The Sustainable Growth Coalition is embracing nature-based solutions

As we search for ways to mitigate the impacts of our changing climate, the Sustainable Growth Coalition (SGC) is helping businesses learn about and create more sustainable business models. Experts Ted Carling and Will Nielson from Ecotone Analytics recently joined an SGC learning lab to provide insight on how nature-based solutions can be used to build thriving and resilient ecosystems.

Session recap

The word “Ecotone” is a biological transition zone where two biomes meet, creating a unique and often diverse environment. This concept of blending is a metaphor for Ecotone Analytics’ approach: They combine traditional nonprofit ideas with business language to help organizations better understand the value of investing in sustainability work.

Nature-based solutions, in particular, leverage the earth’s natural protection and “clean-up” processes to address social, economic, and environmental challenges, such as biodiversity loss, food and water security, and natural disasters. Whether it’s regenerative agriculture, sustainable forestry, or green storm water infrastructure, these practices are grounded in both modern and traditional ecological knowledge and often draw inspiration from Indigenous communities that have stewarded the land for centuries.

The conversation highlighted several projects that demonstrate how nature-based solutions can be implemented:

• Regenerative agriculture: In its natural state, the earth does not rely on annual crops that leave the ground bare for months at a time. Continuous living cover crops and perennial grains provide year-round benefits, such as soil health improvement and reduced nitrogen loss, which simultaneously contribute to environmental sustainability and present new revenue opportunities for farmers.
• Sustainable Aviation Fuel (SAF) Hub: Crops grown using regenerative practices can become valuable feedstocks for sustainable aviation fuel, replacing traditional fossil fuels and significantly reducing greenhouse gas (GHG) emissions. This “win-win” scenario addresses the need for cleaner energy while maintaining agricultural productivity.
• Sustainable Forestry Initiative: Sustainable forestry not only preserves the environment but also respects Indigenous knowledge and practices. Sourcing wood from sustainably managed forests can help reduce the carbon footprint of construction, especially when used as an alternative to concrete in large buildings.

Ensuring the success of these projects requires tracking and monitoring, often involving logic models and hybrid metrics. Logic models allow organizations to visualize the chain of impacts from inputs like money and staff, to activities like tree-planting and impacts of improved ecosystems.

Hybrid metrics combine financial and environmental indicators and are critical in assessing a company’s performance over time. For example, companies might track dollars of sales per megawatt hour used, or earnings before interest, taxes, depreciation, and amortization (EBITDA) per ton of carbon emitted. These metrics help bridge sustainability and business performance and allow companies to focus on methods that are efficient for their organization.

A path forward

Despite their potential, nature-based solutions face significant challenges, including lack of knowledge about their integration with carbon reduction projects. In these cases, Carling and Nielson argued for an approach that reduces carbon emissions now while investing in long-term solutions that take more time, like planting trees or restoring wetlands. These actions work best in a diverse portfolio.

Companies might also be hesitant to invest in these strategies when their efforts may benefit competitors or provide long-term rather than immediate returns. However, collaborative models like the Sustainable Aviation Fuel Hub demonstrate that these investments can benefit entire industries and ensure business longevity.

A recording of this talk is currently available on Environmental Initiative’s YouTube channel. Below are some helpful questions from the audience.

Q&A

Question one

Are investments in nature-based solutions generally more expensive than alternatives?

Answer: Generally, yes. Capitalism has worked in a way where externalities like dumping excess chemicals into a river have been free, but now we see the environmental impact of those free externalities. This leads to the need for investment in solutions that account for these costs, making them seem more expensive than traditional shortcuts.

Question two

Can you talk about stakeholder engagement in the process of promoting nature-based solutions?

Answer: Stakeholder engagement is crucial. Explaining and expanding the scoreboard to include environmental and social benefits, alongside financial returns, helps change minds. Bringing in those who experience negative externalities, like downstream communities, can also change perspectives quickly.

Question three

How important is it to have marketplaces that compensate for the value of nature-based solutions

Answer: It’s critical. While estimating the value of an outcome is essential, there must be stakeholders willing to pay for these benefits. One aspect of our approach is estimating the extent the value is realized by different stakeholders so we can see who may be willing to invest in the benefits we’ve identified. We also see things like public funding bills designed to incentivize the adoption of nature-based solutions, and sometimes insurers will even help with frontend costs to reduce the amount of claims they receive on the backend.

Question four

How can we show the financial benefits of long-term investments in nature-based solutions to stakeholders today?

Answer: This can be addressed by showing annualized benefits and payback periods to demonstrate when investments will start to show returns. Another challenge is reconciling corporate discount rates with longer-term environmental and social returns.

Question five

How do we make these metrics for nature-based solutions become the norm in business, much like “earnings before interest, taxes, depreciation, and amortization” (EBITDA) or “internal rate of return” (IRR)?

Answer: These financial metrics were developed and adopted over time, and a similar process is needed for nature-based metrics. These can be introduced by demonstrating their connection to long-term risk management and by encouraging training and development to build understanding.

Question six

What about the incremental cost and benefits of achieving 100% reduction versus 80% in greenhouse gas emissions?

Answer: Reaching the last 20% is often the most difficult and costly. While carbon goals like 100% reduction sound great, they can be overstated, and perfection shouldn’t always be the target. Aiming for substantial reductions and maintaining them is often more realistic and beneficial.

Question seven

What are the secondary impacts of carbon reduction practices on something like soil? How are they taken into account in the impact modeling that you do?

Answer: Improvements in soil health lead to better water retention, less erosion, and reduced nitrogen and phosphorus runoff. All of those changes have positive ripple effects, such as reducing flood risks and improving water quality, which contribute to indirect carbon reduction benefits. We try to acknowledge these different connections, but it can be a challenge to follow that ripple effect and fully capture the value.