COP28 and the re-NATURE Hub – putting nature at the heart of climate action

Rethinking nature’s role in our economy

On day four of the Summit, at our re-NATURE Hub, some of the world’s leading voices from finance, academia, and government joined Hubert Keller, our Senior Managing Partner, for a specially-convened Nature Day.

Opening the event, Hubert Keller said the debate over the importance of nature in tackling climate change has ended, now we must turn our attention to how we can develop a nature-positive economy. “What we are seeing,” he said, “is that economic systems powered by nature’s regenerative approach can outcompete today’s economic systems. We fundamentally believe that the transition to net zero is the largest opportunity of a generation.”

Read also: The rapid rise of nature-based investments

Giving the first keynote speech, Marc Palahí, Chief Nature Officer at holistiQ Investment Partners, focussed on the vast new opportunities that will arise as we move “from an economy powered by fossil resources to a new regenerative economy powered by nature.”

In Africa alone, he explained, “the wood economy” could create 8 million jobs and add USD 200 billion to the continent’s economy. Sustainably managed forests, he said, could provide innovative materials to replace concrete and steel in the construction industry. In addition to the economic benefits, homes built with the new materials would become carbon stores, locking carbon away for decades or even centuries, while avoiding the vast emissions that arise during concrete and steel production.

However, he warned, while the global opportunity is vast, significant upfront investment will be needed to unleash nature’s value-creating power. “Currently our economy is investing USD 154 billion each year into nature-based solutions. This is not enough. We need to move from billions to trillions if we really want to transform our economy.”

Food first

Morten Rossé, Head of Nature and Climate at holistiQ Investment Partners, explained how our global food systems – which in addition to GHG emissions are responsible for 78% of water pollution¹ and 90% of deforestation² – could lead the way in the shift to a nature-based economy.

Read also: Food systems under growing pressure to reform  

Taking coffee as an example, he said, “We drink 2 billion cups a day in an industry worth USD 200 billion. When we look at how to transition to a nature-based economy, coffee is a good starting point because it is very well-suited to agroforestry.” The solution, he said, is to convert industrial monoculture coffee plantations into organic agroforests. This will roll back deforestation and restore degraded soils to health, while at the same time producing beans that sell at a premium. Coffee farms will even become carbon-negative, sequestering an estimated 4.5kg of CO₂ for every 1kg of roasted coffee, in effect “sequestering carbon with every sip”. 

Sebastian Nielsen, CEO of SLOW Forest Coffee, explained how SLOW is already putting this theory into practice. Working in Laos and Vietnam, SLOW has achieved increases in both crop quality and coffee yields, despite eliminating the use of agricultural chemicals. With the toxic chemicals gone, and the forest canopy cover restored, bee and butterfly numbers have risen, increasing crop pollination.

By cutting out the middlemen from the coffee value chain, he explained, SLOW has connected directly with local communities on the ground. Together they have built a culture of land stewardship and ensured fairer wages for farmers. Where once coffee was a driver of deforestation and land degradation, now it is driving both ecological restoration and the growth of a just, nature-positive economy.

Watch our video with Sebastian Nielson here:  

The investment case for nature

Turning to how this shift can be achieved at scale, Michael Urban, our Chief Sustainability Strategist, explained what he called “the compelling case for investing in nature.” By “purchasing underperforming land, and deploying capital to move away from monocultures, you improve the land, you improve future cash flows, and you also sequester carbon. That has value in itself,” he said.

Read also: Figs, wolves and starfish: the regenerative power of keystone economics

However, he noted, there are challenges. A lot of the capital needed sits in the global north, while much of the investment is needed in the global south. And since ecological restoration is, by its nature, a long-term investment, “patient capital” is needed.

For Sindhu Krishna, Head of Sustainable Investment at the Phoenix Group, this approach makes investing in nature attractive for pension funds. “In pensions you invest for the long term – so you protect long-term returns and you also protect a planet that you can retire into.”

“We see this [nature] as an asset class where there are returns,” she continued. “As investors we always say that past performance isn’t an indicator of future performance. The same can be said of past business models. We don’t have to be destructive to make money. We can be positive and constructive and still make money.”

Azis Armand, Vice President Director and Group CEO of Indonesian energy giant PT Indika Energy Tbk, agreed. From a business point of view, he explained, the investment imperative is clear. “We recognise that as businesses we have invested in things that are bad for people and the planet. Now we are decarbonising our operation and investing in nature-based solutions,” he said.

For Éliane Ubalijoro, CEO of the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF), the investment case extends to the people on the ground, the indigenous and local communities who are often at the forefront of protecting nature. With today’s extractive economy leading to deforestation and land degradation, she warned, “indigenous populations are losing their medicines, their culture, their religion. But there is potential for a win-win.”

“Just as indigenous communities look back to the ancient wisdom of their ancestors,” by building a new, nature-positive economy, we now “have the chance to be the ancestors that future generations look back to.”

¹ Environmental Impacts of Food Production - Our World in Data
² COP26: Agricultural expansion drives almost 90 percent of global deforestation (fao.org)

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