Nature based solutions

Methodology

This metric covers the extent to which the MDBs use and promote nature based solutions for climate mitigation and adaptation, as well as biodiversity, agriculture and forestry.  

Research by the National Academy of Sciences of the US indicates that nature-based solutions (NBS) can provide over one-third of the cost-effective climate mitigation needed between now and 2030 to stabilize warming to below 2 °C, and that NBS can achieve nature’s mitigation potential of 10-12 gigatons of CO2 per year. 

The European Commission has adopted a wide definition of nature-based solutions, which builds on and supports other closely related concepts, such as the ecosystem approaches, ecosystem services, ecosystem-based adaptation/mitigation, and green and blue infrastructure. However there appears to be a lack of definitions of what “good” looks like in the area of nature based solutions, biodiversity and climate-smart agriculture, so further input and comments would be very welcome in this area. (This is possibly less true of forestry, which is more established.) 

At the UN Climate Action Summit in 2019, a coalition of countries led by China and New Zealand issued a manifesto for nature-based solutions, which called for: 

1. Mainstreaming NBS in national policy and NDCs; 
2. Increasing regional and international cooperation on NBS 
3. Shifting domestic and international finance to value nature; increasing public and private funding to NBS and avoidance of funding for deforestation or other activities that harm ecosystems; (this is the most relevant ask for public banks); 
4. Scaling up NBS for forest conservation and restoration; marine and coastal ecosystems; sustainable agriculture and food systems; and ensuring nature’s systemic role in sustainable development.  

Public banks are particularly relevant to item 3 in the list above. 

This metric covers commitments to zero deforestation, as well as to what extent the various drivers of deforestation are being tackled. 

To be ‘Paris-aligned’ there must be a commitment to net-zero deforestation across the portfolio, as well as policy support for country forest goals.  

To be ‘Transformational’, as well as committing to ensure the institution stops deforestation across the portfolio, the institution is proactively engaging in afforestation projects and reversing forest loss with native trees, as well as addressing structural drivers of forest loss through programmes, projects and policy work.  

Secondary sources were used, supplemented with data on levels of financial support for forests within the portfolio, where available.  

This metric deserves a specific mention of peatland conservation and restoration. The Food and Agriculture Organisation advocates for the rewetting of drained peatlands as part of climate mitigation and adaptation, and scholars have argued for peatland restoration as a key climate mitigation measure. More research is needed on MDB involvement in this area. 

We recognise that there are some concerns around nature-based solutions, including their reliability and cost-effectiveness compared to engineered alternatives, their resilience to climate change, and the use of low biodiversity nature based solutions. There are also substantial governance challenges to rolling out many nature-based solutions. There are also long-standing concerns around forest-based carbon credits, which can be seen to be a form of “maladapted” or poor quality nature based solution. The debate around nature-based solutions is relatively new and one which will develop and become more mature over time, and E3G will update this metric accordingly. Feedback is welcome on all these points.  

Evolution of this indicator 

Comparable data on forest finance across the Banks was not available, meaning that the level of support for forests could not be assessed. Further sources of data would need to be explored in future research.  

Please note that E3G hopes to add more research in the space of ocean and marine climate action in the coming years. 

It should be noted that the International Union for the Conservation of Nature adopted a “Global standard for nature-based solutions” in July 2020. This includes principles such as biodiversity net gain, economic feasibility and balancing trade-offs. MDBs should consider using and aligning to this standard in the future.