Why forest restoration paves a path to meeting corporate climate and biodiversity goals

As businesses increasingly recognize the critical role of nature in their operations, investing in biodiverse forest initiatives offers a practical and effective solution to address climate and biodiversity goals.

Forest restoration initiatives not only contribute to immediate sustainability targets but they also help companies proactively adapt to the evolving regulatory landscape.

Following the two recent climate summits—the 2024 United Nations Biodiversity Conference of the Parties to the UN Convention on Biological Diversity (COP16) and the 29th Conference of the Parties to the UN Framework Convention on Climate Change (COP29)—companies are acutely aware of the challenges posed by these shifting regulations.

In October, COP16 saw record-setting private-sector attendance. Over 3,000 business and finance leaders attended, highlighting the private sector’s growing recognition of nature’s role in value chains. Companies are highly motivated to address the risks and seize the opportunities connected with the bioeconomy.

New regulations are also driving this shift. The European Union’s Corporate Sustainability Reporting Directive and related frameworks, including the European Sustainability Reporting Standards, require companies to integrate biodiversity and nature considerations into their operations. Guidance from the Task Force on Nature-Related Financial Disclosures aims to support those efforts by helping companies understand their dependence on nature, manage risks and shift funding toward nature-positive solutions.

Yet, many companies feel overwhelmed trying to implement the new reporting and disclosure frameworks on top of the requirements for reporting climate targets.

As a result, many seek to link their climate- and nature-related targets more closely rather than address them separately. Native reforestation, with its substantial environmental and social co-benefits, can practically and economically meet multiple targets within a single project or initiative.

Native forest restoration is already well-established as one of the most powerful carbon sequestration and removal tools. Forest ecosystems absorb approximately 7.6 billion tons of carbon each year and restoring even 5% of degraded forests in tropical “priority zones” could sequester an additional 113 million tons.

Direct-air carbon capture currently removes just 10,000 tons of carbon annually. There is scientific consensus that multi-species forests sequester more carbon than monoculture tree plantations.

Biodiverse forests are also more resilient than monocultures to threats like drought, severe weather or invasive species. Alongside the biodiversity, ecosystem and social benefits of reforestation projects, the potential for significant carbon removal makes forest restoration the clear choice for companies with broad sustainability commitments.

Metrics and standards for measuring biodiversity are still being developed, and it is not yet apparent which will emerge as the market leader. Even as regulations and standards evolve, one thing is sure: the trend is toward ever-stricter requirements and more ambitious targets.

Forward-thinking funders will be best positioned to meet their companies’ climate, nature and compliance goals by choosing projects with high-integrity carbon and biodiversity requirements to meet any standards or labels that emerge on top.

There is also an opportunity to show complete commitment to climate action, helping affirm a reputation for authenticity and leadership.

However, showing this commitment requires a willingness to fund the critical early stages of a project. Although community-led reforestation projects are highly cost-effective in the long run, they require an up-front investment in design, community engagement, certification and planting.

Without sufficient funds, project teams can’t get started – or are forced to cut corners, reducing the project’s value for the climate and the community.

For corporations working to meet climate and biodiversity goals, two ways to address this financing bottleneck are via partnerships with biodiversity-focused carbon project developers and financing organizations as committed long-term carbon buyers (“offtakers”) or as early-stage funders of project development.

Many corporate climate leaders are already taking this approach, but more and larger corporate commitments and new and innovative financing mechanisms are urgently needed to restore the planet's forests at scale.

Reforestation advocates hope that adopting Article 6.4 of the Paris Agreement at COP29 – to spur the creation of a UN-led, centralized carbon crediting mechanism – will improve the integrity of the carbon markets and ultimately help scale reforestation efforts.

To achieve that outcome, it is essential that the supervisors of the new mechanism set clear rules that promote trust, quality and ecological integrity in carbon offset projects. Demand for high-quality, biodiverse projects will help move the market in the right direction.

As participants process the outcomes of COP16 and COP29 and consider a way forward, it must remain top of mind that the $300 billion funding pledged by nations for climate action represents only a fraction of the $1.3 trillion needed, much of it by the communities left most vulnerable by our changing climate.

The private sector can help close the gap – and in doing so, can lead by supporting a healthy and equitable climate future.

Restoring our planet’s native, biodiverse forests is a straightforward path toward achieving corporate climate and biodiversity goals and the global goals necessary to help us preserve a livable planet.

Quality projects require commitment and partnership. However, the far-reaching benefits of reforestation streamline efforts for companies seeking to address climate and nature targets simultaneously with high-integrity and high-impact actions.