There is a clear but limited role for natural climate solutions in corporate climate commitments. We will not meet the goal of the Paris Agreement to limit temperature rise to no more than 1.5-degrees Celsius without protecting and restoring forests and other natural ecosystems and better managing agricultural land. Companies that produce or source agricultural and forestry products must support the necessary transition to sustainable land use within their value chains. However, guardrails on the use of natural climate solutions as offsets are critical. Companies must use natural climate solutions to raise the ambition of corporate commitments rather than dilute it. Use of natural climate solutions to offset emissions is not a substitute for rapid and deep decarbonization. And it must be accompanied by appropriate social and environmental safeguards to ensure real benefits for climate, nature, and people.
Investors are encouraged to ask companies to disclose:
Short-, medium-, and long-term targets that are aligned with a 1.5 C pathway,
A credible transition plan for achieving targets,
How much of the target will be met through the use of carbon credits or carbon removals,
The GHG crediting programs, suppliers, and projects from which they source carbon credits, and
Whether their carbon credit purchases are certified under a social and environmental standard.
This report is a first-of-its-kind engagement tool for investors to spur meaningful dialogue with companies on the role and use of natural climate solutions in delivering on those commitments. It provides clear guidance on how to facilitate engagements with portfolio companies and lays out expectations for climate disclosures—calling for transparency in critical steps along the way to net zero.