“…Protecting nature makes our business more resilient…”
Nature is no longer a sustainability footnote. It is appearing on risk registers, in investor questionnaires, and in the disclosure rules your reporting teams are preparing for. As CFO, you are increasingly expected to explain how your company identifies, prices, and manages those exposures — and what you intend to do about them.
Nature Based Solutions, often shortened to NbS, have moved from environmental strategy into financial strategy. This guide explains what they are, why they matter to the finance function, and how to evaluate them with the same rigor you apply to any other capital allocation decision.
Why Nature Is Now a Financial Exposure
World Economic Forum analysis indicates that approximately $58 trillion — more than half of global GDP — is moderately or highly dependent on nature. When ecosystems degrade, so do the inputs, supply chains, and insurable assets behind much of that revenue.
Capital markets and regulators have taken note. The TNFD 2025 Status Report found that nearly 70% of organizations already face or expect sustainability reporting requirements within the next three years, with Europe and Asia under the greatest short-term pressure. More than half of investors surveyed described themselves as “very concerned” about nature loss and its impact on financial markets, while another 42% were “somewhat concerned.”
The gap between corporate impact and corporate action is also widening. The World Business Council for Sustainable Development reports that roughly $5 trillion in corporate financial flows harm nature each year, while only about $35 billion flows into Nature Based Solutions. That imbalance is becoming a strategic and fiduciary question — not an ESG one.
What Nature Based Solutions Actually Are
NbS are actions that protect, sustainably manage, or restore ecosystems to deliver measurable benefits for business, society, and climate. In practice, that looks like mangrove restoration, peatland rewetting, improved forest management, regenerative agriculture, wetland protection, and urban green infrastructure.
For a CFO, the useful characteristic is that well-designed Nature Based Solutions produce multiple returns from a single investment: carbon sequestration, flood and drought resilience, water quality, biodiversity outcomes, and community benefits. The Nature Conservancy notes that companies adopting nature-based solutions often see outsized and longstanding benefits across financial, regulatory, and operational objectives — benefits not typically associated with traditional grey infrastructure.
That stacked value is what makes them financially interesting. It is also what separates high-integrity projects from lightweight offsets.
Why the CFO Specifically
Accounting for Sustainability (A4S), the finance-focused initiative established by King Charles III, has been explicit: the finance function is the natural owner of the nature business case. The 2024 A4S Nature Guidance describes nature as the foundation on which all organizations depend to create value, underpinning financial returns, capital markets, and wider economic growth. A companion 2024 briefing by the Cambridge Institute for Sustainability Leadership and A4S places CFOs at the center of aligning strategy, capital allocation, and disclosure with a nature-positive trajectory.
Translated to boardroom concerns, this shows up as:
- Risk management. Nature-related physical and transition risks convert into operating cost volatility, asset write-downs, and potential liabilities.
- Cost of capital. Lenders and investors are beginning to price nature exposure into credit and equity decisions.
- Regulatory readiness. TNFD, CSRD, ISSB, and local equivalents are converging toward integrated climate and nature reporting.
- Supply chain resilience. Dependencies on water, pollination, and soil productivity are increasingly quantifiable and monitored.
- Reputation and investor trust. Credibility now requires measurable outcomes, not aspirations.
How Nature Based Solutions Connect to Carbon Strategy
Many CFOs first encounter NbS through the carbon strategy discussion. High-integrity nature-based carbon credits — from avoided deforestation (REDD+), reforestation, improved forest management, blue carbon, and regenerative agriculture — can play a defensible role in a net zero plan, alongside deep operational decarbonization.
Used well, they help you:
- Address residual emissions that cannot yet be eliminated within your operations or value chain
- Channel finance into the ecosystems your business depends on
- Produce third-party verified outcomes that stand up to investor and auditor scrutiny
Used poorly, they expose you to greenwashing claims, restated reports, and stranded sustainability investments. The difference comes down to project quality, additionality, permanence, methodology, and governance. This is where diligence matters as much as in any other investment decision.
A Practical Framework for CFOs
Credible frameworks from the WBCSD, the World Resources Institute, and TNFD converge on a similar sequence. The following steps reflect WBCSD’s NbS Blueprint, which sets out a six-stage process for building business cases for Nature Based Solutions across sectors and biomes, alongside guidance from WRI’s 2025 Financial Sector Guidebook on Nature-Based Solutions Investment and TNFD’s LEAP approach.
- Locate exposure. Map where your operations and supply chain depend on or impact ecosystems. Focus first on material sectors and regions.
- Quantify the financial impact. Translate those dependencies into cost and revenue scenarios. Nature risk that is not quantified will not be funded.
- Prioritize intervention points. Where does an NbS investment protect core enterprise value — a watershed, a coastal asset, a commodity supply shed — rather than simply offsetting unrelated emissions?
- Select credible instruments. Options include direct NbS investment, insetting within your value chain, sustainability-linked bonds, blended finance structures, and verified nature-based carbon credits from reputable registries.
- Govern for integrity. Define KPIs, reporting cadence, and third-party verification from the start. Align with TNFD, the Science Based Targets Network, and ICVCM Core Carbon Principles where relevant.
- Communicate with discipline. Investor-grade language, conservative claims, and clear linkage to enterprise value create durable credibility.
The 2025 McKinsey and World Economic Forum report Finance Solutions for Nature identifies ten priority financial solutions — including sustainability-linked bonds, thematic bonds, and internal nature pricing — capable of delivering nature outcomes at scale with investable returns. The point for CFOs is that this market is maturing quickly, and familiar financial structures can now be applied to unfamiliar assets.
The Size of the Opportunity
The capital shortfall is also an opening. WRI research indicates that in 2022 only $200 billion was allocated to nature-based solutions globally, with 82% coming from governments; private finance will need to grow significantly to close the gap to an estimated $542 billion per year by 2030. Companies that structure credible NbS strategies now will be better positioned on cost of capital, access to sustainable finance, and customer and regulator trust than those that wait.
This is not a philanthropy line. It is a category of capital allocation that sits squarely at the intersection of risk management, regulatory compliance, and long-term enterprise value.
The CFO’s Role From Here
The practical challenge for most finance teams is rarely intent. It is navigating project quality, methodology, and market complexity with the same discipline you apply to any financial decision — and doing so in a reporting environment that is still standardizing.
That is where external expertise matters. Evaluating Nature Based Solutions requires fluency in voluntary carbon markets, project developer diligence, registry standards, accounting treatment, and the evolving disclosure landscape. Few internal teams carry all of that in-house, and the cost of getting it wrong — in reputation, in restated claims, in capital misallocated — is rising.
Carbon Credit Capital works with CFOs, sustainability leaders, and strategy teams to evaluate Nature Based Solutions, structure high-integrity carbon strategies, and align them with credible net zero pathways. We help finance functions apply investment-grade rigor to project selection, portfolio design, and disclosure — so your climate strategy stands up to investor, auditor, and regulator scrutiny.
If you are assessing how Nature Based Solutions and nature-based carbon credits fit into your company’s broader climate and risk strategy, schedule a consultation at CarbonCreditCapital.com to discuss a defensible, commercially grounded plan with our team.
Sources
- Accounting for Sustainability (A4S), Nature Guidance Series: The Business Case for Nature, 2024. accountingforsustainability.org
- Cambridge Institute for Sustainability Leadership & A4S, Broadening the Horizon: How CFOs and Finance Functions Can Help Drive Corporate Sustainability, 2024. cisl.cam.ac.uk
- Taskforce on Nature-related Financial Disclosures (TNFD), 2025 Status Report. tnfd.global
- World Business Council for Sustainable Development, Building Business Cases for Nature-based Solutions (NbS Blueprint), 2024. wbcsd.org
- World Economic Forum & McKinsey & Company, Finance Solutions for Nature: Pathways to Returns and Outcomes, 2025. mckinsey.com
- World Resources Institute, Financial Sector Guidebook on Nature-Based Solutions Investment, 2025. wri.org
- World Resources Institute, How Businesses Can Finance Nature-Based Solutions, 2025. wri.org
- The Nature Conservancy, The Business Case for Nature-Based Solutions. nature.org
EU Directive: Empowering Consumers for the Green Transition (ECGT)
The EU Directive, Empowering Consumers for the Green Transition (ECGT), takes effect on September 27, 2026.(1) The goal of ECGT is to protect consumers by ensuring that environmental claims are fair, understandable, and reliable. This regulation does create a new compliance requirement for businesses, but it also provides sustainability and marketing teams with important guidance that helps create consistency in sustainability communications.
Key takeaways
- ECGT takes effect September 27, 2026, and prohibits claims that a product or service has a neutral, reduced, or positive environmental impact based on offsetting alone.
- Named example phrases the regulation prohibits include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint.
- ECGT does not want to deter investment in carbon credits. It wants companies to communicate the real benefits of the projects they support instead.
- SBTi’s guidance recommends framing carbon credits as taking responsibility for ongoing emissions, not as making a product or company neutral.
- Voluntary carbon projects deliver real climate progress: reducing super-pollutants, protecting and restoring ecosystems, and supporting communities.
Regarding carbon credits specifically, voluntary carbon projects deliver important climate progress and environmental benefits that provide many talking points for companies. They reduce climate super-pollutants by removing industrial emissions like methane, N2O, HFCs and others. They protect and restore valuable ecosystems and carbon sinks like forests, mangroves and grasslands. They help communities by reducing local pollution, creating employment opportunities, improving access to healthcare, and more.
The Science Based Targets Initiative (SBTi), a global leader in business climate action, concludes that alongside aggressive decarbonization, we should also use high quality carbon credits to take responsibility for our ongoing emissions. SBTi recognizes that carbon credits are important “to help limit temperature overshoot, mitigate transition risks, and support climate solutions.”(2)
ECGT language on carbon offsetting says that they do not want to deter investment in carbon credits. They just want companies to focus on communicating the benefits of the projects they support and avoid claims beyond the scope of carbon credits, which is good for everyone, companies and consumers alike.
The regulation reinforces that carbon credits do not change the sustainability of your products, so carbon credit buyers should not suggest that their products are more sustainable because of carbon credits. Instead, companies need to promote their climate contributions as a way to compensate or take responsibility for their carbon emissions by supporting projects that do great things like reducing global carbon emissions, reducing pollution, preventing deforestation, restoring forests, and more.
ECGT language related to carbon offsetting
The regulation is particularly focused on prohibiting claims, based on offsetting greenhouse gas emissions, that a product or service has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions. These claims are prohibited in all circumstances because they mislead consumers into believing the claim relates to the product itself, or to how it was made and supplied, or into thinking that using the product carries no environmental impact at all.
Named examples of prohibited claims include:
- climate neutral
- CO2 neutral certified
- carbon positive
- climate net zero
- climate compensated
- reduced climate impact
- limited CO2 footprint
These claims are only allowed when they rest on a product’s actual lifecycle impact, not on offsetting emissions outside that product’s value chain, since the two are not equivalent. This prohibition does not stop companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they present that information in a way that is not misleading and that meets the other requirements of Union law.(1)
SBTi also provides guidance on climate contribution language in its Corporate Net Zero Standard Version 2.0 Draft for Second Public Consultation, November 2025. While the SBTi language is fairly technical, it has a good framework for crafting a climate contribution message.
SBTi Language for Carbon Credits(3)
- Take responsibility for ongoing emissions by delivering mitigation impact contributions
- Carbon credits certify the mitigation outcomes of projects that reduce, avoid, or remove carbon emissions
- Activities that reduce emissions from emission sources not located within the company’s value chain
- Activities that conserve, protect, and enhance natural carbon sinks
- Activities that capture and store carbon in storage pools
SBTi’s draft standard also walks through sample claim language for this kind of contribution. In general, the samples move from a simple percentage statement, to naming a specific verified tonnage tied to that percentage, to a fuller statement that breaks the tonnage into reductions versus removals. Across all three, the framing stays consistent: a company took responsibility for a defined share of its ongoing emissions over a set period, by funding a specific, verified amount of mitigation, achieved through emission reductions or removals.(3)
FAQ: ECGT and Carbon Credit Claims
When does the ECGT directive take effect?
The rules apply across the EU from September 27, 2026, after member states transposed the directive into national law by March 27, 2026.
Does ECGT ban carbon offsetting?
No. It bans specific marketing claims that a product or service is environmentally neutral, reduced impact, or positive based on offsetting. Advertising investment in carbon credit projects themselves is still allowed if it is not misleading.
What phrases does ECGT specifically prohibit?
Named examples include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint, when those claims are based on offsetting rather than a product’s actual lifecycle impact.
How should a company describe its carbon credit purchases instead?
SBTi’s guidance recommends stating the specific verified tonnage of emissions reductions or removals funded and describing that as taking responsibility for a defined share of ongoing emissions, rather than claiming the company or product is neutral.
Does this rule apply to company level sustainability claims too?
ECGT is focused on claims about specific products and services in consumer marketing. Broader company level sustainability communication is a separate matter still governed by other existing rules.
While ECGT does add a new compliance burden for businesses, it helps create consistency in sustainability messaging that is important to building confidence in voluntary carbon projects and scaling the industry to help us achieve progress on global carbon emissions.
Disclaimer: Terrapass does not provide legal or regulatory advice. Any interpretation of regulation must be approved by your legal representative.
References:
(1) https://eur-lex.europa.eu/eli/dir/2024/825/oj
(2) https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-version-2.pdf
(3) https://files.sciencebasedtargets.org/production/files/CNZS-V2-Second-Consultation-Draft.pdf
The post The EU’s New Green Claims Rules and Carbon Credits appeared first on Terrapass.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
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