The Intergovernmental Panel on Climate Change (IPCC), the UN body for assessing the science related to climate change, approved a special report, “Climate Change and Land,” at its 50th Session held in early August 2019. The report’s full name is Climate Change and Land, an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems, and is the second in a series of Special Reports to be produced in the IPCC’s Sixth Assessment Cycle.
The IPCC report is a sweeping call to action on investment in nature-based solutions to addressing climate change. The report notes that 23% of total anthropogenic greenhouse emissions between 2007 and 2016 came from unsustainable practices in agriculture and forestry and other land use activities.
Climate models show that even if we fully decarbonize the electricity, transportation, and industrial sectors in the coming decades, we still need to take about a generation’s worth of carbon emissions out of the atmosphere to avoid catastrophic
climate change. In fact, the IPCC report notes that all climatic modelling that limits global warming to under 2°C requires improvements in land use, with some models showing a requirement of up to 1.2 billion hectares of increase in forest area by 2050 relative to 2010.
This is a staggering figure—particularly when we imagine a world where we need to meet the food, feed, fuel, timber, and energy needs of 11 billion people. It would also require the mobilization of hundreds of billions of dollars of investment.
How can we start to conceptualize a responsible investment approach to nature-based climate solutions—one that balances the needs of production, conservation, and people?
Recognize nature-based climate solutions as a critical investment strategy
One important step will be for investors to think proactively about sustainable forestry and land use as part of a systemic transformation of the global economy analogous to the adoption of renewable energy and vehicle electrification—creating both investment opportunities and risks as land use is disrupted by these competing priorities. This requires a massive shift in capital allocation strategies, one that recognizes the value of sustainable transformation in land use—and the opportunity cost of not doing so. In fact, if we imagine a world with a $50 per ton price of CO2, the entire global forest sector would be recapitalized into an asset class worth trillions of dollars.
Build a coalition of stakeholders for equitable nature-based climate solutions
This transformation needs to be equitable and address competing land use needs. Mobilizing investment capital toward nature-based climate solutions means that we need to build coalitions now around sustainable forest management.[1] Investors, corporations, civil society, government, and consumers are all required to move forward. We need:
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Institutional investors and corporate investors recognizing the multiple values and opportunities associated with forestry globally as natural infrastructure;
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Forest owners and agribusiness adopting sustainable and responsible management practices for forestry and agriculture;
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Civil society and NGOs engaging in the development of sustainable forestry investment models that integrate production and conservation;
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Regulatory policy and industry-led initiatives that create long-term and stable demand for carbon sequestration by the forest sector and that promote good governance, disclosure and transparency; and
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Consumers and voters demanding climate change policy and sustainable practices.
Invest in integrated production and conservation
Through building these coalitions, we can begin to design investment models for sustainable forest management that integrate production and conservation in the landscape. There are already opportunities today to expand investment into sustainable forestry from the US, to Australia and New Zealand, Southeast Asia and Africa, to Europe, Latin America and elsewhere. Key investment opportunities in sustainable forestry will be:
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Extensive investment in greenfield timber plantations, ensuring all forest expansion and plantation development is deforestation-free, and integrated with natural forest conservation and ecosystem restoration.
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Increasing the productivity of sustainable plantation forests through advanced silviculture and genetics.
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Managing natural and plantation forests for increased biomass volumes over the long term, which means more carbon stored at the forest level.
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Managing both natural and plantation forests for greater resilience to environmental threats, including wildfire, severe weather events, and pests and disease to keep carbon stored.
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Expanding investment into technologies and markets that will drive the substitution of forest products for carbon-intensive materials like concrete, steel, and plastics.
The IPCC Special Report is clear that sustainable agriculture, forestry and land use must be central to our global plan to mitigate climate change. The investment call to action is also clear—to invest in forests and land as our natural climate infrastructure, for the benefit of people and the planet.
IPCC Special Report, “Climate Change and Land” found here: https://www.ipcc.ch/report/srccl/
Press Release for Report found here: https://www.ipcc.ch/2019/08/08/land-is-a-critical-resource_srccl/
[1] The IPCC report defines “sustainable forest management” as the stewardship and use of forests and forest lands in a way, and at a rate, that maintains their biodiversity, productivity, regeneration capacity, vitality, and their potential to fulfill now and in the future, relevant ecological, economic and social functions at local, national and global levels and that does not cause damage to other ecosystems.
Radha Kuppalli, Managing Director of Investor Services, New Forests
Radha Kuppalli leads New Forests’ Investor Services business unit. Her oversight includes product development and communication of New Forests’ investment strategies in the institutional investment market; integration of responsible investment and ESG innovations into investment strategy; client relations and funds marketing; brand stewardship and thought leadership to place New Forests as a leading investment manager in the forestry sector; and institutional investment and forestry markets research.
