Nature-based solutions could play a significant part in the energy transition, according to a new report from Zurich Insurance Group.
The world is further from its goal to keep global temperature rise below 2°C in 2022 than in previous years, according to Zurich’s Climate Change Scorecard. Russia’s war against Ukraine has pushed energy security to the top of the political agenda at the expense of the energy transition, Zurich said. In the short term, at least, countries are hitting pause on their energy transition plans – which could exacerbate climate change.
The voluntary carbon market could play a more significant role in combating climate change, Zurich said. However, this would require a common metric to demonstrate the impact of projects that absorb carbon while benefiting nature and local communities.
Nature itself is a substantial contributor to climate change mitigation through the absorption and storing of vast amounts of carbon, Zurich said. Biodiversity determines not only the resilience of food systems and the quality of air and water, but also our capacity to mitigate and adapt to the effects of climate change. Zurich’s newly published report, Net positive: why biodiversity metrics make for more effective carbon markets, examines how this potential can be realized.
“Nature-based solutions can provide a significant amount of the emission reductions needed to keep global temperature increases under 2°C, though this would require investment to triple,” said Stephan Van Vliet, group chief investment officer at Zurich. “As a large investor and global risk manager – and a founding member of the Net-Zero Asset Owner Alliance and Insurance Alliance – we want to see the development of a robust and credible voluntary carbon market.
“Incorporating a metric on the wider impact of projects on nature can be supportive as there are huge potential benefits for nature and society in supporting nature-based carbon sequestration projects that also enhance biodiversity.”
Zurich sees the alignment of the voluntary carbon market with biodiversity as vital given the urgency of meeting net-zero targets. However, the company also pointed out the risk of valuing one aspect of nature – carbon – more highly than others, and the need to promote the full biocomplexity of ecosystems to promote environmental health and resilience. A globally agreed-upon biodiversity metric is vital in order to transform the voluntary carbon market into a driver for positive biodiversity outcomes, Zurich said.
“Business, governments, scientists and NGOs need to collaborate to fast-track the development of a globally agreed biodiversity metric that can be readily integrated into carbon projects,” said Alison Martin, CEO of EMEA and bank distribution at Zurich. “This is key to transforming the carbon market into a driver of a positive outcome for biodiversity and to further operationalize the link between carbon offset projects and biodiversity.”