Preserving and enhancing natural capital by investing in Nature-based Solutions 

Natural capital refers to the stock of natural resources (e.g. forests, plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people[1], known as ecosystem services. These services fall into three main categories: provisioning services (such as food, timber, and energy), regulating and maintenance services (such as hazard protection), and cultural services (like tourism and well-being)[2]. Over the past few decades, human activities have led to a significant degradation of natural capital. It is estimated that approximately three-quarters of the Earth’s land and nearly two-thirds of its marine environment have been substantially altered by human impact[3]. Nature-Based Solutions present a significant opportunity to halt this degradation and promote the regeneration of these vital resources, while simultaneously offering appealing investment opportunities. 

Nature-Based Solutions (NbS) are actions that address key societal challenges (such as climate change, human health, food and water security, and disaster risk reduction) through the protection, sustainable management, and restoration of natural or modified ecosystems, benefiting both biodiversity and human well-being[4]. These solutions not only help to protect the environment by addressing the climate and biodiversity crises simultaneously, but they can also offer financial returns to investors through mechanisms such as carbon and biodiversity credits, as well as income generation or asset appreciation derived from the sustainable use of natural resources. For those reasons, they are starting to attract more attention from sustainability-minded investors.  

That said, the level of investment in nature remains insufficient, presenting a significant opportunity for investors. Annual public and private financial flows to Nature-Based Solutions amount to approximately USD 200 billion, with private funding contributing only 18%[5]. In contrast, a recent report from the United Nations Environment Programme (UNEP) indicates that annual finance flows that have a direct negative impact on nature continue to rise, reaching nearly USD 7 trillion per year. This highlights the urgent need to reduce and redirect financial flows that harm nature and society towards Nature-Based Solutions. 

Investing in Nature-based Solutions: Yes, but integrity matters 

The lack of regulation coupled with growing demand has resulted in the development of numerous low-quality nature-based initiatives in previous years. These projects may lack tangible positive impact or, in some cases, could even lead to negative local environmental and social outcomes. This presents a significant challenge to the future development and scalability of Nature-Based Solutions. 

To ensure that investments are directed towards high-quality projects that deliver measurable climate and biodiversity benefits, as well as meaningful positive change to the local communities, BlueOrchard has adapted its B.Impact Framework for NbS. The framework integrates impact and ESG integrity checks based on five core principles, aligned with Integrity Council for the Voluntary Carbon Market (ICVCM) principles. 

Additionality:
We will seek projects that generate tangible environmental and social benefits that would not occur without investment. The assessment of projects’ additionality will be conducted from both a financing perspective and from a project activities’ perspective by comparing baseline and alternative use scenarios. For example, we will seek to understand what is likely to have happened without any intervention and ensure that the project would not have happened otherwise without the carbon financing. For instance, non-native monoculture plantations with low entry barriers would not qualify. In the context of carbon projects, we will also assess the risk of leakage, which refers to the possibility that greenhouse gas emissions from harmful economic activities are simply moved to another geographical area, such as the relocation of intensive cattle grazing. 

Reliability:
We will strive to ensure that the claimed impact, such as emission removals achieved by a project, adheres to the highest quality principles and processes. For that, projects should obtain certifications from leading standard-setting organisations (such as Verra and Gold Standard) aligned with ICVCM principles, utilise best practice methodologies to estimate emissions removals, undergo validation and verification by independent external parties, and provide sufficient evidence, including imagery and satellite monitoring where feasible. 

Permanency:
We will focus on projects that minimise the risk of future reversal, meaning those where the stability and longevity of a carbon sink are less susceptible to risks. For instance, it is essential that farmers transitioning from intensive cattle grazing to agroforestry maintain these activities over the long term. This requires the active engagement of farmers, communities, and future generations, as well as suitable incentive systems. Any potential reversal risk should be appropriately considered in the overall carbon removals claimed by establishing buffer reserves. 

Biodiversity:
We will look for projects that incorporate biodiversity considerations and generate core benefits for biodiversity. We assess initial biodiversity conditions, potential threats (e.g. impact on protected species, habitat fragmentation) and mitigation actions, as well as the presence of a biodiversity monitoring plan. On the impact side, we specify biodiversity objectives and monitor net positive impact on key biodiversity variables, such as plant or animal species diversity and habitat connectivity. 

Inclusivity:
NbS projects should be designed to promote sustainable economic and social development in the communities and regions where they operate. They should involve communities and indigenous groups, while respecting and upholding their rights. Additionally, project benefits should be fairly shared among relevant stakeholders through formalised processes, such as benefit-sharing agreements. 

Blue carbon in action: The success of community-engaged mangrove restoration 

An essential factor for the success of Nature-Based Solutions is local community involvement. This case study highlights a successful example of such an approach, showcasing significant environmental and social benefits achieved through strong community engagement. 

In October of this year, we had the opportunity to visit Vida Manglar, a unique “blue carbon” project located in the Cispatá Bay, Colombia. This 30-year project aims to conserve and restore up to 11,000 hectares of coastal mangrove forests. It is the first “blue carbon” project globally to generate carbon credits certified with the Verified Carbon Standards (VCS) and Climate, Community and Biodiversity (CCB) standards. The project’s goal is to sequester up to 1 million tonnes of CO2 over its lifespan and issue carbon credits for sale in the voluntary carbon market. To date, the project has successfully managed thousands of hectares of mangrove and supported over 450 families. 

Mangroves, tropical forests located on the coastline, are special ecosystems. Their trees have tangled roots that withstand salty water and the rise and fall of tides. Moreover, their root system creates an ecosystem that attracts fish and other organisms, enriching biodiversity. As excellent carbon sinks, they capture carbon dioxide from the atmosphere at rates significantly higher than terrestrial forests, while also providing sustainable timber (with a regulated logging quota) for local construction work. Unfortunately, mangroves are under threat of extinction, with estimates suggesting that at least 35% have already been lost and unprotected mangroves could completely disappear in the next 100 years[6]. Consequently, projects like Vida Manglar are fundamental for safeguarding these vital ecosystems. 

The project came together through the partnership between Conservation International and local partners, including 14 mangrove associations[7]. As with many natural capital projects, a crucial factor for success is the engagement of local communities in both implementation and governance, ensuring economic and environmental benefits are realised and projects sustained long-term. 

During our visit, the “mangleros,” individuals working in the mangroves, shared that they receive permits to harvest limited amounts of wood from the mangroves, adhering to quotas and limits since this area is protected. They are also actively involved in conservation efforts, such as cleaning the mangroves’ waterways to facilitate proper water flow and planting seedlings, receiving financial compensation through the carbon credits’ revenues. It was clear that they are deeply committed to keeping the mangroves healthy, believing this is essential for the long-term sustainability of their communities. 

Effective conservation also relies on providing people with sustainable and viable economic alternatives. Therefore, Vida Manglar also aims to deliver additional benefits by creating alternative sustainable income sources for local communities. The communities described the various trainings they received in forest management, beekeeping, and ecotourism. 

While most of the people working in the mangroves were men, due to the physical demands of cutting and transporting wood and maintaining waterways, it was inspiring to witness female leadership. Ignacia, the head of one mangrove association, has been pivotal in the project’s success, dedicating years of work to promoting the sustainable use of mangroves in her region. As she described, she “was born in mangroves” and has effectively connected the expertise of scientists with the traditional knowledge of local mangleros, forming the basis for the current sustainable management plan of the mangrove forests. Involving women in decision-making processes for NbS and valuing their insights and knowledge of the local environment is crucial for successful project implementation and achieving desired outcomes. 

Conclusion: Nature-based Solutions, an opportunity for sustainable solutions 

We believe Nature-Based Solutions represent a promising pathway to addressing complex environmental and societal challenges, from climate change mitigation and adaptation to enhancing biodiversity and supporting local communities. The examples and principles outlined in this article highlight both the potential and the necessity of investing in high-quality, integrity-driven projects. 

These initiatives can deliver substantial benefits that extend beyond environmental protection. By embracing inclusive and sustainable practices, it is possible to not only preserve vital natural resources and their ecosystem services but also empower communities economically and socially. 

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Sources:

[1] Capitals Coalition (2016) Natural Capital Protocol. This definition has been adopted by TNFD and IPBES.

[2] TNFD (2023) Guidance on the identification and assessment of nature-related issues: The LEAP approach. 

[3]  IPBES (2019): Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.

[4] International Union for Conservation of Nature

[5] State of finance for nature UNEP 2023

[6] https://www.thebluecarboninitiative.org/about-blue-carbon#ecosystems

[7] the Omacha Foundation, Instituto de Investigaciones Marinas y Costeras (INVEMAR), Corporación Autónoma Regional de los Valles del Sinú y del San Jorge (CVS)Corporación Autónoma Regional de Sucre (CARSUCRE) and local communities  and several local partners national environmental authorities, local Non-Governmental Organisations (NGOs)Fundacion OmachaConservation International Columbia