COP17 has put the spotlight on the gap between global nature commitments and the finance needed to deliver them. With the 2030 targets of the Global Biodiversity Framework approaching, the question is no longer just what needs to happen to protect and restore nature, but how it will be funded.
Business has a role to play. Carbon markets are not a solution to the biodiversity funding gap, but they can be one source of finance for nature-based projects. For companies, this also presents an opportunity to connect climate action with wider business priorities, from more resilient landscapes and supply chains to healthier ecosystems and stronger relationships with local communities.
Yet many companies remain cautious about procuring nature-based carbon credits. Some of the questions that have held buyers back are beginning to change. There is greater clarity on the role of credits in corporate climate strategies, more tools to assess credit quality, and growing experience among companies that have started to participate in the market.
So what should businesses be thinking about now?
A clearer role for carbon credits
Carbon credits should never replace the need for companies to reduce emissions across their value chains. But they can play a role alongside those efforts, helping to finance activities that protect, restore and improve the management of natural ecosystems. There is also growing recognition of this need for companies to take responsibility for emissions that continue while they work towards their targets.
The Science Based Targets initiative (SBTi) has taken an important step in this direction through its updated Corporate Net-Zero Standard V2 and the introduction of its Ongoing Emissions Responsibility (OER) framework. OER provides a structured approach for companies to support climate action beyond their validated target requirements while continuing to reduce emissions. This creates an opportunity for high-integrity carbon credits, including those from natural climate solutions, to play a more clearly recognised role in corporate climate strategies.
The purpose of a purchase still matters. Different types of natural climate solutions contribute in different ways, from avoiding emissions through forest conservation to removing carbon through restoration and reforestation. The choice of project should reflect the company’s climate objectives, the intended use of the credits and the quality of the outcomes being delivered.
There is also a wider nature and business case to consider. Well-designed projects can deliver benefits for biodiversity, ecosystem health and local communities alongside climate mitigation. For companies, this creates an opportunity to connect climate investment with wider nature-related priorities and dependencies.
Moving beyond the barriers to nature-based credits
Concerns about permanence and quality are legitimate. Carbon stored in forests and other ecosystems can be lost through fire, disease, land-use change and other disturbances. These risks need to be assessed and managed through good project design, monitoring, buffers and clear arrangements for addressing reversals. New approaches are also emerging, such as the Permanence Trust, developed by the American Forest Foundation and Kita, which aims to provide a pooled, long-term mechanism to fund monitoring, manage reversal risks and replace lost carbon.
But risk does not automatically make a project unsuitable. Buyers should look at the protections in place, the project’s intended outcomes and whether its approach to managing permanence is appropriate for the purpose of the purchase.
The same applies to credit quality. The ICVCM’s Core Carbon Principles provide an important reference point, but buyers still need to look beyond labels and assess projects individually. Credit age alone is not a measure of quality: an older credit is not automatically poor quality, just as a newer credit is not automatically better. Additionality, monitoring, delivery risks, safeguards and wider project impacts all matter.
The business case also needs to extend beyond carbon. Nature-based projects can contribute to healthier ecosystems, biodiversity and community livelihoods. These outcomes matter in their own right, but can also be relevant to companies managing nature-related dependencies and risks across their operations and supply chains. Understanding these wider benefits can help businesses make better-informed investment decisions.
What can businesses do now?
Greater clarity and better tools are helpful, but they will not create a market on their own. Projects need confidence that demand will be there, and companies need to build the knowledge and relationships to procure with confidence.
There are practical steps businesses can take:
- Understand the role of credits in their climate strategy. Be clear about how purchases relate to emissions reductions and longer-term climate goals.
- Build procurement knowledge. Develop internal understanding of project quality, permanence, safeguards and the different uses of credits.
- Look beyond carbon. Consider the biodiversity, community and other nature-related outcomes of projects, and how these connect to business priorities.
- Engage with the market. Build relationships with project developers and suppliers, explore early purchasing opportunities and consider longer-term agreements that can give projects greater certainty.
- Share experience. Work with peers and market initiatives to improve understanding, identify common challenges and help shape better procurement practices.
Companies do not need to wait until every uncertainty has been resolved. They do need to understand what they are buying, why they are buying it and how the risks will be managed.
From COP17 to COP31: turning ambition into investment
COP17 provides an important moment to reflect on the progress needed to meet global nature commitments. COP31 should be a moment to move this conversation forward: from recognising the role of nature in climate strategies to mobilising investment at scale.
That requires businesses to start building procurement experience and relationships now, while policymakers and market initiatives continue to address the barriers that hold demand back. The opportunity is to make nature-based solutions a more established part of corporate climate action, directing more finance towards the landscapes and communities that need it.
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