Nature in the balance

17/11/2025

Carbon markets are booming - can they also save nature?

The voluntary carbon removals market is growing fast. Should nature attributes be bundled into this existing market, or do we need a distinct approach to address the escalating nature crisis?

Despite some debate about the precise route and timeline, net-zero carbon is an accepted concept. The same is not currently true for nature and biodiversity loss. Some see the UN’s Kunming-Montreal Biodiversity Framework (2022) as a landmark agreement, committing governments to protect biodiversity and mitigate harm caused by extractive industries, pollution, and land clearing. But collective goals are futile without mechanisms to engage private finance to flip the trend of funding harm to funding solutions.

For climate, there is a well-trodden route to mobilize private finance. The carbon removal credit market is growing rapidly and, although there are ongoing challenges to define minimum quality thresholds and smooth practices between national and corporate accounts, the direction of travel is clear. This approach provides a clear signal for how companies can both neutralize residual emissions and address their historic liability for past pollution.

The need to address environmental aspects beyond carbon is escalating. Should we make use of this existing carbon market infrastructure and bundle nature attributes with carbon credits? Or do we need an entirely distinct approach?

Funding to nature-harming activities exceeds funding to nature-based solutions by a factor of 35 in a typical year. UN Environment Programme (UNEP)

The case for bundling nature with carbon

The market for carbon credits continues to establish itself, offering buyers a way to neutralize their carbon emissions by funding the removal and storage of carbon dioxide from the atmosphere.

When nature-based solutions, such as the creation of new woodland, are delivered via this Voluntary Carbon Market, the benefits reach far beyond carbon sequestration.

Six key planetary boundaries have now been breached¹

Depending on the nature of the tree planting, benefits may extend to improvements in water and air quality, biodiversity gains, as well as social benefits such as employment and recreation opportunities.

Organizations that have sustainability goals can therefore leverage carbon markets as a means to achieve such environmental and social benefits.

In this sense, a carbon credit can be viewed as a tool for funding the delivery of environmental benefits and used by organizations to take their offsetting beyond carbon alone. For example, an organization that has negatively impacted water quality could purchase credits to fund the development of a project that will provide tangible improvements to water quality.

Bundling nature with carbon is the pragmatic solution with three key benefits:

1. Nature-based solutions credits are low-cost.

Nature-based solutions can be 10-50% of the cost of carbon credits for permanent removals and are thus more affordable for a broader range of organizations.

2. Nature-based solutions credits are available now.

Further delay may cause the problem to worsen. With this approach, organizations can act now.

3. Implementation of nature-based solutions is well-understood and proven.

Nature-based solutions projects are complex, but the risks are well-understood, and mitigations can be put in place. This is an achievable and realistic solution.

The case for a dedicated nature credit

Rather than bundling nature/biodiversity as a co-benefit (i.e., positive outcomes beyond a project’s primary purpose), these nature credits should exist in their own right.

The UK Government recently launched a consultation to help improve the integrity of Voluntary Nature Market credit supply, and how those credits can be used. These tradable units ("credits") represent broader environmental outcomes, e.g. payments for nature-based activities, including biodiversity, and ecosystem services, such as nutrient mitigation and nature-based carbon sequestration. Each credit represents a measured increase in biodiversity or ecosystem service.

There are three arguments for creating a separate market for nature:

1. Stronger climate action.

A separate market for nature reduces the risk that stakeholders could be distracted from funding permanent carbon removal methods (like DACCS or BECCS) that can legitimately be used to neutralize fossil emissions. The "like-for-like" principles state that only geologically stored carbon can neutralize fossil emissions; meanwhile, carbon stored in the biosphere (i.e., nature-based removals like reforestation) can neutralize biogenic emissions (e.g., emissions from agriculture).

2. Physical limits, social justice, and reversal risks.

The "like-for-like" principles are grounded on an understanding of the physical limits of the biosphere and an in-depth understanding of the carbon cycle. The biosphere is not large enough to accommodate our ongoing fossil emissions. Allowing first-movers to utilize nature-based removals instead of emission reduction or permanent carbon removals can be seen as a form of carbon colonialism, where the richest organizations secure rights to a limited supply of projects (typically in the global south), forcing slower-moving organizations up the cost curve. In addition to land equity issues, these nature-based removals also face increased risks of unexpected reversals (e.g., forest fires), as extreme weather intensifies.

3. Valuing nature in its own right.

To date, we have been treating the erosion of natural capital as income, and urgently need to reframe how we see business in balance with nature. Corporate accounting approaches are on the horizon to address this issue, starting with explicit nature-focused target-setting and disclosure through initiatives like the Science-Based Targets for Nature, or the Natural Capital Protocol.

Our cross-disciplinary teams, consisting of PhDs and business experts across the nature-based and permanent removal methods, see merits in both approaches. Unlike other successful environmental advances in the past, such as the global ban on CFC production, there is no quick fix to the interrelated issues of nature and climate. Ultimately, to succeed, our precise approach to ‘valuing nature’ will need to be accompanied by a more fundamental change in worldview that reflects our own dependence on the natural world.

Authored by Mostyn Brown and Ruth Malone, AFRY Management Consulting.

This article is part of our AFRY Insights publication series, where experts from AFRY Management Consulting share their insights into emerging global trends across the energy and bioindustry sectors, as well as sustainability transformation.