WRI report: Consideration of NbS as offsets in corporate climate change mitigation strategies
March 31, 2021
NbS are crucial for reaching climate change mitigation goals, but are not yet receiving sufficient funding to be able to fulfill their potential. A common financing method is use of carbon offsets, but these are associated with significant risks - urgent action is needed to minimise these risks.
This report from the World Resources Institute addresses urgent questions about how NbS may be used as carbon offsets as part of corporate climate change mitigation strategies. The authors give an overview of how NbS are currently being used as offsets, the risks associated with nature-based offsets, and methods for mitigating those risks. They provide useful guidance for companies in developing holistic climate change mitigation strategies, including suggested approaches to managing demand-side risk when using NbS, such as concerns about level of climate ambition and degree of transparency, as well as supply-side risk, such as concerns around leakage, permanence, additionality and social safeguards. The paper also provides examples of ‘no regrets’ investments in NbS that carry no or limited risk, as well as actions to avoid.
The key takeaways are quoted as follows:
- Nature-based solutions cannot substitute for or delay implementing significant abatement of fossil fuel emissions.
- Major companies are incorporating NbS offsets into voluntary climate mitigation targets and strategies even while standards and norms are under development.
- NbS are a critical and time-sensitive component of delivering on global climate goals, but the financial flows supporting them are not commensurate with their mitigation potential.
- NbS can deliver significant benefits for climate stability, SDGs, and economic recovery above and beyond carbon storage.
- Companies should include in their portfolios of NbS investments both urgently needed near-term emissions reductions as well as investments in removals that will pay off in the long term.
- Definitive guidance to companies on the necessary level of abatement prior to the legitimate use of offsets to compensate for remaining emissions is not yet available.
- Key questions regarding the intersection of voluntary and compliance markets for NbS credits, especially for international transfers, remain unresolved.
- The appropriate use of NbS offsets will differ by sector and over time.
- Responsible offsetting requires attention to environmental and social integrity on both the demand and supply sides.
- NBS offsets are often perceived as inherently more risky than other sources of offsets.
- Companies can take many steps to build confidence that the use of NbS as offsets is not a substitute for reducing their own emissions.
- Companies can ensure the integrity of NbS offsets by purchasing only credits that are certified by programs adhering to high-quality standards.
- Many key questions regarding NbS credits in the transition from voluntary to compliance markets remain unresolved.
- Many initiatives and processes are now under way to help guide companies regarding climate mitigation strategies in general and the use of NbS as offsets in particular.
- In addition to implementing aggressive abatement strategies, companies can signal demand for high-quality NBS credits and advocate for robust standards and norms to govern carbon markets.
Read the full paper here.