Exploiting nature's capabilities: Investments in the future of carbon elimination
In the rapidly evolving landscape of climate action, investors are increasingly looking towards nature-based solutions as a promising avenue for returns. These projects, which enhance biodiversity, deliver social outcomes, and sequester carbon, could provide attractive returns for those willing to venture into this burgeoning asset class.
This week, the Nature Positive Investment Forum will feature Joachim discussing the opportunities of nature as an asset class. One such opportunity is moving early into nature-based carbon removal solutions, which can provide investors with access to nature restoration opportunities at scale.
Opportunities are particularly attractive in developing regions like Latin America and Southeast Asia, where large-scale reforestation, peatland restoration, and regenerative agriculture projects are growing rapidly.
Returns
Nature-based carbon projects generate carbon credits, a potential revenue stream, which can be sold on voluntary carbon markets. Prices for nature-based carbon credits typically range from about $5 to $37 per tonne of CO₂ depending on the project type and region.
Investors can also yield financial returns tied to carbon credit sales, enhanced ecosystem services, and risk mitigation benefits such as flood control or improved soil quality. Furthermore, investors gain a hedge against future carbon price increases and align with institutional net-zero goals.
Biodiversity Benefits
Properly designed nature-based projects deliver biodiversity uplift by restoring natural habitats and improving ecosystem resilience, countering the risk of monoculture plantations often associated with poor offset projects. Projects in forests, mangroves, and peatlands can rehabilitate wildlife habitats, enhance soil and water quality, and support broader ecosystem functions.
Demand for high-integrity, biodiversity-positive credits is increasing, especially as markets emphasize quality and alignment with standards like the Core Carbon Principles (CCPs) to ensure lasting carbon sequestration and ecological benefits.
Social Impact
Many nature-based projects provide community benefits through job creation, improved livelihoods, and social inclusion in both developed and emerging markets. The integration of social dimensions with environmental goals is becoming increasingly important for project credibility and investor confidence.
Finding the Right Partners
Because the nature-based carbon removal market is complex and still maturing—with risks related to project quality, permanence, and impact—investors should seek partners with strong scientific and technical expertise that ensure transparent verification and biodiversity and social safeguards.
Partnering with local organizations knowledgeable in ecosystem management and community engagement is critical to unlock opportunities and navigate regulatory environments in emerging markets. Due diligence should include assessing project permanence, avoiding risks of monocultures, and verifying co-benefits beyond carbon removal.
Regional Insights
| Region | Key Opportunities | Challenges | |------------------|-----------------------------------------------|--------------------------------| | Latin America | Large-scale reforestation, regenerative agriculture | Quality assurance, permanence | | Southeast Asia | Forestry, peatland restoration, mangroves | Market comparability, biodiversity risks | | Developed Markets | Advanced verification, higher credit prices | Higher costs, complex regulatory environment |
In summary, investors can unlock financial returns alongside biodiversity and social value by engaging in high-quality nature-based carbon removal projects, particularly when collaborating with credible partners who can ensure integrity and positive outcomes across developed and emerging markets. Selecting the right partner is crucial to unlock opportunities in nature-based carbon removal solutions. Aviva Investors sees an opportunity for investors to develop a path to net-zero emissions through carbon removal credits. Investors can demonstrate their impact through investments by focusing on objectives such as biodiversity enhancement, species protection and reintroduction, improved waterway quality, employment, and public access. These projects have the potential to provide attractive returns through traditional real assets revenue streams and nature and carbon market revenues.
[1] Nature-based carbon removal solutions: A guide for investors. (2021). Nature-based Solutions Investor Collaborative. [2] The role of nature-based solutions in reaching net-zero emissions. (2021). Aviva Investors. [3] Core Carbon Principles. (2020). Science Based Targets initiative. [4] Nature-based carbon credits: A market overview. (2020). South Pole. [5] Due diligence for nature-based carbon removal projects. (2021). Carbon Market Watch.
- The Nature Positive Investment Forum will feature discussions on the opportunities of nature-based projects as an asset class, specifically highlighting nature-based carbon removal solutions that offer investors access to large-scale nature restoration opportunities.
- Investors can generate financial returns from nature-based carbon projects through carbon credit sales, improved ecosystem services, and risk mitigation benefits, while also aligning with institutional net-zero goals and hedging against future carbon price increases.
- To ensure the success and integrity of nature-based projects, investors should partner with local organizations knowledgeable in ecosystem management and community engagement, and prioritize projects that deliver biodiversity uplift, social impact, and comply with environmental and social safeguards.
