Sustainable Finance For Nature-based Solutions Digital Forum
On March 2022, the Luxembourg-GLF Finance for Nature platform hosted the Sustainable finance for NbS Digital Forum with the aim of bringing together practitioners, policymakers, and scientists to explore opportunities for NbS investments emerging from recent developments in carbon finance and sustainable finance regulations, as well as build dialogue to increase the adoption of good practices, and inform policy processes in this arena.
In this panel discussion, experts explore prospects for carbon markets in these sectors, opportunities for local carbon markets in the Global South, and how to transform corporate net-zero commitments into new sources of financing.
Carbon finance and its potential to boost sustainable land use
Forests and sustainable land use are key in the fight against climate change. However, carbon finance remains largely focused on forests, while other land use sectors, such as agroforestry, still struggle to attract financing. Panel experts help us unpack opportunities for local carbon markets:
- Carbon markets can play a major role in financing NbS. The trading of emission allowances encourages companies and countries to reduce their carbon footprints. Credits are generated from projects, such as solar farms or forest conservation, and from government cap-and-trade schemes that put a price on emissions caused by major polluters.
- Sellers in the carbon market create carbon credits by reducing their emissions, such as a farmer who adopts sustainable land-use practices. The credits are then listed on a registry and sold, generating income for the sellers, which are often farmers and local communities. Buyers, usually corporations or governments, gain the right to emit a set amount of carbon dioxide per credit that they buy at a market price.
- Carbon markets can boost financing beyond forests to include other land-use sectors, and how these markets provide opportunities for farmers in the Global South to participate at the local level. Making sure farmers and local communities get access to finance is key in boosting sustainable land use.