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Nature Policymaking Sees Rapid Acceleration – IPR

1.5°C  pathway still out of scope, says Inevitable Policy Response, calling for an end to deforestation by next year.

Half of global emission reductions by 2035 are set to come from the land use sector, the first-ever analysis of nature policy from the Inevitable Policy Response (IPR) has found.

The IPR is a climate-focused policy forecasting body, commissioned by the Principles for Responsible Investment, aiming to prepare institutional investors for the portfolio risks and opportunities associated with an acceleration of policy responses to climate change.

IPR’s first-ever nature and land use forecast, built from analysis of more than 300 policy levers and drawing on the input of more than 100 policy experts, found that progress on nature and land use will ultimately make or break efforts to achieve net zero.

Having conducted climate transition-related policy forecasts for five years, the IPR decided to create a dedicated land and nature policy update for this quarter, in response to an acceleration in nature policymaking over the last 12 months.

“The change was pretty profound for policymakers to have such focus on the topic given everything else that’s going on in the world,” said Research Director Jakob Thomä. “We saw the number of policies double over the last 12 months. That’s super high rates.”

The IPR marked a significant shift for major economies such as China, the EU, and Brazil and said it underlined that a land transition as significant as the energy transition was now under way.

The analysis showed that more than 90% of nature-related policy developments tracked in the last year were in line with a pathway to a temperature rise of well below 2°C, the upper limit of the Paris Agreement. But Russia and Argentina were significant outliers to this trend.

Thomä said the recent of election of right-wing President Javier Milei was likely the reason Argentina was not accelerating on nature policies, adding that Russia had given up on being a constructive stakeholder in the international climate and nature conversation.

Land transition

But despite the significant momentum on nature policy, IPR modelling suggests this does not put the world on a pathway to 1.5°C, the goal reaffirmed by nearly 200 governments at the UAE-hosted COP28.

Thomä said shared pathways for a land and nature transition were not as developed as they were for a climate transition and were a lot more complicated too.

“A lot of people are aware of things like reforestation but haven’t fully appreciated what we need to do on food supply, and visa versa,” he said.

“People have a sense that meat has a big footprint, but don’t fully understand the need to dramatically invest in the system in order to be able to cater to all of our needs in a world where land supply is decreasing because of climate change.”

Thomä said demand for land could outstrip supply by upwards of 15-20% in the coming decades. “It’s not like energy demand where you can build another solar park. You can’t just build another couple of farms. You have certain constraints and when people don’t have enough food it gets real pretty quick,” he said.

IPR highlighted that policymakers need to act more urgently, ending deforestation by 2025. This would raise the stakes for the next 18 months, a period when governments are required to submit new, more ambitious national climate and biodiversity plans at two upcoming UN milestone summits, both hosted in ecologically ‘mega-diverse’ countries: COP16, the biannual biodiversity summit hosted this year in Colombia; and COP30 in Brazil in 2025.

Investment risk

Even as the energy transition has risen rapidly up the corporate agenda, the role of nature, land, and food in the climate transition remains underappreciated. The IPR warned that investors and companies around the world risk being blindsided by the ambition and rapid pace of new policies.

Its analysis showed an increasing acceleration in policies to tackle deforestation, which is the source of 10% of global emissions, largely driven by commodities including beef, soybean, palm oil, timber, coffee, rubber, and cocoa.

This creates significant risk for ill-prepared companies and investors which have yet to eliminate deforestation from their supply chains and portfolios. Taking into account land use transition risks, individual firms at the centre of the global food supply system could lose up to 26% of their value by 2030 unless they change business practices, with a sector average hit of over 7%, IPR analysis has shown. This is equivalent to permanent, non-cyclical US$150 billion in losses to investors.

Thomä said it was important for investors to pay more attention to land use policies. “It still feels like energy policies are the be all and end all,” he said. “We’re expecting corporates and investors to understand the energy transition, but do you understand the land transition and how you want to position yourself?”

Although investors may not have a direct exposure to the land transition, they are almost certain to have significant indirect exposures, he said. “It’s necessary to have a plan basically,” Thomä added.

Speaking at the report’s launch event, Patricia Espinosa, former Executive Secretary of the UNFCCC and Chair of GFANZ Latin America, said nature policy was “moving centre stage” as governments around the world seek to deliver on joint climate, biodiversity and sustainable development goals.

“We need to work urgently to stop deforestation. It will be key to unlock billions of dollars of finance in Latin America in particular, where there is enormous opportunity for nature-based solutions that deliver for climate, people, nature, and economic prosperity,” she added.

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