The Emergence of Biodiversity Credits

What are Biodiversity Credits and how can they play a part in a climate positive future?

In December 2022, the Kunming‑Montreal Global Biodiversity Framework (GBF) was adopted with the aim to guide global action on biodiversity and nature through an actionable framework that will help halt and reverse biodiversity loss and protect 30% of land and sea area by 2030. It contains 4 overarching goals to be achieved by 2050 and 23 action‑oriented targets for 2030.1

The GBF emphasises:

  1. Ecosystem and species conservation and restoration.
  2. The significance of nature as an essential element for livelihoods and socio-economic development.
  3. Recognition of the rights of indigenous peoples and local communities (IPLCs) and their crucial contributions in protecting and sustainably using nature.
  4. The importance of equal rights and the necessity for providing access to land and natural resources for women and girls.

This perspective is crucial because IPLCs and women serve as vital stewards of biodiversity. Numerous studies indicate that indigenous peoples, in particular, play a significant role in protecting nature.2

To work toward achieving the goals and targets established by the framework, the parties that participated in its adoption must regularly update their National Biodiversity Strategy and Action Plans (NBSAPs). These updates should be supported by biodiversity financing plans (BFPs), which will outline a set of clear actions and mechanisms to secure the resources required to address the annual global biodiversity finance shortfall, which exceeds $700 billion.3 The combination of an internationally recognised financing framework and the current global trend of mandating Environmental, Social, and Governance (ESG) standards for businesses is poised to rapidly increase biodiversity investments worldwide, particularly in the private sector. International conservationist groups are currently developing and promoting an innovative biodiversity mechanism known as “biodiversity credits.” This emerging approach to biodiversity protection extends beyond carbon accounting and generates additional benefits that enhance the environment, people, and the economy. It achieves this through the restoration, conservation, and development of biodiversity assets in specific locations. These natural assets can then be locally and globally monetised, making them available to public and private organisations interested in purchasing such assets to fulfil their corporate ESG commitments.4

Biodiversity credits, as an economic tool, can finance actions that yield measurable positive outcomes for biodiversity within specific projects. They also serve as a means for companies to progress on their nature-positive journey by investing in nature’s recovery, rather than merely offsetting damage. These credits offer an opportunity to secure essential funding for nature protection and restoration, strengthening the nature-positive economic model. This, in turn, can create numerous new business opportunities, despite being more intricate in terms of evaluation and measurement compared to carbon credits.

The initial biodiversity credit standards, enabling the allocation of value to biodiversity for trading and investment, are currently under development. However, these proposed models must be firmly grounded in scientific principles and ecosystem assessment data. This data should include species numbers, conservation status, and their ecological roles within specific ecosystems. Achieving this will necessitate the collaboration of multidisciplinary teams of scientists, business experts, and experienced nonprofits. These teams should be skilled in establishing local capacity and accountability structures and maintaining ongoing monitoring and verification, with organisations like Plan Vivo playing a role.

Biodiversity credits should be structured to facilitate long-term benefit-sharing with Indigenous people and local communities (IP&LCs), stakeholders, and shareholders, while also ensuring long-term conservation objectives. This will require multi-faceted collaboration between the public and private sectors and IP&LCs.

Related Articles

1UNEP (2023). Stepping Up on Biodiversity: What the Kunming‑Montreal Global Biodiversity Framework Means for Responsible Investors

2UNEP (2023). Stepping Up on Biodiversity: What the Kunming‑Montreal Global Biodiversity Framework Means for Responsible Investors

3UNDP (2023). Biodiversity Credit – An Effective Trade-Off Mechanism | United Nations Development Programme

4UNDP (2023). Biodiversity Credit – An Effective Trade-Off Mechanism | United Nations Development Programme.

14 Apr 2023
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