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What are Natural Climate Solutions and what is their place within businesses?

Updated: Dec 12, 2022

First off, what is the Australian Federal Government’s strategy to meet the Paris Agreement?

As per the Paris Agreement, many nations have agreed to combine efforts to ensure that the global average temperature will not rise above 2°C, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. As of November 10, 2016, Australia has been amongst the nations aiming to mitigate the threat of climate change and improve global response but, at the time of writing, has not committed to a national Net-0 carbon target.

Australia’s federal government emission reduction strategy includes solutions like:

Australia’s climate policies and their degree of greenhouse gas abatement
Source: Department of the Environment, The Australian Government’s action on climate change, 2016.

You can read about Australia’s Nationally Determined Contribution here. In contrast, the state governments are investigating the economic benefit of their individual biodiversity and how it can simultaneously fight climate change. See below (in our sources) for further information from the Qld, Vic, and NSW governments.

Outside of the strategies used by the federal government are Natural Climate Solutions (NCS) or nature-based solutions.

Worms Eye View of a Bamboo leaf canopy
Photo by kazuend | Unsplash

What are Natural Climate Solutions?

Unlike the technology and economy-driven solutions, NCS are natural options that utilise a variety of landscapes, such as forests, grasslands, and wetlands, to increase carbon storage and/ or avoid greenhouse gas emissions. These landscapes can assist in reaching the Paris Agreement goal as the natural ecosystem can extract carbon dioxide from the atmosphere and store it within trees, soil, and grassland. While reforestation and preservation of these landscapes ensure the release of less carbon dioxide, it also positively affects our air and water.

Are there any challenges with Natural Climate Solutions?

The challenges associated with NCS overlap with the need to increase food production. The same land that could be designed as a NCS is also needed as grazing land. As much as 42% of the reforestation mitigation for a NCS relies on the more efficient production of beef.

NCS is also a global solution, one that requires the appropriation of land. This along with social and political barriers mean that NCS receives approximately 2.5% of climate mitigation dollars.

But what about the benefits of Natural Climate Solutions?

NCS has many benefits. Reforestation demonstrates strong benefits in air and water filtration, improved biodiversity habitats, flood control, and better soil fertility. Meanwhile, investing in wetlands can offer 14% of NCS mitigation opportunities to help in meeting the Paris Agreement’s <2°C.

As The Nature Conservancy (TNC) states, the benefit of NCS goes beyond creating a cleaner environment and extends into boosting jobs and protecting communities. Although not a solution used by the Australian federal government, there are businesses around the world that are delving into NCS. An example of pairing NCS with economic benefit can be found in the Cumberland Forest Project.

Hands digging and making space for a new plant
Photo by Jonathan Kemper on Unsplash

How can Business work with Natural Climate Solutions?

The Cumberland Forest project safeguards 253,00 acres in both Southwest Virginia and along the Kentucky and Tennessee border in the United States. These large stretches of forests create a migratory corridor for both plants and animals while also storing millions of tons of carbon dioxide.

In addition to these climate solutions, this project found a balance between conservation and business through timber harvesting. The careful selection of timber allows for a more climate-change-resilient and healthier forest. And, due to California Law, TNC can offset up to 8% of their carbon emissions. This means that forest owners can claim funds from the state to maintain the trees for carbon storage.

The project has seen such success that they have attracted investment capital to conserve even more forest.

BioPak Logo

Businesses like BioPak have made it their mission to be wholly sustainable. BioPak has recognised the need for environmentally friendly products, profit, and NCS. They achieve this through their affordable and hygienic disposables for Australia’s growing eco-conscious population.

The careful production of eco-friendly food packaging balanced with their efforts of environmental reforestation has allowed BioPak to become the first carbon-neutral packaging company in Australia. Their website breaks down their efforts into simple figures, where 5% of their profits are donated across rainforest rescue, carbon offers, local communities, and charity events.

And most importantly, their NCS efforts stretch all the way back to 1998. In the past 6 years alone, they have funded the planting of 10,500 trees while also purchasing and restoring 4 hectares of previously cleared forest.

Although the federal government claims to be on the road to meet the Paris Agreement, adding NCS to their repertoire has the potential to not only surpass the <2°C but exceed it. The benefits on top of this are many, including the improvement of soil, air, and water. And as demonstrated by the Cumberland Forest Project and BioPak, there is a place for NCS in the economy.

But what can we do to support Natural Climate Solutions?

As individuals, Australians have a lot of work to do to bring down their individual carbon emissions. Luckily, there are simple steps we can all take to chip in.

If you want to take some easy steps into supporting NCS, you can:

You can make an impact!

Do you want your money to work for not against nature? Then download the Bloom app and start using your investments to fight climate change.

Don't forget, you can also join the Bloom community if you want to learn more about sustainable investing We have an upcoming array of events where you can learn how to make a positive impact on your finances.

The information on this website is prepared by Bloom Impact Investment Services Pty Ltd (ACN 651 965 098 AR 001294778), who is an authorised representative of Cache Investment Management Pty Ltd (ACN 624 306 430 AFSL 514 360) (Cache). Bloom’s financial products are issued by Melbourne Securities Corporation Limited (ACN 160 326 545 AFSL 428 289), as disclosed in the relevant PDS. All information provided in this article is general information only and does not take into account your personal circumstances, financial situation or needs. Before making a financial decision, you should read the relevant product disclosure statement and target market determination consider whether the product is right for you and whether you should obtain advice from a professional financial adviser.

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