s also an easily recognisable process for investors. The key in 2023, he says, will be ensuring that nature based solutions and projects are attractive to investors.
Davies adds that she expects we’ll also see new and exciting ways for sequestering carbon in nature. “From seaweed, salt marshes, soil, and woodlands, there’s going to be more innovation around what other natural capital we can be utilising to sequester and capture carbon, and it will be a space to watch.”
Currently, the market is constrained by the lack of investable nature-based solutions projects, says Davies. “But as more seed capital and funding is invested into early stage ideas, we’ll see more large-scale projects that are investment ready.”
Tracking Emissions in Food Supply Chains
Across nearly every sector, Palladium experts have come back to the importance of supply chains in the year ahead, and whether it’s making them more efficient or resilient, sustainability is crucial. Supply chains will continue to play a critical part in the fight against climate change and for many organisations, can be both a part of the problem and the solution. According to Gegg, this will come to the fore in 2023 in food and agriculture supply chains.
“Now that the Science Based Targets initiative has released its guidance for forest and land use, food companies need to start taking into account what’s happening in their supply chains,” he says. “Think about a big grocery store buying from hundreds of farmers around the world. How can they and you track what impact they are having on nature?”
In a world where over 90% of supermarkets’ emissions come from supply chains, these companies need to invest in better measurement and management to understand exactly what’s happening within theirs. “Very quickly these companies are going to need to engage directly with farmers and support them in reducing their footprints while still continuing to produce food.”
It’s complicated and it creates what he calls a ‘mind bending accounting problem’ in tracking and accounting for emissions throughout the supply chain, especially within food supply chains. But he notes that already, technology is emerging that tracks both data and emissions, providing a fuller picture for organisations with complicated ecosystems.
Davies notes that we can expect to see increased policy regulations around what actions companies need to make, to help drive us towards a net zero future. In the UK, the introduction of the Transition Plan Taskforce Disclosure Framework earlier this year aims to standardise and set the bar for high quality private sector climate transition plans in the UK. Currently under consultation, if approved it will force businesses to put in place and implement rigorous net zero plans that go beyond what companies have pledged to date.
The Push for Renewable Energy Tipping Point
Finally, if COP27 was any indication, the race to renewable energy has begun and as Gegg notes, we’re nearing the tipping point. “Since last year’s COP, there have been some super interesting announcements and commitments between developed countries and middle income countries where there is a lot of potential to unlock massive investment into the transition of entire power grids to clean energy.”
It’s a mammoth task but so are the investment amounts ready to be poured into these projects. “The Just Energy Transition Partnerships are great examples of massive coalitions of people coming together to create a tipping point towards renewable energy in both Indonesia and South Africa,” he explains.
The shift to renewable energy won’t happen overnight, but Gegg stresses that time is of the essence, especially when it comes to building momentum around planning for the transition and properly funding it. But one thing is clear: nature based solutions will continue to play a part in both greening supply chains and shifting to renewable energy.
Many commitments and goals set for 2030 remain ambitious, underscoring that governments and corporations alike must continue to accelerate efforts in 2023 and beyond.
For more, read 'CFOs Have Entered the Corporate Sustainability Conversation (And other ESG Trends in 2023)' or contact firstname.lastname@example.org.