Nature-based mitigants to climate change will offer attractive risk-adjusted returns to investors, according to a new report from the Canada Pension Plan Investment Board.

Natural carbon dioxide sinks, like forests, remove carbon dioxide from the atmosphere. By managing these natural assets, investors can monetize the carbon absorption through the sale of carbon credits.

“Companies looking to reduce emissions that cannot yet be abated can balance out today’s emissions by purchasing carbon credits,” stated the report. “These credits help meet the urgent need to reduce global carbon emissions and voluntary or compliance targets.”

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Currently, the cost of offsetting a single tonne of carbon dioxide costs carbon credit purchasers less than $10. By some estimates, it could cost $120 dollars by 2050.

The report highlighted a carbon credit scheme backed by the CPPIB. Launched in 2021, Accelerate Nature is a partnership between the institutional investor and Conservation International. It’s working with Indigenous Peruvian communities to co-manage 500,000 hectares of forests.

In a press release, Deborah Orida, global head of real assets and chief sustainability officer of the CPPIB, said the project serves as a prototype for future partnerships between institutional investors and conservation organizations. “Through initiatives pioneered by Accelerate Nature, we will help protect ecosystems and their communities while we earn attractive risk-adjusted returns in the best interests of our contributors and beneficiaries.”

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