Focus on enabling the market for biodiversity credits welcomed but credits should be a “last resort” in closing the global financing gap in the protection and restoration of nature.
The UK’s environment secretary Thérèse Coffey and France’s state minister Bérangère Couillard have launched a global roadmap to support companies to contribute to nature recovery.
The UK-French Global Biodiversity Credits Roadmap, which was launched at the Summit for a New Global Financing Pact hosted in Paris last month, will build on efforts to mobilise global nature finance in support of the COP15 Biodiversity Framework agreed in Montreal last December, which aims to protect 30% of the world’s land and oceans and restore 30% of degraded ecosystems by 2030.
The roadmap sets out a plan to scale up global efforts to support companies buying credits that contribute to the recovery of nature and aims to facilitate the sharing of best practice on the governance mechanisms for credit funding, monitoring regimes to ensure biodiversity improvements, and the fair distribution of income to indigenous peoples and local communities.
It will also work towards key international milestones, such as the 2024 Un Biodiversity Conference (COP16), where the UK Government website says financing for biodiversity will be high on the agenda.
A UK-French initiated advisory panel was also announced, which would “pool together expert voices from around the world to form and guide diverse working groups to drive forward positive change”.
At the time of the announcement, Coffey said: “Mobilising finance is key to meeting the global goals set out in the COP15 agreement. Initiatives like the roadmap on biodiversity credits launched today will help ensure private sector financing is leveraged to conserve and restore nature. We’re grateful to be working alongside France and look forward to collaborating with many other countries and organisations in delivering the roadmap.”
Biodiversity credits, a nascent market
Although the concept of biodiversity credits has been modelled on carbon credits, unlike the carbon credit market in which companies compensate their emissions through the purchase of credits from companies that reduce or remove greenhouse gas emissions from the atmosphere, biodiversity credits allow companies to invest directly in projects that have a positive impact on nature either by enriching or by restoring biodiversity in areas such as rainforests, oceans, grasslands or other habitats globally.
The credits work by recording where the environmental action has taken place, who has developed it, and how it is measured and checked but according to Ann Meoni, senior sustainability analyst at Abrdn, more work needs to be done in what is still a nascent industry.
“Biodiversity credits are more complex than carbon credits because biodiversity differs by location and that really complicates the unit of credit. Where we are more comfortable currently is with high integrity carbon credits with strong additional benefits,” she said.
Meoni said there was concern around greenwashing and that she was wary of low-cost credits, which she said were often linked to lower integrity.
“Proving robust additionality, units and location comparison are difficult, but at the same time it is a valid mechanism to help finance to flow to much needed restoration and protection schemes,” she said.
According to Meoni, biodiversity credits should be seen as a last resort in closing the global financing gap in the protection and restoration of nature.
She explained that for nature the prime focus had to be on preserving biodiversity, reducing impact and remediating impact at location where possible
“Helping to finance solutions that help reduce the activities that negatively impact nature should be the focus. We need a two pronged approach which looks at ways to reduce damage and restore what has already been damaged,” she added.
Nevertheless, Meoni welcomed the UK/France and said she hoped it would develop a framework that enabled finance to target these solutions.
“There is a big financing gap right now for the restoration of nature and this is a mechanism that could help to address that,” she said. “There is so much potential to restore nature and create more resilient ecosystems. We’ve seen pockets of this being done very well, now we need to finance that at scale, and for that you need a market that is investable.”
The announcement follows the UK Government’s launch of a 10 Point Plan for financing biodiversity in the run up to COP15 in September 2022, which the government said highlighted “the need to urgently explore the role of biodiversity credits in closing the nature finance gap.”
France also launched the Positive Conservation Partnerships (PCPs) at COP27 in November last year to give carbon and biodiversity reserves special status internationally and the countries home to them, political and financial contracts enabling them to guarantee their conservation. To this end it proposed the launch of a “high-level group”, which would “be tasked with making recommendations on the creation of a biodiversity credit market.”