Recognition of the importance of wider business interactions with “nature” – the natural systems on land and sea and the biodiversity that fills them – is also growing and pressure is increasing for businesses to be held accountable for their full range of environmental impacts.

The connections between the destruction of nature and the effort to combat climate change was highlighted at the United Nations climate conference (COP26) in Glasgow, Scotland. For the first time nature had a recognized role in a global climate summit, with recognition of the role of nature in climate mitigation and adaptation in the summit text and multiple stakeholders promising action and finance toward protecting nature and restoring ecosystems.

At CDP, a not-for-profit charity, we work with thousands of companies, investors, cities, states, and regions to measure and manage their environmental impacts. We welcome the recognition of the role of nature in tackling climate change. We have long highlighted the importance of forests and deforestation in impacting greenhouse gas emissions and we realize the potential nature restoration has for sequestering carbon.

There are limitations to this of course. Nature is an important piece of the climate challenge puzzle, but it is not the sole solution. Investments in nature play an important role in reaching net zero, but they cannot negate the need to decarbonize.

But nature is also bigger than climate. Climate regulation is just one of the multitudes of goods and services we rely on our environment to generate. Investing in nature can also generate benefits for pest and disease regulation, for flood mitigation and water security, for soil health and local livelihoods. Investing in nature has not only been estimated to prevent US$3.7 trillion of damage from climate change, but also to lift a billion people out of poverty; create 80 million jobs and add an additional $2.3 trillion of growth to the global economy.

The environmental crisis is a problem of supply and demand. We demand too much of the environment, both in terms of the rates we extract from it and the extent to which we expect it to process our waste. And at the same time we undermine its capacity to supply our requirements by destroying the very systems that generate these services.

We need a global economy that is nature positive; an economy where we limit the demands we place on nature through our resource demands and emissions of greenhouse gases and other pollutants and we invest in the natural capital of the land, freshwater and marine and the variety of life within them.

CDP is striving to reduce emissions in line with a 1.5 degree-Celsius pathway and to restore ecosystem health by 2050. Investing in nature is important for the former and essential for the latter.  

As one of the world’s richest nations in terms of natural capital as well as one of the world’s top emitters, Indonesia is a nation where protecting and investing in nature potentially has a huge role to play in building a sustainable economy. Indonesia clearly recognizes this. According to the government’s commitment to the Paris Agreement, known as its National Determined Contribution (NDC), Indonesia plans to rehabilitate 5.6 million hectares of degraded land by 2030 and establish 6.4 million hectares of timber plantations in unproductive lands. It also plans to restore 2 million hectares of degraded peatland through rewetting and revegetation by 2030.

During COP26, President Joko “Jokowi” Widodo reiterated the country’s commitment to turning its forests into a net carbon sink by 2030 through six strategies; reducing deforestation, development of plantation, sustainable forest management, forest rehabilitation, peat management including mangrove, and biodiversity conservation. These commitments were underlined with Indonesia’s signing of The Glasgow Leaders Declaration on Forest and Land Use to show its commitment to halting deforestation by 2030.

Within this policy framework, there is an enormous opportunity for Indonesia’s private sector to play an active role in contributing to national targets by integrating nature into their operations.

The private sector in forestry and agricultural sector control significant land in Indonesia. Historically, the development of such sectors has been accompanied by large-scale land clearance with all the environmental costs associated with this.

Today, pressure from various stakeholders is resulting in businesses being increasingly held to account for the negative impacts of their operations on climate and nature. At the same time, companies are beginning to take notice of the nature-related risks to their business, sometimes due to direct dependencies on nature and its services and sometimes due to indirect risks of regulation and reputation. According to CDP data, 68 percent of companies that report to the platform identified climate and nature-related risks that could have a substantive financial or strategic impact on their businesses.

Investing in nature can mitigate business risk, benefit stakeholders and contribute to national and international commitments and targets. Despite this, few companies recognize the potential opportunity of working with nature, with only 22 percent of disclosing companies identifying climate and nature-related opportunities and only 11 percent identifying nature-related responses to detrimental impacts.

Realizing the potential of investing in nature in Indonesia requires action from business, support from government and a mechanism that promotes clearer transparency, tracking and accountability.

The CDP environmental disclosure system is currently used by over 13,000 companies worldwide. It demonstrates how transparency and disclosure drives change within the companies reporting, drives change in the investors and buyers that use CDP data to inform their decision making and drives change in the policy frameworks and international standards that use CDP data to guide implementation.

By reporting to CDP, businesses can better understand their own environmental risks and opportunities. Specifically, it enables them to recognize where investing in nature may be beneficial and guides them on how to invest in the appropriate way, adhering for example to the IUCN Global Standard for Nature Based Solutions or the SBTi Net Zero Standard. Using this data, investors and buyers can then selectively favor those companies reducing their risk profile, further incentivizing action from companies.

Governments play a vital role in catalyzing this cycle. The CDP disclosure system is closely aligned with many of Indonesia’s public sustainability goals. Supporting corporate disclosure will encourage companies to actively contribute to Indonesia’s national targets.

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The writer is global director of forest and land at CDP, a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.