Climate Week explores large-scale nature financing

Precious as it is, nature also serves as the foundation for prosperous human societies, sustainable economic systems, and livable climates.

During Climate Week, it contributes to the exploration of financial options for large-scale nature preservation.

The natural world is both important and important to the stability of communities, industries, and climate systems. But even though there have been early successes and a lot of interest in nature-based solutions to social and environmental problems, there is still a gap between what is being done now and what will be needed in the future.

During Climate Week in New York City, McKinsey brought together dozens of leaders, from the heads of startups to global institutional investors, for a roundtable on "Financing nature-based solutions at scale." The next part of the conversation was a discussion of three case studies and how to solve each one as a group.

Associate partner Caroline De Vit, who helps lead McKinsey's work on natural capital, says, "These conversations were real, honest, and involved stakeholders at every level." "And in each one, we talked about how to make these solutions work—financially, for local communities, and for everyone."

In the first case study, for example, the focus was on Pacific Island Tuna and Walmart's plan to supply the market with more tuna that comes from sources that are good for the environment. After that, the people there talked about what it would take to expand the partnership beyond the Marshall Islands, where it is currently focused, to other parties to the Nauru Agreement, which controls 50% of the world's supply of skipjack tuna.

Another was given by Taking Root. It was about how smallholder farmers who take part in reforestation programmes can create long-term value from forests in order to speed up the growth of nature-based solutions like carbon credits. Agricultural and forestry solutions based on nature will grow in a way that is sustainable if communities make land use decisions based on how they make a living and do long-term planning that benefits everyone.

And the third was about Indonesia's PT Rimba Makmur Utama, which is helping the Katingan Peatland Restoration and Conservation Project restore and protect peat swamp forest, as well as the challenges and opportunities they face.

During the day, a number of ideas about how to make it easier to use nature-based solutions on a large scale came up. Read on to find out what people learned from the session.

Early on, everyone should work to build trust.

For a nature-based solution to work, everyone must agree on what the value is. Talk to developers, NGOs, universities, tech innovators, corporations, and other investors as soon as possible to find out if the design of a solution fits with investors' priorities for impact and their expectations for risk and return (and vice versa). Use these talks to also come up with new ideas about everything from technology to business models to ways to pay for things.

Don't stop with carbon credits.

Carbon credits can be a good way to get money for nature-based solutions, but it's also important to think about other ways to make money (such as sustainable agriculture or fishing). These will help the economy in the long run by making change a permanent part of business. As markets get more stable, other types of credit could become available to help the environment.

Plan for expansion.

All pilots should also be made and run with the idea that they will be used on a larger scale in the future. With this built into the way people think about the project and how it is set up, it will be easier to get the most out of the knowledge and experience gained.

Use technology and data to get a fuller picture of returns.

Measuring and keeping track of outcomes related to livelihood, health, and the environment, especially at the local level, can open up funding and ensure long-term success. Some leaders in the field use a landscape-based approach that focuses on economic and social outcomes at the local level. Participants also came up with ideas from outside of nature, like public health, microfinance, or human rights.

Get local people involved for long-term success.

People who live in the places where a solution based on nature will be used need to be on board. These fishermen, farmers, and families should have a reason to keep taking part, and the funding models should be able to keep going on their own. The best projects are those that are supported by the people in the area, and it takes time to build that trust.